European stocks posted their biggest weekly drop since March as concern rose that the sovereign-debt crisis would spread to Italy and Spain and as rating companies said they might cut the US’ top credit rating.
The STOXX Europe 600 Index slid 2.5 percent to 266.91. The decline has left the index trading at about 12.5 times earnings, near its lowest since December 2008, according to data compiled by Bloomberg.
“I think markets are too expensive considering the risk,” said Jean Borjeix, a partner at Paris-based Platinium Gestion, which helps oversee about US$170 million. “It is impossible to take the same risk for the market as we did before 2008 because now we have a public debt problem. We are not in the same environment, so it is not possible to price today at the same level.”
US Treasury Secretary Timothy Geithner warned there was no possible extension to the time limit to raise the debt ceiling as Standard & Poor’s (S&P) joined Moody’s Investors Service in reviewing the US’ s credit rating.
S&P said it would lower the long-term rating by one or more notches into the “AA” category in the next three months if it concludes that the US Congress and President Barack Obama’s administration haven’t found a credible solution to the government’s rising debt burden and aren’t likely to do so in the foreseeable future.
Moody’s put the US on review for the first time since 1996 as talks to raise the country’s US$14.3 trillion debt limit stalled, adding to concern that political gridlock will lead to default.
Even a temporary default will probably have “large systemic effects” on the economy and US Treasury finances by disrupting money funds, the repurchase-agreement market and foreign investors’ willingness to buy government debt, JPMorgan Chase & Co said.
Italy this week sold five-year bonds at the highest yield in three years. The Italian Treasury on Thursday priced 1.25 billion euros (US$1.8 billion) of bonds due in 2016 at an average yield of 4.93 percent, compared with a yield of 3.9 percent at its previous auction on June 14.
Italy’s FTSE MIB Index on Monday plunged the most in more than a year, entering a bear market as its slide from this year’s high on Feb. 17 exceeded 20 percent. The gauge tumbled 3.1 percent this week.
National benchmark indexes declined in every western European market except Iceland, which finished the week unchanged. France’s CAC 40 Index slid 4.8 percent. The UK’s FTSE 100 Index and Germany’s DAX Index each dropped 2.5 percent.
Commerzbank AG, Germany’s second-biggest lender, sank 16 percent, leading a retreat in financial stocks. Thomas Cook Group PLC slumped 44 percent after Europe’s second-largest tour operator cut its profit forecast for the year.
Technology shares sank 6.5 percent for the biggest drop among the 19 industry groups in the STOXX 600 as banking software provider Temenos Group tumbled 30 percent after reducing its prediction for revenue from licenses.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
MAJOR BENEFICIARY: The company benefits from TSMC’s advanced packaging scarcity, given robust demand for Nvidia AI chips, analysts said ASE Technology Holding Co (ASE, 日月光投控), the world’s biggest chip packaging and testing service provider, yesterday said it is raising its equipment capital expenditure budget by 10 percent this year to expand leading-edge and advanced packing and testing capacity amid strong artificial intelligence (AI) and high-performance computing chip demand. This is on top of the 40 to 50 percent annual increase in its capital spending budget to more than the US$1.7 billion to announced in February. About half of the equipment capital expenditure would be spent on leading-edge and advanced packaging and testing technology, the company said. ASE is considered by analysts