ECONOMY
Global debt at new high
Global debt rose to a record US$237 trillion in the fourth quarter of last year, more than US$70 trillion higher from a decade earlier, an analysis by the Institute of International Finance said. Among mature markets, household debt as a percentage of GDP hit all-time highs in Belgium, Canada, France, Luxembourg, Norway, Sweden and Switzerland. That is a worrying signal, with interest rates beginning to rise globally. Ireland and Italy are the only major countries where household debt as a percentage of GDP is below 50 percent. Still, the ratio of global debt-to-GDP fell for the fifth consecutive quarter as the world’s economic growth accelerated.
RETAIL
LVMH shares soar
Shares in France’s LVMH Moet Hennessy Louis Vuitton SE rose more than 5 percent to record highs in early trading yesterday after the Louis Vuitton owner posted better-than-expected sales growth in the first quarter, helped by thriving Chinese appetite for luxury goods. The upbeat start to the year for LVMH, the industry’s biggest company and parent to brands like Christian Dior and Moet & Chandon, sets an encouraging tone for peers at the start of their reporting season. Luxury goods firms last year benefited from a strong rebound in Asian demand, a momentum that has shown little signs of fading.
AVIATION
Air France assesses costs
Air France yesterday said that seven day-long strikes since February by workers demanding higher pay are set to cost it 170 million euros (US$210 million). “The impact on Air France’s operating profit of seven days of strikes between February 22 and April 11 is estimated at 170 million euros,” the group said. The estimate was contained in a statement on the passenger numbers of Air France-KLM, which said they had increased by 5.4 percent last month.
SAUDI ARABIA
Three-part bond sale begins
The sale of a three-part US dollar bond started yesterday, as the kingdom seeks funds to plug its budget deficit. The world’s biggest oil exporter set initial price guidance for the 2025 notes at 170 basis points area over US Treasuries, 2030 securities in the 200 basis points area and 2049 bonds in the 235 basis points area, according to a term sheet seen by Bloomberg. Global books open and the deal is today’s business. The government plans to borrow the equivalent of US$31 billion this year to bridge an expected budget deficit of US$52 billion and fund growth plans after its economy shrank last year. Last month, it increased a US$10 billion syndicated loan by US$6 billion on higher demand.
NORWAY
Inflation slows unexpectedly
Inflation unexpectedly slowed last month, casting doubt on the central bank’s plan to start tightening interest rates after the summer. Underlying consumer prices last month rose 1.2 percent from a year earlier, below the 1.4 percent estimated by analysts. Headline inflation was unchanged at 2.2 percent, missing the 2.4 percent estimate. Underlying inflation is falling deeper below the central bank’s newly minted 2 percent target. Policymakers have said they would start raising rates “after summer” in anticipation a pick up in economic growth and falling unemployment would push up price growth. The krone yesterday fell 0.16 percent to 9.6075 per euro.
Semiconductor shares in China surged yesterday after Reuters reported the US had ordered chipmaking giant Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) to halt shipments of advanced chips to Chinese customers, which investors believe could accelerate Beijing’s self-reliance efforts. TSMC yesterday started to suspend shipments of certain sophisticated chips to some Chinese clients after receiving a letter from the US Department of Commerce imposing export restrictions on those products, Reuters reported on Sunday, citing an unnamed source. The US imposed export restrictions on TSMC’s 7-nanometer or more advanced designs, Reuters reported. Investors figured that would encourage authorities to support China’s industry and bought shares
TECH WAR CONTINUES: The suspension of TSMC AI chips and GPUs would be a heavy blow to China’s chip designers and would affect its competitive edge Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s biggest contract chipmaker, is reportedly to halt supply of artificial intelligence (AI) chips and graphics processing units (GPUs) made on 7-nanometer or more advanced process technologies from next week in order to comply with US Department of Commerce rules. TSMC has sent e-mails to its Chinese AI customers, informing them about the suspension starting on Monday, Chinese online news outlet Ijiwei.com (愛集微) reported yesterday. The US Department of Commerce has not formally unveiled further semiconductor measures against China yet. “TSMC does not comment on market rumors. TSMC is a law-abiding company and we are
FLEXIBLE: Taiwan can develop its own ground station equipment, and has highly competitive manufacturers and suppliers with diversified production, the MOEA said The Ministry of Economic Affairs (MOEA) yesterday disputed reports that suppliers to US-based Space Exploration Technologies Corp (SpaceX) had been asked to move production out of Taiwan. Reuters had reported on Tuesday last week that Elon Musk-owned SpaceX had asked their manufacturers to produce outside of Taiwan given geopolitical risks and that at least one Taiwanese supplier had been pushed to relocate production to Vietnam. SpaceX’s requests place a renewed focus on the contentious relationship Musk has had with Taiwan, especially after he said last year that Taiwan is an “integral part” of China, sparking sharp criticism from Taiwanese authorities. The ministry said
US President Joe Biden’s administration is racing to complete CHIPS and Science Act agreements with companies such as Intel Corp and Samsung Electronics Co, aiming to shore up one of its signature initiatives before US president-elect Donald Trump enters the White House. The US Department of Commerce has allocated more than 90 percent of the US$39 billion in grants under the act, a landmark law enacted in 2022 designed to rebuild the domestic chip industry. However, the agency has only announced one binding agreement so far. The next two months would prove critical for more than 20 companies still in the process