Date Issued – 12th November 2024
Preview
Baidu reveals new AI products, including text-to-image generator and no-code app tool, as it expands AI offerings. China’s surging copper production threatens global smelters, raising concerns over margins and overcapacity. Japan’s minority government could boost retail, utilities, and tech sectors, while investing heavily in semiconductors and AI. Oil prices remain weak due to demand concerns and strong dollar, as markets await OPEC guidance. Ivanhoe’s Friedland downplays US tariff impact on China, citing reduced export reliance. Asian stocks retreat while Bitcoin soars on Trump euphoria, with investors betting on pro-growth policies.
Baidu Expands AI Offerings with Text-to-Image and No-Code App Tools
Baidu Inc., China’s leading search engine, revealed new AI-driven products at its annual Baidu World Conference, signaling its push into large language model (LLM) applications. Among the highlights are I-RAG, a text-to-image generator designed to mitigate “hallucination” issues—common in AI image generation—and Miaoda, a tool that enables users to create software without needing coding skills. CEO Robin Li also noted that Baidu’s Ernie platform now handles 1.5 billion daily interactions, up from 200 million in May, underscoring the company’s rapid AI expansion. Additionally, Baidu debuted AI-powered smart glasses, further integrating AI into its product ecosystem.
Investment Insight
Baidu’s strategic focus on AI commercialization, particularly through scalable tools like no-code solutions and smart hardware, positions it as a key player in China’s AI race. Investors should monitor Baidu’s ability to convert these innovations into revenue streams amidst competition from domestic rivals like ByteDance.
Market price: Baidu Inc. (BIDU): $88.20
China’s Copper Production Surge Threatens Global Smelters
China’s rapid expansion in copper production is squeezing margins globally and could force smelters in countries like Chile and Europe to scale back. As China approaches 50% of the world’s refined copper output, its smelters continue to grow capacity despite shrinking treatment fees, increasing pressure on global operations. With demand for copper set to soar—driven by the energy transition and electric vehicles—China’s dominance in refining capacity is raising concerns internationally. This week’s Asia Copper Week in Shanghai will see key industry players discuss the worsening ore supply gap and potential curtailments outside China.
Meanwhile, Russia’s MMC Norilsk Nickel is exploring plans to build a 500,000-ton copper smelter in southern China, further strengthening China’s grip on copper processing.
Investment Insight
China’s copper production boom creates headwinds for non-Chinese smelters, with growing overcapacity and margin compression as key risks. Investors should keep a close eye on China’s ability to manage overproduction while maintaining profitability in the face of global demand shifts.
Market price: Copper Futures: $4.188 per pound
Weak Government in Japan Could Boost Retail, Utilities, and Tech, While Semiconductors Get Major Support
Japan’s minority government under Prime Minister Shigeru Ishiba may provide a boost to sectors like retail, utilities, and tech, as the administration looks to maintain support from opposition parties. Tax cuts aimed at increasing disposable income are on the table, which could benefit consumer-facing companies such as Ryohin Keikaku and Shimamura if the Democratic Party for the People (DPP) succeeds in raising the tax-free income ceiling. At the same time, the opposition’s pro-nuclear stance is likely to support utility stocks, as plans to restart additional reactors move forward.
Meanwhile, Ishiba has also announced a massive ¥10 trillion ($65 billion) investment in Japan’s semiconductor and AI sectors, aiming to unlock ¥50 trillion in public and private investment over the next decade. This initiative is part of a broader effort to ensure Japan remains competitive in the global chip race, particularly as the U.S. and China pour resources into advanced semiconductor technologies. The funding is expected to drive growth in Japan’s tech sector, with companies like Renesas Electronics and Tokyo Electron well-positioned to benefit from the government’s AI and chip ambitions.
Investment Insight
Retail and utility stocks stand to gain from increased disposable income and pro-nuclear policies, while tech firms could see long-term growth from Japan’s aggressive investment in AI and semiconductors. However, political gridlock may slow decision-making on military spending and corporate reforms, creating challenges for defense-related stocks. Investors should focus on the opportunities in Japan’s chip sector as public and private investment accelerates under favorable policy frameworks.
Market price: Nikkei 225: JPY 39,376.09
Oil Holds Biggest Drop in Two Weeks Amid Demand Concerns and Strong Dollar
Oil prices remained weak after the largest drop in two weeks, driven by concerns over soft demand in China, a stronger US dollar, and fears of a potential oversupply. Brent crude traded below $72 following a 3% decline, while West Texas Intermediate hovered around $68. China’s latest economic measures have failed to provide direct stimulus, and weak inflation adds to the uncertainty. Meanwhile, the dollar’s strength, fueled by Donald Trump’s election victory, has made oil more expensive for non-US buyers. With global supply expected to exceed demand in 2025, markets are closely watching OPEC’s monthly report for further guidance.
Investment Insight
Oil markets face bearish sentiment due to US dollar strength, weak demand forecasts, and oversupply concerns. Investors should monitor OPEC+ decisions and potential US sanctions enforcement against Iran as key factors that could shift the outlook for crude prices in 2025.
Market price:
Brent Crude: $71.90 per barrel
WTI Crude: $68.06 per barrel
Ivanhoe’s Friedland Downplays US Tariff Impact on China
Robert Friedland, founder of Ivanhoe Mines Ltd., believes China is better positioned to withstand US tariffs under Donald Trump’s incoming administration due to its reduced reliance on exports to the US. In an interview, Friedland noted that China’s economic exposure to the US has significantly decreased since Trump’s first term, making it less vulnerable to the president-elect’s proposed 60% tariffs. He also highlighted China’s ongoing efforts to stimulate domestic demand and address local government debt, asserting that China’s long-term outlook remains strong. Friedland expressed optimism about the US as well, citing Trump’s alignment with technology leaders like Elon Musk as a potential boost for innovation.
Investment Insight
China’s reduced dependence on US exports mitigates immediate risks from new tariffs, offering resilience to its economy. Investors might find opportunities in Chinese equities, which are attractively priced compared to US stocks, while keeping an eye on potential trade negotiations between the two superpowers.
Market Price: Ivanhoe Mines (IVN.TO): CAD 18.33
Asian Stocks Retreat, Bitcoin Soars on Trump Euphoria
Asian stocks slid on Tuesday, with Taiwan and South Korea leading the declines, while the dollar held at four-month highs. Markets are reacting to Donald Trump’s re-election, with investors betting on pro-growth policies like tax cuts and deregulation. Bitcoin surged to an all-time high of $89,637, buoyed by expectations of a favorable regulatory environment for cryptocurrencies under Trump’s second term. Meanwhile, the euro weakened to near seven-month lows due to concerns over potential tariffs from the new White House administration.
In Japan, the Nikkei gained 0.5% on a weaker yen, bucking the regional trend. U.S. chip restrictions on China have hurt stocks like Taiwan Semiconductor, adding pressure in the tech sector. Wall Street hit record highs overnight, with Tesla jumping 9% on optimism surrounding Trump and Elon Musk’s continued leadership.
Investment Insight
Investors are riding a wave of optimism on Trump’s re-election, with bitcoin and equities seeing strong gains. However, risks remain, particularly around potential tariffs and inflationary pressures. Watch for volatility as markets digest the full implications of Trump’s policies, especially in tech and trade-sensitive sectors.
Market price: Bitcoin (BTC): $89,702.32
Conclusion:
The market landscape is evolving as Trump’s re-election prompts reactions across various sectors, from energy and technology to Asian and U.S. markets. As these changes unfold, our aim is to provide insights to guide your investment decisions. We are here to discuss strategies and portfolio adjustments in light of these complex developments.
Upcoming Dates to Watch:
- November 13, 2024: U.S. Consumer Price Index (CPI) data release
- November 14, 2024: Eurozone Q3 GDP report release
- November 20, 2024: U.S. Federal Open Market Committee (FOMC) meeting minutes
Find below some of our Buy/Sell Recommendations. Balfour Capital Group is a distinguished global boutique investment management firm with $400 million AUM and over 1000 Clients.
Disclaimer: This post provides financial insights for informational purposes only. It does not constitute financial advice or recommendations for investment decisions.