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Yahoo
an hour ago
- Yahoo
Xi's Price-War Campaign Creates a Buzz in China's Stock Market
(Bloomberg) -- For strategists at JPMorgan Chase & Co. and Goldman Sachs Group Inc. as well as money managers in Hong Kong and Singapore, an opaque term has suddenly emerged as the catchphrase for deciphering Chinese policy intentions and navigating the stock market. Singer Akon's Failed Futuristic City in Senegal Ends Up a $1 Billion Resort Why Did Cars Get So Hard to See Out Of? How German Cities Are Rethinking Women's Safety — With Taxis Philadelphia Reaches Pact With Workers to End Garbage Strike The term 'anti-involution' has cropped up in government documents over the past year, but gained prominence earlier this month when President Xi Jinping chaired a high-level meeting that pledged to regulate 'disorderly' price competition. It refers to efforts to root out China's industrial malaise, marked by cutthroat price wars and overcapacity that have hurt profitability in sectors ranging from solar, new energy vehicles to steel. Investors are hopeful that a more coordinated policy response to tackle the drivers of deflation is on its way, though Beijing hasn't yet released any plan. Analyst reports on the theme have flooded the market, while solar and steel stocks have rallied in July. Morgan Stanley strategists changed their preference to onshore shares from those in Hong Kong last week. 'One of the biggest issues that investors have investing in China is that of excessive competition,' said Min Lan Tan, head of the Asia Pacific chief investment office at UBS AG. 'It's actually a very positive development that top down the government is now recognizing it and directly saying that destructive competition has to stop. It's a powerful policy signal.' The Chinese term for involution, 内卷 (neijuan), literally means rolling inwards. In practice, it's used to describe a system of intense competition that yields little meaningful progress. Huge spending on building capacity has helped Chinese firms enhance their global standing. The nation's companies now dominate every step of the solar supply chain, while its EV makers have toppled Tesla's dominance. Yet, ending destructive competition has rarely been more important. Producer deflation is worsening, and trade tensions mean China can no longer unleash some of its overcapacity to other countries. 'With foreign markets closing off Chinese trade routes, part of the competition is forced to return to the domestic market,' said Jasmine Duan, senior investment strategist at RBC Wealth Management Asia. The campaign seems to be helping improve investor sentiment for the mainland market, where policy drivers have a stronger sway and industrial stocks have bigger weighting. The onshore CSI 300 Index has risen 2% so far in July, outperforming the Hang Seng China Enterprises Index after lagging it for most of the year. Solar stocks Xinjiang Daqo New Energy Co. and Tongwei Co. have advanced at least 19% this month. Liuzhou Iron & Steel Co Ltd. has surged more than 50% while Angang Steel Co. has gained about 16%. Glass, cement and chemicals shares have also jumped. It's still early stages but if the reforms pan out, 'there'll be consolidation in China and there'll be slightly better pricing and margins, and there'll be better valuation,' said Wendy Liu, head of China and Hong Kong equity strategist at JPMorgan. Sectors that are likely to benefit include autos, battery, solar, cement, steel, aluminum and chemicals, she said. To seasoned China watchers, the current rhetoric recalls the supply-side reforms of 2015-2018, when a government-led push to cut outdated capacity in sectors such as coal and steel helped drive up prices in the following years. This time, however, key differences may limit the campaign's effectiveness. A decade ago, oversupply was mostly concentrated in upstream and construction-related sectors. It's become more pervasive today, encompassing the most promising industries of solar, EV and battery to downstream consumer sectors such healthcare and food. That point is illustrated by the intensifying price war among technology giants listed in Hong Kong — China's private sector leaders. Shares in Meituan, Alibaba Group Holding Ltd. and Inc. have slumped more than 20% from their March highs as they jostle for delivery market expansion. 'This time the overcapacity is concentrated in industries mostly dominated by private firms, so the challenges are going to be greater than when SOEs ruled and could just buy up the private firms and shut them down,' said Li Shouqiang, a fund manager at Shenzhen JM Investment Management. Addressing the supply-demand imbalance will also require measures to reflate the economy by boosting consumption — a tall order the government has struggled to deliver on. For now, investors seem hopeful that a bigger supply-side reform is in the offing. Morgan Stanley strategists said sentiment has improved with the government's message, and added they now prefer A-shares over offshore ones. 'When senior policymakers change some policy tone, there should be some actionable items or something to follow through,' said Louisa Fok, China equity strategist with Bank of Singapore. It won't be a quick overnight fix, but it's 'definitely positive' that the government is aware of the problems, she added. 'Our Goal Is to Get Their Money': Inside a Firm Charged With Scamming Writers for Millions Trump's Cuts Are Making Federal Data Disappear Soccer Players Are Being Seriously Overworked Will Trade War Make South India the Next Manufacturing Hub? Trade War? No Problem—If You Run a Trade School ©2025 Bloomberg L.P.
Yahoo
an hour ago
- Yahoo
Goldman Sachs Starts Coverage on Marvell (MRVL)—Why It's Not a Buy Yet
Marvell Technology, Inc. (NASDAQ:) is one of the . On July 10, Goldman Sachs analyst James Schneider initiated coverage on the stock with a 'Neutral' rating and a price target of $75.00. The firm is cautious on the stock, along with AMD and Arm Holdings. Even though all three are involved in AI, the firm is of the view that they don't offer the same upside potential right now. 'Our ratings reflect a more negative risk/reward skew on these companies' shares from current levels, or areas where we see additional downside risk to fundamentals.' Particularly for Marvell, the firm said that it has AI exposure, but not enough upside right now to recommend buying. 'We initiate on Marvell (MRVL) with a Neutral rating and a 12-month target price of $75. Marvell is a networking solutions provider and an industry leader in optical DSPs. The company has also seen growing traction in its custom compute franchise. We believe the company has demonstrated early success in its custom compute franchise, with deployments at Amazon and recently announced new customer wins at its Custom AI event. "However, we have only moderate visibility into the shape of the company's custom compute ramp in CY26. On the positive side, we believe that the company is on a path to recovery in its traditional Enterprise Networking and Carrier businesses. All in, we see a balanced risk/reward profile at these levels. We could be more constructive on the stock if we were to gain better visibility on the company's ASIC ramp in 2026 and beyond.' Marvell Technology, Inc. (NASDAQ:MRVL) engages in the development and production of semiconductors, focusing heavily on data centers. While we acknowledge the potential of MRVL as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: and . Disclosure: None.
Miami Herald
2 hours ago
- Miami Herald
Lavrov says North Korea affirms Russian war goals in Ukraine
Russian Foreign Minister Sergei Lavrov said North Korea has affirmed its 'clear support' for Russia's war in Ukraine and for Kremlin leadership as he started a three-day visit to Pyongyang. The two heavily sanctioned nations are in constant contact, and more meetings between President Vladimir Putin and Leader Kim Jong Un are likely in the future, Lavrov said at a press conference after talks with his North Korean counterpart Choe Son Hui, according to the state-run Tass news service. Lavrov referenced the participation of North Korean troops in Russia's Kursk region, where Kremlin forces reversed last year's surprise incursion by Ukraine, calling it evidence of an 'invincible brotherhood' between the nations. Ukraine in June said it retains a sliver of territory in Kursk oblast, some 90 square kilometers (35 square miles). Russian authorities would facilitate an increase in tourist flows to North Korea from Russia, Lavrov said. North Korea opened the Wonsan‑Kalma coastal tourist area in June, with Kim presiding over the ribbon-cutting ceremony. Lavrov also said that Belarus, with Russia's backing, has invited North Korea to take part in the third conference on Eurasian security architecture, expected to be held in Minsk in October. This weekend's visit comes less than a month after Pyongyang agreed to send an additional 6,000 military workers to the Kursk region at a June meeting between Kim and Sergei Shoigu, Putin's top security aide and former Russian defense minister. It was Shoigu's third trip to Pyongyang in as many months. The two countries have been deepening ties after signing a military treaty last year to expand their strategic partnership under mounting international sanctions. Russia and North Korea also intend to relaunch maritime transport between the two countries Western governments have accused the Kremlin of bartering military technology for arms and manpower amid Putin's war on Ukraine, now well into its fourth year. The deployment of North Korean troops to Russia has also helped Pyongyang's military gain modern, real-world combat experience. North Korea is now supplying as much as 40% of Russia's ammunition for the war and 'those are good weapons,' Kyrylo Budanov, head of Ukrainian military intelligence, told Bloomberg News in an interview. 'North Korea has huge stockpiles and production goes on around the clock,' he said. Bloomberg can't independently verify Budanov's assessment. Lavrov's visit to Pyongyang is part of 'the second round of strategic dialogue between the top diplomats,' Russian Foreign Ministry spokeswoman Maria Zakharova said on Wednesday, according to Tass. Choe Son Hui met with Putin and Lavrov in November during a trip to Moscow. Before Pyongyang, Lavrov was in Kuala Lumpur, where he met with US Secretary of State Marco Rubio on the sidelines of the gathering of the Association of Southeast Asian Nations. Copyright (C) 2025, Tribune Content Agency, LLC. Portions copyrighted by the respective providers.
