Market 01/02: US-China stocks open the new year in the red

China: Home sales continue to decline, economy stagnates, government pumps money to stimulate growth again

December new home sales of China's top 100 real estate companies fell -34.6% Y/Y to 451.3 billion RMB (64 billion USD).

• Annual revenue of these major real estate firms down -16.5% from 2022

Hong Kong real estate market dismal with transaction volume at lowest in 33 years

China's GDP performance and its stocks have slightly declined recently:

• Chinese stocks also plunged right at the start of 2024:

  

China's economic stagnation causes Asian factories to fall into recession.

• Taiwan factory business conditions drop sharply to 47.1 in December from 48.3 in previous month.

• Korea's PMI slightly down to 49.9, new orders continue to decline due to weak domestic economy and slowing demand from China.

To stimulate the economy, especially the real estate sector, China injected 50 billion USD into policy banks, boosting funding for housing and infrastructure projects

Manufacturing data plunged in December: orders down, prices up

In 2023, only 2 months of S&P Global manufacturing PMI data were not in contraction territory, including December:

• US December manufacturing PMI at 47.9, below 48.4 expected

Tesla's Q4 delivery volume at record high but misses 2023 target

Tesla's Q4 figures:

• Production: 495,000 vehicles - higher than Bloomberg estimate of 482,336

• Deliveries: 484,000 vehicles

For full year 2023, Tesla:

• Production: 1.846 million vehicles

• Deliveries: 1.81 million vehicles, up 38% from previous year but misses 2 million target

• Tesla delivered 461,538 Model 3/Y vehicles and 22,969 other models, including Model S, Model X, and new Cybertruck.

• Model 3 and Model Y remain the main drivers of revenue, while Model S, Model X, and Cybertruck account for only about 5% of total quarterly deliveries

Despite record Q4 vehicle sales, Tesla's position as the world's largest EV maker has recently fallen to BYD - Chinese EV producer

• BYD's Q4 deliveries reached 526,000 vehicles — first time BYD surpasses Tesla in quarterly sales.

ASML shares fall as Netherlands bans lithography machine exports to China

ASML – world's leading chip equipment maker – canceled some shipments to China at the request of the US government.

Reason: Dutch government recently revoked some licenses to ship lithography systems to China.

• Immediately, Beijing criticized this Dutch move and stated that the Netherlands should “respect market principles”

According to Chinese customs data, from July to November, China's lithography machine imports surged more than 5x to 3.7 billion USD.

• China accounted for nearly half of ASML's Q3 sales – compared to 24% in previous quarter and 8% in three months ending March.

• ASML shares plunge more than 3% after this news:

Bitcoin hits price milestone above 45,000 USD after nearly 2 years

Bitcoin now trading above 45,000 USD for the first time since April/2022.

• Bitcoin up 175% from last year and 210% higher than November 2022 low.

• Volume of Bitcoin options contracts in past December rises to unseen high.

Other news

1. $VIX volatility index up 14% on first trading day of 2024 — largest daily move since 10/13.

2. Barclays downgrades Apple from Equal Weight to Underweight, expressing concerns about prolonged weak results and unsustainable product expansion.

• Apple stock drops more than 3% following the above news

3. January 1, 2024 marks the official entry of 5 new BRICS members: Egypt, Ethiopia, Iran, Saudi Arabia and UAE.

   • This new alliance will represent ~46% of the world's population, accounting for 30% of nominal GDP and 37% of global GDP at purchasing power parity.

   

   • Previously, Argentina's new president Javier Miley has officially notified BRICS member country leaders that the country will not join BRICS.

4. According to data from the Mortgage Bankers Association, there are $117 billion in office building mortgage loans that need to be repaid or refinanced in 2024.

   • This raises concerns about the severity of the crisis in the commercial real estate market.

5. Google searches for “Soft Landing” reach the highest level since 2004.

6. Number of zombie companies in Russell 3000 returns to Dot Com bubble levels