MyStratWeekly – February 27th 2024

Topic of the week: China has crossed the threshold of sophistication !

• China is the world’s largest manufacturing powerhouse;
• However, it is in sophisticated and technological products that China has become competitive;
• China gained market share in the automotive sector, including electric vehicles;
• This is thanks in particular to the integration of ASEAN in its value chain;
• Labor-intensive production chains are moving out of China to ASEAN, while high value-added chains remain in China;
• China continues to strengthen its integration into the global value chain by expanding free trade agreements.

Market review: About-face

• Central banks ever more cautious about inflation;
• Yield curves flatten as T-note hovers about 4.30%;
• Nvidia earnings spark new equity strength;
• Market environment still supportive of risky assets..

Axel Botte's and Zouhoure Bousbih's podcast

• Topic of the week: Rates, equities and credit in the euro area
• Theme: China’s Industrial Policy: Upscaling

Chart of the week

The Nikkei 225 index closed on Thursday at 39,098.68 points, up 2.2%. This is a historic record which finally erases the peak of the speculative bubble recorded at the end of 1989.

Japanese growth in the 1980s had generated excessive expectations regarding the value of securities. The bursting of this speculative bubble, stock market but especially real estate, is the trigger for the long period of stagnation which has marked Japan since the mid-1990s.

This stock market signal perhaps validates the end of purgatory for the Japanese economy.