In today’s briefing:
- The US “Fair and Reciprocal Plan” & Its Impact on India
- Japan Morning Connection: Walmart Results Raising Questions over the Overall Economy
- Ohayo Japan | Walmart Warning Weighs on Markets
- Regional Economics: More Competitive AI Landscape a Positive for Asia
- Tencent, Baidu Look to Capitalize on DeepSeek’s Stunning Rise
- Trump’s Tariffs Prompt Chinese E-Commerce Giants to Expand Beyond U.S.
- Furniture/Furnishings Weekly – Steel and Aluminum Tariffs; Return-To-Work Enforcement, Realities
- Chinese Carmakers Expand Into Growing Central Asian Markets
The US “Fair and Reciprocal Plan” & Its Impact on India
- The US has unveiled its “Fair and Reciprocal Plan,” signaling a shift to impose reciprocal tariffs, which specifically target high tariffs on products.
- This move could reduce India’s export volumes, particularly in labor-intensive sectors, by raising US tariffs closer to India’s levels, potentially triggering a $7 billion export drop and deflationary pressures.
- Investors and policymakers must now reassess India’s trade strategy; proactive measures such as bilateral agreements and targeted tariff reductions will be key to mitigating risks and stabilizing long-term economic growth.
Japan Morning Connection: Walmart Results Raising Questions over the Overall Economy
- Japan defence may be buoyed by comments from Frances Macron that spending needs to rise.
- Wild ride for Kokusai Electric continues as outstanding short interest jumps 46% over the last week.
- Kura Sushi bringing back free meals – limit up yesterday, but with a big SI will there be more today?
Ohayo Japan | Walmart Warning Weighs on Markets
- US stocks fell as Walmart (-6%) issued cautious guidance and Trump’s tariff plans weighed on sentiment. The Dow lost 450 points (-1%), while gold (+0.7%) hit a record high.
- Yesterday the Nikkei fell 486 points to 38,678, led by declines in transportation and banking. Investors remain cautious on Trump’s tariffs
- The yen strengthened to 149.92/USD on BOJ rate hike hints: Suzuki set a ¥8 trillion sales target by 2030, investing ¥1.2 trillion in India; SoftBank’s Arm plans its own-designed chips.
Regional Economics: More Competitive AI Landscape a Positive for Asia
- Short term economic and policy factors may hurt technology sector prospects in coming months but the structural factors continue to support growth in Asia.
- Consumer and business demand for tech remain solid, but risks loom in the form of trade tensions.
- In particular, Asia will benefit from a more competitive AI landscape as tech accessibility improves. Tech investments in Asia will also see growth.
Tencent, Baidu Look to Capitalize on DeepSeek’s Stunning Rise
- Tencent Holdings Ltd. and Baidu Inc. are launching search functions powered by the large language models developed by DeepSeek, joining the ranks of global tech giants seeking to capitalize on the rise of the artificial intelligence (AI) developer that has sent a shockwave through the industry.
- Tencent, for example, is incorporating the full version of the DeepSeek-R1 model into Weixin, the Chinese version of its instant messaging app WeChat, to power its search capabilities, though the function is still in beta testing, Tencent told Caixin in a statement Sunday.
- While the function is in beta, selected users can use the “Search with AI” option from the search bar to access the R1-powered service, along with Tencent’s own AI model Hunyuan, the statement said.
Trump’s Tariffs Prompt Chinese E-Commerce Giants to Expand Beyond U.S.
- Facing rising trade barriers and regulatory scrutiny in the United States and Europe, Chinese cross-border e-commerce platforms are scrambling to diversify their markets and reduce reliance on any single region.
- On Feb. 1, U.S. President Donald Trump signed an executive order imposing a 10% tariff on all Chinese imports and ending duty-free treatment for small parcels from China.
- The U.S. Customs and Border Protection agency enforced the order on Feb. 3, requiring all Chinese goods, including those from Hong Kong, to be formally declared and taxed.
Furniture/Furnishings Weekly – Steel and Aluminum Tariffs; Return-To-Work Enforcement, Realities
- Tariffs and policy uncertainty don’t seem to be weighing down stocks in the furniture and furnishings space at this point.
- The WTR Commercial/Contract Furniture Index was up 3.2%, the Residential Manufacturers & Suppliers Index gained 6.4%, and the Home Goods Retailers Index was up 1.2%, all better than the broader market indexes.
- The US imposed across-the-board 25% tariffs on steel and aluminum.
Chinese Carmakers Expand Into Growing Central Asian Markets
- Chinese automakers are pushing deeper into Central Asian markets through exports and manufacturing localization after Russia’s crackdown on a lucrative loophole that allowed re-exports of vehicles through Eurasian Economic Union (EAEU) member states.
- Carmakers including Chery Automobile Co. Ltd., Chongqing Changan Automobile Co. Ltd. (000625.SZ), Anhui Jianghuai Automobile Group Corp. Ltd. (JAC) (600418.SH) and Great Wall Motor Co. Ltd. have built a presence in the Kazakhstani market, which has developed a major taste for Chinese vehicles.
- Last year, China-made cars accounted for 39% of the 205,111 vehicles sold in Kazakhstan, the region’s largest economy.
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