Plus, bitcoin loses its ETF oomph | [Finimize]( Your Weekly Brief should take you 3:14 minutes to read. Let us know [what you think here]( Weekly). Indiaâs Winning Indiaâs stock market has just overtaken Hong Kongâs as the worldâs fourth-biggest. And it shouldnât come as a huge surprise. [WINdia] ð WHAT JUST HAPPENED? US - Growth in the worldâs biggest economy trounced forecasts last quarter.
- Bitcoin has slumped since the launch of the first US ETFs investing directly in the cryptocurrency. Europe - The European Central Bank (ECB) kept interest rates steady for a third straight meeting.
- ASMLâs orders more than tripled last quarter, in the latest sign of the chip industryâs revival. Asia - The Bank of Japan (BoJ) opted to keep its negative interest rates.
- India surpassed Hong Kong to become the worldâs fourth-biggest stock market. âï¸ WHAT DOES ALL THIS MEAN? US economic growth blew past expectations in the fourth quarter, as lower inflation and a hot job market encouraged Americans to keep spending. The worldâs biggest economy grew at a 3.3% annualized rate last quarter compared to the one before â slower than the 4.9% pace recorded in the third quarter, sure, but trouncing forecasts of 2%. That was mainly driven by the economyâs biggest growth engine, consumer spending, which rose at a 2.8% pace. The figures are the latest proof of the US economyâs resilience in the face of the Federal Reserveâs aggressive run of interest rate hikes: instead of plunging into recession last year, as many had warned, it expanded by 2.5% instead. In a classic example of âbuy the rumor, sell the newsâ, the price of bitcoin has dropped by more than 20% since the first US ETFs investing directly in the crypto became more than just chatter, and actually launched. Mind you, that dip was made worse by the US dollarâs sudden strength, plus higher bond yields, and some big one-off transactions. And itâs not the first time bitcoinâs taken a turn for the worse after a major product launch. But still, investorsâ speculation that the new ETFs would catalyze wider bitcoin adoption by institutional and retail investors was likely already built into bitcoinâs near-160% surge last year. The ECB kept its key interest rate on hold at a record high of 4% for a third straight meeting, and stuck with its previous message that rate cuts may still be some distance away. That warning seems to be falling on deaf ears though, with traders still betting that the ECB is more likely than not to cut rates in April. And that coincides with economists making gloomy revisions to their 2024 projections for eurozone growth and inflation, to reflect discouraging data on industrial production, producer prices, business orders, and retail sales. And, to be fair, with attacks on ships in the Red Sea disrupting supply chains and threatening to reheat the blocâs cooling inflation, you can see why the ECB might be a tad extra cautious about changing course too hastily. Europeâs most valuable tech company, ASML, is the sole producer of the equipment needed to make the most sophisticated semiconductors, so demand for its products is a bellwether for the industryâs health. And its latest results suggest the chip industry is roaring back to life after a slump that dates back to the pandemic. Orders for ASMLâs machines jumped to a record â¬9.2 billion ($10 billion) in the fourth quarter â a more than threefold increase from the previous quarter and way more than the â¬3.6 billion that analysts were forecasting. The Semiconductor Industry Association might not have been too surprised by the comeback: it reported a rise in global chip sales in November for the first time in more than a year, on the back of rising demand for AI. The BoJ has been hanging onto its ultra-low interest rates with two hands, hoping to nudge consumer prices higher after decades of battling with economy-crushing deflation. So it wasnât too surprising when it held its key rate at minus 0.1% last Tuesday. The BoJ has been the only major central bank with rates in negative territory for a while now. However, with Japanâs inflation exceeding the Bankâs 2% target for almost two years, economists figure the days are probably numbered for those negative rates. They expect the BoJ to raise rates in April after it has assessed the results of the countryâs annual compensation negotiations. After all, higher pay is crucial in securing a positive cycle of rising prices and income that feeds into economic growth. The total value of Indiaâs stock market surpassed Hong Kongâs for the first time, making it the fourth-biggest equity market in the world. And it shouldnât come as a huge surprise. India is benefitting from a rapidly expanding base of retail investors, robust corporate earnings, and a young and growing population. Whatâs more, global investors and companies see it as a compelling trade and manufacturing alternative to China, with a stable political environment and a big, fast-growing, consumption-driven economy. [TPP]( SPONSORED BY TPP The benefits of getting active One of the most crucial decisions investors will make is [whether to be active or passive](. [Passive investing]( is a hands-off approach that usually means tracking entire markets via exchange-traded funds (ETFs), while [active investing]( means buying and selling more proactively. But not all active investors operate the same way. Thatâs why [TPP]( put together a guide detailing three major active strategies: [do-it-yourself stock picking, active mutual funds, and active ETFs](. [Check out the guide for free](, and you wonât just discover the pros and cons of each approach, but also the techniques youâll need to [stay diversified]( while implementing your chosen strategy. Find out which of these three approaches would best suit you â and the risks you need to know before you start investing â with [this free guide by Finimize and TPP](. [Check Out The Guide]( ð This weekâs focus: India flexes, as China sags Indiaâs remarkable sprint has coincided with a historic slump in Hong Kong and China, with the total market value of their stocks having tumbled by more than $6 trillion â roughly the equivalent to the entire market capitalization of Japan â since their peaks in 2021. Itâs been rough sledding for China these past few years, with strict pandemic restrictions, new regulatory actions targeting corporations, an ongoing debt crisis in the property sector, escalating geopolitical tensions with the West, and the implications of a shrinking (and fast-aging) population weighing on the countryâs stocks. Making matters worse, pessimism about the countryâs prospects has further deepened this year, with the government failing to announce any major new economic stimulus. But it did emerge last week that authorities are considering a package of measures to help prop up the countryâs drooping stock market. Specifically, policymakers are seeking to mobilize about 2 trillion yuan ($278 billion), mainly from the offshore accounts of Chinese state-owned enterprises, as part of a stabilization fund to buy shares onshore through the Hong Kong exchange link. Authorities have also earmarked at least 300 billion yuan in local funds to invest in onshore shares. This initiative follows recent government efforts to bolster the countryâs faltering stock market â including limits on short-selling, cuts to trading fees, and purchases of bank shares by a government investment fund. But so far those measures have failed to halt Chinaâs stock market slide, with the CSI 300 index down by 18% over the past year. ð
THE WEEK AHEAD - Monday: Nothing major.
- Tuesday: Japan unemployment (December), eurozone economic growth (Q4), eurozone economic sentiment (January), US consumer confidence (January). Earnings: Alphabet, Microsoft, General Motors, Pfizer, AMD, Starbucks, Mondelez.
- Wednesday: Japan industrial production and retail sales (December), Federal Reserve interest rate announcement, China PMIs (January). Earnings: Qualcomm, Boeing, Mastercard, Novo Nordisk, Thermo Fisher Scientific.
- Thursday: Eurozone inflation (January), eurozone unemployment rate (December), Bank of England interest rate announcement. Earnings: Amazon, Apple, Meta, Merck.
- Friday: US jobs report (January). Earnings: ExxonMobil, Chevron, AbbVie. Stay classy âï¸ Your Finimize Analyst team ⸠Want to turn off the Weekly Review? [Hit pause]( To stop receiving all Finimize emails (including the daily newsletter) [Unsubscribe]( [View in browser](