Complete Intelligence


Are Central Banks Moving Too Little Too Late?

This podcast first appeared and originally published at on April 28, 2022.

With inflation being the main concern in global markets, are central banks reacting quick enough to hike rates to contain inflation? And how will tech stocks perform amidst the volatility that we have seen year to date so far? Tony Nash, CEO of Complete Intelligence shares his insights with us.

Show Notes

KSC: Good morning. This is BFM 89, five minutes past seven in the morning on 28th April, 2022. I am Khoo Hsu Chuang with Wong Shou Ning and Tan Chen Li. In the meantime, let’s recap how global markets and the It yesterday.

WSN: US Market down 0.2%, SMP 500 up .2% Nasdaq close flat Asian Market Nikay down 1.3%, Hong Kong up .6% Shanghai Composite up 2.5%, SDI closed flat FBM KLCI down .7% pretty interesting trend over there. You can see I think the Shanghai site went up a bit because of the possibility of maybe cases eating in China.

KSC: Yes, foreclosures and more openings. So to join us on the line for some analysis on what’s moving markets, we now turn to Tony Nash, the chief executive of Complete Intelligence. Tony, good morning. Now, let’s start with tech stocks, and they’ve had a bit of a bumpy ride the first quarter and into the second quarter. What’s the situation report in terms of where that risk on asset class is concerned?

TN: Well, check so far in the earnings season hasn’t performed well except in the last few hours when Facebook announced their earnings. So Tech’s really disappointed. Up until about two or 3 hours ago, Facebook announced that ads to their users, their earnings were up and so on and so forth. So after hours, they’ve popped by $30 a share or something like that. And Qualcomm also after hours reported really good earnings. So what we saw early in the earnings season with tech down, hopefully Facebook and Qualcomm have changed things a little bit. But that’s not to say we’re out of this. Just because we’ve had a couple, it doesn’t necessarily mean that we’re out of the woods with tech. So Pinterest reported and they were negative. And so we’re really separating the kind of the viable tech businesses from those that really aren’t viable and who are really struggling. Part of the problem with tech also is that we have a lot of ad space coming online now with Twitter now sorting themselves out and with other tech firms having new ad space like Netflix is adding ad space and ad based subscriptions. So we’re going to see a glut of ad space going forward, which will challenge some of these technology guys in, say, two to four quarters time.

TCL: So, Tony, how do we know what is good and what is not such a good tech stock? What differentiates it? Is it going to be margins? Is it going to be market share? What is it management?

TN: Yeah, I think people are looking at earnings. People are looking for, say, online companies. They’re looking at users. So let’s compare, say, Netflix and Facebook. Netflix had a net loss of users. Facebook had a net out of users. Netflix’s earnings went down. Facebook earnings went up. Netflix versus Facebook, their earnings went up. People are really looking at what is the core business of that tech firm. And are they succeeding at that. So you can’t necessarily make a broad sectoral play. Right now, markets are really in flux as interest rates rise and money supply is kind of reined in. So you really have to understand the companies and you have to understand what the advantages and how they’ll play, at least over the next quarter, if not more kind of medium term.

KSC: Yeah. Tony talked about earnings. Right. What’s earnings season been like so far? It appears to be a mixed bike. Bad at Boeing. Okay. At Visa. Robin Hood is laying off people. What’s your take on earning season so far?

TN: It’s very mixed. And I think you’re seeing the companies that are well run versus the companies that have been just kind of posting. So during the Pandemic, we saw the Fed buying a lot of these Fang names and Tesla and other tech names. So it was pretty easy for tech firms to just kind of move along with that wave and not really get their management in place and not actually manage the business and the operations. These ones like Qualcomm and Facebook that are reporting well, they’re getting their operations in place regardless of what’s happening in the external environment. The guys like Pinterest and some of these other guys, they’re not managing well and it’s showing in their earnings.

WSN: Let’s talk about inflation. As we know, this is the key concern of the global markets. So are central banks around the world a little too late? Too late already in trying to hike rates?

TN: Yes. Central banks are always too late because nobody he wants them to be the buzzkill on a Bull market. And so if they had come in earlier, although it would have been appropriate, they would have been blamed for killing the Bull market. So the pressure on a central banker is such that they really don’t want to be blamed for killing it. Now they have to come in for a lot of different reasons and raise rates. So I would say they’re definitely too late. They’re always too late. Is it too little? That remains to be seen. We expect a 50 basis point hike in May and another 50 basis point hike in June. That would really recalibrate some expectations. And we’ll have to see what happens in markets there. When you look at the ECB, they can’t raise at that rate. They’re stuck in a really bad place with energy and food prices. So they’ll move much more slowly.

TCL: And I guess the same for the bank of Japan that’s supposed to be meeting in the next two days. You don’t expect them to move? I mean, look at the yen. It’s like two decades low. Do you think this will continue?

TN: Yeah. BOJ and ECB have a lot of similar issues, and they’re really kind of pedging into a corner. They can either support their bond markets or they can support their currencies. They’re in that bad of a position. They can’t do both so both of them have to support their bond markets right now. They can’t mind their currencies. Now, when we look at the PBOC really has to just drop helicopter cash across China right now. They have to get incredibly aggressive to support the Chinese economy. If they don’t and if China doesn’t open soon, there are major problems in China. So the PVoC has to be very aggressive going forward.

KSC: Yeah. Just think of the PVC. Tony, do you expect that the Chinese government maintains its very strict zero covered policy, especially since in the context of a rapidly declining local economy.

TN: think China cannot stay closed. Okay. The rest of the world has come to a position where COVID is endemic. That’s the view of the governments. People realize that they have to have an active economy to feed their people. China is making these very active, say, policy changes for a number of reasons. But what’s happening is it’s starting to really bite. They’re starting to impoverish their people because of food prices, because of fuel prices, because there are no exports and so on and so forth. So the Chinese government is in a really sticky position. And if they don’t change policies soon, there will be major difficulties both politically and economically in China.

KSC: Yeah. And lastly, Tony, just want to get your view in terms of rushes and systems are being paid in rubles with its energy supplies. How do you read that move in the context of it being taken off the Swift financial system? It’s freezing of dollar assets in the context of the US dollars utility in the global economy.

TN: Yeah. I think look, Russia, this is a negotiating position for them, and it’s something that they’re insistent on. They know that countries like Germany are way too dependent on Russian oil and gas. So they know that Germany will pay in rubles if they’re pushed to do it. They don’t have a choice. So Russia is right now showing Europe who is boss, and Europe has unfortunately put themselves in this position. Poland hasn’t worked on diversifying their energy of late, and a lot of their energy mix comes from domestically mined coal. But for oil and gas, they’ve been working feverishly on getting alternate supplies, but other parts of Europe have not. And also they’re much more dependent on Russian oil and gas. So Putin is flexing. They have to kind of count out to him and they have to do what he says because he’s their main source.

KSC: Absolutely. Okay. Tony, thank you so much for your time. That was fantastic, as always. That was Tony Nash, complete intelligence chief executive, talking to us about markets. And just in the context of China’s insistence on staying closed, I think if the Chinese government doesn’t about turn even in the slightest, it might just be the biggest fill up for capital markets going forward.

TCL: Well, we’ll find out later at 730. Right. Because you’re going to be talking to Gary, he’s an economist and he’s going to be telling us what’s the situation like on the ground, whether the GDP target of 5.5% is going to be achievable at all, because it looks like the lockdown might even extend all the way to Beijing.

KSC: Yes. And of course, our Foxconn’s factory is bigger supply to Apple also is close in Kunshan, two of them. So global repercussions. Let’s turn to Facebook, now known as Meta, which did report earnings before they reported the shares actually did soon, considerably on the expectation that they would report a bad set of numbers. But actually, Facebook Meta surprised.

TCL: I think there was a lot of negative news even before this. And they were already receiving regulatory headwinds from the EU with regards to whether their dominance questions of their advertising, questions of how much are they involved in our daily lives. But I think the results were better than expected. Yeah.

WSN: So I think adding on to what Shannon was saying, there was also a concern about user base that’s not growing for the first time. The revenue that came out yesterday, it was reported their shares jumped 15% because their revenue jumped 6.6% to $27.9 billion. And this is the first time in Facebook’s ten year history as a public company that they landed in a single digit growth. And if you look at it, is that better?

TCL: Good.

WSN: Well, slower, but still growth.

KSC: Yeah. Because with this kind of platform, it’s all about Dows and Miles. Right. Daily active users and monthly active users now.

TCL: And what they found is that people have been spending a lot of time. So maybe the number of users hasn’t increased as much as they should, but the duration in which you spend on Facebook has increased. So you’re looking at maybe people spending as much as an hour versus other social media platforms where, yes, you might have an increase in users, but the duration is actually shorter. So that’s the justification as to why the share price has bounced today. And this is what Meta is telling the analyst community out there.

KSC: And we saw Snap also report a good set of numbers, surprisingly. Right. So actually doubling daily active users beat expectations, one point 96 billion versus one point 94. And Mouse monthly active use is two point 94 billion. Missed expectations of two point 95. So not a big mess. But actually they did also guide for revenue that was weak because of three things. Right. First of all, the military situation in the Ukraine. The second one, of course, the Apple Privacy changes, which made it more difficult to target ads. And of course, then the supply chain affecting advertisers now very quickly Spotify.

TCL: How many of us have subscriptions? Me, yes, me, I. But the share price fell more than 12% despite reporting first quarter earnings that beat both top and bottom line. Looks like markets still not happy with that number. I think exiting Russian market led to a loss of 1.5 million subscribers. Although monthly active users went up by 19% year on year to 422,000,000 users I think ad supported revenue did also grow 31% but I think basically ending subscriber subscriber base like Netflix seems to have come under pressure in the last few months.

KSC: Yeah sign of the Malays affecting streaming sites. Stay tuned. BFM 89 nine

News Articles

COVID-19: Towards the end of everything “made in China” for electronics manufacturers?

This post on Made in China first appeared in The copy posted below is originally in French and was Google-translated to English.


It is an old factory with a decrepit facade, on which climb some wild grasses. At the edge of this canal in the south of Taipei, only a watchman watches the ear. The plot has just been bought by the Taiwanese electronics manufacturer Pegatron to increase its production capacity in Taiwan. Reported by the financial media Bloomberg, the initiative is the latest in a series of investment projects outside of China announced by Taiwanese subcontractors.


From Apple to Samsung, these shadow firms manufacture, assemble and sometimes design products on behalf of major electronics brands. Most of these companies have their headquarters and a handful of factories in Taiwan. But the final assembly is mainly carried out on the other side of the strait. The Taiwanese giant Foxconn, the main assembler of the iPhone, thus employs more than a million workers in China, distributed in twelve giant factories.




This model, based on economies of scale, was severely tested by the COVID-19 crisis. Travel bans imposed by Chinese authorities have led to production delays, as evidenced by the shortage of Nintendo Switch, assembled by Foxconn. The firm also anticipates a 15% decrease in revenue for the first quarter of 2020.


“The ‘gigantic’ model takes a hell of a slap, straightforward analysis Pascal Viaud, managing director of UBIK, a company specializing in partnerships and industrial cooperation based in Taiwan. The sectors are aware of their dependence on China and the logistical risks that this implies. Some companies, especially the smaller ones, did not necessarily know this because it concerns their second or third level of subcontracting. ”


According to recent announcements from Taiwanese subcontractors, the COVID-19 epidemic would push major brands to rethink their production line. Wistron, another supplier to Apple, recently unveiled a budget of $ 1 billion for projects of new factories in India, Vietnam and Mexico. “Many signals from our customers let us think that’s what we need to do “, Wistron chief strategy officer Simon Lin said in a conference call reported by the Singaporean daily Straits Times. According to Bloomberg, Foxconn, for its part, planned an envelope of $ 17 billion for projects in India and Vietnam.


Foxconn’s headquarters in Taiwan




“China is becoming riskier for these companies, which may have felt that authorities withheld information during the epidemic, said Tony Nash, chief executive of Complete Intelligence, a business planning platform. costs and revenues of companies running on artificial intelligence. These companies are increasingly looking for alternatives to China. This is a classic risk reduction strategy already at work, but one that will seriously accelerate the next three years. ”


Kuan-lin (the first name has been changed) can testify to this. This salesperson works for a Taiwanese manufacturer whose client is a famous American brand of computers. For the past three weeks, the employee has been under constant pressure from his hierarchy and rarely leaves his office before 10 p.m. “Because of the epidemic, our client is asking us to speed up a project to build a factory in Mexico,” he explains, with dark circles and a pale complexion.





The trend is not new. The trade war between China and the United States had already pushed part of the electronic production out of China. The manufacturers hoped to escape the sanctions of the Trump administration, applied to “Made in China” products. Depending on its Chinese factories, Foxconn had paid the price: according to calculations by the specialized media Bloomberg, the profits of the subcontractor fell by 24% for the period from October to December 2019.


“Competitors who did not have production lines in Taiwan have been disadvantaged by the trade war, confirms a manager of a Taiwanese electronics company which has a production tool on site. Thanks to our Taiwanese factory, we were able to reserve our products made in Taiwan for the American market. ”


With a skilled workforce and cutting-edge infrastructure, Taiwan is well placed to stand out. The Taiwanese government has elsewhere launched a vast plan to facilitate the return of factories to its soil. But the archipelago lacks space and has a limited comparative advantage. “Taiwan is suitable for high-end products, which can be sold more expensive, points out the same frame. For other products, manufacturing in Taiwan has an impact on profitability.”





The most likely scenario seems to be that of a regionalization of production, which would jointly benefit several countries. “This is not going to be a massive departure from China, anticipates Tony Nash. For Asia, there will simply be more additional parts manufactured in Taiwan or Vietnam. For the American market, it could be Mexico.”


As a note from Deloitte suggests, this shift could also be accompanied by increased digitization of the production chain. Joined by L’Usine Digitale, Eddie Chang, head of finance at ASE Group, one of the Taiwanese behemoths for the assembly and testing of electronic circuits, confirms this future direction: “We are going to develop technologies enabling virtual teamwork and industrial automation. We also plan to increase the automation of our logistics to reduce human interactions”.





However, the recent development of the epidemic calls for caution. In China, the main factories have returned to their pre-crisis operating level. Foxconn was able to restore production of the new iPhone SE with massive hires and inflated work premiums. “During the crisis in China, our factories were at 60% of their capacity, today we are not far from 100%”, confirms a sector executive whose factories are in Shenzhen.


At the same time, the countries presented as alternatives to China are in turn impacted by the epidemic. In India, where Apple produces its iPhones for the local market, Foxconn and Wistron have announced that they have suspended production until mid-April. The US state of Wisconsin, where a Foxconn factory is soon to come out of the ground, has seen in recent days a dizzying increase in the number of cases of contamination.


“The new turn that the COVID-19 crisis has taken is a game-changer,” says Aymeric Mariette, research officer at the France China Committee. The attitude [of electronics companies located in China] is now much more wait-and-see for relocations “. Apple CEO Tim Cook also defended himself at the end of February from any major movement, preferring to speak of “adjustment adjustments” linked to the crisis.


Especially since China will not let these companies slip through its fingers so easily. The strategic challenges are significant: the ecosystem of electronic suppliers has enabled Chinese brands, such as Huawei, to follow in the footsteps of American giants. “The Chinese authorities are carrying out charming offensives towards foreign investors in China, for example with the promise of equal treatment in access to financial aid, facilitation of investments or even the announcement of new reforms, analyzes Aymeric Mariette: China knows that it is now ahead of the other major world economies and intends to profit from it. ”