I. Performance of Global Equity Indices (in US dollars)
Source: Bloomberg, 25/03/2024-31/03/2024
II. Key Market Themes
i. The U.S. Core PCE Aligns with Expectations; Powell Reiterates “No Rush to Cut Rates”
•Recently, the U.S announced its Core Personal Consumption Expenditures (PCE) data for February, which showed a 0.3% MoM increase, aligning with market expectations and avoiding a consecutive "punch" to the markets.
•In the meantime, during a speech at the Federal Reserve Bank of San Francisco, Powell reiterated his stance of "no urgency to cut interest rates." He also stressed that "the latest data is not as strong as it was in the second half of last year, and more data is needed to support the inflation eventually returning to 2%."
•We believe that the PCE data and Powell's statements are fundamentally within market expectations and have maintained consistency with previous positions. The attitudes of Fed officials towards rate cuts have not seen significant changes. With a strong economic foundation, the Fed has ample space to prepare and does not need to engage in "preventive" rate cuts currently.
Source: Bloomberg, 03/2024
ii. The storage industry is experiencing a cyclical recovery, with AI fueling a surge in demand.
•Recently, NVIDIA's founder, Jen-Hsun Huang, publicly endorsed Samsung, stating that the company will introduce HBM (High Bandwidth Memory) storage chips manufactured by Samsung in the future, and the plan is currently in the validation phase. The storage industry currently presents a tripartite situation with SK Hynix, Samsung, and Micron as the major players. The main product in the market is still HBM3, with SK Hynix holding a 90% market share; meanwhile, Micron is fully developing the next generation of HBM3e, which is expected to be delivered to NVIDIA in 2Q 2024.
•The rapid development of AI large-scale models continuously increases the requirements for the capacity and performance of memory devices, with HBM emerging as a crucial component for AI chips. Industry experts analyze that the cost proportion of HBM in NVIDIA's AI chips reaches nearly 70%. At the same time, HBM offers a higher unit price and profit margin compared to traditional DRAM particles, becoming a significant driver for memory manufacturers.
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