The US Squeezes China's Chip

Good Morning 

How are you doing?

Welcome to this week’s edition of 4 Customs Street, our weekly newsletter on the stock market.

The newsletter is divided into two: 

• Green White Green—focused on the Nigerian stock market. 
• Star-Spangled Banner—focused on the US stock market.

Green White Green 

Back to peace

Following the intervention of the federal government, Dangote Cement’s Obajana plant has been reopened. (You can read up on what went down prior to this here.) 

Peace and agreements can be very expensive. The likelihood of the company not spending money in the form of additional community developments or other payments is slim.

We should have more clarity on this during the company’s Q3 2022 analyst call. 

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Star-Spangled Banner Last Week 

Battle for the chips 

From the blues, the United States stepped up its economic war with China. Last week, the Biden administration released new rules around the sale of semiconductors (commonly known as chips) and equipment to manufacture them to China.

Essentially, Americans working in this space in China have been forced to quit their jobs or lose American citizenship.

What are chips and why are they important? They are a key component in everyday devices such as mobile phones and kitchen appliances to bigger items like cars, medical equipment and military equipment.

Chips are also essential for new and developing areas such as Artificial Intelligence, 5G and robotics. The US believes being ahead of China in these areas is key for national security and wants to slow down Chinese progress.

So how does all this sabre rattling affect you as an investor? Semiconductor stocks such as AMD and Nvidia may lose some revenue. While China is yet to issue an official response, one can be sure retaliation is in the works. 

Star-Spangled Banner This Week 

Netflix and Tesla are among the companies that will be releasing their recent quarterly earnings during the week. For Netflix, the focus will be on subscriber growth and insight around its advert supported plans, which will launch in the United States and 11 other countries next month.

For Tesla, barring any theatrics from Elon, key points to note will focus on how the company is dealing with higher transportation costs and logistic issues. 

Did you find this newsletter useful? You can read previous newsletters here

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