1. Semiconductors in focus: The semiconductor sector, as represented by the Philadelphia semiconductor index, posted a 10% gain in February. This reflected renewed optimism surrounding artificial intelligence (AI) chips and their associated applications. Asian chipmakers, which are responsible for manufacturing most of these chips, posted similarly strong gains in the month. This blistering pace of gains may not be repeated in March, but sentiment toward the sector for now remains positive. We are constructive on a broad-based recovery in semiconductor demand in 2024.

2. Electric vehicle (EV) slowdown: The EV sector has been under pressure in recent months despite rapid growth in 2023. Chinese EV demand rose 36% to 7.7 million units, and demand in the United States rose 58% to 1.5 million units last year.2 Looking ahead, price sensitivity in the United States and irrational range anxiety (the average trip by a US car owner is less than 50 kilometres) is slowing capital investment plans and lowering sales forecasts for 2024. Predictably, this has a negative impact on share prices. Nevertheless, our long-term outlook for the sector remains optimistic. We expect input costs – especially for batteries – to decline, leading to improved cost competitiveness against internal combustion engine vehicles.

3. Egyptian capital infusion: Egypt has been struggling economically in recent  months due to an influx of refugees from Gaza, and Houthi attacks in the Red Sea which have disrupted shipping traffic in the Suez Canal. Egypt is expected to agree to an extension and possible increase to its $3 billion loan program with the International Monetary Fund in the coming weeks. This follows a recent agreement with the United Arab Emirates (UAE) to invest $35 billion to develop Egypt’s Mediterranean coast area Ras El-Hekma. The investment hopes to double foreign tourist arrivals to 30 million by 2030. While there may be a devaluation in the official exchange rate once the IMF loan is agreed upon, the UAE investment should boost confidence in the long-term prospects for the economy.

‹ Previous2024-03-28Next ›