Top Stock Market Highlights of the Week: TSMC, Lion Global-Nomura’s Japanese Active ETF and China’s GDP

Welcome to this week’s edition of top stock market highlights.

TSMC (NYSE: TSM)

Taiwan Semiconductor Manufacturing Co, or TSMC, released its fourth quarter (4Q 2023) and full year 2023 (FY 2023) earnings this week.

Revenue for 4Q 2023 dipped by 1.5% year on year to US$19.6 billion but was 13.6% higher than the previous quarter’s US$17.3 billion.

Gross margin contracted from 4Q 2022’s 62.2% to 53% as gross profit tumbled 14.8% year on year to NT$331.8 billion.

Operating expenses for the quarter jumped 11% year on year to NT$71.6 billion, resulting in operating profit falling nearly 20% year on year to NT$260.2 billion.

Net profit declined by 19.3% year on year to NT$238.7 billion for 4Q 2023.

For FY 2023, revenue dipped by 8.7% year on year to US$69.3 billion while net profit fell by 17.5% year on year to NT$838.5 billion.

The 7nm and 5nm wafers made up the bulk of TSMC’s revenue for 4Q 2023, coming in at 17% and 35%, respectively.

The 3nm wafer has begun contributing to the group’s revenue since 3Q 2023 and took up 15% of total revenue for 4Q 2023.

The semiconductor manufacturer also generated a positive free cash flow of NT$224.7 billion for the quarter, nearly 50% higher than the free cash flow churned out in the same period last year.

TSMC’s guidance for 1Q 2024 projected revenue to be between US$18 billion and US$18.8 billion.

1Q 2023’s revenue for the world’s largest semiconductor producer came in at US$16.7 billion.

Lion Global-Nomura’s Japanese Active ETF

Lion Global Investors (LGI) and Nomura Asset Management (NAM) have come together to launch the first Japan active exchange-traded fund (ETF).

This ETF will be listed on the Singapore Exchange (SGX: S68) as Japan’s economy emerges from deflation and demonstrates a revival spurred by macroeconomic growth.

LGI is a wholly-owned subsidiary of OCBC Ltd (SGX: O39) with S$66.5 billion of assets under management as of 30 September 2023.

This active ETF will be powered by artificial intelligence (AI) and provide investors with exposure to 50-100 securities listed in Japan.

The initial offer period runs from 5 to 25 January and the ETF will be listed on 31 January and be available in both Singapore Dollars and US Dollars.

The Japan Active ETF covers a wide range of sectors running the gamut from advanced technology to traditional industries.

LGI and Nomura will leverage their proprietary AI and machine learning models to actively manage the portfolio based on fundamental, technical, qualitative, and quantitative analyses.

While most passive index ETFs are rebalanced either quarterly or semi-annually, the Japan Active ETF can be rebalanced monthly as it is powered by AI.

Investors can subscribe to this ETF through OCBC ATMs and participating dealers such as iFAST Financial, Moomoo Financial, OCBC Securities, Tiger Brokers, and Phillip Securities.

China’s GDP

Official data released by China showed that its economy grew 5.2% in 4Q 2023, slightly missing analysts’ expectations of 5.3%.

For the full 2023, China’s economy grew 5.2%, in line with economists’ projections, and partly assisted by the prior year’s low base effect.

Growth was in line with Beijing’s target of 5% for 2023 but looking ahead, the economy is faced with mounting challenges that may make it tough for China to attain this target for 2024.

Some of these challenges include a protracted property downturn, weak consumer and business confidence, a sharp rise in local government debt, and slower global growth.

December home prices in the Middle Kingdom fell at their fastest pace since February 2015 which is the sixth consecutive month of decline.

New construction starts also plunged by 20.4%.

Earlier this week, the Chinese central bank left its medium-term policy rate unchanged even as investors expected a cut.

Concerns are also mounting over China’s longer-term growth prospects with the country’s population falling for a second consecutive year in 2023.

The total population fell to 1.41 billion in 2023, down by 2.75 million, which was also a faster decline than in 2022.

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Disclosure: Royston Yang owns shares of Singapore Exchange Limited.

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