Aurelia Butler

HONG KONG (Reuters) -U.S. measures to limit the export of advanced artificial intelligence (AI) chips to China may create an opening for Huawei Technologies to expand in its $7 billion home market as the curbs force Nvidia (NASDAQ:NVDA) to retreat, analysts say. While Nvidia has historically been the leading provider of AI chips in China with a market share exceeding 90%, Chinese firms including Huawei have been developing their own versions of Nvidia’s best-selling chips, including the A100 and the H100 graphics processing units (GPU). Huawei’s Ascend AI chips are comparable to Nvidia’s in terms of raw computing power, analysts and some AI firms such as China’s iFlyTek say, but they still lag behind in performance.Jiang Yifan, chief market analyst at brokerage Guotai Junan Securities, said another key limiting factor for Chinese firms was the reliance of most projects on Nvidia’s chips and software ecosystem, but that could change with the U.S. restrictions.”This U.S. move, in my opinion, is actually giving Huawei’s Ascend chips a huge gift,” Jiang said in a post on his social media Weibo (NASDAQ:WB) account.This opportunity, however, comes with several challenges.Many cutting edge AI projects are built with CUDA, a popular programming architecture Nvidia has pioneered, which has in turn given rise to a massive global ecosystem that has become capable of training highly sophisticated AI models such as OpenAI’s GPT-4.Huawei own version is called CANN, and analysts say it is much more limited in terms of the AI models it is capable of training, meaning that Huawei’s chips are far from a plug-and-play substitute for Nvidia.Woz Ahmed, a former chip design executive turned consultant, said that for Huawei to win Chinese clients from Nvidia, it must replicate the ecosystem Nvidia created, including supporting clients to move their data and models to Huawei’s own platform.Intellectual property rights are also a problem, as many U.S. firms already hold key patents for GPUs, Ahmed said.”To get something that’s in the ballpark, it is 5 or 10 years,” he added.Huawei and Nvidia did not immediately respond to Reuters’ requests for comment. COMPUTING POWER If Huawei manages to grab Nvidia’s market share, it could claim another victory against the United States, which has targeted the firm with export controls since 2019.Huawei rolled out the first Ascend GPUs that year and it is one of a number of products – such as its Harmony operating system – that the company says are entirely homegrown. Over the past year, the telecoms giant has shown signs that it is beating back against the U.S. curbs by unveiling an advanced smartphone chip and making claims of breakthroughs in chip design tools.It has also set its sights on becoming a key provider of computing power for AI, with Chief Financial Officer Meng Wanzhou saying last month that Huawei wanted to build a computing base for China and give the world a “second option”, in a veiled reference to dominant provider the United States. Huawei’s partners in China so far include iFlyTek, a leading Chinese AI software company which is using the Ascend 910 to train its AI models. IFlyTek was also blacklisted by the United States in 2019. On Thursday, during iFlyTek’s earnings call, Senior Vice President Jiang Tao said the Ascend 910B’s capabilities were “comparable to Nvidia’s A100” and announced that it was developing a general-purpose AI infrastructure in China alongside Huawei. “Our partnership now aims to enable domestically developed LLMs to be built with both homegrown hardware and software technology,” Jiang said. Other partners include state-owned software firms Tsinghua Tongfang and Digital China. At a conference in July, Huawei said its AI chips now help power more than 30 large language models (LLM) in China, which is going through a generative AI craze and currently has more than 130 LLMs. Charlie Chai, an analyst with 86Research, said Nvidia’s ecosystem dominance was not “an insurmountable obstacle if domestic players are given sufficient time and a big customer base”. China’s self-sufficiency push, which has been championed by President Xi Jinping, is likely to aid this. “In short, a small disruption to near-term supplies, but a big boost to the long-term self-sufficiency agenda,” Chai added. ($1 = $1.0000) More

PARIS (Reuters) – Governments should open a new front in the international clampdown on tax evasion with a global minimum tax on billionaires, which could raise $250 billion annually, the EU Tax Observatory said on Monday.If levied, the sum would be equivalent to only 2% of the nearly $13 trillion in wealth owned by the 2,700 billionaires globally, the research group hosted at the Paris School of Economics said.Currently billionaires’ effective personal tax is often far less than what other taxpayers of more modest means pay because they can park wealth in shell companies sheltering them from income tax, the group said in its 2024 Global Tax Evasion Report.”In our view, this is difficult to justify because it risks to undermine the sustainability of tax systems and the social acceptability of taxation,” the observatory’s director Gabriel Zucman told journalists.Billionaires’ personal tax in the United States is estimated to be close to 0.5% and as low as zero in otherwise high-tax France, the Observatory estimated.Growing wealth inequality in some countries is fuelling calls for the richest citizens to bear more of the tax burden as public finances struggle to cope with aging populations, huge financing needs for climate transition and legacy COVID debt.U.S. President Joe Biden’s 2024 budget included plans for a 25% minimum tax on the wealthiest 0.01%, but that proposal has since fallen by the wayside with lawmakers in Washington preoccupied with government shutdown threats and looming funding deadlines.Though a coordinated international push to tax billionaires could take years, the Observatory pointed to the example of governments’ success in all but ending bank secrecy and reducing opportunities for multinationals to shift profits to low-tax countries.The 2018 launch of automatic sharing of account information has reduced the amount of wealth held in offshore tax havens by a factor of three, the observatory estimated.A 2021 agreement between 140 countries will limit multinationals’ scope to reduce tax by booking profits in low-tax countries by setting a global 15% floor on corporate taxation from next year.”Something that many people thought would be impossible, now we know can actually be done,” Zucman said. “The logical next step is to apply that logic to billionaires, and not only to multinational companies.”In the absence of a broad international push for a minimum tax on billionaires, Zucman said a “coalition of willing countries” could unilaterally lead the way. Although the end of banking secrecy and the corporate minimum tax have put an end to decades-long competition between countries on tax rates, numerous opportunities remain to reduce tax bills, the report said.For example the rich increasingly park wealth in real estate instead of offshore accounts while companies can exploit loopholes in the 15% corporate tax minimum.Meanwhile, governments are increasingly competing for investment through subsidies even though that is less harmful to their tax bases than competing only on low tax rates, the Observatory said. More

Stay informed with free updatesSimply sign up to the More

(Reuters) – A look at the day ahead in Asian markets from Jamie McGeever, financial markets columnist.The big question this week hanging over global financial markets – and Asian markets in particular, given the lack of big-hitting regional economic indicators or policy decisions – is whether the U.S. Treasuries selloff abates or not. Third-quarter gross domestic product data from South Korea, and consumer price inflation reports from Australia, Singapore and Tokyo are the main indicators this week, and flash purchasing managers indices from Japan and Australia will be published on Monday.These figures may have a brief impact on their respective currencies, but are unlikely to move the dial in terms of broader market sentiment. That will come from the U.S. bond market, and Monday’s price action could be instructive.The ICE BofA Treasuries index fell 1.4% last week, its biggest fall since May, and is at an eight-year low. The TLT Treasuries ETF has lost a fifth of its value since mid-July. Short-covering on Friday ahead of the weekend and Middle East event risk stopped the rot, at least momentarily. Perhaps ominously, however, Friday’s bond market relief didn’t ease the pressure elsewhere – Wall Street’s three main indices still closed 0.9%-1.5% lower.The S&P 500 lost 2.4% last week, one of the biggest falls this year, and the VIX ‘fear index’ of U.S. stock market volatility on Friday hit its highest since March.That’s not a positive backdrop for Asia’s open on Monday, although braver investors might be looking for some bargains – the MSCI Asia ex-Japan index on Friday fell to its lowest in almost a year and is down 12% since the start of August. Meanwhile, the stock and bond market selling has tightened financial conditions significantly. According to Goldman Sachs, financial conditions in emerging markets and globally are the tightest in almost a year.It’s even worse in China – financial conditions in the world’s second largest economy are the tightest since Goldman’s China index was launched in 2006.Chinese central bank governor Pan Gongsheng on Saturday said that the central bank will make policy more “precise and forceful”, guide financial institutions to cut real lending rates, and reduce financing costs for firms and individuals.His comments are significant because they are his first on policy since stronger-than-expected third-quarter economic data were released earlier this month.In currencies, the yen and yuan open the week under heavy selling pressure and at critically important levels. Traders will again be on Bank of Japan intervention watch.Meanwhile, Japanese and Australian PMI data for October are out on Monday. September’s reports showed that manufacturing activity in both countries shrank and services sector activity grew, although growth in Japan was the slowest this year. Here are key developments that could provide more direction to markets on Monday:- Japan flash manufacturing PMI (October)- Australia flash PMI (October)- Singapore inflation (September) (By Jamie McGeever; Editing by Diane Craft) More

Stay informed with free updatesSimply sign up to the More

BUENOS AIRES (Reuters) -Argentines began voting on Sunday in a national election that a far-right libertarian appears in pole position to win, propelled from radical outsider to front-runner by fallout from the country’s worst economic crisis in two decades.Polling stations opened at 8:00 am (1100 GMT) in a ballot that is likely to roil financial markets, set a new political and social path for the nation – a major grains exporter with huge reserves of lithium and shale gas – and impact its ties with trade partners including China and Brazil.Libertarian economist Javier Milei is one of three candidates likely to split the vote, and the man to beat after posting a shock win in open primaries in August.Centrist Peronist Economy Minister Sergio Massa and conservative Patricia Bullrich are tipped to trail him by a small margin, and pollsters expect no outright winner, meaning a runoff vote will be needed.Milei, pledging to “chainsaw” the economic and political status quo, has seen angry voters flock to his tear-it-all-down message, fed up with annual inflation at close to 140% and poverty affecting over two fifths of the population.”Milei is the incarnation of all society’s demands,” said Juan Luis González, who wrote a biography of him titled “El Loco”, meaning the crazy one. He thinks Milei, a brash former TV pundit likened to Donald Trump and former Brazilian President Jair Bolsonaro, will win despite being an “unstable” character who could damage Argentina further.”I see a very worrying situation,” González said.SHOCK THERAPYTo win outright on Sunday, a candidate will need over 45% of the vote or 40% and a 10-point lead over rivals. Polls will close around 6:00 p.m. (2100 GMT) and first results are expected at 9:00 p.m. (00:00 GMT).Any run-off would be held on Nov. 19. Whoever of the trio emerges victorious will have to deal with an economy on life support: central bank reserves are empty, recession is expected after a major drought, and a $44 billion program with the International Monetary Fund (IMF) is wobbling.Milei’s recipe of shock therapy includes pledges to dollarize the economy, shut the central bank, slash the size of government and privatize state entities. He has criticized China, favors looser gun laws, opposes abortion and is anti-feminist.”He is the only one who understands the situation in the country and understands how to save it,” said Buenos Aires student Nicolas Mercado, 22.Massa, current economy chief, is in the running despite overseeing inflation hitting triple digits for the first time since 1991. He has said he will cut the fiscal deficit, stick with the peso and defend the Peronist social welfare safety net.”Massa represents certain traditional guarantees with which I was raised: public health, state education, which is what I want to defend with my vote,” said astrologer Flavia Vázquez.Bullrich, a former security minister who is popular in business circles, has seen her support diluted by the unexpected emergence of Milei. Pollsters see her as the most likely of the top three runners to miss out on a second round.”I voted, I’m really happy. Democracy is the best system,” 69-year-old Emilio Betesh at a polling station in Buenos Aires on Sunday morning. “I think there will be a run-off, between Milei and someone. Who? I don’t know. Let’s see what happens.” More

Stay informed with free updatesSimply sign up to the More