infrastructure hack. American Water Works, the latest target as officials warn of threats from Iran and China. But first, we turn to our top story on the markets, which is this Chinese chipmaker, semiconductor manufacturing international, SMIC, leading that $13 billion sector rally after global investors bet that Beijing will declare more policy or financial support for the industry that is central to its geopolitical ambitions. Who makes Emily Grafeo Jones us for more? Look, SMIC is blacklisted for U.S. investors, but this is a broad rally in the chip sector over in China. This

is. It's not just SMIC that's rallying, but that stock is up over 28% just on the day, up about 65% in the last few days. And these are shares that have been trading in Hong Kong because the stock market actually in the mainland China has been closed all week for the holiday. So there's a lot of anticipation that when the Chinese stock market opens, I guess tonight for us in the U.S., but tomorrow morning, Tuesday morning in China, that there's going to be a flurry of bets. So we're seeing now traders kind of getting ahead of that. Smaller competitors in the chip space are also up as well. Huahong semiconductor up something like 17% right now.

stimulus, right? But if you look at the Chinese equity market, since kind of late September, things have been improving. Give us the bigger picture of this performance relative to, I guess, US tech or European tech so far in 24. Well, I mean, the bigger picture

performance is that Chinese stocks overall have pretty much been in a bear market since about February of 2021. So although we've seen big gains since late September, when, like you said, Beijing did announce fiscal and monetary stimulus, we're still down for the year in a lot of these areas. And that's right. It's really a big question here. What exactly are we going to get from China when they do have that press conference later tonight, tomorrow morning in China? And when the stock market reopens, there was a note from analyst Brent Donnelly. And the subject line of his email was China, China, China, China. And he has a point. Yeah, he has a point. And his note, he said, how big is the stimulus? Will they even tell us? Tonight's China reopening is likely to be spicy. So there's a lot of questions about is the government actually going to pledge specifically to add stimulus to the semiconductor sector? But the bet here in the market right now is that they will. And

also, look, this has been a long-hated area more broadly. Positioning has not been long China and indeed China tech more broadly. Because people have gotten burned by it in the last two years. Anyone who's gotten in, like I said,

back in 2021 is actually still in negative territory. We are seeing sentiment start to, I guess, come around as one would expect. The stock market goes up. ETF flows follow. So in just the last week, we saw about $6 billion flowing into U.S.-listed China ETFs. So even across the globe, investors are trying to get in or at least play the momentum right now. Bloomberg's

Emily Graffier with the reporting on the market moves on China tech. Let's discuss a bit more with Janet Mui, head of market analysis at RBC Brewing Dolphin. And your reaction, Janet, was to upgrade your call in the equities context on Asia x Japan. When you're weighing up the factors in the context of China tech, what were the things that you were looking at, short, medium and long term? Thanks

for having me. I think we have been skeptical on China as many people are, but I think it's really how undervalued China has been versus, say, the US or other developed markets. And also the fact is positioning has been very light. I mean, for us, we have been underweight for quite a sustained period of time. So I think that that is shifting. And I think, you know, Chinese market is a very momentum driven, very liquidity driven. So we have seen both happening. And I think we would like to participate in this rally. This probably has more to go. And in terms of Chinese tech, I mean, obviously, undervalued, very unloved versus the U.S. counterparts. Obviously, they're different. But still, we think that there is still much upside potential from here. But having said that, we just upgraded modestly. I think there's still a lot of question marks for the longer term. Emily's

reporting just in that conversation was largely about some of the domestic chip names in China. What's your attitude towards the semiconductor sector in mainland China? Yes,

I think it is obviously a very state supported sector, has been for a while long term wise. So I think it makes sense for investors to favor this sector given basically I think the new tech, the semiconductor strategic areas of those equities have, it should do well given how important that is. But ultimately, we have to understand that a lot of developed economies are likely to still be skeptical and have restrictions of all sorts on those companies' products. So I would say I would participate in the rally. I do think that it has further to go, but I would be a bit more cautious over a longer term. And we have to kind of understand where to take profits

when it is necessary. To that point, Janet, do you think that people are protecting to the downside enough? Do we think a lot of people are going to get burned once again? I

mean, it is potentially possible. We have seen that play out before in the previous bull market cycle and then a very sharp bear market in China. We have seen that play out again and again. But I think it could last for quite a bit, as I said, given how light the positioning, how underweight it is for global investors. So I would say it could have further to run in the next, you know, a couple of months, at least, I think. I think the Chinese authorities, their hands are tied. They will just have to provide more stimulus. But you're right, there is absolutely a chance for some investors to get burned. So that's why we have to monitor it very closely. What's been interesting is

there's been institutional money flowing in, David Tepper saying how much he's liking China, and also retail. I want to get your check just more broadly on sentiment towards semiconductors globally, technology globally. Where are we seeing the optimism? Still in institutional money, or is it now sort of retail and we question, therefore, the longevity?

I think both. I think for us, for example, we still like the global semiconductor sector. Obviously, that's mostly US play. So I think there's a lot of structural supportive drivers behind that. We are very happy to get exposure to those high quality companies. So I think for institutions, I think it will be very dangerous if you don't participate in the semiconductor, that AI-related theme. I think for retail investors, I think once the momentum is back, I think that will draw in more participation, particularly as interest rates are being cut, the economy continues to expand and hopefully less bad news out there on the headlines. I think that that could help. Overall, we still like the sector pretty much. We have stayed invested and we continue to encourage investors to add in more money when valuations have turned attractive, say, the past couple of months.

Janet, when you got to your desk this morning in London, how big a factor or risk was trade risk or supply chain risk for technology investors around the world?

Obviously, it is part of the consideration, given that the cheap industry is very, know the supply chain is very complicated and if there's well widespread trade protectionism then obviously that's not great but fundamentally the demand is still very strong and I think what we are a bit more reassured now is that if you look at the polls and the you know the probability of Trump winning the election by betting market it has gone down. Obviously, it's a very tight race, but it gives us a bit of comfort to be a bit more positive on the China equities story and also the global semiconductor play. But I think ultimately, fundamentally, it's about the demand, the long-term buildup of AI infrastructure and how strategically important that sector is for many sovereigns out there. Janet,

how important, therefore, when you sat down, was the 4% number on the 10-year yield in that macro context for these AI bets?

Well, the thing is, yeah, we saw yields go back to 4%. I think some small to mid-cap stocks could be struggling a little bit today, but we still see some of the key semiconductor stocks rising. Obviously, it's very company specific, but what we think is, I think, yeah, a strong economy, good job market ultimately is good for the world economy, for the US, for corporate earnings, etc. I wouldn't look too much into this one-day move for equities. If they're down or struggling a little bit, I would still be quite comfortable to be overweight in the US and in the US semiconductor

space.