Finimize - 💪 The era of Arm

What’s going on here?

British chip designer Arm had investors agog, with a hulking stock market debut.

What does this mean?

The grapevine’s long been abuzz about Arm’s stock market launch, with whispers questioning both the timing and investor hunger. But lo and behold, Arm’s gone and silenced the skeptics. Not only did its shares end up pricing at the top of the marketed range, but the debut also ranked as the US’s biggest since Rivian’s sizable 2021 splash. And the wins didn’t end there. Once the trading bell rang, retail investors, hungry for a slice of the AI pie, helped drive the shares skyward. It’ll come as no surprise, then, if Arm’s dazzling debut turns out to be the green light other companies have been waiting for – triggering a flurry of public listings in the coming months.

Why should I care?

For markets: SoftBank’s soft approach.

SoftBank, which still holds a whopping 90% of Arm, has had a spotty record with stock market debuts in recent years – and the firm desperately needed this win. So this time, the Japanese company opted for caution. By playing it cool and not jacking up Arm’s share price, despite the investor clamor, SoftBank ensured a sizzling first-day trading pop. And even though that gambit meant the firm probably left around $100 million on the table, it seems the stratagem has more than paid off for SoftBank.

The bigger picture: Stay tuned.

Arm’s successful debut was just the first hurdle. Now, it’s under pressure to accelerate growth, a feat investors are already banking on given its impressive valuation. But it’s not going to be a walk in the park: after all, its revenue dipped last fiscal year. And Arm’s not as firmly entrenched in the AI revolution as it would probably like to be, while the smartphone market, its mainstay, is shrinking.

What’s going on here?

Data out on Friday suggested that China’s economy is gradually getting back on its feet.

What does this mean?

China hasn’t been the bearer of great economic news lately – but in August, government stimulus and a summer travel boom helped bring some unexpected sunshine. Retail sales, which tell us a lot about how consumers are feeling, rose by 4.6% compared to last year. That’s not just better than July: it’s also better than what most were expecting. And factories have been busy too – mostly because carmakers have been in overdrive – with industrial production up by 4.5%. Throw in a drop in unemployment and the fact that consumer prices aren’t falling anymore, and you’ve got signs of an economy on the mend.

Why should I care?

Zooming in: Trying to prop up property.

Not all the data was rosy, mind you. China’s sprawling property market, a big chunk of its economy, is still showing cracks. Despite the government’s best efforts, like slashing downpayments and offering better mortgage rates, new home prices in 70 major cities dipped in August. Still, many experts reckon the government has more tricks up its sleeve to support the market, and think it’ll take time for the full effects to trickle through.

The bigger picture: Bitter first, sweet later.

There’s been a fair share of sourness about China’s performance this year, but history suggests the country might have a pretty sweet future. The nation is flexing its muscles in areas like renewable energy supply chains, positioning itself for a sustainable future. And there’s more: China’s now seemingly crafting its own advanced chips, suggesting US efforts to curb its tech progress might be hitting a wall. Remember, China’s faced economic storms before, like the 1998 Asian financial crisis and the 2015 yuan devaluation. And each time, China left the naysayers who predicted its downfall with a whole lot of egg on their faces.