Worsening is zero

June 29, 2021 (Tuesday) Rain then cloudy

・“100 Presidents Survey” more than 90% of managers expect the economy to expand six months later.

More than 70% responded that the negative impact of the coronavirus on economic activity will be eliminated by next year.

　

・“100 Presidents Survey” is conducted about every three months targeting presidents (including chairmen) of domestic major companies.

This time, conducted from June 4 to 21, with responses from 139 companies.

When asked about the timing of the elimination of the negative impact on economic activities as vaccination progresses, the most common answer was “2022,” at 61.1% (calculated excluding non-responses).

Responses expecting the impact of COVID-19 to be eliminated within the year accounted for 10.7% in total. “23” (two years later) for the year 2023 stood at 16%.

・In six months, regarding domestic economy, the “expanding” and “recovering gradually” were 10.8% and 82.0%, respectively.

Compared with the previous survey, “expanding” increased by 5.8 points, while there were zero deteriorations.

Factors for economic expansion (multiple answers allowed) included “spread of vaccinations” 82.2%, “recovery of personal consumption” 73.6%, and “recovery of the U.S. economy” 43.4%.

On the other hand, the current business sentiment shows “flat” as the most common, at 59.7%, similar to the previous survey’s current state at 54.3%.

・RIKEN and Fujitsu <6702> [Closing price 20,440 yen] developed the supercomputer “Fugaku” which, on the 28th, maintained its world-leading position in the global ranking of supercomputer capabilities.

In the third consecutive quarter, following June and November 2020, it surpassed U.S. and Chinese computers.

The U.S. and China aim to deploy supercomputers even surpassing Fugaku within the year.

The U.S. and China plan to deploy supercomputers beyond Fugaku within the year.

・In drafting rules for digital taxation aimed at large IT companies, the OECD proposed to narrow the target to around 100 companies based on revenue of 20 billion euros (about 2.6 trillion yen) and a profit margin of 10%, so that tax can be imposed in a wide range of consumer market countries and regions.

Once the framework is decided, it will be a major turning point in international tax systems.

Negotiations among involved countries are being adjusted to finalize a command paper at the official level during an online meeting from the 30th to July 1.

An agreement is sought at the G20 finance ministers and central bank governors meeting in Italy in July.

・A critical point about China: the isolation move during the 100 years of the Communist Party (mid) raises global concerns.

China extends its hands to Korea’s semiconductor companies. At the end of March,

Chinese investment fund Wise Road Capital agreed to acquire Magna Chip Semiconductors of Korea within the year.

The acquisition amount of $1.4 billion (about 150 billion yen) is rumored to be overpriced. “A Chinese government-backed fund is backing them. They do not spare money,” some say.

“Self-strengthening is the starting point for the Chinese nation to stand independently and strive in the world.” The party theoretical magazine “Qiushi” published President Xi Jinping’s speech in March.

The axis of conflict between the U.S. and China, which started with trade, has now shifted to ideology of “democracy versus dictatorship.”

China, clinging to one-party rule, is increasingly turning its back on the world.

・Monitoring of crypto asset (cryptocurrency) exchanges is tightening.

The UK financial authorities announced warnings on the 26th to Binance Markets, which continued to operate without registration, banning its business activities within the UK.

Japan’s Financial Services Agency also issued warnings on the 25th. The crypto asset market is expanding, and concerns about money laundering and impacts on financial order are becoming non-negligible.

・Italy will host the G20 foreign ministers’ meeting on the 29th, and will skip the U.S.-China foreign ministers’ meeting.

China will not dispatch its foreign minister, while on the 28th it held an online summit with President Putin of Russia, signaling an approach to counter the U.S.-led encirclement.

・There is a spread of replacing mobile phone network infrastructure with cloud-based software.

This reduces the need for dedicated equipment and large-scale base stations.

In the latest 5G, some foresee a roughly 40% reduction in infrastructure construction costs.

It may also lower telecommunications costs. Around the world, 5G infrastructure construction is intensifying, and the telecom industry is in a once-in-a-decade renewal cycle.

Cloud migration ahead of PCs and core enterprise systems may transform the communications network.

・The challenge for cloud base stations is the network power consumption.

The Japan Science and Technology Agency (JST) forecasts that global IT-related electricity consumption will be about 200 times higher by 2050 if current trends continue.

Industry has already begun developing technologies to overcome this.

NTT <9432> [Closing price 2,911.0 yen] aims to promote a telecommunications network with reduced power consumption.

Positioning the “IOWN” (I/O Following) concept, using optical components instead of electronics for communications as a key technology beyond “6G.”

Reducing power consumption to one-hundredth of its current level.

Major semiconductor players like Intel in the U.S. and Sony Group <6758> [Closing price 10,870 yen], among others, are gaining support from leading firms,

and intend to establish it as a standard technology for the next generation of the communications industry.

“In 5G, the issue of power consumption was not sufficiently discussed; in 6G, it will become important.”

・The government on the 28th published the vaccination results for the new coronavirus,

the number of people who have completed the second vaccination reached 13,002,462 by the 27th, exceeding 10% of the domestic population.

22.5% of those aged 65 and over have completed two doses. The total number of vaccination doses administered reached 40,177,951.

・In June polls conducted by major news organizations, the approval rating of the Cabinet generally rose slightly or stayed flat compared to May.

As vaccinations progress and government infection-prevention measures are evaluated more favorably, this trend is seen.

Nikkei Newspaper’s June poll: Cabinet support 43% (May: 40%), NHK’s June poll: 37% (May: 35%), Kyodo News: 44% (May: 41%).

・Six major U.S. banks, including JPMorgan Chase, are turning toward increasing stock buybacks and dividends.

With regulations lifted by the U.S. Federal Reserve (FRB),

the total shareholder returns of the six major banks are expected to exceed $130 billion (about 14 trillion yen) over the year from July-September 2021 onward.

・SMBC Group <8316> [Closing price 3,921 yen] acquired an equity stake in the Philippine banking giant Rizal Commercial Banking Corporation (RCBC) on the night of the 28th.

The stake is about 10 billion yen, acquiring 5% of issued shares.

RCBC’s strength in digital banking is expanding its user base; looking ahead to the post-COVID era, this will accelerate Asia’s economic growth.

・Worldwide new COVID-19 cases (daily change in death toll) as of 4:00 PM on 6/28, compiled by Johns Hopkins University: global total 181.09 million (deaths 58,24,000)

U.S. 33,625,036 (76) India 30,279,331 (979) Brazil 18,420,598 (739) France 5,831,972 (17) Turkey 5,409,027 (52) Russia 5,387,486 (591)

UK 4,748,644 (11) Argentina 4,405,247 (251) Italy 4,258,069 (14) Colombia 4,158,716 (684) Spain 3,782,463 (0) Germany 3,734,489 (7)

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