China's CICC Shares Jump After Plan To Buy Two Rivals In $16 Billion Stock-swap Deal

When U.S. President Donald Trump signed an executive order to rebrand the Department of Defense as the Department of War, he was probably not thinking of corporate governance battles in South Korea. Nevertheless, his administration's decision to build a new zinc refinery stateside has dragged it into one of the country's messiest takeover feuds. The saga is another reminder of the pitfalls of state meddling in private firms.

There's little to fault the strategic rationale of joining forces with Korea Zincin a $7.4 billion refining project. The United States is keen to cut its reliance on China for materials vital to chips, electronics and weapons. The $18 billion Korean company is the world's top zinc smelter and produces 14 of the 54 critical minerals designated by Washington as essential to national and economic security. The latest agreement envisages Korea Zinc building and operating a large-scale facility in Tennessee that will begin producing zinc, lead and copper before expanding to strategic minerals like antimony and germanium. Commerce Secretary Howard Lutnick hailedthe initiative as a "big win for America".

The financial small print is messier. Korea Zinc will get access to up to $4.7 billion of loans plus $210 million in subsidies for the project. But in an odd move, it is also creating a joint venture that will inject $1.9 billion into Korea Zinc in return for a roughly 10% stake. The company will in turn take a similar shareholding in the joint venture, in which the Department of Defense will hold a 40% voting stake. The new unit will not directly own or operate the U.S. refinery, which will be wholly owned by Korea Zinc.

The company has yet to explain the reason for diluting investors or for creating a new circular shareholding of the type that many of South Korea's family-controlled conglomerates are unwinding. True, this joint venture would allow Korea Zinc to keep full control of the U.S. smelter, according to someone familiar with the matter. But the biggest beneficiary may be Chair Yun B. Choi, who since October last year has been locked in a fierce battle for control with the company's top shareholders, Young Poong and private equity giant MBK Partners. Issuing shares to a potential ally might tip the balance of power in Choi's favour.

It's not clear that the U.S. government realised it was potentially picking sides in a bitter corporate dispute. The Department of Defense did not respond to a request for comment. However, Young Poong and MBK are legally challenging the share issue, partly on grounds that it is designed to "preserve" Choi's grip over the company. The project's fate will now be decided by a court in Seoul.

The outcome could be an embarrassing hitch for Trump's administration, which is eager to buy shares in companies it deems strategic. In August, for example, the government took a 10% stake in ailing chipmaker Intel. Korea Zinc is a reminder that sometimes the art of the deal is not so different from the art of war.

CONTEXT NEWS

Korea Zinc's two major shareholders, Young Poong and MBK Partners, announced on December 16 that they have filed for an injunction with the Seoul District Court to block the company's plan to issue new shares as part of a $7.4 billion critical minerals project with the United States government.

The pair, which together holds roughly 46% of Korea Zinc, said they were not opposed to the company's decision to build a new U.S. smelter but objected to the proposed issuance of new shares worth $1.9 billion to a joint venture backed by the U.S. government and unnamed U.S.-based strategic investors. The joint venture would own roughly 10% of Korea Zinc, diluting the two shareholders' holdings and helping the company's chairman cement control of the firm, the pair said.

Young Poong and MBK have been trying to wrest control of the company from current management led by Chairman Yun B. Choi. He and his backers have a 32% stake in Korea Zinc but have 11 members on the 15-strong board.

Korea Zinc on December 15 unveiled a joint venture with the U.S. Department of Defense and other unnamed investors. The company will issue 2.2 million new shares to the joint venture. It will also inject $89.99 million in capital in exchange for a 9.99% equity stake in the entity, in which the Department of Defense will hold a 40% voting right, according to filings.

Korea Zinc will then inject $2.5 billion into a wholly owned U.S. subsidiary that will build and operate a smelter in Tennessee. The Department of Defense and other financial institutions will contribute up to $4.7 billion in loans, while the Department of Commerce will contribute $210 million in subsidies under the CHIPS and Science Act. Besides zinc, the project also aims to refine copper and a range of other minerals considered critical by the U.S. government, including antimony and germanium.

As of mid-morning on December 18, Korea Zinc shares had fallen roughly 16% to 1,337,000 won since December 15. The Department of Defense did not respond to a request for comment.

Source: TradingView

Foreign investors bought the most Japanese bonds in eight months last week as rising yields attracted overseas demand.

Net purchases totaled ¥1.41 trillion ($9.1 billion), the largest since the period ended April 11, preliminary Ministry of Finance data showed Thursday. Demand was also evident in the Dec. 11 auction of 20-year notes, where the bid-to-cover ratio climbed to a five-year high.

Overseas funds are on track to purchase the most Japanese government bonds this year since at least 2005, lured by multi-decade-high yields and extra returns from hedging against the yen. With the Bank of Japan stepping back through quantitative tightening, foreign investors have increasingly filled the gap — a shift that could introduce more volatility into what was once a placid market.

"Overseas investors' demand for Japanese bonds has increased now that yields have reached sufficiently high levels," said Akira Moroga, chief market strategist at Aozora Bank Ltd. in Tokyo. "Even if the BOJ continues to raise interest rates, it may be the case that super-long yields are sufficiently high too."

The BOJ is expected to raise its policy rate by 25 basis points to 0.75% on Friday, according to economists' forecasts. Overnight-indexed swaps suggest the central bank will lift rates once more by October 2026.

The ministry's weekly data do not include details by bond type, investor category or geographic location.

Source: Bloomberg Europe

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China is dispatching a diplomat to Cambodia and Thailand as a new bout of violence between the two Southeast Asian nations threatens to derail a ceasefire brokered by President Donald Trump.

Deng Xijun, China's Special Envoy for Asian Affairs, will travel to Cambodia and Thailand on Thursday to conduct mediation, the Foreign Ministry in Beijing said in a statement.

"China closely follows the ongoing border conflict between the two countries," according to the statement. "Through its own way, China has been working actively for deescalation."

Trump has pushed for peace since the conflict spiked in July and has threatened both with trade retaliation if either nation violates the terms of an October peace declaration he orchestrated. While Deng has traveled at least twice to seek mediation, this is his first since the so-called Kuala Lumpur Peace Accords were signed.

Clashes along the 800-kilometer (497-mile) border resumed earlier this month, including Thai airstrikes on Cambodian military targets. More than two dozen people have been killed, including 16 Thai soldiers and 12 Cambodian civilians, and over half a million people have fled the area because of the fighting.

China has engaged with both sides since the start of the violence, but has kept a much lower profile than the US as Beijing generally avoids publicly intervening in conflicts, beyond seeking to facilitate discussions.

The Trump administration has sought to highlight that China hasn't played a role in the peace process. The White House didn't immediately respond to a request for comment sent outside normal working hours.

Trump called both leaders last week to push again for a ceasefire, although the fighting has since continued.

Malaysia's Prime Minister Anwar Ibrahim, who chairs Asean this year, said Wednesday that he's been in contact with the leaders as well, and that both told him they want to resolve their border clashes as soon as possible.

Deng's trip also comes as Cambodia's use of Chinese weapons comes into focus, following reports that the Thai military seized a large number of Chinese-made weapons from Cambodian soldiers.

China's Foreign Ministry spokesman Guo Jiakun didn't confirm nor deny the news at a press briefing Wednesday, but reiterated that Beijing has had "normal defense cooperation" with both countries and that such cooperation doesn't target any third party.

Thailand, which is a treaty ally with the US, has far larger and more sophisticated armed forces than Cambodia. Its attacks on Cambodia have included the use of American F-16 fighter jets.

Source: Bloomberg Europe

Key Points:

Wall Street Slides as AI Spending Doubts Knock Tech to Three-Week Lows

Daily S&P 500 Index (SPX)

U.S. stocks finished Wednesday on the back foot, with the S&P 500 and Nasdaq closing at three-week lows as renewed unease around artificial intelligence funding hit big-name tech.

Daily Nasdaq Composite Index (IXIC)

The selling wasn't panicky, but it was persistent. Traders trimmed exposure where conviction has thinned, especially across chips and cloud names tied to heavy capital spending.

Daily Dow Jones Industrial Average Index

The Dow slipped 228 points, while the S&P 500 fell 1.16% and the Nasdaq dropped 1.81%. Breadth leaned defensive, and volume ran slightly above recent averages — a sign this wasn't just passive drift lower.

Is the AI Trade Losing Its Shine?

The pressure started in megacap tech. Oracle slid 5.4% after reports that Blue Owl Capital won't back a planned $10 billion data center deal. That hit a nerve. The market has been fine with big AI checks — until it isn't.

Nvidia fell 3.8% and Broadcom dropped 4.5%, dragging the chip index down nearly 4%. The message was clear: traders are questioning how much balance sheet strain the sector can absorb before returns become harder to justify. There's growing concern that AI spending is feeding back into itself, with OpenAI sitting at the center of the loop.

Amazon slipped 0.6% after news it's in talks to invest roughly $10 billion in OpenAI. The deal may strengthen its AI position, but the tape treated it as another reminder that the bill is still rising.

How Are Traders Responding to the Risk?

They're stepping back rather than chasing dips — at least for now. Decliners outpaced advancers by a wide margin, especially on the Nasdaq. This wasn't indiscriminate selling, but positioning felt lighter as traders reassessed exposure going into year-end.

Alphabet shares fell 3.2% after reports that Google is working with Meta to challenge Nvidia's software edge. It's ambitious, but the market focused on execution risk and timelines rather than the long-term vision.

Outside tech, media names were mixed. Netflix edged higher after its bid for Warner Bros Discovery gained board support, while Warner Bros and Paramount slid after rejecting a hostile offer.

Can Energy and the Fed Offset Tech Weakness?

Energy stocks provided a pocket of strength. Crude prices climbed after President Trump ordered a blockade of sanctioned oil tankers linked to Venezuela. ConocoPhillips and Occidental both jumped more than 4%, offering some balance to an otherwise tech-heavy selloff.

Rates also helped steady nerves at the margin. Fed Governor Christopher Waller said the central bank still has room to cut if the labor market softens. That kept yields in check, even if it didn't spark risk-on buying.

What's the Setup Into Inflation Data?

The next test is Thursday's consumer inflation report. A softer print could calm nerves around rates, but it won't answer the bigger question hanging over tech: how sustainable all this AI spending really is.

Bottom line: the market isn't abandoning AI, but it's no longer giving the trade a free pass. Until confidence improves on returns, traders look content to stay selective rather than aggressive.

Source: FX Empire

Steady Liquidation by Veteran Holders Alters Market Structure

Fading Demand from ETFs and Retail Amplifies Imbalance

Market Psychology and Price Action Reflect Fatigue

Reactivation Nearing Saturation Point

Source: Bloomberg