Chinese GPU Startups Moore Threads and MetaX Launch $1.7 Billion IPO Plans Amid U.S. Export Curbs

Economic

Summary:

Moore Threads and MetaX, two Chinese GPU startups, are seeking a combined $1.65 billion in IPOs on Shanghai’s STAR Market, betting that U.S. restrictions on advanced chip exports will accelerate domestic demand...

IPO Moves Reflect China's Strategic Shift Toward Tech Autonomy

In a high-stakes response to escalating U.S. export controls, Beijing-based Moore Threads and Shanghai-based MetaX have filed for initial public offerings totaling 12 billion yuan (approximately $1.65 billion) on the Shanghai STAR Market. The filings mark a strategic moment for China’s chip sector, signaling a transition from dependency on foreign semiconductor giants to cultivating domestic innovation in graphics processing units (GPUs), particularly in the field of artificial intelligence.

The IPO filings underscore how both firms aim to capitalize on China’s policy-driven momentum for indigenous semiconductor development, as geopolitical tensions effectively constrain access to cutting-edge chips from U.S. companies like Nvidia and AMD.

Export Curbs as Both Risk and Catalyst for Domestic Growth

The firms acknowledged that U.S. export sanctions pose a direct threat to their long-term operations. Moore Threads, added to the U.S. Entity List in late 2023, is now blocked from partnering with key global foundries such as Taiwan Semiconductor Manufacturing Company (TSMC). MetaX similarly faces downstream disruption from Washington’s tightening rules. However, both firms argue that these restrictions paradoxically open a domestic market opportunity: as Chinese AI developers lose access to foreign GPUs, they are forced to turn to homegrown alternatives.

This represents a clear causal dynamic. The more restrictive U.S. policies become, the greater the incentive for Chinese firms to fill the void, not only to ensure operational continuity but also to build strategic resilience. MetaX explicitly stated that geopolitical pressure is accelerating partnerships between local customers and domestic chip suppliers—a trend that aligns with Beijing’s long-term technological ambitions.

Heavy R&D Investment Drives Losses But Builds Technical Moats

Both Moore Threads and MetaX are early-stage companies with ambitious R&D agendas. Since their founding in 2020, they have posted cumulative losses in the billions. Moore Threads recorded a 1.49 billion yuan loss in 2024 on revenues of 438 million yuan, while MetaX lost 1.4 billion yuan on revenues of 743 million yuan in the same year.

These persistent losses are not anomalous; rather, they reflect high upfront investment in chip design and software ecosystem development. Analysts argue that such investment is necessary for the firms to catch up with entrenched players like Nvidia and AMD, particularly as economies of scale in chip production take years to achieve.

The correlation between intensive R&D spending and short-term financial loss is expected in the sector, but the long-term viability of these companies hinges on their ability to translate this technological groundwork into scalable, commercially viable products within China’s AI and data infrastructure.

Founders Bring Silicon Valley Experience to China’s AI Race

Both companies were founded by former senior executives from major U.S. chipmakers. MetaX was co-founded by ex-AMD leader Chen Weiliang, while Moore Threads was launched by Zhang Jianzhong, formerly Nvidia’s general manager in China. This transfer of experience highlights China’s strategy of leveraging global human capital to build domestic champions.

These leadership backgrounds provide an advantage in technical design and international product benchmarks, positioning Moore Threads and MetaX as serious contenders in the race to develop Nvidia-class alternatives for China's AI ecosystem.

Crowded Market, State Support, and a Race for Scale

While Moore Threads and MetaX are leading GPU contenders, they face growing competition from other domestic firms, including Huawei, Cambricon, and Hygon. All operate in an environment increasingly shaped by state support and industrial policy. Access to domestic capital markets via the STAR Market is seen as critical to sustaining innovation and surviving long development cycles.

He Hui, research director at Omdia, emphasized that achieving economies of scale through China’s large domestic AI and data center demand could eventually improve profitability for these firms. In this context, the IPOs are not just funding events—they represent strategic positioning in an evolving national technology landscape.

The dual IPO plans by Moore Threads and MetaX highlight the dual reality of China’s chip sector in 2025: vulnerable to geopolitical risk yet determined to turn adversity into strategic independence. As export curbs cut access to Western technology, Beijing’s bet on local champions gains urgency and capital support. Whether these firms can navigate the challenges of scale, technical parity, and sustained funding will shape the trajectory of China’s AI hardware ecosystem for years to come.

Source: Reuters

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Economic

Political

China Targets Philippine Politician as Maritime Dispute Deepens

In a rare public move signaling escalating diplomatic tensions, China’s Foreign Ministry on Tuesday announced sanctions against former Philippine Senator Francis Tolentino, barring him from entering mainland China, Hong Kong, and Macau. The action reflects Beijing’s growing unease over Manila’s recent assertiveness in the South China Sea and a perceived increase in anti-China rhetoric from Filipino lawmakers.

The decision underscores a reactive shift in Chinese diplomacy, where Beijing is now openly targeting individual political figures for allegedly damaging bilateral relations. While no specific incidents were cited, Chinese officials accused Tolentino of a “pattern of malicious behavior” that undermines China’s strategic interests.

Tolentino Responds With Defiance, Frames Sanction as Nationalist Stand

Tolentino responded swiftly and defiantly, calling the sanction “a badge of honor” and affirming that “no foreign power can silence me or weaken my resolve to uphold our sovereignty.” His statement, posted on Facebook, reframes Beijing’s punitive measure as a symbol of his commitment to national integrity. This rhetorical stance reflects a broader domestic sentiment in the Philippines that views Chinese actions in the South China Sea as coercive and unlawful.

Tolentino, who lost his reelection bid in May, had remained a vocal critic of Chinese influence. He spearheaded Senate inquiries into alleged Chinese espionage activities in the Philippines and sponsored legislation formalizing Philippine maritime zones—both moves that Beijing strongly opposed.

Underlying Conflict: South China Sea Sovereignty Disputes

At the heart of the diplomatic clash lies the contested South China Sea, where both nations assert competing claims over strategic and resource-rich waters. China maintains expansive territorial claims rejected by the 2016 Permanent Court of Arbitration ruling, which sided with the Philippines. Despite this international legal decision, Beijing has continued to build infrastructure and enforce maritime control in the region, prompting repeated confrontations with Philippine vessels.

Tolentino’s legislative push to define maritime boundaries is viewed by Beijing as a direct challenge to its claims. The causal relationship between these political moves and China’s retaliatory sanction is evident: Beijing is leveraging diplomatic tools to deter further legislative and political escalation from Manila.

Broader Implications: Diplomatic Signaling and Regional Posturing

While sanctions against active or former lawmakers are rare, they serve a clear signaling function. China’s decision to publicize the move indicates an intent not just to punish but to warn other Philippine officials contemplating similar initiatives. It also reveals Beijing’s sensitivity to domestic legislation that could legitimize international resistance to its territorial claims.

However, such pressure may have unintended consequences. Rather than silencing critics, China’s actions may embolden Philippine lawmakers and civil society to take firmer stances, especially as U.S. and regional alliances recalibrate in response to China's assertiveness.

The sanction of Francis Tolentino is more than a symbolic act—it reflects China's increasing use of targeted political pressure to influence regional dynamics in the South China Sea. As the Philippines strengthens its legal and diplomatic posture, Beijing appears prepared to escalate its deterrence efforts beyond naval operations to include individual sanctions. Whether this approach consolidates China's position or triggers further backlash will shape the next chapter in Southeast Asian maritime diplomacy.

Source: Bloomberg

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Glendon

Economic

Forex

J Sainsbury Plc’s sales rose more than expected in what it called a positive start to the year, as food inflation accelerates across the UK.

Like-for-like sales rose 4.7% in the 16 weeks to June 21, beating the 2.9% average estimate of analysts in a Bloomberg survey. Sales volumes were strong, giving Sainsbury’s its highest market share in almost a decade, the company said in a statement Tuesday.

Like rivals, Sainsbury’s is navigating a sudden increase in costs due to the the rise in employers’ national insurance contributions and the minimum wage, both of which came into effect in April. The pressure on retailers — coupled with a period of hot weather that has hurt harvest yields — is pushing up grocery prices with food inflation reaching the highest in more than a year.

The UK’s second-largest grocer reiterated guidance that underlying operating profit from retail will remain about the same as last year at about £1 billion ($1.4 billion). The retailer also said that profits will be weighted more toward the second half of the year.

Shares of Sainsbury’s have risen almost 6% so far this year. The retailer has been price-matching to products at rival Aldi and using promotions linked to its Nectar loyalty card to entice shoppers.

Source: Bloomberg Europe

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Economic

Dealers in Economic Heartland Raise Alarm Over Price Pressures

A coalition of dealer associations across the Yangtze River Delta—encompassing Shanghai and the provinces of Jiangsu, Zhejiang, and Anhui—has issued a rare public appeal to automakers, warning of “severe challenges” to their operations. Representing a region that contributed 23% of China’s domestic auto sales in 2024, the dealers’ message underscores the widening fallout from an unrelenting price war in the world’s largest vehicle market.

The joint statement, published via official WeChat channels, highlights a convergence of stress factors: elevated inventory, chaotic market competition, and increasing risk of capital chain rupture. This marks a growing financial fracture in the dealership sector, which sits downstream in the automotive value chain and often bears the brunt of aggressive discounting campaigns.

Below-Cost Sales Pressure Margins and Violate Competition Principles

Dealers allege that some automakers are enforcing sales at prices below cost—a practice that not only squeezes profitability but also raises legal and regulatory concerns. Although no specific companies were named, the accusation suggests a causal relationship between OEM-imposed pricing strategies and the rising financial distress among dealers.

Such practices may breach China's recently amended Anti-Unfair Competition Law, which explicitly strengthens prohibitions on forced below-cost pricing. The revised law, due to take effect in October, is expected to offer dealers stronger legal grounds to resist coercive pricing measures, although enforcement remains uncertain in the interim.

Inventory Surge and Loan Suspensions Amplify Financial Risk

A key issue raised by the associations is the unsustainable level of vehicle inventory. High stock volumes tie up working capital, burden storage capacity, and increase the risk of depreciation. Compounding this, since June, many consumers in the region have faced sudden suspensions in car loan disbursement—effectively freezing transactions and exacerbating dealer cash flow problems.

This is a direct causal chain: blocked financing delays vehicle deliveries, leading to unsold units accumulating on dealer lots, which in turn strains liquidity and increases the likelihood of capital chain breakdowns. Dealers are caught between falling revenue and mounting financial obligations to suppliers and automakers.

Persistent Price War Defies Regulatory Guidance

The latest outcry follows similar warnings from dealer associations in Henan and Jiangsu, and mirrors broader concerns from suppliers. Despite previous calls from regulators to end aggressive discounting tactics, automakers appear to be continuing deep price cuts in pursuit of market share, even at the cost of profitability and supply chain stability.

This ongoing price war reflects a market that has prioritized volume over sustainability. The strategy, while effective in clearing short-term stock, undermines long-term brand equity and financial viability across the sector. The persistence of this model reveals a correlation between intense market competition and deteriorating financial conditions across the automotive distribution network.

Dealers Propose Market-Based Reforms

In their joint letter, the four associations suggested several reforms aimed at restoring equilibrium. These include allowing dealers to negotiate reasonable inventory ceilings, recalibrating sales targets to reflect actual market absorption capacity, and enhancing coordination between manufacturers and dealers.

Such measures reflect a shift toward a more demand-driven sales model, where dealers play a more active role in balancing supply with regional consumer dynamics. If adopted, these changes could mitigate the misalignment between top-down production quotas and bottom-up retail realities.

The Yangtze Delta dealers’ coordinated appeal signals a deeper malaise within China’s automotive distribution model. With price wars eroding profit margins, and financial stress rising across supply chains, the sector faces growing systemic risk. As the revised anti-unfair competition law looms and consumer financing remains unreliable, both automakers and regulators must address the underlying structural issues—starting with more sustainable pricing, fairer dealer policies, and better demand forecasting. Without strategic realignment, the financial health of one of the world’s most critical automotive markets may continue to deteriorate.

Source: Reuters

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Forex

Factory activity in many Asian economies shrank in June as U.S. tariff uncertainty kept demand low, but signs of modest relief for manufacturers raise the stakes in trade talks with Washington amid the region's gloomy economic recovery prospects.

The underlying softness in private surveys released on Tuesday highlights the challenges facing policymakers as they try to navigate U.S. PresidentDonald Trump'smoves to shake up the global trade order withsweeping tariffs.

Japan's manufacturing activity expanded for the first time in 13 months, and South Korea's activity contracted at a milder pace, private surveys showed on Tuesday.

China's Caixin purchasing managers' index (PMI) also expanded in June due to an increase in new orders, confounding an official survey that showed activity shrinking for a third straight month.

However, stalled trade talks with the United States, prospects of weakening global demand and lacklustre growth in China will likely weigh on Asia's factory activity, analysts say.

"Overall, manufacturing supply and demand recovered in June," said Wang Zhe, economist at Caixin Insight Group on China's PMI.

"However, we must recognise that the external environment remains severe and complex, with increasing uncertainties. The issue of insufficient effective demand at home has yet to be fundamentally resolved," Zhe said.

The Caixin/S&P Global manufacturing PMI rose to 50.4 in June from 48.3 in May, surpassing analysts' expectations in a Reuters poll and the 50-mark that separates growth from contraction.

Japan's final au Jibun Bank PMI rose to 50.1 in June from 49.4 in May due to an upswing in output, but overall demand remained weak as new orders shrank on uncertainty over U.S. tariffs, a private sector survey showed.

Factory activity in South Korea contracted for the fifth straight month in June at 48.7, though the pace of decline eased due to companies' relief over a snap presidential election on June 3 that ended six months of uncertainty.

TRUMP TRADE SHOCK

"Volatility in U.S. tariff policy and economic recovery uncertainty are expected to persist in the second half," South Korean Industry and Trade Minister Ahn Duk-geun said, underscoring the urgency in Seoul to reach a trade deal with the United States.

The comments came after separate June data showed exports from Asia's fourth largest economy rebounded but shipments to the U.S. and China remained weak.

Steep tariffs imposed by Trump have upended global trade and heightened uncertainty for many Asian economies heavily reliant on exports to the U.S. market.

Negotiators from more than a dozen major U.S. trading partners are rushing to reach agreements with Trump's administration by a July 9 deadline to avoid import tariffs jumping to higher levels.

While China is continuing negotiations for a broader trade deal with the U.S., Japan and South Korea have so far failed to gain concessions on tariffs imposed on their mainstay export items like automobiles.

India was a significant outlier in the region, as manufacturing activity accelerated to a 14-month high in June, driven by a substantial rise in international sales that helped spark record-breaking hiring.

The PMI climbed to 58.4 in June from the previous month's 57.6 and in line with a preliminary estimate released last week.

Factory activity in many other countries in Asia shrank.

Indonesia's PMI fell to 46.9 in June from 47.4 in May, while that of Vietnam stood at 48.9 in June, down from 49.8 in the previous month, the private surveys showed.

Malaysia's PMI rose slightly to 49.3 last month, from 48.8 in May, while that of Taiwan dropped to 47.2 in June from 48.6 in the previous month, the surveys showed.

Shivaan Tandon, markets economist, at Capital Economics, said that given the broader weakness in manufacturing in the region, policymakers are likely to focus their attention on reviving growth.

"With worries about growth having taken precedence over those about inflation, we think most central banks in the region will continue to loosen monetary policy and by more than most analysts expect."

Source: TradingView

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Economic

Commodity

Gold Extends Gains as Fed Policy Expectations Shift

Gold prices continued their upward momentum on Tuesday, gaining 0.6% to reach $3,322.64 per ounce during midday trading in Asia. This follows a 0.9% increase on Monday, driven by renewed market conviction that the Federal Reserve will begin cutting interest rates later this year. Traders have increasingly priced in at least two rate cuts for 2025, shifting expectations amid signs of economic fragility and political tension in the U.S.

The link between interest rate expectations and gold is causally well established. Lower interest rates reduce the opportunity cost of holding non-yielding assets like gold, enhancing its relative attractiveness. As expectations for Fed easing grow, so does demand for gold as a defensive asset.

Dollar Weakness Continues to Support Bullion Strength

A critical tailwind for gold has been the prolonged weakness in the U.S. dollar. The Bloomberg Dollar Spot Index slipped another 0.1% on Tuesday, following a 0.5% drop the previous day. The dollar has declined nearly 11% in the first half of 2025—its worst semiannual performance since the adoption of free-floating exchange rates in the early 1970s.

This sustained depreciation directly boosts the appeal of gold priced in dollars, especially for foreign investors. As Commonwealth Bank of Australia analyst Vivek Dhar notes, gold retains significant upside in the short term if the dollar continues to deteriorate.

Geopolitical and Trade Tensions Reinforce Safe-Haven Demand

The broader economic environment continues to reinforce investor preference for safe-haven assets. Gold’s 2025 rally—now exceeding 25% year-to-date—has been bolstered by rising geopolitical risks and trade uncertainty, particularly in light of President Trump’s aggressive fiscal agenda and the looming July 9 tariff deadline.

Concerns over how tariffs and spending measures might reshape the U.S. economic structure have added to the dollar’s decline and contributed to the flight toward traditional portfolio hedges like gold. In this case, the relationship is both causal and psychological: fears of policy instability push capital toward safe, liquid, and historically resilient assets.

Other Precious Metals Show Mixed Movements

While gold remains the centerpiece of investor attention, movements across other precious metals have been more varied. Platinum declined slightly after a historic 29% surge in June, its best monthly performance on record. That rally had been driven by acute supply tightness and robust demand from Chinese jewelry manufacturers and speculative buying from U.S. and Chinese traders.

Silver and palladium, meanwhile, continued to climb, reflecting broader optimism across the precious metals complex. These movements are influenced by both industrial demand cycles and investor sentiment, particularly as volatility in the currency markets reshapes asset allocation strategies globally.

Jobs Report May Serve as Next Major Catalyst

Looking ahead, the U.S. nonfarm payrolls report due Thursday is expected to serve as a key inflection point. A weaker-than-expected labor market print could further depress Treasury yields and elevate the case for near-term rate cuts, offering an additional boost to gold prices. This potential outcome reinforces the reflexive connection between soft economic data and increased demand for gold.

Gold’s recent rally is built on a convergence of falling real yields, a weakening U.S. dollar, and heightened geopolitical and trade-related risks. As long as the Federal Reserve appears poised to ease monetary policy and the U.S. dollar remains under pressure, gold is likely to maintain its strength. With bullion now trading less than $200 below April’s record high, the path forward will be shaped by incoming economic data and the trajectory of U.S. trade policy. If current trends hold, gold may soon test new highs.

Source: Bloomberg

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Forex

A review of South Africa’s inflation target by the National Treasury and the nation’s central bank is close to completion, Governor Lesetja Kganyago said.

“It should be very soon that it’s finalized,” Kganyago said in an interview with Bloomberg Television on Tuesday on the sidelines of a European Central Bank forum in Sintra, Portugal. “Our teams have been working very hard, they are fine-tuning the final details and they’ll make their recommendations to the minister and the governor.”

The central bank’s inflation target, which was adopted in 2000 and hasn’t been reviewed since, is currently under review by teams from the SARB and Treasury. That technical work is nearly and they will present recommendations soon to Kganyago and Finance Minister Enoch Godongwana, the SARB said in its annual report on Monday.

“We have impressed on the team — there is an opportunity right now of using opportunistic inflation and that the sooner we finalise that the better,” Kganyago said.