Core Viewpoint - The price gap between TSMC's American Depositary Receipts (ADR) and its shares listed in Taipei has surged to the highest level in over 16 years, raising concerns about a potential overheating in the AI market [1][2] Group 1: Price Discrepancy - TSMC's ADR in July had a premium of 24% compared to its local shares, up from 17% in April and significantly higher than the 10-year average of 7.4% [1] - The current price difference is the largest since April 2009, indicating a significant divergence in market perception between the U.S. and Taiwan [1] Group 2: Market Dynamics - The increase in ADR premium is attributed to heightened investor interest in TSMC's role in the global AI supply chain, leading to increased demand for its ADRs in the U.S. market [1] - The supply of ADRs is relatively fixed, with limited room for new issuances and more challenging conversion processes, which has contributed to the widening premium [1] Group 3: Investment Trends - Since the release of ChatGPT in 2022, TSMC's ADR has risen over 190%, while its Taipei-listed shares have increased by less than 140% [2] - Foreign ownership of TSMC's local shares has risen to nearly 74%, still below the historical high of 80% recorded in 2017 [2] Group 4: Cautionary Signals - Market observers, including Owen Lamont from Acadian Asset Management, suggest that the expanding price gap may signal caution, as excessive premiums for popular tech companies' ADRs relative to local stocks often indicate market bubbles [2]

Group 1 - Emerging market currencies and stocks have declined due to escalating tensions in the Middle East and the upcoming Federal Reserve interest rate decision, with indices dropping over 0.4% before narrowing to a 0.1% decline at close [1] - The South African rand, Hungarian forint, and South Korean won were among the worst performers, each depreciating over 1% against the US dollar, while the Israeli shekel dropped as much as 0.8% before recovering [1] - The market is under pressure from risk aversion due to geopolitical tensions and uncertainty surrounding the Federal Reserve's decisions [1][3] Group 2 - Despite recent declines, fund managers believe that the strong performance of emerging markets relative to US assets will continue, as the risks from the conflict are not expected to be deep or prolonged [4] - Emerging markets are expected to outperform other markets in macroeconomic growth this year and next, with international investors recognizing the need to diversify their investments [7]

Core Viewpoint - The tariffs imposed by the Trump administration on imported aluminum have failed to revive domestic aluminum production, leading to increased costs for American consumers and closures of local smelters instead of restarts [1][6]. Group 1: Impact of Tariffs - The 25% aluminum tariff has significantly affected the physical market, with regional delivery premiums reflecting the tariff costs, despite the London Metal Exchange providing benchmark aluminum prices [1]. - European aluminum premiums have decreased by over 30% year-on-year, highlighting the price disparity caused by U.S. trade policies [5]. - The CFO of Norsk Hydro indicated that the costs from tariffs will ultimately be passed on to downstream users, likely resulting in higher prices for American consumers [5]. Group 2: Energy Costs and Production Challenges - High energy costs, particularly electricity prices in the U.S., are a major barrier to the revival of the energy-intensive primary aluminum smelting industry [6]. - The cost of electricity for aluminum production in the U.S. is approximately $550 per ton, significantly higher than Canada’s $290 per ton, which hampers competitiveness [6]. - Recent industry developments include the permanent closure of Alcoa's Intalco smelter due to a lack of competitive power supply, and Century Aluminum temporarily idling its smelter in Kentucky due to soaring energy costs [9]. Group 3: Market Dynamics and Price Effects - The tariffs have led to a restructuring of trade flows, with Canadian producers shifting to European markets in response to U.S. tariffs, which has allowed European metals to fill the gap in U.S. demand [10]. - The increase in Midwest aluminum premiums due to tariffs has also raised scrap aluminum prices, indirectly passing costs onto downstream customers [10]. - The construction sector, which is experiencing weak demand, is particularly affected, as the rising costs are reflected in the performance guidance of companies like Hydro, indicating a soft spot in their extrusion products segment [10].