FirstFT: Investors raise concerns over Arm’s exposure to China

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Good morning. Prospective investors in Arm’s initial public offering are sounding the alarm over the UK chip designer’s exposure to China after the company warned of “significant risks” in the country.

Managers at four separate funds considering an investment in Arm told the FT that the prospectus for the planned listing on Nasdaq in September confirmed some of their fears about the global semiconductor industry amid souring relations between Washington and Beijing.

Arm revealed in its IPO filing on Monday that it made a quarter of its revenues from China and warned that it was “particularly susceptible” to economic and political risks, including tensions between China and the US or UK.

“When you read through the risks that Arm has flagged here, it seems a lot for an investor to digest,” said one institutional investor, who added that they had yet to decide whether to invest in the IPO. Read the full story.

• US-China news: Jake Sullivan, the US national security adviser, has called on China to be more transparent about the state of its economy as Beijing grapples with a slowdown that poses risks to global growth.

Here’s what else I’m keeping tabs on today:

• Results: Trillion-dollar AI chipmaker Nvidia reports its highly anticipated second-quarter earnings, after stunning Wall Street in May with a revenue forecast that smashed expectations. FT Alphaville explains why hedge funds will be praying for another blockbuster quarter.

• Space exploration: India’s Chandrayaan-3 is scheduled to become the first spacecraft to land on the South Pole of the Moon. Russia’s attempt to land there failed on Sunday after its unmanned vehicle crashed into the Moon’s surface.

• Economic data: Singapore publishes its consumer price index for July.

Five more top stories

1. Thailand’s former prime minister Thaksin Shinawatra has returned from exile to face a jail sentence, as parliament picked a candidate from his Pheu Thai party as the country’s next leader. The choice of Srettha Thavisin as prime minister ends almost a decade of military leadership, but comes after the progressive Move Forward party, which won May’s general election, was locked out of power by Thailand’s conservative military-royalist establishment. Read more on Pheu Thai’s wager to reclaim power.

2. Japan is to begin releasing radioactive water from the crippled Fukushima Daiichi nuclear plant on Thursday, prompting China to warn it would take “all steps necessary” to protect food safety and Hong Kong to ban some Japanese seafood imports. More than 1mn tonnes of treated water will be discharged from the plant, a process that is expected to take decades. Here’s how the region is responding to the contentious plan.

3. The leaders of South Africa and China said they had found common ground on expanding Brics, as a summit of the emerging market bloc began in Johannesburg. Beijing is pushing to add weight to the group as a rival to the G7, but member countries Brazil and India are sceptical of expansion on terms that would dilute their influence and embellish China’s claim to lead the developing world. The FT’s Joseph Cotterill reports from the summit.

4. China’s smaller than expected cuts to core interest rates on Monday highlighted a dilemma for Beijing: how to balance any desire to stimulate the stuttering economy — by reducing borrowing costs — with the need to preserve the stability of China’s $56tn banking system and support its weakening currency. Our report sheds light on Beijing’s surprisingly modest action on lending rates.

5. Britain and India will this week intensify trade talks in a bid to remove “significant” barriers to a deal before Rishi Sunak, UK prime minister, and Narendra Modi, his Indian counterpart, meet in New Delhi next month. Read more on the prospect of a UK-India trade deal.

The Big Read

With feelgood clichés such as “harmony between man and nature” and “benefits for all”, a speech by China’s leader at the UN in 2021 was widely ignored by international media. But Xi Jinping’s remarks have since taken on crucial significance through his Global Development Initiative, now gaining recognition as a foundation stone in China’s blueprint for an alternative world order.

We’re also reading .

Chart of the day

Indian wealth managers are targeting a new class of entrepreneurs making fortunes in everything from masala factories to hospitals as the economy grows. Between 2020 and 2021, the number of Indian millionaires grew from 689,000 to 796,000, according to Credit Suisse, with smaller cities also spawning their own millionaire’s rows.

Take a break from the news

FT airman-columnist Mark Vanhoenacker explains how pilots deal with multiple concepts of speed — and why today’s airliners are no quicker than those 60 years ago. Read Vanhoenacker’s fascinating View from the Cockpit column.

Additional contributions from Tee Zhuo and Leah Quinn