The Chinese balloon was the main story of the weekend. At least, that was what social media thought. While the US claims that it contains spy equipment, China claims that it was a weather balloon which went off course. The incident provides plenty of political fodder for Washington and Beijing and has increased tensions. The US Secretary Of State Blinken stopped a US trip to China as a first step.
Depending on how you perceive it, the incident was both amusing and alarming. What does it all mean for the market? What can we do here?
Is there more to chips than chips?
Even before the balloon fell, advanced semiconductors were being discussed. The US, Japan, and the Netherlands recently agreed to new restrictions on the supply of technology to China to make advanced semiconductors. A large amount of chips would be required to gather, process, and transmit information by a spy balloon.
The primary reason for shooting down the balloon to retrieve the payload was not known. Analyzing the contents of the balloon could reveal the type of chips used and whether they were supplied by the US, or other allies. This could result in another round export bans, especially on advanced chips .
