Here is a look at some of the most significant global happenings, ranging from OpenAI’s current fundraising round to China’s persistently low manufacturing activity.
On September 30, Japan’s benchmark Nikkei 225 index dived 4%, as investors reacted to recent Liberal Democratic Party election results. Prior to October 31, China’s central bank declared that banks would lower mortgage rates. In related news, OpenAI, creator of ChatGPT, is reportedly on track to lose nearly billion this year, despite a projected revenue of .7 billion. All this and more is covered in the September 30 edition of World Street.
Making waves
As investors processed Shigeru Ishiba’s victory in last Friday’s Liberal Democratic Party elections, which positioned him to succeed Fumio Kishida as prime minister of Japan, the Nikkei 225 index plummeted 4% today. Given that Ishiba has previously criticized the Bank of Japan’s soft monetary policies, his triumph has alarmed investors. But to allay market concerns over the weekend, he took on a more lenient tone, stressing that monetary policy “must remain accommodative” in light of Japan’s economic circumstances.
Feeling of relief
As part of larger attempts to stabilize the faltering real estate market amid a weakening economy, China’s central bank said on Sunday that it would direct banks to decrease mortgage rates for current home loans by October 31. This information was published by Reuters. It is anticipated that commercial banks will gradually lower interest rates until they are at least 30 basis points less than the Loan Prime Rate (LPR), which is the benchmark rate set by the central bank for mortgages. Mortgage rates are predicted to drop by an average of 50 basis points as a result of the reduction.
Crisis call
Despite making $3.7 billion in sales this year, OpenAI, the company that created ChatGPT, is expected to lose almost $5 billion, according to The New York Times. OpenAI generated $300 million in income in just the last month, a startling 1,700% increase from the beginning of the year. The report states that the corporation expects sales of $11.6 billion in the upcoming year.
The New York Times reports that a financial expert who examined OpenAI’s documentation conducted an analysis and found that the company’s high operating costs, including payroll and office rent, are the main causes of the $5 billion in losses expected this year. Even with its remarkable growth in revenue, the company’s financial shortfall is largely caused by these operational expenditures.
The battles go on
September saw a fifth consecutive month of declines in manufacturing activity in China, highlighting the continued difficulties in spurring growth in the second-largest economy in the world. According to the National Bureau of Statistics, the official manufacturing Purchasing Managers’ Index (PMI) for the month was 49.8, up from 49.1, 49.4, and 49.5 in August, July, and June. Although the number was somewhat higher than the 49.5 predicted by Reuters-surveyed analysts, it is still below the 50-point threshold, indicating that industrial activity is still contracting.
Financial matters
The Wall Street Journal reported on Friday that Apple had ended talks to take part in an OpenAI funding round that was projected to raise about $6.5 billion. The story, which cites sources, adds that Apple reportedly pulled out of the negotiations, with the round scheduled to end next week. Nonetheless, negotiations about participation have been held by other major tech companies such as Microsoft and Nvidia. Microsoft is reportedly preparing to contribute approximately $1 billion, increasing its previous $13 billion investment in OpenAI.
Relying on money
The government of Australia declared on Sunday that it has achieved its second consecutive year of budget surplus, amounting to $10.91 billion (A$15.8 billion) for the year ending in June 2024. This surplus follows Australia’s first budget surplus in 15 years, A$22.1 billion for the previous fiscal year, and surpasses the A$9.3 billion estimate made in May.
The surplus is said to be the result of reduced government spending at a time when Australians are spending more on necessities like healthcare as a result of high mortgage rates and inflation. The surplus is a “key part of our plan to take pressure off inflation while providing relief to families under financial strain,” as stated by Finance Minister Katy Gallagher.
