Market View: Shipping Beats Chips, Meta’s AI Hardware Blitz, Palantir’s Comeback & a StarHub-M1 Deal?

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Michelle Martin (0:21)

Is this my second last show? It is my second last show. I will not be with you tomorrow. I will be back on Monday, and then bon voyage. I am a Reuters Institute. I will be on a fellowship for journalism over at University of Oxford from next week onwards. So, all right, it is now time for Market View. And I'm going to start with shipping. I was recently hosting a supply chain summit, and a very interesting question came our way about whether shippers were dislocated from the sort of technological change that is transforming the supply chain industry. And we're talking warehousing, logistics, transport. Are shippers sort of outside that? And it's interesting because it's a perspective that I've heard as well that shippers are so big and so...

there's so many legacy systems that they don't have to change. But there's a lot of debate there, okay, whether or not shippers are happy with paper and doing things the way they always have, or whether shippers are changing as well and have to have, you know, in order to meet the world with greater resiliency given the geopolitical challenges that have been thrown their way. So anyway, I wanted to start in the world of shipping. The market buzz is still dominated by AI, but one of Asia's strongest trades this quarter has been something that is quite old economy, shipping. A Goldman Sachs gauge of Asian shipping stocks is up about 17% this quarter, while the semiconductor index has fallen 18%.

TS Lines has surged about 75% over the past three months. SITC International surged about 50%. Japan's Mitsui OSK Lines more than 30%.

Behind the rally, freight rates. The Shanghai containerized freight index has risen for eight consecutive weeks to its highest level since July 2024, as disruption in the Red Sea and Straits of Hormuz constraints vessel supply. Now, you add on port congestion, you add on typhoons in Asia, and the pre-Golden Week shipping in the Russian, the capacity is getting tighter. So AI has commanded our attention, but shipping is outperforming chips in Asia this quarter. Question is, is this simply a geopolitical trade, or are the fundamentals pretty strong to sustain it? And what exactly are investors buying here? Is this higher freight rates? Is this constraint capacity stronger than expected demand? All three Jeffreys has raised earnings forecasts and price targets for Japanese shipping names, including Nippon Yessin, Kawasaki Kisen, Mitsui OSK.

Have earnings expectations caught up with freight rates yet, or could there still be upgrades ahead? And the obvious risk is peace, right? If there's a diplomatic breakthrough involving Iran, and shipping rates normalize, how quickly could freight rates and shipping valuations reverse? Now for investors, if you missed the enormous moves in TS Lines, SITC and Mitsui OSK, are you chasing if you're buying shipping now? Those are just some considerations as we see shipping stocks eclipse chips here in Asia as freight rates jump. I just ran through your Goldman Sachs gauge of Asia shipping, which has climbed 17% this quarter, compare that with the index of semiconductor stocks which fell 18% during the same period. Next, let's look at Meta, which appears to be making a much bigger bet than simply buying an AI chatbot. It wants Muse to follow you across devices. Now, over at MetaConnect, Mark Zuckerberg unveiled a striking hardware lineup, a $349 camera-free Ray-Ban Meta Audio Glass, a new VR glasses weighing around 100 grams costing $1,299 and Muse Charm. What's Muse Charm? A palm-sized device designed to give users quick access to Meta's AI agent on the go. Meta says it expects to offer more than 100 AI glass options by the end of the year. Now, is Meta essentially trying to build a post-smartphone computing platform before Apple or anyone else gets here? I think so. Zuckerberg is putting Muse into glasses, is putting Muse into VR, even palm-sized devices. It wants to make Muse ubiquitous, but consumers have to buy all this hardware. The $1,299 VR glasses weighs about 100 grams, so they're trying to solve the form factor problem, and this is important for adoption. The camera-free Ray-Bans are interesting. Why is Meta acknowledging that privacy concerns could become a serious barrier to mainstream smart glasses adoption? So this on the back of news that Meta has debuted $349 camera-free Ray-Bans and is bringing Muse, its assistant, virtual assistant, to glasses. That's right. So, broadly, they're expanding their smart glass line up, right? And this is the first pair of Ray-Ban glasses. They're called Ray-Ban Meta Audio, and they do not have cameras on them. So the new focus is on audio, and it gives Meta a way to revisit a category that has sparked outcry over privacy issues. There's so many concerns out there that if they did put cameras in their smart glasses, then you could have Ray-Bans recording people without their knowledge, without their consent.