Carbon market agreement at COP29 | Asia IPO surge sparks hopes of stronger 2025 | China increases local government debt swap
World leaders convened this week in Baku, Azerbaijan, for the COP29 climate summit. Dubbed the ‘Finance COP’, the conference’s goal is to agree how to support developing countries with climate-related costs. Donald Trump’s US presidential election victory last week looms heavily over the event and big names such as current US president Joe Biden and key European leaders have not attended. But climate negotiators secured a breakthrough on day one of the summit by agreeing on rules for a United Nations-administered global carbon market.?
In Saudi Arabia, a new artificial intelligence project with backing of as much as $100 billion is in the works as the kingdom seeks to develop a technological hub to rival the United Arab Emirates. Saudi Arabia’s Public Investment Fund (PIF) has also signed a deal with the Hong Kong Monetary Authority (HKMA) to anchor a new US$1 billion investment fund.??
Asian bankers think that a surge in IPO volumes in some markets this year – notably Hong Kong – could signal a stronger year for equity deals overall in 2025. Meanwhile, in China the National People’s Congress Standing Committee announced a six trillion yuan (US$840 billion) increase to a debt swap programme that is aimed at easing the burden of local government debt.??
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COP29 negotiators agree on global carbon market mechanism?
Climate negotiators secured a breakthrough on day one of the COP29 climate summit by agreeing on rules for a United Nations-administered global carbon market. Proponents argue the new market will form the gold standard for emissions trading, unlocking billions in finance for emissions mitigation projects in the developing world. Paying for credits from projects that cut pollution would help buyers meet their climate goals. COP29 President Mukhtar Babayev said that such markets could reduce the cost of implementing nationally determined contributions by US$250 billion dollars a year. Climate groups, however, were hesitant in welcoming the new rules, which they said still had “significant issues”, such as how projects would tackle the risk of stored carbon leaking back into the atmosphere.?
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Saudis plan AI powerhouse to rival UAE tech hub?
Saudi Arabia is planning a new artificial intelligence (AI) project with backing of as much as US$100 billion as it seeks to develop a technological hub to rival the United Arab Emirates. The state-backed entity will invest in data centres, startups and other infrastructure to support the kingdom’s efforts to emerge as an AI hub. An existing partnership between Google and Saudi Arabia’s Public Investment Fund (PIF) may act as a starting point for the broader push. The project will also focus on recruiting new talent to the kingdom, developing the local ecosystem and encouraging tech companies to put resources in the country.??
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Hong Kong-Saudi deal agreed for new US$1bn investment fund?
The Hong Kong Monetary Authority (HKMA) has signed a deal with Saudi Arabia’s PIF to anchor a US$1 billion investment fund in another sign of a growing financial relationship between the Middle East and Hong Kong. The fund, which will support businesses in Hong Kong and the Greater Bay Area, expects to provide a platform for companies to internationalise their businesses and offer access to attractive investment opportunities in Saudi Arabia, especially to those in manufacturing, renewables, fintech, and healthcare.???
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Asia bankers see signs of recovery as Hong Kong IPOs pick up?
Hong Kong IPOs have raised about US$9 billion so far this year, a big increase from 2023’s level of US$5.6 billion – which was the lowest annual total since 2001.?More Chinese firms are considering flotations in Hong Kong as the benchmark Hang Seng Index heads for its first annual gain since 2019. India has already notched up a record year for funds raised in share sales, with more planned, while blockbuster deals are also lighting up Tokyo’s stock market. The overall value of Asian equity capital markets deals may still drop this year compared to 2023, but dealmakers are optimistic that 2025 will show an improvement if Hong Kong continues to pick up.?
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China increases debt swap to ease local government pain?
China’s National People's Congress Standing Committee said it will add six trillion yuan (US$840 billion) to the amount that local governments can raise through special bond sales to replace debt built up by local government financing vehicles (LGFVs). The increase brings the total value of the programme to 10 trillion yuan (US$1.4 trillion) and marks another step in attempts to reinvigorate the world’s second-largest economy. The measure was signed off in the wake of Donald Trump’s US presidential election victory last week, which has raised the threat of higher tariffs in the future. However, the readout of the National People’s Congress Standing Committee meeting did not address other stimulus policies targeted toward the property market or consumer spending, measures that many investors have been hoping for.?
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