HK expects revival of stock market on tech and healthcare IPOs, increased risks for shadow banking in S. Korea
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Tech and healthcare listings are expected to revitalise Hong Kong’s slow IPO market: IPO applications increased by 23% year-on-year in the first quarter, according to Nikkei Asia. But risks are increasing in South Korea’s shadow banking sector as delinquencies rise amid a property sector downturn, Bloomberg reports, while the Bank of Japan considers intervention to stabilise the falling yen.?
In climate finance, a new report has revealed that over half of Asia's stock market value is tied to companies vulnerable to nature-related risks like deforestation. An alliance of asset owners representing $9.5 trillion of?assets is also calling for greater accountability from private markets players amidst rising private credit deals in fossil fuels.?
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?Tech, healthcare IPO aspirants to overturn HK's subdued stock market?
The Hong Kong stock market is witnessing a surge in initial public offerings (IPOs), especially from tech, healthcare, and retail sectors, potentially reversing a recent downtrend. In Q1, 64 IPO applications were submitted, up 23% from last year, with 29 from new candidates, a 93% rise. Notable applicants include Horizon Robotics and Zongmu Technology, both in autonomous driving. The trend reflects investor optimism in AI and new energy vehicles amid dwindling private market liquidity. These IPOs signal a shift towards tech as a growth area for Hong Kong, aiming to revitalize the market after years of sluggish activity. Despite optimism, projected IPO proceeds for 2024 are expected to be lower than peak years, influenced by interest rates and the mainland Chinese economy's performance.?
BOJ to discuss impact of yen's rapid slide at this week's policy meeting?
The Bank of Japan's upcoming meeting will likely focus on the impact of the yen's depreciation on inflation, following recent speculation on the timing of rate hikes. Despite pressure from a weakening yen, most analysts don't anticipate policy adjustments at this meeting. The BOJ is monitoring core inflation and wage-price dynamics before considering further rate hikes. It plans to release its economic outlook, including forecasts for core inflation, while discussions may touch upon adjustments to its asset purchase program. While Governor Kazuo Ueda signals a return to "normal" monetary policy, the BOJ remains cautious about reducing its bond purchases without a clear timeline.?
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?Shadow banking stress in South Korea sends warning to global investors?
South Korea is facing escalating risks in its shadow banking sector, particularly due to real estate market strains and rising delinquency rates. With a record-high shadow-bank financing to real estate, concerns are mounting over a potential economic fallout. While policymakers are aiming to contain risks through measures like loan guarantees, restructuring announcements by firms like Taeyoung Engineering highlight underlying threats. Despite efforts to stabilize the situation, the specter of property market downturns looms large, potentially impacting smaller financial institutions. Overseas investments in commercial real estate add another layer of vulnerability.?
?Investors spot new risk in firms worth half Asia market value?
A new report reveals that over half of Asia's stock market value is tied to companies vulnerable to nature-related risks like deforestation and species loss. Sectors in New Zealand, Taiwan, and South Korea are particularly exposed. Investor awareness has grown since the COP15 biodiversity summit in 2022, prompting collaborations to address these risks. Government regulations, such as the EU's ban on imports from newly deforested land, have spurred investor attention. Manulife Investment Management has adjusted its fixed-income portfolio due to deforestation and biodiversity risks, prioritizing investments in companies with better practices. As regulations evolve, investors are focusing on financially material risks like supply chain disruptions and revenue loss.?
A $9.5 trillion investor group wants private market reforms?
Global ESG investors managing $9.5 trillion are calling for greater accountability from private markets amid concerns about the absorption of fossil fuel assets. The Net Zero Asset Owner Alliance, comprising 89 members including CalPERS, Zurich Insurance, and Munich Re, is expanding its protocol to include all private asset classes. The rise in private credit deals in the oil and gas industry, reaching $9 billion in the past 24 months, has raised concerns among investors about investment performance and engagement efforts. Under the updated protocol, alliance members have committed to target emission cuts of 40% to 60% by 2030 compared to 2019 levels, without the use of carbon credits until the next decade.?
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