Nikkei hits all-time high, China unveils GDP growth target for 2024 and private credit firms go for the gold in Asia
Welcome to this week’s edition of? Trending ?by Ashbury, which brings you the news that matters most on Asia, sustainability, technology and financial markets - in your inbox, every Wednesday.
Japan’s rally continues to make headlines this week as the Nikkei reached a 35-year high led by gains in semiconductor stocks. The exchange closed at a record 40,000 points on Monday, reflecting investor confidence in the ongoing AI boom. South Korean regulators took a page from Japan’s book in introducing a plan to end the Korea discount. However, market participants are not convinced, and are calling for more meaningful reforms.?
In China, the ‘national team’ comprising state-backed entities have invested approximately $57 billion into local ETFs this year to bolster the stock market, according to UBS. China has also set a GDP growth target of around five per cent for 2024, and announced a plan to issue ‘ultra long’ treasury bonds. In a roadblock for US chip companies aiming to redesign AI chips for the China market in wake of US export restrictions, Washington has barred AMD from exporting lower-level chips to China.?Nvidia faces similar constraints.??
According to a Bloomberg survey, some private credit asset managers in Asia expect the market – which accounts for less than six per cent of $1.7 trillion of global assets under management – to grow by more than 10%. Managers are increasingly focusing on performing rather than distressed loans, Bloomberg reported.?
We’re also reading:?
Private credit firms see more Asia growth as banks retreat?
Major private credit firms anticipate a surge in lending in the Asia-Pacific region in 2024, focusing on higher-quality borrowers rather than distressed cases. With banks reducing their financing support, the $1.7 trillion global private credit market is gaining traction, offering attractive returns. Although the Asia-Pacific share of assets is comparatively small, its growth rate surpasses other regions. Anticipated factors driving demand include mergers and acquisitions, demographic shifts, and increased household spending. Despite concerns about China's economic slowdown and geopolitical tensions, private credit firms remain optimistic about opportunities in the region.?
South Korea’s plans to boost stock market disappoints investors?
The South Korean financial regulator's plan to boost the stock market disappointed investors with its lack of concrete changes, failing to address the root cause of the "Korea discount" phenomenon: high inheritance tax favoring conglomerates. While the Corporate Value-up Program mirrors Japan's approach, it offers vague incentives, leaving investors wanting meaningful reforms, particularly concerning tax benefits and minority shareholder rights. Complex ownership structures and high inheritance tax contribute to South Korean companies' low valuations, posing challenges in gaining corporate participation and legislative approval for tax incentives. Despite skepticism, hopes remain for market growth through comprehensive reforms post-elections.?
China ‘national team’ ETF buying reaches $57bn this year, says UBS?
China’s state-backed financial entities, known as the "national team," have invested approximately Rmb410bn ($57bn) into local equities exchange traded funds (ETFs) this year, according to UBS estimates. The majority of these investments have been directed towards ETFs tracking the CSI 300 Index. Central Huijin Investment, a key player in the national team, along with other state-backed asset managers and insurers, aims to bolster China's stock market. This move aligns with recent efforts by policymakers to stabilize the market through increased long-term capital inflows and measures to enhance investment value.?
领英推荐
?China sets GDP 2024 target of ‘around 5%,’ plans to issue ‘ultra-long’ special bonds for major projects?
China has set a growth target of "around 5%" for 2024 and announced the issuance of "ultra-long" special bonds for major projects. Premier Li Qiang also pledged to remove restrictions for foreign investment in manufacturing. The deficit-to-GDP ratio for the year is set at 3%, down from a recent revision to 3.8%. Beijing will issue 1 trillion yuan in "ultra-long" special treasury bonds and 3.9 trillion yuan of special-purpose bonds for local governments. The plan emphasizes proactive fiscal policy enhancement and strategic infrastructure construction support. The goals were outlined during the National People’s Congress annual meeting in Beijing.?
?Japan's Nikkei average closes above 40,000, led by booming chip stocks?
On Monday, Japan's Nikkei Stock Average surged to 40,000, propelled by semiconductor stocks amid anticipation of increased demand for generative artificial intelligence. While semiconductor-related stocks like Tokyo Electron and Advantest soared, large-cap stocks such as Fast Retailing and Toyota Motor dipped. The rally reflects investor confidence in the ongoing artificial intelligence boom driving semiconductor spending. Foreign investors have contributed to the market surge, drawn by governance reforms and tax-deferred investment programs like NISA. Analysts suggest the market isn't overheated, citing companies' expected record profits and a moderate price-to-earnings ratio. Wage negotiations and continued shareholder-friendly policies are seen as key indicators of Japan's economic strength.?
?AMD hits roadblock in selling AI chip tailored for China?
US officials have informed Advanced Micro Devices Inc. (AMD) that its AI chip tailored for the Chinese market requires a license due to its strength, escalating Washington's export restrictions on advanced technologies. Despite being designed for lower performance in China, AMD's chip still necessitates a license from the Commerce Department. Similar constraints have affected California-based Nvidia Corp., prompting both companies to adjust their chip designs to comply with US regulations. The move reflects US efforts to limit China's access to cutting-edge semiconductors amid geopolitical concerns. While leading Chinese tech firms have stockpiled chips, Huawei is developing its own AI semiconductors to counter the US ban's impact.?
For more forward thinking about finance in Asia brought to you by expert contributors from across the financial community, visit us at realise.asia.
Hello there! Your thoughts immediately reminded me of what Steve Jobs once said, embrace what you love and don't settle - As Steve Jobs brilliantly put it, your work is going to fill a large part of your life, and the only way to be truly satisfied is to do what you believe is great work ?? Keep reaching for greatness in all you do! ???