Proposed Honda-Nissan merger could change auto industry landscape – Asia Times

Honda and Nissan are expected to begin negotiations on a consolidation next year, which will mark a turning point for the Japanese automobile industry. The two organizations, both of which have been overtaken by BYD and which, combined, buy fewer than three-quarters as some vehicles as Toyota, wish to step a healing by combining their technologies and achieving greater economies of scale.

However, the strategy appears to be a tribute to Japan Inc’s reduction of twilight business in the past and a knee-jerk nationalist response to Foxconn’s desire to acquire a stake in Nissan, or even to take over it. Foxconn is the global manufacturer of Taiwan’s Hon Hai Precision Industry.

The investment market’s decision came quickly and clearly. The proposed merger was headline news on the morning of Wednesday, December 18, by the time the market closed, Honda’s stock price was down 3 %, while Nissan’s was up 24 %. Put into words, this is a loan: a fortune for Nissan, terrible news for Honda’s owners. The stock price of Renault, which owns 17.0 % of Nissan directly and 18.7 % through a trust, was up 5 %. Hon Hai’s was down 1 %.

Toyota, Tesla, and BYD have all fallen way behind Honda and Nissan, both of whom were market leaders in the past, in the market for electric and hybrid vehicles. According to information for the three weeks to September, BYD is the sixth-largest manufacturer in terms of vehicle sales, trailing only Honda and Ford. Perhaps even more humiliating, Chinese automaker Geely ( which owns Volvo ) overtook Nissan to rank ninth.

Of program, the consolidation is pitched as forth looking. The two businesses will discuss a merger, according to NikkeiAsia, the English-language type of Japan’s major business regularly,” to better engage against Tesla and Chinese electric vehicle makers in a rapidly changing automotive industry.” According to The Financial Times, Nikkei owns the two businesses, “are in exploratory discussions about a merger of the two carmakers that would create a$ 52 billion Japanese behemoth.”

However, the Japanese language Nikkei’s title for Thursday morning read,” Hon Hai order, sense of problems.” Honda, which had begun discussing a” proper relationship” with Nissan next March, said it would withdraw if Nissan tied up with Hon Hai.

Hon Hai is expanding its electric car company, adding pressure to Honda and Nissan. In 2020, it established the Freedom in Harmony ( MIH) Consortium in hopes of becoming the “android structure of the Vehicle business” and” creating a’ software-defined’ available ecosystem for the Vehicle manufacturing business”. Additionally, Hon Hai and Taiwanese manufacturer Yulon work together to create electronic vehicles under their own design.

The MIH Consortium, which develops guide patterns and open requirements, now has more than 2, 700 people, including more than 100 in Japan. Jun Seki, the CEO of Dongfeng Nissan ( Nissan’s joint venture with Dongfeng Motor in China ), the CEO of Japanese automaker Nidec, and most recently, the CEO of Hon Hai’s electric vehicle operations, is the head of the company.

Seki apparently sees possible synergies with Nissan, which launched its founding electric car, the Nissan LEAF, in 2010, and is said to be interested in acquiring Renault’s communicate of Nissan.

Renault has been backing away from its alliance with Nissan and Mitsubishi Motors, while Honda and Nissan are considering bringing Mitsubishi Motors into a novel, all-Japanese, three-way ally. After cutting back on the production of gasoline-powered cars, this alliance would be no more than 80 % the size of Toyota today, but probably no more than 70 % as large. Despite this, it may conceivably be comparable to the size of the Hyundai Motor Group, which presently leads Toyota and Volkswagen in terms of size.

Note that only three of the world’s top 10 automakers reported year-on-year unit sales increases in the three months to September 2024: BYD ( 38 % ), Geely ( 20 % ) and Ford ( 1 % ). The others reported single-digit declines, except for GM (-13 % ) and Honda (-12 % ). On current trends, BYD perhaps soon beat GM and Stellantis, while Geely catches up with Honda.

Asia Times Chart. Data from motor1.com

Nissan’s overall product sales decreased by only 3 % in the previous quarter, but both sales and prices dropped in China. As a result, the bank’s online income dropped by more than 90 % in the first quarter of this fiscal year, which ends in March 2025. Honda’s online profit was over 20 % in the same time, for the same purpose.

Honda also needs a self-driving car alternative after failing to work with GM on its Cruise robotaxi next week, leaving Honda in the dark. Cruise and GM had a lot in mind when they were planning to visit Tokyo in 2026.

The solution may already be in the works. At the beginning of August, Honda and Nissan announced plans to do joint study into next-generation software-defined cars, autonomous driving and AI, as well as chargers, power paying, and electric car engine and transmission systems (e-axles ). With time, this could lead to self-driving taxis.

Honda intends to follow Toyota and BYD into the passenger car market, where they are already the most popular brand.

Although it is easy to be cynical about these developments, we need to remember that Toyota’s commitment to hybrid vehicles was criticized for years by those who believed pure electric, battery-powered vehicles were the future’s car of the future. They were wrong, and those who are skeptical of the Honda-Nissan merger may also be mistaken. But fighting back against Toyota, Hyundai, BYD, Geely and other aggressive competitors won’t be easy.

Follow this writer on&nbsp, X: @ScottFo83517667

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Musk’s DOGE could protect Asia from Trump’s tariffs – Asia Times

Elon Musk, the driving force behind Tesla and SpaceX, has consistently disrupted traditional industries with his relentless focus on innovation, efficiency and radical change. 

Now, as co-head of the newly established Department of Government Efficiency (DOGE) in Donald Trump’s incoming administration, Musk is poised to reshape not just the US government but potentially the global economic landscape. 

While the overarching goal of DOGE is to cut bureaucratic waste and streamline public services, Musk’s involvement signals a more ambitious agenda: a fundamental rethinking of how technology and government intersect, with significant implications for Asia’s economies.

The world’s richest man’s influence in the new administration is not merely symbolic. His reputation as a disruptor suggests he will bring a Silicon Valley mindset to Washington, advocating for aggressive digitization, automation and the adoption of emerging technologies across government operations. 

This approach, however, is far from straightforward, especially when viewed through the lens of Trump’s threatened new tariffs. These protectionist measures, designed to bolster domestic industries, add a layer of complexity to Musk’s efficiency mission. 

For Asian economies, which are deeply integrated into global supply chains and heavily reliant on trade with the US, the combination of Musk’s efficiency drive and Trump’s tariffs presents both risks and opportunities.

One of the immediate effects of Musk’s leadership within DOGE could be the acceleration of technological adoption in areas like customs and border control. 

Streamlined processes powered by artificial intelligence and blockchain could reduce administrative bottlenecks, making trade faster and more transparent. This would be a welcome development for exporters across Asia, particularly in countries like South Korea, Japan, and Vietnam, where delays and inefficiencies often add significant costs. 

But these procedural improvements may be offset by the financial burden of higher tariffs, particularly in key sectors such as electronics, automotive parts and machinery.

For example, South Korea’s semiconductor industry, which plays a crucial role in the global tech supply chain, will face increased costs due to the new tariffs. While Musk’s push for efficiency might lower non-tariff barriers, the direct impact of higher duties cannot be ignored.

Similarly, Japan’s automotive sector, a major exporter to the US, will need to tackle this challenging landscape. Musk’s known advocacy for electric vehicles (EVs) and sustainable technologies could open doors for collaboration in these areas, but traditional manufacturers may find themselves under pressure to adapt quickly or risk losing market share.

China, the primary target of Trump’s tariffs, faces a particularly nuanced challenge. While the tariffs themselves are a clear obstacle, Musk’s efficiency reforms could paradoxically benefit Chinese exporters by simplifying compliance and reducing bureaucratic hurdles. 

Tesla’s significant presence in China, exemplified by its Gigafactory in Shanghai, positions the country as a potential partner in Musk’s broader vision of government efficiency and technological integration. 

However, the geopolitical tensions underpinning US-China relations complicate this dynamic. Beijing’s response will likely involve a careful balancing act, seeking to leverage any benefits from Musk’s reforms while countering the broader impact of higher tariffs.

India, on the other hand, may find itself in a more advantageous position. With its growing emphasis on digital infrastructure and renewable energy, India aligns well with Musk’s priorities. If DOGE promotes closer US-India cooperation in these areas, it could catalyze significant investment and innovation.

Tesla’s long-anticipated entry into the Indian market could finally materialize, driven by a more favorable regulatory environment shaped by DOGE’s initiatives. Beyond Tesla, the broader renewable energy sector stands to gain, with potential collaborations in solar power, battery storage and electric mobility.

The financial markets are already reacting to the twin forces of Musk’s appointment and Trump’s tariffs. Investor sentiment in Asia is mixed, reflecting both optimism about efficiency gains and concern over protectionist policies. 

Currencies in export-dependent economies like South Korea and Japan are under pressure, while equity markets are closely monitoring developments. In the medium term, much will depend on the extent to which Musk’s reforms can offset the trade frictions caused by tariffs. 

If DOGE succeeds in making the US government more agile and responsive, the resulting improvements in trade logistics could mitigate some of the negative impacts on Asian exporters.

However, it would be a mistake to view Musk’s role purely through an economic lens. His broader vision encompasses a reimagining of governance itself, with implications that extend beyond trade and tariffs.

Musk’s commitment to sustainability, for instance, is likely to influence DOGE’s priorities, potentially leading to increased support for clean energy initiatives. This could create new opportunities for Asian countries that are leaders in renewable energy technologies. 

Japan’s investment in hydrogen, South Korea’s leadership in solar manufacturing and India’s ambitious renewable targets all position these nations as potential partners in a global shift toward sustainability, driven in part by Musk’s influence.

In this context, Musk’s impact on US-Asia relations will be profound but not uniform. Countries that can align with his efficiency agenda and invest in next-generation technologies will likely emerge as winners. 

Those who remain reliant on traditional export models may struggle to adapt. The key for Asian economies will be agility and innovation—traits that Musk himself embodies. Ultimately, Musk’s leadership of the new DOGE represents a bold experiment in governance. For Asia, the stakes are high, but arguably so are the opportunities.

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The nations likely to win, not lose, from Trump’s tariffs – Asia Times

Donald Trump’s returning to the White House brings with it the high possibility of renewed taxes, a basis of his” America First” plan.

While his critics see isolationism, others see an opportunity—an extreme method to balance global trade and defend American manufacturing. Trump’s taxes, however, are likely to have a far-reaching impact beyond US borders, opening up new opportunities for nations that are ready to step up and fill the void.

For&nbsp, Vietnam, &nbsp, India, &nbsp, Mexico, &nbsp, Malaysia and&nbsp, Thailand, Trump’s method could be a game-changer. As businesses intensify diversification efforts and change supply chains away from China, these countries stand to gain from the world realignment that may result from fresh tariffs.

These nations was experience unprecedented financial transformation if Trump builds on his earlier successes with a more sophisticated technique.

1. Vietnam: Trade battle success

Some countries capitalized on Trump’s 2018-19 trade war with China as efficiently as Vietnam. As American levies hit Chinese goods, companies scrambled to travel production, and Vietnam immediately became a major target. Its low labor costs, corporate closeness to China, and robust US trade agreements made it a good choice.

If Trump reinstates taxes, Vietnam could once again draw companies who want to avoid China’s higher costs. From technology to fabric, its import basic is well-prepared to meet British demand. Trump’s demonstrated willingness to negotiate individual business agreements may strengthen Vietnam’s standing as a preferred partner.

2. India: a proper alliance

Trump’s second term saw a strengthening of US-India relationships, driven by a shared need to counter China. His leadership improved trade and established security partnerships, giving India a significant role as a regional ally.

India’s growing producing center and focus on self-reliance—championed through its” Make in India” initiative—align completely with Trump’s focus on reducing US dependency on China. Trump’s support for bilateral agreements might help India stable trade agreements that support its emerging industries, such as medicine and electronics.

Under Trump, India may grow not just financially but carefully, more merging into US-led efforts to ensure a free and open Indo-Pacific.

3. Mexico: the descriptions superstar

Mexico was one of the biggest beneficiaries of Trump’s first-term taxes. His renewal of NAFTA into the USMCA boosted American firms ‘ ability to link their supply chains more closely while providing a stable platform for business. Mexico’s geographical closeness and cost-competitive work marketplace gave it a healthy advantage.

If Trump renews tariffs on Chinese imports, Mexico’s part as a descriptions hotspot will only increase. With streamlined logistics and lower travel costs, industries like electrical manufacturing and customer goods are likely to grow even further.

Trump’s border laws, though provocative, are unlikely to outweigh the monetary dependence between the US and Mexico.

4. Malaysia: a high-tech lover

Malaysia is truly positioned to benefit from Trump’s focus on cutting-edge business. It is a significant player in the global technical supply chain because of its expertise in manufacturing electronics and technology.

Malaysia became a focal point for businesses looking to reduce their reliance on Chinese manufacturers in delicate business both during Trump’s second word and as Biden did thereafter. If Trump reinstates taxes on Chinese tech materials, Malaysia’s advanced manufacturing industry may see a surge in demand.

Trump’s administration had more incentivize US expense in Malaysia, solidifying it as a trusted companion.

5. Thailand: the dynamic candidate

Thailand is a good winner thanks to its varied economy and robust manufacturing base. Its advantages in automotive manufacturing, technology, and agricultural exports fit well with US business needs.

Thailand benefited directly from the trade war as businesses looked for alternatives to China during Trump’s second term. A second round of tariffs may enhance its role in supply ring growth, particularly if Trump pursues diplomatic trade agreements. Thailand’s ability to balance relationships with both the US and China may be important in maximizing these options.

Why Trump’s strategy may work

Trump’s reviewers often paint his business plans as problematic, but the information suggests they have spurred long-term adjustments that benefit international business dynamics. Trump accelerated shifts that are now required for economic resilience by requiring a reevaluation of China’s centrality in supply chains.

For countries like Vietnam, India and Mexico, Trump’s unapologetic focus on tariffs created openings that might never have emerged under more conventional leadership. His potential return gives these countries a chance to strengthen ties with the US, draw investment, and secure a larger share of global trade.

The balancing act

Of course, the risks remain. Trump’s transactional style and steadfast pursuit of success may rekindle tensions, especially if tariff disputes or trade imbalances arise. But these five countries have shown they can adapt to volatility, leveraging Trump’s bold moves to their advantage.

If Trump learns from the lessons of his first term, refining his strategy to focus on sustained partnerships, his return could usher in a new era of economic collaboration. For Vietnam, India, Mexico, Malaysia and Thailand, the opportunity is immense.

As Trump reshapes global trade, these nations are well-positioned to rise alongside America’s renewed economic ambitions.

Kurt Davis Jr., a Council on Foreign Relations member, is a Millennium Fellow at the Atlantic Council. He is also an advisor to private, public and state-owned&nbsp, companies and their boards as well as creditors across the globe on a range of transactions.

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Asia feels the pinch of growing ‘food chokepoints’ – Asia Times

In recent years, global food security has suffered from overlapping problems caused by problems, political tensions, climate change, and the Covid- 19 pandemic, resulting in severe foods provide problems.

These problems have been made worse by a number of “food causeways,” such as those that Yemen-based Houthi soldiers have attacked merchant boats and have hampered food shipments through the Suez Canal.

The transport visitors through the Panama Canal has decreased expected to&nbsp, drought&nbsp, which likewise hit river transport systems like as the&nbsp, Mississippi River&nbsp, and the&nbsp, Rhine River.

The emphasis on particular transport routes makes the pressure on global food security even more pressing because the global food system is already becoming increasingly dependent on the movement of meals from a few key “breadbasket” exporting areas to food-deficit locations around the world – frequently through these “food chokepoints”

It furthermore impacts agricultural goods profitability, shipping schedules, as well as food supply and prices. Longer delivery periods even put perishable foods at hazard, while&nbsp, shipping disruptions&nbsp, such as changes to shipping schedules stress cargo management and street transport sectors, causing major delays.

What does Asia’s interpretation of this mean?

For both food- exporting and importing countries, challenges loom. Exporting nations may experience profit margin pressures, which lower the cost of production while importing nations may have to deal with potential increases in transportation costs, which could lead to higher food prices, increased price volatility, and altered consumption patterns.

Due to their reliance on European and Black Sea markets for important agricultural products and fertilizers, Southeast Asia, East Asia, and South Asia are more vulnerable. Import disruptions pose inflation risks, contributing to a cost- of- living crisis.

In countries already grappling with crises like extreme weather ( Pakistan ), conflict ( Bangladesh and Myanmar ), economic turmoil ( Sri Lanka ) and political uncertainties ( Thailand ), &nbsp, food price inflation&nbsp, exacerbates poverty, stalling socioeconomic growth.

The most under- and middle-income households, which are most likely to be affected, may also be at increased risk of malnutrition, which could turn back decades of development progress in Asia.

Trade disruption implications

The US announced plans for a task force&nbsp in late December 2023 to combat the Houthi attacks in the Red Sea, but it is unlikely that immediate redress for trade turbulence and food price inflation will occur.

Concerns about food and fertilizer supplies being manipulated are raised by ongoing supply chain disruptions, as demonstrated by the Ukraine-Russian war, combined with the escalating geopolitical tensions.

Amid recurrent crises, urgent reforms to food systems are essential. Governments and policymakers must prioritize&nbsp, preparedness and resilience- building&nbsp, at national and regional levels to address food security issues and mitigate future impacts.

Governments and policymakers should diversify their sources of supply chain disruptions in addition to the increasing national stockpiles that the numerous net food importing nations in Asia have.

A good example is Singapore, which, while importing over 90 % of its food, has reduced vulnerability to food price and supply fluctuations through contact with&nbsp, more than 180 countries and regions.

This strategy has been largely successful, resulting in Singapore enjoying the world ‘s&nbsp, second most affordable food, behind Australia. &nbsp, The average&nbsp, Singaporean household&nbsp, spends less than 10 % of monthly expenses on food, in contrast with the Philippines ‘ 38 %.

Additionally, the Philippines, which has a large food deficit, ranks low in affordability, importing&nbsp, nearly 80 %&nbsp, of its agricultural imports. Food inflation in the Philippines reached&nbsp, 8 % &nbsp, in 2023.

Facilitating food access

Governments across the country must develop early action plans and strengthen social safety nets to lessen the strain of the cost-of-living crisis. For lower-income households with lower incomes, initiatives like food relief, cash support, and food voucher programs can help ease the strain. Subsidies and tax measures, which can provide temporary relief, may also be considered.

With average households spending over a third of their income on food in countries like&nbsp, the Philippines, and lower- income households in countries like&nbsp, Indonesia&nbsp, spending up to 64 % on food monthly, addressing food price inflation is crucial to safeguard average and lower- income households from undernutrition.

To address the interconnected issues of food availability, access, and affordability, Asian governments reliant on food imports could sign agreements with agricultural exporting countries in the region such as&nbsp, grain and oilseed powerhouses&nbsp, Australia and New Zealand. Doing so can avoid risks posed by chokepoints.

Greater focus on intra- regional trading could also be encouraged, such as in Southeast Asia, which has large exporters of key agricultural products including&nbsp, rice&nbsp, ( Vietnam and Thailand ) and&nbsp, palm oil&nbsp, ( Malaysia and Indonesia ).

Increased intra- regional trade could reduce&nbsp, regional food import dependency&nbsp, while also increasing regional food accessibility, market stability, and economic development. This could be aided by initiatives to encourage investments in agricultural research and development in the area to increase production of other staple grains ( such as wheat ) and reduce reliance on imports.

Looking ahead

The Middle East’s ongoing supply chain disruptions serve as a reminder of how crucial it is to have resilient national and regional food supplies and agrifood systems, according to Asian governments and policymakers. Countries must try to address these interlinked issues at national and regional levels in both the short and long term in the face of persistent food price inflation and malnutrition.

The region has a better chance of preparing itself for the challenges that lie ahead in terms of food security by implementing policy measures like diversifying food imports and strengthening social safety nets.

Genevieve Donnellon- May is a Research Associate at the Asia Society Policy Institute, Melbourne, Australia. Paul Teng is a Senior Adjunct Fellow at Nanyang Technological University (NTU), Singapore’s Nanyang Technological University (NTS Center ), S. Rajaratnam School of International Studies ( RSIS), and the Centre for Non-Traditional Security Studies (NTS Centre ).

This article first appeared on RSIS Commentary, and it has since been republished with kind permission. &nbsp,

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China mulls market rescue as tears of regret flow – Asia Times

After falling 12.2% this year, Hong Kong’s stocks rebounded 2.63% on Tuesday on news that Beijing may mobilize about 2 trillion yuan (US$278 billion) through offshore entities to support beaten-down Chinese stocks.

The Hang Seng Index, the benchmark of Hong Kong markets, increased 392 points to close at 15,353 on Tuesday. But it is still down 32% from 22,566 a year earlier – and sob stories are plentiful and heart-rending.

For comparison, Japan’s Nikkei 225 from the end of last year grew 9.7% to 36,517 on Tuesday. It has risen 33.8% over the last one year. The Taiwan Weighted Index has eased 0.3% to 17,874 this year but it has gained 19.7% over the past year. 

The Dow Jones Index closed at 38,001 on Monday, up 13% from a year ago, while the S&P 500 gained 22.7% to 4,850.

The rebound in Hong Kong stocks came after Bloomberg reported that Chinese authorities are considering a rescue package backed by offshore money to boost sentiment in the H-share markets.

The report also said Beijing has already put aside 300 billion yuan of local funds that would be used to invest in A-shares. 

Some analysts said Hong Kong stocks’ decline in recent weeks came partly because investors were disappointed by a potential delay of the rate cuts in the United States. They said Hong Kong shares were also dragged down by a slower-than-expected recovery of China’s consumption markets. 

Linus Yip, chief strategist at First Shanghai Securities, told mainland media that there will be support for the Hang Seng Index at about 14,600 points within the short run, but the future trend of Hong Kong stocks will depend on the Chinese economy and people’s consuming power.

Kenny Wan, head of investment strategy at KGI Asia, said the Hang Seng Index was affected by different factors, including the US interest rates and geopolitics. He said many investors have adopted a wait-and-see approach and hoped that Beijing would unveil some supportive measures. 

Meanwhile, some veteran investors blamed Chinese policy makers’ inconsistency in fighting against deflation.

Sob story #1: big mistake

Chua Soon Hock, founder and chief investment officer of Singapore-based Asia Genesis Asset Management, said Tuesday that his firm decided to close its Asia Genesis Macro Fund and return money to clients.

The fund, launched in 2020, declined 18.8% in the first few weeks of January, Chua said in a letter to investors seen by Reuters.  

He admitted that he had made a big mistake by increasing long positions in Hong Kong and China and short ones in Japan. He said he thought that China would outperform Japan this year after being sold off for the past three years while Japan would correct after a 30% gain in 2023.

“I still do not understand the inconsistency of China policymakers’ not fighting against deflation, leading to continued loss of market confidence and prolonged bear market,” he wrote in the letter.

“I have lost my knowledge, trading and psychological edge,” he wrote. “I have reached the stage whereby my confidence as a trader is lost.”

He said his past experience is no longer valid and instead it is working against him. 

Chua said in a post on LinkedIn last month that 2024 would be the beginning of a multi-year bull market for Chinese stocks. Investors had anticipated that the People’s Bank of China would cut the rate for medium-term lending facility (MLF) on January 15 but it did not. 

Next spring

On January 12, the National Bureau of Statistics said China’s consumer price index (CPI) decreased by 0.3 percent year-on-year in December 2023. The figure has been declining for the third straight month. 

State-owned Xinhua News Agency said many foreign media were wrong to jump to the conclusion that China has slid into deflation, and even hyped the possibility of a long-term deflation.

It said the CPI’s low-range performance is mainly a structural issue. It said the core CPI, which strips out volatile food and energy prices, has posted a rather stable year-on-year growth in 2023. 

Hu Xijin, a “patriotic” political commentator and the former editor-in-chief of the Global Times, tried to boost people’s confidence in the stock markets by buying A-shares with his own money.

Initially, the newbie injected 100,000 yuan in his investment account last June, and gradually invested the amount to 480,000 yuan.

On Monday, when the Shanghai Composite Index fell 2.7% to 2,754, the lowest since April 2020, Hu said he felt sad that he lost 10,444 yuan in a single day. He said he has so far suffered a loss of 71,024 yuan, or 17.4% of his money.  

He said it’s urgent for policy makers to launch supportive measures to boost market sentiment. Last month, when his accumulative loss exceeded 42,000 yuan, he said he still believed the Winter of China’s stock markets will soon pass while the Spring will come.  

Prepare for the worst

On Monday, a regular State Council meeting chaired by Chinese Premier Li Qiang said the government will increase the quality and investment value of listed firms and encourage mid-and-long-term capital to enter and stabilize the stock markets.

The call was followed by Bloomberg’s report about the potential launch of a rescue package to support Hong Kong stocks. In fact, Chinese media said some state-owned funds had already entered the A-share markets last week. 

However, Lau Kwan-ming, a Hong Kong financial writer, said in an article on January 16 that once US and European stock markets had started to correct from current high levels, the Hang Seng Index likely would drop farther, perhaps to as low as 12,000. 

He said investors should prepare for the worst – a market crash similar to the ones seen in the Asian Financial Crisis in 1998 and the Global Financial Crisis in 2008. 

In a two-day meeting chaired by Chinese Communist Party General Secretary Xi Jinping on December 11 and 12, the Central Economic Work Conference said the government should direct public opinion to promote the bright side of the Chinese economy.

On December 7, Liu Jipeng, dean of the Capital Finance Institute of China University of Political Science and Law, said he had left his position. His sudden departure came after he’d said in a forum on December 1 that individual investors should avoid entering A-share markets as some outdated listing rules needed to be changed.

Read: Chinese stocks slump after Moody’s outlook cut

Follow Jeff Pao on Twitter at @jeffpao3

Read: Chinese stocks slump after Moody’s outlook cut

Follow Jeff Pao on Twitter at @jeffpao3

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Nobel Sustainability Trust launches digital currency initiative

MUNICH, Nov. 9, 2023 —A meeting sponsored by the Nobel Sustainability Trust today launched the Central Bank Digital Currency Collaboration Organization (CBDCCO), under the chairmanship of Peter Nobel, president of the Trust. The organization’s goal is to nurture sustainable economic growth and stability by encouraging the adoption of digital currencies.

The inauguration ceremony represents the culmination of years of activity on the part of a pioneering global Central Bank Digital Currency research organization, the International Telecommunications Union Focus group headed by Dr. David Wen. Dr. Wen is the Director-General of the new CBDCCO.

The new initiative draws on experts from leading regulatory and financial organizations, including the European Security and Market Authority, the Federal Reserve, the Official Monetary and Financial Institutions Forum, China Merchant Bank, CBDC solution provider eCurrency, and technology experts from CBDC solution providers like eCurrency, and Modern Sustainable Solutions (MOSS), a leading carbon offset provider.

Dr. Bruno Wu, the President of CBDCCO and Director-General of the World Sustainability Standard Organization (WSSO), outlined a seven-part program in his keynote speech to the founding conference. Dr. Wu was the honoree of last year’s Nobel Sustainability Trust award.

Under the theme “Star Bridge,” the CBDCCO program will work with central banks to develop digital technology, assist in the integration of digital financial infrastructure, promote accounting standards that corporate sustainability data in accounting standards, apply CBDC technology to Real World Asset Management, develop digital infrastructure for improved global carbon asset management, foster technical standards for a wide range of CBDC solutions, and provide innovative technology for regulatory oversight of sustainability products.

Dr. Wu is a shareholder of the parent company of Asia Times.

Peter Nobel, representing the Nobel Sustainability Trust, stressed the importance of embedding sustainability into the core of future economies. They stated, “Digital currencies present a unique opportunity to rebuild and reshape our financial systems with sustainability at their core.” The Nobel Sustainability Trust, long active in the sustainability space, will provide expertise and support for the new organization.

The CBDCCO and the Nobel Sustainability Trust extended an invitation to other organizations and governments to join their endeavors in forging a sustainable and inclusive financial future.

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China driving Marcos deeper into American arms

MANILA – “I’m not aware of any such arrangement or agreement that the Philippines will remove from its own territory its ship,” Philippine President Ferdinand Marcos Jr said when asked about China’s recent request for the removal of the BRP Sierra Madre grounded vessel from the contested Second Thomas Shoal.

“And let me go further: If there does exist such an agreement, I rescind that agreement now,” Marcos added, the latest fusillade in the leader’s tough stand on China amid escalating tensions in the South China Sea.

The Filipino president was responding to claims by the Chinese Foreign Ministry on August 7 following yet another major incident in the maritime area that Manila had “promised several times” to tow the Sierra Madre away “but has yet to act.”

Over the weekend, Philippine authorities released footage showing China Coast Guard ships blocking and harassing Philippine resupply vessels approaching the Second Thomas Shoal, where a detachment of Philippine marines are stationed over the rusty, half-sunken ship.

China has denied blocking resupply of food and water supplies, but it has defended its latest action by accusing Manila of efforts to transfer construction materials to the area.

The Sierra Madre, a rusted warship that has been grounded on the Second Thomas Shoal since 1999, has been kept in place as a way to reinforce the Philippine claim to the shoal. Photo: Asia Times files / AFP via Getty / Jay Directo

While China has engaged in massive reclamation activities in the disputed sea, it has at the same time opposed any similar efforts by rival claimant states. The Asian powerhouse has also opposed the Philippines’ recent efforts to expand military cooperation with the United States under the Enhanced Defense Cooperation Agreement (EDCA).

The recently enhanced agreement gives US troops rotational access to Philippine bases, including strategic facilities situated close to Taiwan. Speculation has grown in recent months that the US may eventually seek to preposition weapons pointed toward China on Philippine soil.

Confronting growing harassment by Chinese vessels in the South China Sea, top senators and political figures in the Philippines are egging on Marcos to adopt even tougher measures vis-a-vis Beijing. As a result, the notoriously conflict-averse Filipino leader is being forced to harden his line towards China.

Shifting mood

By all indications, the Marcos administration’s foreign policy pivot toward the United States has taken China by surprise. Just weeks after a high-profile state visit to Beijing, Marcos greenlighted an expanded EDCA with the US. Months later, he traveled to the White House and the Pentagon to upgrade bilateral defense ties further.

To be sure, the Filipino president did repeatedly seek to reassure China by vowing that EDCA sites would not be weaponized by the Pentagon. His top defense officials also downplayed the proximity of some of the EDCA sites to Taiwan’s southern shores, emphasizing that Philippine defensive capability development was the main focus of growing cooperation with the United States.

Public statements, however, indicate that China is unconvinced. In a direct challenge to Marcos’s mandate, former president Rodrigo Duterte accepted an invitation to visit top Chinese leaders including President Xi Jinping in Beijing, reportedly to mediate rising tensions.

In recent months, the popular former president has wasted no opportunities to criticize his successor’s pro-US foreign policy, most notably the enhanced EDCA, as unnecessarily provocative toward China and potentially devastating for Philippine sovereignty.

Aside from exerting pressure on Marcos via pro-Beijing figures in the Philippines, China has also upped the ante in the South China Sea. Ever since the Philippines cleared an expanded EDCA with the US, Chinese vessels have engaged in various forms of intimidation against Philippine counterparts.

Beijing’s tough tactics, including the Chinese Coast Guard’s recent use of water cannons against Philippine resupply ships destined for the Second Thomas Shoal, have galvanized Manila’s political elite.

“I’m begging you to stop bullying Filipinos,” exclaimed Philippine Senator Christopher “Bong” Go during a particularly spirited speech earlier this year.

“Just because we are a small country we will be oppressed? Don’t do that!” said Go, vice-chairman of the Senate Committee on National Defense. “Let’s maintain respect. We will fight for what is ours. What is ours is ours. That’s ours. So stop using violence or bullying.”

What makes Go’s comments particularly noteworthy is that the senator is the de facto right-hand man of former president Duterte.

Go, who is of Chinese-Filipino descent, repeatedly accompanied Duterte during trips to Beijing in order to elevate bilateral strategic ties. But now, even this top advocate of Philippine-China relations has begun adopting a more critical stance, at least in public.

Philippine President Ferdinand Marcos Jr (L) and his predecessor Rodrigo Duterte (R) don’t see eye to eye on China. Image: Twitter Screengrab / ABS-CBN

Other key Duterte allies have adopted similar lines. Senator Francis Tolentino, former political affairs secretary under Duterte, has been a leading advocate of stronger defense ties with Western allies.

Earlier this year, he even called for a “new quadrilateral” security alliance with Australia, Japan and the US to counter China’s assertiveness in the South China Sea.

Following the latest incident in the disputed waters, other pro-administration stalwarts have also taken harder lines.

“China’s bullying only promotes discord and instability, which does not do well for regional peace and harmony,” said Senator Ramon Revilla Jr, another key Duterte ally. “We have long advocated for a coexistence built on respect and amity. And with this incident, we must put our foot down and draw the line where the safety and interest of our countrymen are endangered.”

Radical measures

Senators JV Ejercito and Joel Villanueva, who belong to the majority bloc in the 24-member Senate, have called on the Marcos administration to ramp up measures against China while enhancing the country’s defensive capabilities.

In fact, there seems to be growing support for opposition Senator Risa Hontiveros’s earlier call to take China to the United Nations over there South China Sea disputes, as well as pursue joint patrols with Southeast Asian claimant states in the contested waters.

Senate President Juan Miguel Zubiri cited China’s recent “atrocities” as a reason to consider more extreme measures beyond the hundreds of notes verbales filed by the Department of Foreign Affairs (DFA) to Beijing against China’s various actions in the disputed waters.

“Those acts done were completely illegal and therefore a complaint should be filed under the United Nations Convention on the Law of the Sea with the UN,” said Zubiri.

“Not just notes verbale. With due respect to the DFA, with the number of notes verbale – with the number of diplomatic protests – we can gift wrap the Chinese embassy in Metro Manila yet we are still ignored,” the Senate president added, underscoring the hardening stance among the Philippine political elite on the issue.

Top political figures have also called on the government to start refurbishing the Philippine position on the ground, most especially the grounded vessel in the Second Thomas Shoal.

Under the Duterte administration, the Philippines upgraded its facilities across the Spratly group of islands, most notably on Thitu Island, which hosts a relatively large Filipino community composed of both civilians and military personnel.

But refurbishing the Sierra Madre vessel in the disputed area risks provoking an even more aggressive response from Beijing. So far, Marcos seems determined to avoid direct clashes with China, but he will also have to contend with growing public pressure.

An authoritative survey released earlier this year showed that more than eight out of 10 Filipinos want the government to seek US assistance to better defend the Philippines’ position in the South China Sea. Meanwhile, a more recent survey by the New York-based Eurasia Group consultancy showed that 69.8% of respondents held negative views of China.

This photo taken by the Philippine Coast Guard shows Chinese vessels anchored at the Whitsun Reef 175 nautical miles west of Bataraza in Palawan in the South China Sea. Photo: AFP

In the Philippines, public opinion is often king and could eventually force the president’s hands. If the status quo persists, Marcos will have no choice but to further enhance military cooperation with the US to better defend his country’s position in the South China Sea.

He may also seek the Pentagon’s assistance – even if indirectly through security guarantees in the event of potential clashes with China – to refurbish Philippine facilities in the Spratlys.

By resorting to intimidation tactics rather than providing meaningful concessions and incentives, Beijing may have inadvertently alienated a potential ally in one of the most strategically situated nations in the Indo-Pacific, with major implications for the trajectory of US-China rivalry in the region.

Follow Richard Javad Heydarian on Twitter at @Richeydarian

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Singapore’s plant-based entrepreneurs are targeting meat eaters

In an unassuming butcher’s shop on Singapore’s Ann Siang Hill, juicy steaks hang from hooks in the windows. Local favourites – chicken satay skewers and beef rendang – sit in cool glass booths. 

But the meatiness is an illusion, the satays are soy-based and the steaks pumped up with shiitake mushroom. But, Love Handle, Asia’s first plant-based butcher, is not targeting Singapore’s vegans, or the vegetarian diets of the country’s Buddhist and Hindu communities. About 70% of its customers are meat eaters and its mission is to reach the mainstream. 

“Our target audience is specifically not vegans,” said Ken Kuguru, Love Handle’s CEO and founder. “It’s a bit of a paradox. [But in everything] we are a little bit paradoxical.” 

Love Handle CEO and co-founder Ken Kuguru (right) works to bring meaty flavours to plant-based dishes at his meat-free butcher. (Photo supplied)

As a city-state that imports more than 90% of its food and has little room for actual livestock, Singapore has a vested supply chain interest in shifting from traditional meats. 

Last year, a three-month chicken export ban from Malaysia, which provides the Lion City with about 34% of its poultry, halted the normal inflow of approximately 1.8 million broiler chickens a month. The ban caused a hike in poultry prices and concern over the country’s food security.

At the same time, environmental sustainability concerns are pushing many in Singapore and beyond to rethink their diets to reduce consumption of animal products. Restaurants and suppliers are increasingly following a similar path as Love Handle in using plant-based foods to reach customers beyond just vegans and vegetarians. Though challenges remain in making a convincing meat substitute, a rising class of Singaporean food entrepreneurs are betting on new techniques to recreate favourite dishes in a more eco-friendly way. 

For some of them, this isn’t just a business decision – it’s a way to possibly prevent the worst outcomes of global climate change while preparing for a new world brought on by environmental crises.

Hawker Neo Cheng Leong (right) and his apprentice Lim Wei Keat at Neo’s chicken rice stall in Singapore. Recent chicken export bans have triggered food supply chain fears for the country, which imports 90% of its food. (Photo: Roslan Rahman/AFP)

In the Lion City, about 7% of the population are vegan or vegetarian, according to a 2020 poll by research firm YouGov Singapore. Individual reasons for the diet typically include environmental and health concerns, which together accounted for 70% of the reasons to give up meat.But it is unlikely that change will be driven by the small minorities who are willing to fully embrace a plant-based diet. 

“There’s a lot of dishes that already cater to this community,” said Kuguru. “It’s established, it’s traditional, it’s there – but it hasn’t grown.”

To penetrate beyond this small and set demographic, he believes it’s important to emulate the “meaty” flavours that might hold people back from moving away from animal proteins. 

Love Handle’s products replicate the umami tones of meat by catalysing the natural chemical interactions released from vegetables through the cooking process. Some plant-based companies replicate meat’s bloody qualities through leghemoglobin, a red protein found in soybeans. 

These kinds of efforts are already showing promise in the marketplace as consumers around the world gain a taste for the meat-free lifestyle. According to Bloomberg Intelligence data, the global market for plant-based foods could see fivefold growth by 2030

On the other hand, the quantity of meat produced over the past 50 years has increased threefold and remains on an upward trajectory, according to an October report on sustainable food by accounting giant PwC’s strategy consulting business. 

Another report by the Stockholm Environment Institute a month later stated animal-based foods could be responsible for at least 16.5% of total greenhouse gas emissions. The report warned that if current consumption trends continue, it will be impossible to keep global warming below the 1.5° Celsius mark and increasingly challenging to stay below the 2° Celsius upper limit.

Vegan alternatives of popular local food … appeal[s] to the masses, draws them in to give vegan food a try”

LK Ong, Chef, VeganBliss

The high environmental stakes have provided extra motivation to those hunting the elusive secrets of re-creating meatiness. 

For VeganBliss restaurant, which opened last year amongst the bright Peranakan shophouses of Joo Chiat Road, the key to selling a wider market on sustainable eating has been emulating not just the meat, but also the meal. The restaurant’s “roast chicken rice” bestseller is made from natural gluten but resembles the sliced fillets found at most of the country’s popular hawker food markets. 

“Making vegan alternatives of popular local food … appeal[s] to the masses, draws them in to give vegan food a try, [and shows them] that the switch to veganism doesn’t entail sacrificing your favourite food,” says LK Ong, chef at VeganBliss. 

For other restaurants, branching out from familiarity of local favourites has raised a challenge.

“In Asia, we eat based on tradition. You eat what you do because that’s what your mum did and grandmother did,” said Christina Rasumussen, a chef and entrepreneur. “But this doesn’t work for our planet anymore … we have to change.” 

Chef and entrepreneur, Christina Rasmussen is tackling preconceptions of what a plant-based diet should look like. (Photo supplied)

After working at Michelin-starred restaurant Noma and a plant-based collective in her native Denmark, Rasmussen moved to Singapore in 2022. When launching Mallow, her first pop-up concept in the city-state, she grappled with the challenge of how to integrate a vegan business into a culinary culture that celebrates local dishes such as poached Hainanese chicken rice and seafood laksa soup noodles and where traditional hawker food markets have gained UNESCO heritage status.  

“Overall, vegan concepts are not popular like you may find in other western cities,” she said.

Most of Mallow’s customers were not vegan. As she prepares to launch her first permanent restaurant, Fura, she has consciously moved away from “plant-based” or “plant-forward” labels, to instead focus on “what our diet could look like in the future, due to climate change”. The menu will use ingredients that are in abundant supply, including insect proteins. 

“We don’t openly brand ourselves as being vegan on purpose as it turns many away, instead we say plant-focused,” Rasmussen said. “[We’re] slowly changing people’s perceptions of what being conscious can look and taste like.”

Meat-free roast chicken fillet made from gluten resembles its animal-based counterpart. (Photo: Amanda Oon/Southeast Asia Globe)

As a small island metropolis, making sustainable diets the norm in Singapore will rely on sustainable supply chains.

Last year’s upheaval of chicken imports brought this fact into stark relief. 

“We intend to grow more food locally to serve as a buffer in times of supply disruption,” said Grace Fu, minister for sustainability and the environment, in a parliamentary response to the chicken situation.

Fu and others in government used the issue to promote Singapore’s “30 by 30” campaign, an ongoing effort that aims to boost domestic food production to about 30% of everything consumed in the city-state by the end of the decade. 

A demonstration for flavour smell testing room at ADM’s Plant-based Innovation Lab in Singapore. (Photo: Roslan Rahman/AFP)

Restaurants including Love Handle and Fura focus on native ingredients such as soybeans, jackfruit and mushrooms. But the market still faces serious challenges in cost accessibility. Currently, Love Handle’s prices parallel those of high-end meat butchers in the city. 

“Green Rebel” beef steak, made from mushrooms and seasoned with Cajun spices, costs $5.91 (SGD 8) for a 180 gram portion, while a 100 gram packet of vegetable “sausage” mince is priced at $5.17 (SGD 7). 

In comparison, $10.16 (SGD 13.75) can buy 500 grams of Australian grass-fed beef mince and a 250 gram New Zealand striploin beef steak costs $8.49 (SGD 11.50) at local supermarket FairPrice. At local wet markets, prices can be even cheaper. 

“In order to bring plant-based meats closer to the [meat-eating] consumer, the company will often add in additives, flavourings, colours, textures – when you add in all these new ingredients, you add to the cost, you add to the energy consumed in the process,” said Willam Chen, a professor in food science and technology at Singapore’s Nanyang Technological University. 

“Subsequent processing of plant-based protein foods to suit consumers’ demand also needs energy. There is no holy grail.”

Nuggets made from lab-grown chicken meat are displayed during a media presentation in Singapore, the first country to allow the sale of meat created without slaughtering any animals, in December 2020. (Photo: Nicholas Yeo/AFP)

To address this issue, some innovation hubs are developing alternative proteins grown from animal cells in labs. Last year, Singapore became the first country in the world to grant regulatory approval for the sale of lab-cultured meat.

It’s a sector of innovation that fascinates Kuguru. For Love Handle’s next venture, he is  partnering with a research lab to fuse animal and plant cells to create alternative proteins at a larger scale. 

While not involving the slaughter of live animals, these new hybrid meats would not be considered vegan. But Kuguru is confident this move will not shut most vegans out.

“Anecdotally, the vast majority of vegans and vegetarians opted to move to a vegan and vegetarian diet because of either environmental reasons or animal cruelty reasons,” he said. “For those groups, moving to hybrid meat products would solve their core issues and allow them to reintroduce sustainable and ethical meat products back into their diets.”

As companies vye to keep up with consumer tastes, the wider industry has a more pressing issue on its plate. For Kuguru, switching to greener alternatives from traditionally farmed, animal meats may quite literally be a way to save the earth. 

“Given the data on the beef industry, the carbon emissions, the amount of land that’s available, the math doesn’t work,” he said. “The planet is going to implode.”

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Volatility expected as debt ceiling negotiations intensify

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Investment strategy: How to trade the 14th Amendment?

David Woo writes that markets have largely disregarded the debt ceiling negotiation as a major risk due to the growth of passive investing and a lack of urgency from negotiators. However, concerns are rising over whether the positive talk is a mere show, and there is speculation that President Biden may invoke the 14th amendment if a deal cannot be reached.

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James Davis details how the war in Ukraine has entered a phase of increased uncertainty as neither side has a defined strategy. Both sides are regrouping after the Wagner group’s capture of Bakhmut, where Ukrainian troops suffered significant losses in morale and resources, with Russia now considering various offensive options.

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Scott Foster delves into China’s move to ban the use of Micron’s memory chips due to concerns over national security, which is seen as retaliation against US sanctions and is expected to lead to tougher sanctions on the Chinese semiconductor industry, favoring Korean competitors like Samsung and SK Hynix.

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Singapore pulling all stops to avert a housing collapse

Singapore’s housing market is going through some big changes. It has a dual market structure consisting of a public and a private market. The public housing market is divided into a primary and a secondary (resale) market.

The Housing & Development Board is responsible for building and selling public housing flats at concessionary prices in the primary market to Singaporeans.

The primary public housing market is regulated and only open to Singaporean families, subject to a monthly household income cap of 14,000 Singapore dollars (US$10,400). After meeting the minimum occupation period of five years, owners can sell their flats in the secondary public housing market to Singaporean citizens and permanent residents who do not own private houses.

The private housing market is a laissez-faire market that supplies non-landed houses, such as apartments and condominiums, as well as landed houses, such as terrace, semi-detached and detached houses. Foreigners are prohibited from owning public housing flats. While they can buy and sell non-landed apartments and condominiums, they can only buy landed houses on Sentosa Island.

Despite Covid-19-related disruptions to supply chains and economic activities, the benchmark private residential property price index experienced 12 consecutive quarters of growth of 25% total after exiting the “circuit breaker” in June 2020. The resale public housing price grew by 28% over the same period.

The government introduced three rounds of cooling measures to pre-empt housing prices from diverging from economic fundamentals. On December 16, 2021, the government raised the Additional Buyer’s Stamp Duty (ABSD) — a form of transaction tax when buying private residential Singaporean properties — for foreigners from 20-30%.

The ABSD was also raised to 17% and 25% for Singaporean citizens and permanent residents respectively when buying second properties and 25% and 30% respectively when buying third and subsequent properties. Property developers also pay the ABSD of 40% — but 35% is remittable if developed units are sold within five years of the land acquisition date.

Another intervention occurred on September 29, 2022, when government agencies raised the medium-term interest rate floor — which is used to calculate the loan quantum granted by private financial institutions for property purchases — from 3.5-4%. The government also imposed a 15-month wait-out period for private owners to insulate first-time home buyers against intense competition in the public resale market.

The government is concerned about high housing prices weakening its social compact. Although foreign investments only constituted 7% of private property sales in 2023, they significantly drove up private housing prices, especially in the luxury housing segment. The latest ABSD rate hikes were intended to check the flows of oversea “hot money”, which have inflationary effects on the private housing markets.

On April 26, 2023, the government increased the ABSD from 30-60% for foreigners when buying private residential properties in Singapore. Singaporean citizens and permanent residents will now have to pay ABSD of 20% and 30% respectively — an increase of 3% and 5% — when purchasing second private properties for investment purposes.

Private residential property prices are already at historically high levels, with average launch prices ranging from S$2,000-S$2,900 (US$1,485–$2,153) per square foot. The current median housing price is 14 times that of medium-income — such high prices will make the private housing market unaffordable and inaccessible for medium-income families.

Using a recent project launched after the new ABSD rule, Blossoms by the Park, a local buyer purchasing a 3-room unit at S$2.28 million (US$1.7 million) will make a down payment of S$570,000 (US$423,000), based on a loan-to-value ratio of 75%.

Because of the 4% interest rate floor, their monthly mortgage payment will be S$10,360 (US$7,693). Based on the total debt servicing ratio of 55%, their monthly income must be at least S$18,840 (US$13,990) to obtain a mortgage loan from a local bank. This means that only the top 10% of Singaporean households by income could afford the unit in the Blossoms by the Park.

Interest rate hikes and geopolitical tension add significant risks to investing in private real estate markets. If macro-risks trigger negative economic outcomes — such as recession and unemployment — private housing market prices could spiral, leading to more socioeconomic consequences.

While the potential effects of the new ABSD of 60% are unclear, the costs of inaction could be more detrimental regardless of the direction private housing prices go.

A market failure could have a widespread impact on every stakeholder In the market. Developers may not recover the costs of investments and local buyers will face a negative equity situation when their housing value drops. Foreigners will lose money by selling their properties below the original costs. 

The housing market crash would destabilize Singapore’s financial system when borrowers default on their mortgage loans. But the economic costs of inaction would be higher than an intervention that curbs short-term foreign investment flows into the property market.

Tien Foo Sing is the Provost’s Chair Professor at the Department of Real Estate, Business School, National University of Singapore. The views expressed here are the author’s and do not represent the views of their companies and affiliates.

This article was originally published by East Asia Forum and is republished under a Creative Commons license.

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