US pension fund’s exit may shake Hong Kong markets

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Hong Kong’s status as an international financial hub faces a new challenge as the United States’ federal pension fund has decided to exclude Hong Kong-listed shares from the benchmark indexes for its international funds.

The decision was announced by the US Federal Retirement Thrift Investment Board (FRTIB) on Tuesday before Chinese President Xi Jinping and US President Joe Biden met in San Francisco on Wednesday. In a dinner on Wednesday evening, Xi called on the US business community to boost investment in China. 

The FRTIB said it had conducted a routine review of the four benchmark indexes followed by its Thrift Savings Plan (TSP) and decided to adjust its International Stock Index Investment Fund, or I Fund, which has an asset size of US$68 billion as of the end of last month. It said it had reviewed the recommendations of its staff and Aon, its investment consultant. 

“Overall, operational complexity has increased when investing in emerging markets in recent years given a range of events such as investment restrictions on sensitive Chinese technology sectors, delisting of Chinese companies and sanctions on Russian securities due to the Russia-Ukraine conflict,” Aon said. 

“These types of unforeseen events can incur transaction costs and may cause performance and volatility swings,” it said.

It said any announcement of investment restrictions can cause the value of a stock to decline at a time where the investor is forced to sell. It said, given the asset size of the I Fund, the forced selling or restricted investments could incur higher than average market impact costs due to liquidity challenges.

It said it will work with its fund managers to implement the transition from the current index (MSCI Europe, Australasia and Far East (EAFE) Index) to the next index (MSCI All Country World (ACWI) ex USA ex China ex Hong Kong Investable Market Index (IMI)) in 2024. It said the next index is expected to outperform the current one on a risk-adjusted basis over the long term.

Assets in Hong Kong

The MSCI ACWI IMI ex USA ex China ex Hong Kong, launched in June this year, provides exposure to 5,621 large-, mid-, and small-cap stocks in 21 developed markets and 23 emerging markets. 

The MSCI EAFE Index currently provides exposure to 798 large- and mid-cap stocks in 21 developed markets. Hong Kong stocks represent about 3.3% of the index’s assets, according to the geographical breakdown of a similar MSCI index. 

If the I fund is closely tracking the MSCI EAFE Index, it should have allocated US$2.2 billion of its assets into Hong Kong markets.

Simon Lee, a US-based Hong Kong commentator, noted that the asset size of the I Fund’s assets in Hong Kong is not enormous, comparatively speaking. But he predicted the fund’s departure will still hurt the city’s stock markets. 

“In general, the US now sees China as a risk, not an opportunity, and it does not treat Hong Kong as an independent economy from mainland China,” Lee said. “As the TSP is representative, its departure from Hong Kong may make some state-level pension funds follow suit.” 

He said the TSP’s departure will fuel capital outflows in Hong Kong and hurt the city’s status as an international financial hub. 

A Shanghai-based columnist says in an article that shares of 29 Hong Kong-listed firms, including AIA Group Ltd, Hong Kong Exchanges and Clearing Ltd, CK Hutchison Holdings and Sun Hung Kai Properties Ltd, will face downward pressure when the TSP’s fund managers dispose of them next year. 

The Hang Seng Index, a benchmark of the Hong Kong stock markets, has fallen 13.4% so far this year. The Shanghai Composite Index, which tracks the A-share markets, has dropped by only 2%.

Trump’s decision

In November 2017, the FRTIB decided to let its I Fund follow the MSCI ACWI IMI ex USA, instead of MSCI EAFE Index, as a way to enter the A-share markets. 

As of July 31, 2019, China received the third-most investment on a per-nation basis within the MSCI ACWI IMI ex USA at 7.56% of the index’s assets. 

In August 2019, US Senators Marco Rubio and Jeanne Shaheen told FRTIB Chairman Michael Kennedy in a letter that some of the US federal government employees’ money mightd have been invested in Chinese firms that pose national security, human rights and financial disclosure risks. 

The FRTIB was ordered to stop investing in A-shares by the Trump administration in May 2020.

As of the end of March in 2020, the TSP had US$557 billion of assets while its I Fund had US$41 billion.

The Economic Daily, a state-owned newspaper, said in a commentary in 2020 that the negative impact on the A-share markets of the TSP’s exit was negligible. 

Citing an estimation of the Bocom Schroders Asset Management Co Ltd, it said all US pension funds totaled US$30 trillion but the US federal government only controlled US$1.9 trillion of that while the remaining was owned by state governments and the private sector. 

It added that no more than US$15 billion of US pension funds had been allocated to the Greater China region and most of it was in Hong Kong.

The Chinese Foreign Ministry in May 2020 criticized the US government for blocking American investors from entering China’s markets and politicizing the matter in the name of national security. It said such a move would hurt US investors’ interest.

‘Butterfly effect’

In the first 10 months of this year, the average daily turnover of Hong Kong’s stock market was HK$106.6 billion (US$13.7 billion). Market capitalization amounted to HK$30.8 trillion (US$3.95 trillion) at the end of last month.

Some analysts said the I Fund’s US$2.2 billion investments in Hong Kong is negligible as it is only about 16% of the market’s daily turnover and 0.06% of its market capitalization. 

However, they are worried that if more institutional investors are leaving Hong Kong, it will create a “butterfly effect” that may lead to a market crash. 

In October 2022, the Teacher Retirement System of Texas, managing a US$184 billion public pension fund, cut its China target allocation to 1.5% from 3% of its assets. 

In April this year, Ontario Teachers’ Pension Plan (OTPP), Canada’s third largest pension fund, reportedly closed down its China equity investment team based in Hong Kong.

On Wednesday, lawmakers passed a bill to lower the stamp duty for stock trading to 0.1% from 0.13%, hoping to make the bourse more competitive.

Read: BlackRock, MSCI probed for investments in China

Follow Jeff Pao on Twitter at @jeffpao3

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Impact investing on the rise: BNP Paribas survey | FinanceAsia

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Impact investing is gaining in popularity across the globe, but a lack of harmonised environmental, social and governance (ESG) data, regulations and standards pose barriers to its development in Asia, a BNP Paribas survey suggested.

“Asia Pacific (Apac) is behind Europe, which has already integrated broader ESG topics such as inequalities and biodiversity. But it is ahead of North America which is highly fragmented over this topic,” Jules Bottlaender, Apac head of sustainable finance at BNP Paribas (securities services), told FinanceAsia.

So far 41% of global investors recognise a net zero commitment as their priority, while in Apac, 43% have set a due date to achieve net zero targets, according to the survey.

The global survey, titled Institutional investors’ progress on the path to sustainability, looked into how institutional investors across the globe are integrating their ESG commitments into implementation.

It gathered data from 420 global hedge funds, private capital firms, asset owners and asset managers between April and July 2023. Among them, 120 (28.6%) are from Asia Pacific (Apac) markets including China, Hong Kong, Singapore and Australia.

Impact investing

Impact investing, a strategy investing in companies, organisations and funds generating social and environmental benefits, in addition to financial returns, is a global trend that in the next few years, is set to overtake ESG integration as the most popular ESG strategy, the report revealed.

Globally, ESG integration dominates 70% of investors’ ESG investment strategies, but the proportion is expected to drop by 18% to 52% over the next two years. In contrast, 54% of respondents reported a plan to incorporate impact investing as their primary strategy by that time.

European investors have the greatest momentum in adopting impact investing at present, with 52% employing impact investing. While in the four markets in Apac, the proportion stood at 38%.

Negative screening took a lead as a major strategy of 62% investors surveyed in Apac. In the next two years, the figure is set to shrink to 47%, overtaken by 58% estimating to commit to impact investing.

“Impact investing is a rather new concept for most people [in Asia]. It is driven by the need to have a clear and tangible positive impact,” Bottlaender said.

An analysis from Invesco in March 2023 pointed out that while impact assessment is key to a measurable outcome of such investments, clear and consistent frameworks are required to avoid greenwashing acts.

“There is no singular standard for impact assessment,” the article noted. On the regulatory side, specific labelling or disclosure requirements dedicated to impact investing have yet to come in Asia.

Private markets, including private debt, private equity and real assets, will take up a more sizeable share of impact investing assets under management (AUM), it added.

Bottlaender echoed this view, saying that current regulatory pressure in Asia “is almost all about climate”. As a result, Asian investors’ ESG commitments are mostly around climate issues such as including net zero pledges and coal divestment. These are coming before stronger taxonomies and broader ESG regulations which are set to be finalised over the next few years.

Data shortage

A lack of ESG data is one of the greatest barriers to investors’ commitments, as respondents to the survey reported challenges from inconsistent and incomplete data. The concern is shared by 73% of respondents across Apac, slightly higher than a global average of 71%.

Bottlaender explained that although mandatory reporting of climate data is adopted in certain regulations, a majority of ESG data is submitted voluntarily.

This leads to a fragmentation and inconsistency of sources based on the various reporting standards they adhere to. Moreover, the absence of third-party verification results weighs on the accuracy and reliability of the data provided, he continued.

He shared that investors are either engaging directly with companies to encourage standardised reporting practices, or relying on data providers, or leveraging technology to carry out quality control to address the lack of ESG data.

But “significant gaps persist, especially concerning private companies and aspects like scope 3 emissions.”

“As a result, investors must be extremely cautious when advancing any ESG claim or commitment,” he warned.

¬ Haymarket Media Limited. All rights reserved.

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Impact investing on the rise: BNP survey | FinanceAsia

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In: Asia, Finance, South-East Asia

Impact investing is gaining in popularity across the globe, but a lack of harmonised environmental, social and governance (ESG) data, regulations and standards pose barriers to its development in Asia, a BNP Paribas survey suggested.

“Asia Pacific (Apac) is behind Europe, which has already integrated broader ESG topics such as inequalities and biodiversity. But it is ahead of North America which is highly fragmented over this topic,” Jules Bottlaender, Apac head of sustainable finance at BNP Paribas, told FinanceAsia.

So far 41% of global investors recognise a net zero commitment as their priority, while in Apac, 43% have set a due date to achieve net zero targets, according to the survey.

The global survey, titled Institutional investors’ progress on the path to sustainability, looked into how institutional investors across the globe are integrating their ESG commitments into implementation.

It gathered data from 420 global hedge funds, private capital firms, asset owners and asset managers between April and July 2023. Among them, 120 (28.6%) are from Asia Pacific (Apac) markets including China, Hong Kong, Singapore and Australia.

Impact investing

Impact investing, a strategy investing in companies, organisations and funds generating social and environmental benefits, in addition to financial returns, is a global trend that in the next few years, is set to overtake ESG integration as the most popular ESG strategy, the report revealed.

Globally, ESG integration dominates 70% of investors’ ESG investment strategies, but the proportion is expected to drop by 18% to 52% over the next two years. In contrast, 54% of respondents reported a plan to incorporate impact investing as their primary strategy by that time.

European investors have the greatest momentum in adopting impact investing at present, with 52% employing impact investing. While in the four markets in Apac, the proportion stood at 38%.

Negative screening took a lead as a major strategy of 62% investors surveyed in Apac. In the next two years, the figure is set to shrink to 47%, overtaken by 58% estimating to commit to impact investing.

“Impact investing is a rather new concept for most people [in Asia]. It is driven by the need to have a clear and tangible positive impact,” Bottlaender said.

An analysis from Invesco in March 2023 pointed out that while impact assessment is key to a measurable outcome of such investments, clear and consistent frameworks are required to avoid greenwashing acts.

“There is no singular standard for impact assessment,” the article noted. On the regulatory side, specific labelling or disclosure requirements dedicated to impact investing have yet to come in Asia.

Private markets, including private debt, private equity and real assets, will take up more sizeable share of impact investing asset under management (AUM), it added.

Bottlaender echoed this view, saying that current regulatory pressure in Asia “is almost all about climate”. As a result, Asian investors’ ESG commitments are mostly around climate issues such as including net zero pledges and coal divestment, before stronger taxonomies and broader ESG regulations which are set to be finalised over the next few years.

Data shortage

A lack of ESG data is one of the greatest barriers to investors’ commitments, as respondents to the survey reported challenges from inconsistent and incomplete data. The concern is shared by 73% of respondents across Apac, slightly higher than a global average of 71%.

Bottlaender explained that although mandatory reporting of climate data is adopted in certain regulations, a majority of ESG data is submitted voluntarily.

This leads to a fragmentation and inconsistency of sources based on the various reporting standards they adhere to. Moreover, the absence of third-party verification results weighs on the accuracy and reliability of the data provided, he continued.

He shared that investors are either engaging directly with companies to encourage standardised reporting practices, or relying on data providers, or leveraging technology to carry out quality control to address the lack of ESG data.

But “significant gaps persist, especially concerning private companies and aspects like scope 3 emissions.”

“As a result, investors must be extremely cautious when advancing any ESG claim or commitment,” he warned.

¬ Haymarket Media Limited. All rights reserved.

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Japan’s Kioxia reports Q2 loss, says prices have bottomed out

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TOKYO (Reuters) – Japan’s Kioxia on Tuesday reported a 100.8 billion yen ($664.5 million) operating loss in the second quarter as earnings were hit by a slump in demand for memory chips used in smartphones and personal computers (PCs).

The result at Bain Capital-backed Kioxia, formerly Toshiba Memory, compares with a loss of 130.8 billion yen three months earlier.

Makers of memory chips have been struggling with slumping demand since the COVID pandemic, with the market awash with supply and growing pressure for the industry to consolidate.

Merger talks between Kioxia and Western Digital have stalled, Reuters reported previously, after Kioxia investor SK Hynix said it did not back the deal.

A combined company would control one-third of the global NAND flash memory market, on par with Samsung Electronics and threatening the position of SK Hynix.

Since then, Western Digital has said it will spin off its memory business but remains open to alternatives that would deliver “superior value” to the planned separation.

While investment in artificial intelligence is expected to boost the chip industry, a rebound in demand for NAND flash memory used for data storage is less clear.

Selling prices have bottomed out, Kioxia said, pointing to expected higher shipments of smartphones and PCs next year.

Revenue fell quarter-on-quarter with Kioxia saying the smaller loss was because of higher average selling prices with a boost from the weaker yen.

Separately, Toshiba, which holds a stake in Kioxia after selling its chip unit to the Bain-led consortium in 2018, posted a 26.7 billion yen net loss in the second quarter.

The industrial conglomerate is due to go private after a successful $13.4 billion tender offer from private equity firm Japan Industrial Partners.

($1 = 151.7000 yen)

(Reporting by Sam Nussey; Editing by Tom Hogue and Christian Schmollinger)

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The great AI regulation race is on

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A wide range of tasks involving machines carrying out tasks with or without human intervention are referred to as artificial intelligence ( AI ). From visual identification devices and bots to photo editing software and self-driving cars, our knowledge of AI technology is largely shaped by where we encounter them.

If you think of AI, you may imagine technology firms, from established behemoths like Google, Meta, Alibaba, and Baidu to up-and-coming competitors like OpenAI and Anthropic. Governments around the world, which are determining the rules under which AI systems will work, are less obvious.

Tech-savvy regions and countries in Europe, Asia-Pacific, and North America have been enacting laws aimed at AI technology since 2016. ( Australia is falling behind and is still looking into the viability of such rules. )

Worldwide, there are now more than 1, 600 Artificial policies and strategies. The creation and management of AI in the world have been significantly influenced by the European Union, China, the US, and the UK.

In April 2021, when the EU proposed an original framework for restrictions known as the AI Act, efforts to regulate AI started to pick up speed. These guidelines seek to impose duty on companies and customers based on various risks connected to various AI technologies.

China advanced by putting forth its own AI requirements while the EU AI Act was still pending. Politicians have talked about wanting to lead the way and provide global leadership in AI management and development in Chinese press.

China has been regulating certain aspects of Artificial one after another, whereas the EU has taken a complete view. These have included conceptual AI, deep production, or “deepfake” technology, and algorithmic recommendations.

These policies and others will be included in China’s comprehensive framework for AI management. The incremental process gives regulators the flexibility to implement new policy in the face of new risks while allowing them to develop their bureaucratic know-how and governmental capacity.

A “wake-up phone”

China’s rules of AI may have served as a warning to the US. Influential senator Chuck Schumer stated in April that his nation if” never allow China to lead on technology or read the rules of the road” for AI.

The White House issued an executive order on secure, safe, and reliable AI on October 30, 2023. The purchase focuses on particular technological applications while attempting to address broader problems of capital and civil rights.

In addition to the major players, developing IT nations like Japan, Taiwan, Brazil, Italy, Sri Lanka, and India have even tried to put defensive measures in place to reduce any challenges that the widespread adoption of AI might present.

Global AI laws show a struggle against outside influences. On a political level, the US competes diplomatically and economically with China. The EU places a strong emphasis on achieving US independence and establishing its own modern sovereignty.

These regulations are perceived as favoring major former tech companies over up-and-coming competitors on a regional level. This is due to the fact that following the law is frequently costly and may require sources from smaller businesses.

Calling for AI legislation have received support from Tesla, Meta, and Alphabet. In addition, Tesla CEO Elon Musk’s xAI has merely introduced its first product, a robot called Grok, and Alphabet-owned Google has joined Amazon in investing billions in OpenAI rival Anthropic.

shared perception

Shared passions between the parties are evident in the AI Act of the EU, China’s AI requirements, and the executive order from the White House. Together, they prepared the ground for past year’s” Turing declaration,” in which 28 nations—including the US, UK, China, Australia, and a number of Union members—promised assistance on AI protection.

AI is seen as a benefit to nations or regions ‘ economic growth, regional stability, and global leadership. All areas are attempting to help AI development and innovation despite the acknowledged risks.

By one estimate, global spending on AI-centric techniques could surpass US$ 300 billion by 2026. The conceptual AI industry alone could be fair$ 1.3 trillion by 2032, according to a Bloomberg statement.

The pleasant page for the ChatGPT software from OpenAI. Photo: Leon Neal, Getty Images, and Asia Times Files

These statistics, along with discussions of alleged advantages from software companies, regional governments, and consulting firms, frequently dominate media coverage of AI. Tones of criticism are frequently ignored.

Countries use AI techniques for defense, security, and defense applications in addition to economic ones.

International conflicts were evident at the UK’s AI security conference. China endorsed the Enigma declaration made on the first day of the summit, but it was not included in the next day’s public events.

China’s cultural payment system, which has little transparency, is one area of contention. According to the EU’s AI Act, cultural scoring systems of this kind pose an intolerable risk.

China’s opportunities in AI pose a threat to US regional and economic security, particularly in the form of attacks and disinformation campaigns, according to the US.

International cooperation on conditional AI regulations is likely to be hampered by these tensions.

the restrictions of laws

Existing AI restrictions have major restrictions as well. For example, current regulations across jurisdictions do not include a clear, typical set of definitions of various types of Artificial technology.

There is concern about how useful the latest legal definitions of AI are because they are frequently very large. Rules cover a wide range of systems that pose various risks and may require various treatments because of their large range.

It is difficult to ensure exact legal compliance because many regulations lack exact definitions for danger, safety, transparency, fairness, and non-discrimination.

Additionally, local states are starting to implement their own rules within the national structures. These might solve particular issues and aid in balancing the growth and regulation of AI.

Two bills have been introduced in California to control AI job. A technique for rating, managing, and monitoring the provincial level of AI development has been put forth by Shanghai.

Yet, limiting the definition of AI technology, as China has done, raises the possibility that businesses will figure out a way to circumvent the regulations.

Nearby, national, and international organizations are developing sets of “best practices” for AI leadership, with oversight from organizations like the UN’s AI advisory panel and the US National Institute of Standards and Technology.

The current AI leadership structures from the UK, US, EU, and, to some extent, China are likely to be used as examples. Both social consensus and, more importantly, nationwide and geopolitical interests will serve as the foundation for international cooperation.

Fan Yang, doctoral research brother at the American Graduate School of Policing and Security, Charles Sturt University, and the ARC Centre of Excellence for Automated Decision-Making and Society, The University of Melbourne and Ausma Bernot

Under a Creative Commons license, this post has been republished from The Conversation. Read the original publication.

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The AI regulation battle is only just beginning

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It’s amazing that the United States has just recently released distinct rules regarding the technology given the rate of development in artificial intelligence in recent years.

President Joe Biden andnbsp issued an executive order at the end of October to guarantee” healthy, secure, and reliable artificial intelligence.” The order establishes new guidelines for AI health in general, including fresh privacy measures intended to safeguard consumers.

The executive order is a crucial step toward reasonable rules of this fast developing technology, even though Congress has not yet passed complete regulations dictating the use and development of AI.

The fact that the US did n’t already have any such AI protections on the books may surprise casual observers. The rest of the world is even further on, according to a meeting of 28 institutions for the AI Safety Summit&nbsp last week in the UK.

Attendees at the storied former spy bottom Bletchley Park were able to come to an understanding to collaborate on security research to prevent the” severe harm” that AI might cause.

The US, China, the European Union, Saudi Arabia, and the United Arab Emirates are among the members to the &nbsp declaration, which was a rare political revolution for the UK but was brief on specifics. The US promoted its own fresh guardrails&nbsp as something that the rest of the world should emulate through the celebration.

To comprehend that AI is a crucial component of one of the most significant technological shifts humanity has ever experienced, you do n’t need to be an expert in computing.

AI has the ability to alter how we think and teach ourselves. It may alter our working practices and render some work unnecessary. To produce these results, AI systems typically gather enormous amounts of data over the empty Online. There’s a good chance that some of your data is being used to power AI platforms like ChatGPT by huge language versions. &nbsp,

AI engages in battle

This is merely the beginning of the ice. AI is now being used in Israel’s businesses in Gaza to aid in the decision-making process. According to Israel’s Military Intelligence Directorate&nbsp, the military “produces trusted target quickly and accurately” using AI and another “automated” tools.

The new AI-powered resources are being used for the” first occasion to immediately give ground forces in the Gaza Strip with updated information on target to attack,” according to an unnamed senior official.

This represents a significant increase in Artificial use across the board, not just among Palestinians. As a part of Israel’s sizable and potent weapons-technology industry, the technologies being tested in Gaza will almost certainly been exported.

Simply put, various issues, from Africa to South America, could immediately use the AI techniques used to assault Israeli targets. &nbsp,

Issues with Artificial security, consumer security, and privacy are specifically addressed in Biden’s executive order. New safety assessments of new and existing AI platforms, capital and civil rights direction, and analysis on AI’s effect on the labour market are all required by the order&nbsp.

The US government will now be required to receive health exam results from some AI businesses. The Commerce Department has been asked to develop guidelines for AI hashing and a security system that you develop AI tools to help find bugs in important software.

There has been some activity in recent years, despite the fact that the US and other European nations have been slow to draft complete AI rules.

A thorough&nbsp, AI risk management framework was outlined by the US National Institute of Standards and Technology ( NIST ) this year. The professional order of the Biden administration was based on the report. Importantly, the administration has given the Commerce Department—which houses the NIST—the authority to assist with get implementation. &nbsp,

Need for conformity

Finding buy-in from top American tech companies will now be the problem. Biden’s order wo n’t accomplish much without their cooperation and a framework for punishing businesses that break the law.

There is still a ton of work to be done. Over the past 20 years, technology firms have mostly been able to grow without much supervision. The connected world of technology, where businesses have developed new goods or services outside of the US, contributes to this.

For instance, the ground-breaking AWS sky hosting systems from Amazon was created and developed significantly from American regulators at the University of Cape Town in South Africa. &nbsp,

The Biden presidency could look for more detailed laws and regulations with sincere buy-in from top businesses. Strong government involvement in tech generally carries a chance of stifling technology. However, smaller nations with understanding markets have a clear chance to intervene.

Artificial protection can be used by nations like Estonia and the UAE that have invested in their understanding markets, have little groups ( and regulatory situations ). In cities like Dubai, where foreign tech companies have established regional offices, this would have a significant impact.

These smaller nations have less red tape, so AI regulations can be rapidly passed and, perhaps more importantly, changed if they overly restrict development.

The global community cannot wait for larger nations or coalitions like the United States and the European Union to push through regulations first given the hyper-connected world of technology enhancement. Instead, regulations that meet their needs should be implemented in new markets with it economies to take into account. &nbsp,

The speed at which AI technology is developing is astounding. We do n’t have the luxury of waiting for world leaders to take action first because it is so crucial to the overall technology sector. It’s time to set an example for others, and AI laws are a great place to start.

The copyright-holding Syndication Bureau, &nbsp, provided this content.

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Engine Biosciences secures USm for precision oncology and biomarkers

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Existing investors, ClavystBio and Invus participated in the & nbsp, roundFunds will aid in advancing biomarkers, target discoveries through collaboration & nbsp,Engine Biosciences, a company leveraging machine learning and high – throughput biology to discover and develop precision oncology medicines has announced the completion of a US$ 27 million( RM125.5 million…Continue Reading

Malaysia’s net zero transition: expediting ESG | FinanceAsia

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The Joint Committee on Climate Change ( JC3 ) of Malaysia met last month to discuss working together to improve the financial sector’s ability to develop climate resilience. & nbsp,

According to a spokesperson for Bank Negara Malaysia( BNM ),” sustainable assets are gaining momentum in Malaysia with key investment styles built around the need for accelerating sectoral transition and climate resilience, such as energy transition, circular economy, food security, and freedom change.”

The JC3 board was established in September 2019 to ensure a cogent approach to ESG initiatives, with its founding serving as” great testimony” to how proponents of Malaysia’s capital markets intend to work closely to improve sustainability practices in Malaysia, according to Angelia Chin – Sharpe, CEO of BNP Paribas Asset Management, which operates in Southeast Asia.

Its members include representatives of the market’s central bank, BNM, capital markets regulator, Securities Commission Malaysia ( SC ), stock exchange, Bursa Malaysia, and 21 other financial industry players, including Chin-Shawni at BNP AM, insurance companies Allianz, Swiss Re and Zurich, as well as banks like RHB Islamic and CIMB.

The committee outlined five initiatives at the meeting that” emphasise the crucial part of the banking sector in enabling a lasting plan” with the goal of expediting the economy’s low-carbon practices. A pilot project to switch industrial parks and their operational infrastructure to low-carbon practices was one of these, along with three data-related initiatives and a RM1 billion($ 0.210 million ) guarantee to provide funding to smaller market players to support their ESG agendas. & nbsp,

The BNM spokesperson stated to FA that one of the goals of” Ekonomi Madani” is to encourage Malaysia’s green growth in the direction of climate resilience. This goal aims to put Malaysia on a strong development path by realizing and addressing key national issues.

There are numerous opportunities for industry players, including international investors, to achieve the National Energy Transition Roadmap ( NETR ) targets set for 2050, she said.

Energy efficiency( EE ), renewable energy( RE ), hydrogen, bioenergy, and green mobility and carbon capture, utilisation and storage( CCUS ) are the six energy transition levers that Malaysia’s NETR identifies as its ten flagship projects. These are anticipated to catalyze and quicken the market’s energy transition, reduce greenhouse gas ( GHG ) emissions by at least 10 metric tons of carbon dioxide equivalent ( MtCO2eq ) annually, create 23, 000 high-impact job opportunities, and improve corporate ecosystem growth opportunities with benefits to society.

According to the BNM touch, their powerful supply necessitates investments in infrastructure, engineering, and human capital totaling between RM1.2 trillion and Rs1.3 trillion up to 2050. In addition to & nbsp,

While Malaysia’s administrative society is capable of reviewing such an option and is aware of the significance of incorporating ESG into purchase technique,” there is still a need to teach” smaller scale investors on the opportunities and risks associated with sustainability strategies, according to Chin-Sharpe, BNP Paribas AM.

Having said that, she added,” Most banks in Malaysia are committed to playing a more active role to align and help their clients understand the[ relevant ] Malaysian taxonomies.”

Purchase and regulation

The five new initiatives have been included in the government’s budget for 2024 and” complement other policies such as the NETR, the New Industrial Master Plan ( NIMP ) 2030 and the Mid-Term Review of the 12th Malaysia Plan ( MTR – 12MP ,” according to YB Nik Nazmi Nk Ahmad, minister of Natural Resources, Environment, and Climate Change.

All governing events, including JC3 users, Malaysia’s Corporate Guarantee Corporation, and pertinent ministries, are committed to putting the tasks into action, the BNM representative confirmed with FA.

The regulatory environment in Malaysia keeps up with the country’s continued energy transition and the funding needed to make it happen. To obtain conservation and environment goals, the money market should be prepared to help finance raising and investments. Since 2011, when Sustainable and Responsible Investment ( SRI ) has been included as a crucial growth strategy in the Capital Market Masterplan CMP2, the SC has paved the way for sustainability, according to Dato ‘ Seri Dr. Awang Adek Hussin, its chairman.

A Climate Chance and Principle-based Taxonomy was published by BNM in 2021. In December 2022, SC unveiled a Principles-Based SRI Taxony for the Malaysian Capital Market. This year, in June of this year. SC also established the International Sustainability Standards Board’s ( ISSB ). & nbsp,

Meanwhile, the BNM spokesperson emphasized last month’s Energy Efficiency and Conservation legislation as having the potential to significantly lower energy use by 2050 — by 2, 017 million gigajoules, or RM97 billion in savings— and to” create new jobs in energy management and auditing ,” she said.

According to Adrian Wong, mind of jobs and director at the Singapore-based law firm Prolegis, which has a formal legal ally with Herbert Smith Freehills( HSF ),” investment has increased in Malaysia in part because the regulatory environment has done more to promote appetite in renewables.”

Large-scale solar auctions in Malaysia’s peninsular and projects along the Sarawak Corridor of Renewable Energy ( Score) are two of the renewable infrastructure projects his team is helping clients with.

The transport industry is anticipated to play a significant role in the demand for renewable energy, with electric vehicle ( EV ) usage expected to reach 80 % of the car market in 2050.

However, he informed FA that the greatest possibility is present in projects involving solar, water, and biofuel. In 2040, it is anticipated that all three sources will increase and account for roughly 17 % of Malaysia’s total energy mix.

a files travel

Data and the potential of emerging technologies to support Malaysia’s conservation plan are the three activities that were announced at the event.

The first builds on the accomplishments of JC3’s Greening Value Chain ( GVC ) pilot program, which began in 2022 and has so far assisted 80 small and medium enterprises( SMEs ) in tracking and reporting greenhouse gas ( GHG ) emissions across the length of their supply chains. In order to provide public listed companies( PLCs ) capacity-building support, reporting tools, and additional financing facilities, which the BNM spokesperson said could be accessed” at competitive rates via the Low Carbon Transition Facility( LCTF ), the updated plan connects Bursa Malaysia’s sustainability data platform with the GVC program.

Access to an” ESG jump-start portal,” through which Malay businesses can obtain useful information on ESG-related capacity-building programs, certification, as well as financial and opportunity methods, and the introduction of a Green AgriTech program to promote the adoption of green technology and sustainable agriculture techniques among local producers, are additional data related initiatives.

According to the BNM director,” Green AgriTech offers substantial potential for Malaysia’s agricultural field by opening up new possibilities and addressing vital difficulties.”

Wong concurred that emerging technology has the potential to modernize and alter Malaysia’s ESG strategy, particularly in the agricultural industry. From ensuring a sustainable supply of food sources to raising general health and environmental criteria, he mentioned the potential for positive effects.

To ensure that farmers may conduct their financial transactions online, he suggested the Malaysia Digital Economy Corporation’s project, which linked small farmers to online marketplaces offering bright warehouse facilities, supply, and farming solutions.

Through a thorough approach to alternative solutions, this catalytic pilot program encourages farmers to use technologies and follow greener and ecological practices. Participating farmers can obtain grants and LCTF to purchase natural systems, the BNM spokesperson added.

” Technology use may improve produce stability and quality while also assisting in the resolution of food safety issues.”

maintaining speed

The efforts to enlist input from all parts of Malaysia’s market, both the public sector and the private sector, is at the core of the country as it transitions. The BNM spokesperson informed FA that” efforts to level public-private partnerships are even continuing, with fresh initiatives.”

She stated that the GVC program is an excellent illustration of a cutting-edge blended financing initiative in Malaysia that supports the country’s move toward enlightenment.

BNM continues to support private institutions’ participation in the government’s loan offerings, the call emphasized,” BNM also supports such attempts by facilitating the release of Government of Malaysia Sustainable Sukuk for registration by both domestic and foreign investors.”

According to SC chairman Hussin at the conference, the SRI-linked Sukuk Framework was introduced last year, giving the Indonesian capital market access to a full range of frameworks to assist businesses in financing transitional projects as well as alternative, social, and sustainability initiatives.

Fitch recently released an ESG document that showed a steadfast global appetite for the sukuk. The data shows that by the end of 3Q23, ESG sukuk issuance had increased by 66 % year over year( YoY ) to reach$ 33.3 billion worldwide.

Due to built-in sharia filters, there is a cross between Islamic funding and ESG principles, according to the ratings agent’s research. & nbsp,

Over the moderate name,” Fitch Ratings anticipates more rise.” According to the review, the company’s growth is largely driven by governments’ sustainability initiatives and issuers’ funding diversification goals toward both sharia and ESG-sensitive investors.

” ESG sukuk could receive an awareness and issuance boost ,” said Bashar Al-Natoor, Fitch’s global head of Islamic Finance, with the United Arab Emirates( UAE) hosting the Conference of Parties( COP ) 28 this year.

It is motivating to see the Indonesian government adopting a” full of state” approach to addressing the impact of climate change on economic conservation, Hussin said at the conference’s conclusion. The nation’s interests and sustainable development methods are outlined in roadmaps and masterplans that have been made available by the relevant ministries.

I want to say it again:” Our planet is facing an unprecedented problem, one that necessitates immediate and coordinated effort from all countries, sectors, and individuals.”

 

Haymarket Media Limited All right are held back.

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Singapore to propose new law to manage significant investments into critical entities

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WHAT IS THE PROPOSED REGIME’S PROCESS?

If an entity is incorporated, formed, or established in Singapore, engages in activities there, and offers goods and services to locals, it can be identified and designated as essential under the proposed investment control program.

Numerous ownership and control specifications will have to be followed by designated companies. & nbsp,

These organizations and their buyers will first need to contact or request authorization for rights or control changes. Deals that take place without the required consents will be void.

For instance, when buyers become a 5 % controller of the institution, they will be required to inform the minister. Another controlling levels, such as 12, 25, and 50 %, as well as acquisitions require acceptance.
Sellers are also required to request approval once they stop being a 50 % or 75 % controller.

Second, in order to hire important positions like the chief executive officer and managers, the institutions will need to obtain authorization.

If they were appointed without acceptance or if the terms of approval are broken, like officers may be fired. In the interest of national protection, the chancellor may even fire important officials.

Lastly, additional clauses that guarantee the security and dependability of the entities’ functions apply to them. For example, they require the minister’s permission before they can be freely wound up or dissolved.

In the event of problems with national security or delays in the provision of crucial services, orders can be issued to” direct the assumption of control of the designated entities’ affairs, business, and property to ensure their continuity ,” according to MTI.

Third, if certain conditions have not been met, corrective directions may be given, such as a directive to move or dispose of an individual’s equity stakes in the designated entity.

Additionally, the Bill may give the curate the authority to examine rights or handle transactions involving non-critical entities that have violated Singapore’s national security interests.

Targeted actions, like ordering the transacting group to sell their capital interest in the entity, you get taken in these situations.

Provisions made under the Bill do not have a retroactive effect, meaning they won’t apply to institutions until they’ve been designated and have no bearing on recent or past agreements. & nbsp,

According to MTI, the proposed legislation was created after consulting with industry experts to” take into account its possible effects on businesses and investors.”

It is intended to be” business-friendly ,” and procedures will be in place for appeals to an impartial reviewing tribunal and requests for reconsideration. Three people, including the president, a Supreme Court judge, will make up the latter group, which the President has appointed on the advice of the Cabinet.

As the designated stage for stakeholders, an office may be established under MTI.

An MTI director told CNA that” we may also post the list of designated companies in the Gazette, which will provide clarity to affected celebrations.”

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US action for regulating AI is world’s strongest

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On Monday (October 30), US President Joe Biden released a wide-ranging and ambitious executive order on artificial intelligence (AI) – catapulting the US to the front of conversations about regulating AI.

In doing so, the US is leapfrogging over other states in the race to rule over AI. Europe previously led the way with its AI Act, which was passed by the European Parliament in June 2023 but won’t take full effect until 2025.

The presidential executive order is a grab bag of initiatives for regulating AI – some of them good and others seemingly rather half-baked. It aims to address harms ranging from the immediate, such as AI-generated deepfakes, through to intermediate harms such as job losses, to longer-term harms such as the much-disputed existential threat AI may pose to humans.

Biden’s ambitious plan

The US Congress has been slow to pass significant regulation of big tech companies. This presidential executive order is likely both an attempt to sidestep an often deadlocked Congress, as well as to kick-start action. For example, the order calls upon Congress to pass bipartisan data privacy legislation.

The executive order will reportedly be implemented over the next three months to one year. It covers eight areas:

  • safety and security standards for AI
  • privacy protections
  • equity and civil rights
  • consumer rights
  • jobs
  • innovation and competition
  • international leadership
  • AI governance.

On the one hand, the order covers many concerns raised by academics and the public. For example, one of its directives is to issue official guidance on how AI-generated content may be watermarked to reduce the risk from deepfakes.

It also requires companies developing AI models to prove they are safe before they can be rolled out for wider use. President Biden said that means

Companies must tell the government about the large scale AI systems they’re developing and share rigorous independent test results to prove they pose no national security or safety risk to the American people.

AI’s potentially disastrous use in warfare

At the same time, the order fails to address a number of pressing issues. For instance, it doesn’t directly address how to deal with killer AI robots, a vexing topic that was under discussion over the past two weeks at the General Assembly of the United Nations.

This concern shouldn’t be ignored. The Pentagon is developing swarms of low-cost autonomous drones as part of its recently announced Replicator program. Similarly, Ukraine has developed homegrown AI-powered attack drones that can identify and attack Russian forces without human intervention.

President Joe Biden has plans to regulate AI. Photo: Jim Lo Scalzo / EPA via The Conversation

Could we end up in a world where machines decide who lives or dies? The executive order merely asks for the military to use AI ethically, but doesn’t stipulate what that means.

And what about protecting elections from AI-powered weapons of mass persuasion? A number of outlets have reported on how the recent election in Slovakia may have been influenced by deepfakes. Many experts, myself included, are also concerned about the misuse of AI in the upcoming US presidential election.

Unless strict controls are implemented, we risk living in an age where nothing you see or hear online can be trusted. If this sounds like an exaggeration, consider that the US Republican Party has already released a campaign ad that appears to have been generated entirely by AI.

Missed opportunities

Many of the initiatives in the executive order could and should be replicated elsewhere, including Australia. We too should, as the order requires, provide guidance to landlords, government programs and government contractors on how to ensure AI algorithms aren’t being used to discriminate against individuals.

We should also, as the order requires, address algorithmic discrimination in the criminal justice system where AI is increasingly being used in high-stakes settings, including for sentencing, parole and probation, pre-trial release and detention, risk assessments, surveillance and predictive policing, to name a few.

AI has controversially been used for such applications in Australia, too, such as in the Suspect Targeting Management Plan used to monitor youths in New South Wales.

Perhaps the most controversial aspect of the executive order is that which addresses the potential harms of the most powerful so-called “frontier” AI models. Some experts believe these models – which are being developed by companies such as Open AI, Google and Anthropic – pose an existential threat to humanity.

Others, including myself, believe such concerns are overblown and might distract from more immediate harms, such as misinformation and inequity, that are already hurting society.

Biden’s order invokes extraordinary war powers (specifically the 1950 Defense Production Act introduced during the Korean War) to require companies to notify the federal government when training such frontier models. It also requires they share the results of “red-team” safety tests, wherein internal hackers use attacks to probe a software for bugs and vulnerabilities.

I would say it’s going to be difficult, and perhaps impossible, to police the development of frontier models. The above directives won’t stop companies from developing such models overseas, where the US government has limited power. The open-source community can also develop them in a distributed fashion – one that makes the tech world “borderless.”

The impact of the executive order will likely have the greatest impact on the government itself, and how it goes about using AI, rather than businesses.

Nevertheless, it’s a welcome piece of action. The UK Prime Minister Rishi Sunak’s AI Safety Summit, taking place over the next two days, now looks to be somewhat of a diplomatic talk fest in comparison.

It does make one envious of the presidential power to get things done.

Toby Walsh is a professor of artificial intelligence and research group leader at UNSW Sydney.

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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