“Hong Kong to emerge as stock exchange of choice” – Dealmaking experts | FinanceAsia

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Former Securities and Futures Commission (SFC) senior director, Roger Cheng, is set to join UK-headquartered law firm, Linklaters, at its Hong Kong base from August.

The move follows his nearly five years of experience at the special administrative region’s (SAR) financial regulator, where Cheng oversaw the operations of the Takeovers Team. The law firm’s announcement pointed to the instrumental role that he played during this time, developing Hong Kong’s takeovers and mergers policy, as well as driving forward other listing-related progress.

Prior to his tenure with the SFC, Cheng spent 13 years at Slaughter and May.

Offering some thoughts around trends affecting dealmaking in Hong Kong and China, Betty Yap, Linklaters partner and global co-head of the firm’s Financial Sponsor Group shared that there had been a noticeable rebound of M&A activity in the region post-pandemic, though activity has not yet returned to pre-pandemic levels.

“Inbound investment into mainland China is still somewhat marred by geo-politics and recent regulatory changes,” she told FinanceAsia, adding that her team is optimistic around sectors less affected by national security concerns, such as the consumer segment.

“Interest from Middle Eastern investors in M&A opportunities in China has increased as relations between [both] continue to strengthen.  We are also seeing a number of sales by private equity (PE) sponsors in the market, as investments made in prior years mature,” she continued.

Her colleague, Hong Kong-based partner, Xiaoxi Lin, noted that recent financial stress in the Chinese real estate market has presented interesting M&A opportunity in Hong Kong, through the sale of prime commercial and residential properties to generate cashflow and service restructuring debts.

“A cocktail of factors including the distress in the PRC real estate sector, rising interest rates, and regulatory restrictions have meant that commercial banks are reducing their exposure to the real estate sector, including loans secured by residential and commercial properties,” Yap said.

“Credit funds – who are not subject to the same regulatory restrictions – are stepping into this funding gap,” she added, highlighting that while the current elevated interest rate environment means that borrowing costs are higher, credit funds are able to provide financing on the back of higher loan-to-value (LTV) ratios and can offer swift deal execution.

IPO dynamics

In terms of the IPO landscape ahead, Lin told FA, “Market participants are cautiously expecting a stronger HK IPO market this year with more companies listed than in 2022”.

Corporate partner, Donnelly Chan, added that Hong Kong’s recent introduction of the Chapter 18C regime – which reduces the listing requirements threshold for firms operating in new economy industries – together with recent China Securities Regulatory Commission (CSRC) reforms, is likely to support the market’s advancement.

“The track record and proven success of the pre-revenue Biotech listing regime and the weighted voting rights (WVR) listing regime since their introduction in 2018, coupled with the concession route for Greater China companies to secondary list on the main board has demonstrated the Hong Kong market’s flexible approach and readiness to evolve and explore opportunities,” he told FA.

Chan added that, as a result, it is hoped Hong Kong’s bourse will become “the stock exchange of choice” compared to other regional fundraising hubs.

Opportunity elsewhere

However, Yap is bullish on opportunity across the full breadth of Asian markets.

“For the remainder of 2023, we believe there will be continued interest in M&A opportunities in Asia,” she told FA.

“As inbound investment interest in China remains mixed given geo-politics, other single jurisdiction markets in Asia that can provide scale will be of interest to financial sponsor investors looking for efficiency in the deployment of capital.”

She pointed to markets such as India and Japan as benefitting from investor appetite – with the latter offering attractive costs “because of the lower yen”.

Yap added that Southeast Asia will continue to draw capital: “in particular Indonesia, with its relatively young demographics and the consumption power of its growing middle class.”

In terms of sectors, she noted that energy transition will remain of utmost importance “with interest in targets from renewables to electric vehicles to batteries to de-carbonising assets,” while digital infrastructure and data centre investment will continue to support the rise of e-commerce.

In the Linklaters release, head of Corporate, Sophie Mathur shared, “We are delighted to welcome Roger to our corporate practice. We are confident that his insights into takeovers and mergers regulations and policy matters will be of immense value-add to our clients when navigating take-privates and other public market transactions.”

Unlike the typical structure of a corporation, Linklaters employs a limited liability partnership which enables the firm’s partner leadership-base to make long-term strategic decisions for the business together.

Cheng’s appointment follows other key hires in Asia in recent months, including the appointment of Yoshiyuki Asaoka as corporate partner in Japan. In June 2021, William Liu was appointed as regional managing partner for Asia Pacific.

 

¬ Haymarket Media Limited. All rights reserved.

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Commentary: Can Singapore presidential hopefuls be overqualified?

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NOT A JOB ANYONE CAN DO

It should not be surprising that the elected presidency was conceived, and is best understood, as an institution with eligibility restricted to a select group.

In response to a parliamentary question in May, Minister-in-charge of the Public Service Chan Chun Sing stated that there were 50 public service positions that fulfil the public sector service requirement to run in the next presidential election. These include the positions of minister, chief justice, Speaker of Parliament, attorney-general, chairman of the Public Service Commission, auditor-general, accountant-general or permanent secretary.

For potential presidential candidates looking to qualify under the private sector service requirements, there were more than 1,200 companies with average shareholders’ equity at or exceeding S$500 million (US$372 million).

This, of course, does not tell us how many of these eligible individuals will have the gumption to run in a bid for the highest office in Singapore.

It does not help that in a well-governed country, many may not find compelling reasons to step forward and serve. Moreover, the president and his or her family are not exempted from public glare and scrutiny and so sacrificing that comfortable privacy may be a deterrent to seeking elected office.

Singapore’s current and past elected presidents had entered office with impressive credentials and brought their personalities to bear on the office. In that regard, the office of Singapore’s head of state has moulded into a symbol of national unity and a crucial governance guardrail.

Having a capable and wise person to represent our country internationally and to safeguard the vast national reserves is not a job anyone can do. Instead of being a promoter and protector of good governance, the presidency can expedite the road to ruin.

In my view, there can never be an overqualified president.

Eugene K B Tan is associate professor of law at the Singapore Management University and a former Nominated Member of Parliament.

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China, US move closer to high-level official talks

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The China and the United States governments are getting closer to resuming high-level dialogue as media reported that US Secretary of State Antony Blinken will visit Beijing within several weeks, or as soon as next week.

CNN reported on Tuesday that Blinken will travel to China in the coming weeks. Politico reported on Thursday that his trip may occur next week.

Beijing has so far refused to comment on Blinken’s itinerary. It said the US and China should maintain dialogue but Washington must show sincerity and stop “saying one thing but doing another.”

Some Chinese commentators said it shouldn’t be surprising if Blinken visits Beijing, given that there have been several rounds of talks between US and Chinese officials over the past month. But they said Beijing will have limited expectations for meetings with US officials.

If confirmed, Blinken’s trip will mark the highest-level visit of a US official to China since then-Secretary of State Mike Pompeo visited the country in 2018. It will show an easing of Sino-US political tensions, which have been heightened by the Chinese balloon incident in late January.

Due to rising hopesof a bilateral thaw between the world’s two largest economies, the Dow Jones index has increased 258 points, or 0.8%, to 33,833.61 on Wednesday and Thursday. The Shanghai Composite index has also surged by 31 points, or 1%, to 3,231.41 on Thursday and Friday.

Choosing sides  

On Friday, the Chinese foreign ministry called on all US diplomats to implement Blinken’s promise that Washington will not require other countries to choose sides between the US and China. 

“We hope US diplomatic missions around the world will truly treat other countries’ development of relations with China with an open and inclusive attitude, stop suppressing Chinese companies including Huawei Technologies everywhere, stop coercing allies to restrict chip exports to China, stop luring other countries to give up their cooperation with China and stop spreading false information such as ‘China’s debt trap’,” Wang Wenbin, a foreign ministry spokesperson, said in a regular media briefing on Friday.

US President George Washington. Photo: Wikimedia Commons

To describe the Sino-US relations, Wang used a quote from the first US president, George Washington, who said, “A slender acquaintance with the world must convince every man that actions, not words, are the true criterion of the attachment of friends.”

“We care about what the US says, but we care even more about what actions it takes,” he said.

Prior to this, Wang said on Wednesday that China and the US should maintain necessary communication but the responsibility for the current challenges facing China-US relations does not lie with China.

“The US needs to respect China’s core interests and major concerns, stop interfering in China’s internal affairs, stop harming China’s interests, and stop calling for communication on the one hand and making provocations on the other,” he said.

On Thursday, Blinken told the media during his visit to Saudi Arabia that the US is not asking anyone to choose between Washington and Beijing. He said Washington is only trying to demonstrate to other countries the benefits of having a partnership with the US. 

Last December, China and Saudi Arabia signed a series of strategy deals, including one involving Huawei, during Chinese President Xi Jinping’s three-day visit to Riyadh. On March 10, Saudi Arabia and Iran agreed to reestablish diplomatic relations and reopen embassies after years of tensions. Chinese media said Beijing had contributed to the talks between Saudi Arabia and Iran.

‘De-risking’ plan

On May 20, G7 leaders said in a joint statement that they have a common interest in preventing a narrow set of technological advances from being used by some countries to enhance their military and intelligence capabilities to undermine international peace and security. 

They said G7 countries are not decoupling with China but they also recognize that economic resilience requires “de-risking and diversifying.”

On Tuesday, the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned a network of seven individuals and six entities in Iran, China and Hong Kong in connection with Iran’s ballistic missile program. 

“As a Chinese saying goes, ‘Good faith makes good things happen.’ Dialogue should be based on mutual respect and aim for real results,” Xie Feng, China’s Ambassador to the US, told the American business community during an event of the US-China Business Council on Wednesday. 

“It surely is not the right way to seek dialogue and cooperation while putting the other on the sanction list,” he said. “Dialogue conducted only for its own sake will not work either. Saying one thing but doing another could only bring unintended results.”

“For high-level interactions, whole-process management is essential – fostering a good atmosphere in advance, accumulating outcomes in the process, and delivering on them afterwards,” he said.

He added that to many Chinese people, the word “de-risking” may be just another name for “decoupling.” He said the US should not use national security as an excuse for protectionism.

Diao Daming, an associate professor at the Renmin University of China in Beijing, told the Global Times on Wednesday that the US is trying to test China’s reaction to Blinken’s potential visit through media hype and is trying to shape its own image as a promoter for communication.

He said the series of actions recently taken by the US reflects Washington’s duplicity and self-contradiction.

China’s demands

In April, media reported that US President Joe Biden would sign an executive order to restrict US companies and private equity and venture capital funds from investing in China’s microchips, artificial intelligence, quantum computing, biotechnology and clean energy projects and firms. But there has been no update so far.

On May 8, China’s Foreign Minister Qin Gang met with US Ambassador to China Nicholas Burns in Beijing. On May 11, top Chinese diplomat Wang Yi and US National security adviser Jake Sullivan met in Vienna. On May 25, China’s Commerce Minister Wang Wentao met with US Secretary of Commerce Gina Raimondo in Washington, DC. The three meetings were described by both sides as candid and constructive.

On May 8, 2023, State Councilor and Foreign Minister Qin Gang met with US Ambassador to China Nicholas Burns in Beijing. Photo: Chinese Foreign Ministry

“Proven by the three meetings, the tensions between the US and China have eased over the past one month,” a Guangdong-based commentator writes in an article published on Friday. “If US officials have to visit China, there is no harm for Chinese officials to meet them.”

“But when Blinken visits China, the Chinese government should issue an official warning to the Biden administration that if it continues to cross China’s red line over Taiwan issues and take extraordinary actions, the responsibility of shaking the Sino-US relations or causing military conflicts in the Western Pacific region will lie with the US,” the commentator says.

He says the Biden administration has not cancelled the extra tariffs and sanctions imposed on China but hopes that China will continue to buy US food, natural gas, airplanes and semiconductors, instead of purchasing goods from Brazil, Russia and France. He says Beijing must tell Americans that China will not purchase goods from countries that hurt its interest.

He adds that Blinken should answer why the Russian-Ukrainian conflicts have shown signs of spillover, which is bad news for Europe. He says problems will be resolved only if the US is willing to work with China.

Read: US-China trade talks end in more chip war salvos

Read: With Micron ban, China says no to ‘de-risking’

Follow Jeff Pao on Twitter at @jeffpao3

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Why Japanese equities are attracting foreign investors

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International investors are likely to increase their exposure to Japanese equities or, indeed, consider including them in their portfolios for the first time this year and beyond.

The reason is that the world’s third-largest economy is experiencing inflation that reached a four-decade high in February and continues to run hot.

Sharp price gains are rarely desirable, but Japan is an exception after bouts of deflation since the late 1980s and early 1990s.

Japan has been grappling with a persistent problem of low inflation and deflation for several decades for four main reasons. 

First, it has an aging population and a declining birth rate, which has led to a shrinking workforce and reduced consumer spending. With fewer people entering the workforce and spending less, there is lower demand for goods and services, resulting in stagnant prices.

Second, Japan has experienced prolonged periods of economic stagnation, characterized by sluggish growth and weak consumer and business spending. This has limited the potential for inflationary pressures to build up.

Third, the country has one of the highest debt-to-GDP ratios among developed countries. To manage this debt burden, the government has implemented accommodative monetary policies, including low interest rates and quantitative easing. While these policies aimed to stimulate economic growth, they have not translated into significant inflationary pressures.

And fourth, Japan has faced structural challenges in its economy, such as excess capacity in certain industries, weak productivity growth, and limited wage increases. These factors have contributed to a lack of upward pressure on prices.

Economic recovery

However, in more recent times, as the economic recovery continued amid supportive monetary and fiscal policies and a surge in tourism, inflation has surged.

For this reason, cash is no longer king as the rising prices are eroding Japanese investors’ purchasing power.  

As such, they’re increasingly looking for alternatives, and we expect Japanese equities are going to be the go-to as a way to preserve or even increase the real value of their investments.

Equities are often seen as a potential hedge against inflation. When prices rise, the value of a company’s revenue and earnings may increase, leading to higher stock prices. 

Should Japanese investors pile into the Tokyo and Osaka exchanges, equity values will naturally increase, and this will pique the interest of international investors looking to further diversify their portfolios to seize opportunities and mitigate risk.

Japan experienced a prolonged period of economic stagnation in the 1990s and 2000s, often referred to as the Lost Decades. This era was characterized by low economic growth, deflation, and a weak stock market. The negative perception of Japan’s economy during this time seriously deterred international investors from considering Japanese equities.

In addition, historically, Japan’s corporate governance practices and transparency standards were considered relatively weak compared with other developed economies. This lack of transparency and shareholder-friendly practices made some would-be overseas investors cautious about investing in Japanese companies.

Plus, of course, equities in Japan have not consistently outperformed other global equity markets in recent years.

But as values are likely to rise as investors shed cash and fixed-income investments because of rising inflation, this trend for overlooking Japanese stocks will be reversed.

Nigel Green is founder and CEO of deVere Group. Follow him on Twitter @nigeljgreen.

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Commentary: Should workplaces in Singapore embrace pay transparency?

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In a LinkedIn December 2022 survey, 91 per cent of the respondents based in the US said that including salary ranges in a job post would impact their decision in applying for a role.

This finding was consistent across industries and seniority levels. Salary clarity allows applicants to tailor their search and form a good idea of their growth potential, while recruiters can focus on the most viable candidates.

Despite this, many companies are not adding pay ranges to job ads, stemming from fear that it may lead to discontent in their current workforce. It may also be due to a lack of confidence in their pay structures or in the maintenance of pay equity within the company. 

There is no one answer to how pay transparency will affect the future of hiring, as the impact will vary depending on organisation and industry. 

Pay transparency can be an effective tool in addressing challenges in talent attraction and retention, but it is not a comprehensive solution on its own. It is also important to remember that employees may decide to leave a company for non-quantifiable reasons, such as better career development and progression opportunities.

With increased competition for talent, business leaders must work together with HR to adopt and implement progressive policies to keep top talent with the organisation.

Aslam Sardar is Chief Executive Officer, Institute for Human Resource Professionals (IHRP). Dr Fermin Diez is an IHRP Master Professional and until recently the Deputy CEO and Group Director of Sector Capability and Transformation at the National Council of Social Service (NCSS). Carmen Wee is an IHRP Master Professional and Founder and CEO, Carmen Wee & Associates.

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Thai stock exchange completes infrastructure upgrade | stock exchange of thailand, set, nasdaq, technology, upgrade, infrastructure | FinanceAsia

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On Wednesday (May 31) Nasdaq and the Stock Exchange of Thailand (SET) announced the launch of a new trading system that is set to provide improved function and efficiency across capital market dealflow and execution.

The upgraded infrastructure is built on Nasdaq-conceived technology that draws on state-of-the-art, in-built market data distribution and surveillance systems which support increasing transaction volumes and product varieties.

“Nasdaq has had a longstanding partnership with SET, having provided technology solutions to the exchange for over a decade. This announcement marks the successful completion of a technology upgrade programme that began in 2019,” Roland Chia, executive vice president and head of Marketplace Technology at Nasdaq, told FinanceAsia.

“It facilitates efficient system integration with widely adopted interfaces based on global standards for order entry and market data, including ITCH and OUCH.”

He shared that following the recent successful launch, SET has plans to integrate additional capabilities into its workflow, including Nasdaq’s Pre-Trade Risk Management, Index calculator, Data platform and other Market Surveillance solutions.

In the announcement, SET president Pakorn Peetathawatchai explained that the new system was inaugurated by the Thailand Futures Exchange last month and achieved a “smooth transition”. He reported particular success in terms of improved efficiency and faster order management. 

In a video discussing the infrastructure upgrade, Thirapun Sanpakit, head of SET’s Information Technology division, highlighted the development’s capacity to “boost the competitiveness of the Thai capital market.”

“We believe the solution will enable our customers to achieve the fastest time to market. While also minimising total cost of ownership,” he said.

Sanpakit explained that the upgrade reduces roundtrip order latency to under 40 microseconds and said that it would support the bourse’s pursuit of new product launches. He detailed callable bull-bear contracts (CBBC) in the equity market, and single stock options in the Thailand Future Exchange (TFEX) derivatives market, as likely to go live in the near future.

The Thai bourse boasts the highest liquidity among Asean-based exchanges – a position it has maintained for over a decade. In 2022, capital raised through IPO totalled $3.46 billion, the highest volume among Asean exchanges and fourth largest in Asia after China, South Korea and India. According to Sanpakit, the exchange handles a daily trading volume of $2.5 billion. 

SET was not able to comment beyond the press release prior to publication.

 

¬ Haymarket Media Limited. All rights reserved.

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Don’t underestimate China’s ability to catch up with the West

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Investment strategy: Not a time to play the hero

David Woo voices skepticism about the smooth passage of the debt ceiling deal and ponders the motivations behind Kevin McCarthy’s actions. He discusses the performance of GPM’s portfolio trades and a bullish outlook on gold due to the debt ceiling situation.

Ukraine: What next and to what effect?

Uwe Parpart questions the likelihood of a successful major offensive by Ukraine without air superiority and highlights the perspective of General Mark Milley, head of the US Joint Chiefs of Staff, who states that the war cannot be won militarily by Russia and predicts continued fighting until a settlement is negotiated.

The China bailout that wasn’t

David Goldman writes that while China’s post-Covid recovery has been below expectations, with weak consumption and property investment and an underperforming equity market, China’s exports to developing markets, especially in the auto sector, are showing strength, with China becoming the world’s largest auto exporter in April.

Russian air offensive intensifies as Ukraine grapples with stalemate

James Davis assesses that the war in Ukraine remains in a state of attrition, with Russian forces focusing on gradually weakening Ukrainian manpower and infrastructure. Both sides lack the readiness for large-scale offensives, leading to a probable continuation of the current stalemate with increased air and missile attacks.

China’s C919 passenger jet’s maiden voyage could invite US sanctions

Scott Foster writes that China’s COMAC could surpass Boeing to become China’s second-largest commercial aircraft supplier after its C919 passenger jet successfully completed its first commercial flight. There are concerns, however, that Washington may impose export restrictions on COMAC’s US suppliers.

Japan likely to benefit from ‘de-risking’ China, at least in the short run

Scott Foster believes US-imposed chip export restrictions are expected to have a limited impact on Japanese equipment makers in the short term, investments by TSMC, Micron and Rapidus in Japan’s semiconductor industry are anticipated to significantly enhance production capacity and technological sophistication.

Meet the GPM team

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Timeline: What to expect in the event of a contested Presidential Election

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Here’s a look at what we might expect based on the 2011 Presidential Election, when it was last contested:

QUALIFYING TO RUN

Not everyone can run for President. Before nominations, potential candidates first need to pass the Presidential Elections Committee (PEC) by submitting forms to apply for a Certificate of Eligibility.

The strict criteria that presidential hopefuls must meet include having held a senior public office or helmed a company that has at least S$500 million (US$370 million) in shareholders’ equity for at least three years.

These are listed in the Constitution of Singapore, including a clause that says the PEC has to be satisfied the potential candidate is a person of integrity, good character and reputation. The contender must also be at least 45 years old, and not belong to any political party.

In 2011, the Certificate of Eligibility forms were available from Jun 1.

WRIT OF ELECTION

The race officially kicks off when the Writ of Election is issued, and aspiring candidates have three days from then to apply for the Certificate of Eligibility.

In 2011, Prime Minister Lee Hsien Loong issued the Writ on Aug 3 and Nomination Day was set on Aug 17.

The PEC announced the potential candidates’ eligibility on Aug 11 and four met the threshold, out of six who had applied.

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The quiet committee keeping China investment at bay

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A Chinese private equity firm, Primavera Capital Group, in May acquired the well-known test preparation company Princeton Review and an online learning platform, Tutor.com.

The move, like other Chinese investments in tech and those that deal with personal information, is increasingly drawing the attention of politicians, the US government and national security experts – especially as tensions rise between the US and China.

What remains unclear, however, is if this seemingly routine business acquisition was reviewed by the Committee on Foreign Investment in the the US, which has authority to examine transactions involving foreign investment.

The committee is largely prohibited from publicly disclosing any information filed with it, including whether it is reviewing a transaction or whether one was referred for review.

While the committee is hardly a household name, its mission and its expanding oversight have important implications for the US economy and national security.

Government oversight

The dark grey dome of the U.S. Capitol Building against a light grey sky.
Congress strengthened the Committee on Foreign Investment’s powers, allowing it to scrutinize foreign investments in areas including cybersecurity, microelectronics and artificial intelligence. Photo: Joshua Sukoff for Unsplash.com, CC BY via The Conversation

The Committee on Foreign Investment, a US government interagency committee established in 1975 by President Gerald Ford, is tasked with studying and coordinating the implementation of policy on foreign investment in America.

Investment by foreign countries greatly benefits the US, supporting 10.1% of the total labor force in 2019. Yet, beginning in the 1980s, the federal government grew increasingly concerned about potentially harmful effects of foreign investment in the US. For example, if a foreign firm gets control of sensitive technologies, it could hurt national competitive advantages or even threaten national security.

The primary objective of the committee is to review selected foreign investments and some real estate transactions by foreigners in the US for their national security implications. Real estate transactions are generally scrutinized only when a transaction involves land that is either close to a military base or near an airport or seaport.

Vetting foreign investments

In the 1980s, political concern grew about Japanese investment and, specifically, the proposed purchase by Japanese computer giant Fujitsu of chipmaker Fairchild Semiconductor. Semiconductors were considered a sensitive industry, with potential defense applications, so the purchase prompted Congress in 1988 to pass the Exon-Florio amendment to the Defense Production Act of 1950.

This amendment empowered the committee not just to review foreign investment deals but also to recommend rejecting them. Acting on its recommendation, a US president could block a foreign transaction on “national security” grounds.

For instance, in 1990, President George H W Bush voided the sale of MAMCO Manufacturing, which made metal parts for airplanes, to a Chinese agency, ordering the China National Aero-Technology Import & Export Corporation to divest itself of the Seattle-based company.

In the context of a committee review, the term national security typically refers to foreign transactions that could cause significant outsourcing of jobs, a loss of control over agricultural supply chains, the sharing of sensitive technologies, control of a firm that satisfies defense needs, or the impairment of critical infrastructure.

Strengthening the committee

In 2006, Dubai Ports World, owned by the United Arab Emirates government, was about to gain managerial control of six US ports in a major deal. Because of terrorism-related concerns, Senator Chuck Schumer led a campaign against this proposal and the transaction was eventually called off, even though it had initially been approved by both the committee and President George W Bush.

White sand beach in the foreground with Abu Dhabi skyscrapers in the background.
Political concern scuttled a United Arab Emirates deal to manage US ports and triggered greater power for the Committee on Foreign Investment. Photo: Damian Kamp for Unsplash.com, CC BY via The Conversation

In the aftermath of this controversy, lawmakers passed the Foreign Investment and National Security Act in 2007, giving Congress greater oversight of the committee to ensure that potential acquisitions were adequately reviewed. In addition, it required the committee to scrutinize any foreign investment deal in which the pertinent overseas entity is either owned or controlled by a foreign power.

National security concerns

Over time, the Committee on Foreign Investment has been given more power to reflect and act on the political and economic concerns of the US.

China, for example, appears to have global ambitions to replace the US-led world order. As it gains geopolitical power, China has come under increased scrutiny by the US, with public support for getting tough with China on economic issues. In response to these concerns, concrete steps have been taken by US lawmakers to increase the scope of what the committee is able to do.

In 2018, then-president Donald Trump signed the Foreign Investment Risk Review Modernization Act, giving the committee new powers over certain types of foreign investment that affect many Chinese investors. In the two-year period after the passage of the act, transaction registrations from Chinese investors fell by 43%.

In 2022, President Joe Biden signed an executive order directing the committee to sharpen its investigation of foreign investment deals that could negatively affect cybersecurity, quantum computing, biotechnology and sensitive data.

A teal-green schematic on a black background computer screen.
Foreign investments scrutinized by the US can range from agricultural supply chains to biotechnology and quantum computing. Photo: Adi Goldstein for Unsplash.com via The Conversation

The Committee on Foreign Investment is now more powerful than it has ever been, and it is a gatekeeper on major foreign investment deals.

The US is not alone in examining foreign investment deals for national security implications. In recent times, the United Kingdom, the European Union and Australia have either created or strengthened existing regulations to police with greater care foreign investment deals, particularly those originating in China.

It remains to be seen what the long-term implications of these expanding powers of the Committee on Foreign Investments in the US will be.

Amitrajeet A. Batabyal is a distinguished professor, the Arthur J Gosnell professor of economics and interim head of the Department of Sustainability at the Rochester Institute of Technology.

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

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SC seeks to transform agri sector via fintech, alternative financing

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Access to finance is critical to agriculture’s future, said SC chairman
Capital market could help Malaysia achieve its food security agenda

The Securities Commission Malaysia (SC) encourages the broader adoption of financial technology (fintech) in agriculture to help achieve the country’s food security agenda.
SC Chairman Awang Adek Hussin (pic) said access to finance…Continue Reading