HONG KONG: Asian stocks fell on Thursday (Nov 16) pausing the heavy gains made this week, as fresh Chinese data showed prolonged weakness in the property sector and dented some of the recent optimism about a recovery in the world’s second-largest economy. While data released this week showed China’s industrialContinue Reading
A regenerative food system is the best way to create a sustainable food supply, a forum was told this week.
Tastebud Lab and Bio Buddy held a “Future Food System Synergies by Tastebud Lab” discussion and workshops at the Queen Sirikit National Convention Center (QSNCC) on Wednesday.
This was part of the “Asean-Asset 2023: Global Summit on the Future of Future Food — Global Protein Integrity” event, jointly organised from Tuesday to Wednesday by the International Joint Research Center on Food Security; the National Center for Genetic Engineering and Biotechnology at the National Science and Technology Development Agency; the Ministry of Higher Education, Science, Research and Innovation; Queen’s University Belfast from the United Kingdom; the Development Research and Innovation (PMU-B) Department at Thammasat University; and the Thai Academy of Science and Technology.
Santi Abakaz, Tastebud Lab and Bio Buddy CEO and co-founder, said the food industry employs the most workers, or around 60-70% of workers globally. Those who work in the food industry are the lowest-paid workers compared to other sectors.
Also, food production, distribution and consumption is among the main contributors to greenhouse gases, accounting for 24-26% of global emissions, Mr Santi said.
“We need to look in a systematic way at the value chain to solve the problem,” he said.
“Yes, we already have bright ideas such as solutions to problems of livestock and fisheries through plant-based food, insect proteins, mushrooms, cellular culture, cultured meat, novel food and so on. But that is just beginning in our efforts to solve the problem and tackle the problem in our food system,” he added.
There are still issues of inefficiency in food production, as well as a need to reduce food waste and make better use of it in the circular economy, Mr Santi said.
Another way to tackle food system-related problems would be to throw more support behind regenerative food systems, he said.
This is a way of producing food that does not harm the environment but rather restores the planet and helps society.
“We have been talking a lot about how to stop or slow down the climate crisis, but instead of slowing it down, why don’t we talk about resilience or restoration?” Mr Santi asked.
“So, the very concept of regenerative food and food systems is really to understand the core idea of life, including different forms of life like microorganisms and living organisms.
“[We need to] understand each other and make an ecosystem, environment and food systems that complement each other. That is the core idea of regenerative food.”
Rungphech Chitanuwatm, the regional portfolio director for Asean at Informa Markets, highlighted the importance of having a strong local food system.
It would be better, she said, if farmers had access to the technology that can make their products more valuable, rather than selling them as fresh goods in local markets.
“The question is how to help the locals supply more of their products to major food producers, rather than selling them as merely commodities or goods,” she said.
MANILA – “Are you sure you (Filipinos) want to get into a fight where you will be the battleground?”, Singapore Prime Minister Lee Hsien Loong cautioned at a recent forum in the city-state when asked about rising tensions in the South China Sea.
The leader’s comments came shortly after yet another incident that risked tilting toward violence between Chinese and Philippine coast guard forces.
Manila accused Beijing of conducting “dangerous maneuvers” during its latest resupply mission to the hotly disputed Second Thomas Shoal, a feature which precariously hosts a detachment of Filipino soldiers atop a grounded vessel. Beijing has consistently claimed Manila is the provocateur in recent incidents around the shoal.
In the event, a Chinese Coast Guard vessel fired a water cannon at a Philippine counterpart after Beijing said it “entered the waters adjacent to [Second Thomas Shoal] Reef in China’s [Spratly] Islands without the permission of the Chinese government.”
China also warned the Philippines against refurbishing its de facto naval base in the area, the largely dilapidated BRP Sierra Madre vessel, lest it risk armed confrontation.
For its part, Manila has maintained that since the disputed feature is just a low-tide elevation within its continental shelf, as per a 2016 arbitral tribunal ruling under the United Nations Convention on the Law of the Sea (UNCLOS), the Second Thomas Shoal is not even a territory to be claimed by Beijing.
Western powers, Japan and traditionally neutral nations like India have publicly expressed support for the Philippines amid multiple encounters and near-collisions with Chinese maritime forces in recent months. But most Association of Southeast Asian Nations (ASEAN) members have remained largely silent on the issue.
“The South China Sea is important, but it is not the only thing at stake,” Singapore’s leader Lee said while expressing his hope that none of the region’s rival claimants “truly want to push it to the brink.”
Malaysia, Vietnam and Indonesia also have rival sea claims with China, but none are pushing back as hard as the Philippines.
Lee’s comments, however, didn’t go down well with many Filipinos who lament the lack of support, if not outright abandonment, from its ASEAN brethren amid its intensifying maritime tussle with the Asian superpower.
Home to Asia’s first anti-colonial revolution, the Philippines sees itself as a key member of the Global South. In fact, its voting record at the United Nations has largely tracked with fellow post-colonial nations including among ASEAN members.
At the same time, Manila has aligned with more Western democratic nations during many key UN votes, most notably on the creation of the State of Israel, the recent Ukraine conflict and the current Israel-Hamas war.
Throughout the Cold War period, the Philippines also kept a healthy distance from its more communist-friendly counterparts, most notably Indonesia and India, during the 1955 Bandung Conference.
Although the Philippines is one of the founding members of ASEAN, originally devised as an anti-communist bloc, it has had relatively testy relations with neighbors over the interceding decades. This largely stems from Manila’s geographic and cultural distance from the rest of Southeast Asia.
Geographically, Manila is far closer to Taipei than all ASEAN capitals. Manila is just as close to Guam, Tokyo and Seoul as it is to key Southeast Asian capitals such as Jakarta and Singapore.
This has had major geopolitical implications, namely making Manila historically central to determining the broader order in the Western Pacific and Northeast Asia.
As a former Spanish and American colony, the Philippines’ cultural distance from the rest of ASEAN is just as pronounced. A Catholic-majority nation with a long history of liberal democratic politics, the Philippines has arguably more in common with Latin American nations than some of its immediate neighbors.
And as America’s oldest ally in Asia, the Philippines has been a key pivot point of Washington’s grand strategy in the region. Already enjoying a Status of Visiting Forces Agreement with Australia, the Philippines is also the only Southeast Asian nation to have openly backed the Australia-UK-US (AUKUS) defense pact.
It’s also the only regional state pursuing a Visiting Forces Agreement-style deal with Japan.
The Philippines’ distinct geopolitical alignment is not only a reflection of its unique strategic culture but also an upshot of its growing frustration with ASEAN.
For more than three decades, Manila has incessantly pushed for greater regional diplomatic intervention to protect the interests of smaller claimant states in the South China Sea.
During the negotiation of the UNCLOS in the 1970s, the Ferdinand Marcos Sr administration mobilized regional states in order to collectively lobby for the rights and interests of smaller maritime nations in the UNCLOS negotiations.
Shortly after the bloody Sino-Vietnamese skirmish over Johnson South Reef in the late 1980s, Manila started pushing for a regional Code of Conduct (COC) in the South China Sea.
Thanks to incessant diplomatic efforts by multiple Filipino governments, most notably under the Fidel Ramos administration, ASEAN and China finalized a transitional Declaration on the Conduct of Parties (DOC) in the South China Sea in 2002 as a prelude to a legally binding COC.
Two decades later, however, ASEAN has yet to finalize even a final draft of the agreement, with China constantly dragging its feet and sending mixed signals during the protracted negotiations.
With most ASEAN nations deeply dependent on China’s markets and economic largesse, the COC negotiations have been largely pro forma rather than substantive. To the Philippines’ chagrin, some ASEAN neighbors, most notably Cambodia, widely seen as a China satellite, seem uninterested in even discussing the disputes.
In 2012, ASEAN faced a major diplomatic crisis, when Hun Sen, as the regional body’s rotational chairman, tried to block even the mere mention of the disputes just months after Manila lost control over Scarborough Shoal to China. In response, then-Philippine president Benigno Aquino warned, “The ASEAN route is not the only route for us.”
When the Philippines filed an international arbitration case against China at The Hague, no ASEAN nation expressed public support. Once it was clear that the unprecedented legal case was about to bear fruit, Hun Sen lambasted the Philippines by complaining: “It is very unjust for Cambodia, using Cambodia to counter China…this is not about laws, it is totally about politics.”
Nor did ASEAN as an organization even mention, never mind support, the arbitral tribunal award at The Hague, which rejected the bulk of China’s claims to the sea in favor of the Philippines.
The only exception was Vietnam, which informally supported the Philippines’ arbitration case and, once the final ruling was published, broadly agreed with the precedent and its legal implications for its claims in the South China Sea. Vietnam has since weighed whether to file a parallel case against China over their sea disputes.
In fairness, Singapore, which is not a claimant in the South China Sea, has historically stood for a rules-based order in the region. Ahead of the 2016 arbitral tribunal ruling, Lee also emphasized the importance of UNCLOS as a foundation for managing maritime disputes in the region.
Singaporean leaders, most notably the late Lee Kuan Yew, have also constantly emphasized the importance of America providing a military and economic counterbalance to China in the region.
Although not a US treaty ally, Singapore also has a robust defense relationship with America, including the Memorandum of Understanding in 1990, the Strategic Framework Agreement in 2005 and the 2019 Protocol of Amendment to the 1990 MOU, which granted the Pentagon significant access to the city-state’s naval facilities.
From 2019 to 2021 alone, the United States authorized the permanent export of over US$26.3 billion in defense equipment to Singapore. Significantly, the city-state is the only Southeast Asian nation to gain access to US-made F-35 fighter jets.
Against this backdrop, the Singaporean leader’s recent statements on the South China Sea disputes were met with a mixture of perplexity and criticism in the Philippines, where a vast majority favor a tougher stance against China in tandem with allied nations.
Philippine Foreign Secretary Enrique Manalo has made it clear in the past that the maritime disputes are “not the sum” of bilateral relations with China. Nevertheless, Manila is determined to draw the line in the South China Sea to protect its core interests after six years of fruitless flirtation with Beijing under the Rodrigo Duterte presidency.
And with the rest of ASEAN largely silent on the Philippines’ rising struggle teetering toward confrontation, there is a growing perception that Manila should just rely more on its traditional Western allies rather than fellow ASEAN members, many of which seem more keen to please Beijing rather than uphold regional solidarity.
Follow Richard Javad Heydarian on X, formerly Twitter, at @Richeydarian
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.
The 800-pound gorilla in the room when Joe Biden goes toe-to-toe with Xi Jinping on November 15 will be the extreme political dysfunction in Washington that is threatening America’s last AAA credit rating.
As US President Biden angles to remind Chinese leader Xi who’s boss in San Francisco, partisan brinkmanship 3,000 miles away in Washington is reminding global markets that the world’s biggest economy is in a rather bad place.
The threat Biden faces is less from Asia’s top trading power than lawmakers on Capitol Hill in burn-it-all-down mode.
Moody’s Investors Service just reminded Biden’s White House that the stakes are rising, and fast. On November 10, the last credit rating company to grade Washington AAA warned a downgrade is coming, and perhaps soon. Moody’s cited the US debt topping US$33 trillion and political polarization throwing fiscal management into chaos.
This adds an awkward subplot to the Biden-Xi tete-a-tete on the sidelines of this week’s Asia-Pacific Economic Cooperation (APEC) summit. For all the challenges Xi faces in Beijing — slowing growth, property sector defaults, deflation, aging demographics — Biden faces his own daunting odds in stopping Moody’s from dealing his administration a humiliating blow.
And at a time when global financial markets were just warming to the idea that the US Federal Reserve might be done tightening this inflation-curbing cycle. A downgrade would take the “higher-for-longer” yield era to entirely new heights of economic damage and disorientation.
White House officials claim, somehow with straight faces, that this drama isn’t casting a pall over US-China dynamics in San Francisco. “We don’t have any changes to his schedule,” White House press secretary Karine Jean-Pierre told reporters this week. “This is something that Congress can get done very easily. This is their job, right? Their job is to keep the government open.”
But tell that to officials at Xi’s State Administration of Foreign Exchange (SAFE) managing China’s $860 billion worth of US Treasury holdings. Though this is Beijing’s lowest exposure to US political shenanigans in 14 years, it entrusts a sizable block of state savings to Washington lawmakers acting rationally.
This year’s surge in US yields to 17-year highs is disproportionately affecting China’s investment and trade-reliant economy. The 5.7% drop in the yuan this year raises the risk of more property developers defaulting on overseas debt dominated in dollars.
The US economy, meanwhile, is buckling under the weight of 11 Fed rate hikes in less than 20 months. Germany is fending off chatter that it’s the “sick man” of Europe as the rest of the continent loses economic altitude. Economists forecast that Japan’s economy shrank in the July-September period.
This global backdrop adds pressure on Xi’s team to support demand in the short run, while also stepping up structural reforms to improve the quality of China’s long-term growth. A fresh surge in US yields, particularly if Moody’s pulls the trigger, could slam global markets in the homestretch of 2023.
In this sense, political dysfunction in the US is emerging as the biggest threat to Asia’s 2024. “In Moody’s view, such political polarization is likely to continue,” the agency said. “As a result, building political consensus around a comprehensive, credible multi-year plan to arrest and reverse widening fiscal deficits through measures that would increase government revenue or reform entitlement spending appears extremely difficult.”
Analysts at Moody’s cited a number of recent standoffs that augur poorly for Republicans and Democrats coming together to address Washington’s fiscal challenges. They include a near-default earlier this year as Republicans refused, for a time, to raise the statutory debt limit.
That clash led to the ouster of Kevin McCarthy, a Republican, as speaker of the House of Representatives, the first such stunt by Congress in history. It left the House leaderless and rudderless for weeks, feeding into the negative sentiment at Moody’s on US fiscal vulnerabilities. It also upped the odds of yet another government shutdown.
The specter of lawmakers effectively shuttering Washington prompted Fitch Ratings to downgrade the US in August. Fitch cut America’s rating to AA+, 12 years after S&P Global yanked away its AAA status amid an earlier budget showdown.
The days since Moody’s fired its bow shot at Capitol Hill haven’t been promising. New House Speaker Mike Johnson has yet to outline a path forward for avoiding another shutdown. One will indeed occur if Congress fails to pass a budget or stopgap-funding bill by November 17.
Troubling, too, is the gimmicky ways in which Johnson is looking to paper over Washington’s dysfunction. One is passing a “laddered continuing resolution.” This would only extend funding for certain government agencies and programs until January 19, and for others until February 2.
Senator Chris Murphy, a Connecticut Democrat, speaks for many when he calls the strategy “extreme” and “just a recipe for more Republican chaos and more shutdowns.”
Proceeding this way, Murphy warns, means “that the House process requires you to come back and deal with half the budget on one date and half the budget on another date.” Murphy dismisses it as “a little bit of a recipe for failure.”
Nor are close observers of Washington’s fiscal mechanics impressed. “This punt delays [progress] until the first quarter of 2024, rather than resolves, the standoff over spending levels and priorities,” says Benjamin Salisbury, director of research at Height Capital Markets.
Analyst Chris Krueger at TD Cowen Washington Research calls the contours and effectiveness of such a plan a “total mystery.” What’s more, he says, credit rating companies understand that hardline Republicans have made passing 12 different funding bills to keep the government open, rather than an omnibus spending measure, a “cause celebre” this year.
As global markets hang in the balance, this “overly-complex” answer to a simple problem is likely to face strong pushback in the Senate, says Isaac Boltansky, strategist at BTIG Research.
“All said,” Boltansky notes, “the new Speaker is facing the same complicated calculus as the old Speaker and the only thing that has changed is that more than a month of the legislative calendar has been wasted.”
Xi would be wise to broach the issue with Biden. Though Japan has the biggest stockpile of US government debt at $1.1 trillion, China’s huge $860 billion exposure has to worry Communist Party bigwigs in Beijing.
Raising such concerns is also a way for Xi to remind Biden that China has unique leverage over Washington. It’s unlikely that Beijing would dump its dollars wholesale as the resulting panic in global markets would quickly boomerang back on China’s economy. Surging yields would hurt American consumers’ finances, reducing demand for Chinese goods. Still, it’s an option.
Another reason to worry: Donald Trump’s attempt to win back the White House. Should Trump win a second term in November 2024, hitting China with fresh trade sanctions would likely be a top priority. Trump and his inner circle have in the past threatened to default on US debt to hurt Beijing.
This works both ways, of course. A Moody’s downgrade might trigger Asian policymakers’ PTSD. Back in August, Fitch’s downgrade sent ripples through markets but not quite shockwaves.
At the time, Fitch said: “The rating downgrade of the United States reflects the expected fiscal deterioration over the next three years, a high and growing general government debt burden, and the erosion of governance relative to ‘AA’ and ‘AAA’ rated peers over the last two decades that has manifested in repeated debt limit standoffs and last-minute resolutions.”
The message clearly wasn’t received on Capitol Hill, where lawmakers are still playing games with America’s status as defender of the global reserve currency. Yet the specter of Moody’s piling on could shake markets. Might it also have S&P wondering if it’s time to give a second look at the AA+ rating at which it has held the US since 2011?
Additional turmoil emanating from the US is the last thing North Asia’s newish central bank leaders need. Governor Kazuo Ueda only took the helm at the Bank of Japan in April; People’s Bank of China Governor Pan Gongsheng in July. For both, 2024 is looking more precarious by the day.
Right out of the gate, Pan has had to confront a worsening economic slowdown, a slip back to deflation, a property sector in crisis, record youth unemployment and foreign capital fleeing at record speed.
Tumbling home sales are adding to already extreme pressures on developers grappling with a multi-year credit crisis. On November 13, Fitch said it was withdrawing all ratings on China’s Country Garden Services Holding. Fears of a Country Garden default in recent months have #ChinaEvergrande trending on global search engines and social media again.
Moody’s economist Madhavi Bokil warns that “we see downside risks to China’s trend growth on account of structural factors.” In the shorter run, Bokil thinks Beijing’s stimulus efforts to date could help China grow 5% this year.
“Third quarter data shows a modest improvement in economic activity that was helped by policy support, including infrastructure spending, interest rate cuts, stimulus directed at the property sector and some stabilization on the external front,” he says.
Bokil’s team sees China growing at a roughly 4% pace in both 2024 and 2025. Yet as US Treasury Secretary Janet Yellen said after discussions with APEC finance ministers, China’s troubles present a “downside risk” to the region. Yet so is the US, as Moody’s is reminding a global economy on edge.
Follow William Pesek on X, formerly Twitter, at @WilliamPesek
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.
Within days of a cyberattack at its US unit, members of Industrial & Commercial Bank of China Ltd’s management were on a plane.
Officials from the world’s largest lender arrived in the US over the weekend in a hastily arranged trip to limit fallout from the incident last week, people with knowledge of the situation said. As they sought to calm markets through a steady stream of discussions and calls, one question remained unanswered: When will the stricken systems start functioning again?
The bank is racing to reassure market participants it has a handle on the situation following the attack by prolific ransomware gang LockBit, which rendered it unable to clear swathes of US Treasury trades and forced many to reroute their orders. The firm has yet to restore normal operations.
On Friday, senior ICBC executives spoke with hundreds of member firms of the Securities Industry and Financial Markets Association in a bid to allay concerns, according to people familiar with the matter who asked not to be identified discussing private information. Some participants left without a clear outline of ICBC’s response, one of the people said.
ALSO READ: World’s biggest bank has to trade via USB stick after hack
And while the bank has been working to restore access to its systems, a subsequent investigation and ongoing discussions with regulators have made any resumption of normal service hard to predict, one of the people said.
The incident also prompted China’s National Administration of Financial Regulation to issue guidance last week pressing large banks with offshore units to bolster their defenses against potential cyber attacks, another person familiar with the matter said.
Representatives for ICBC didn’t immediately respond to requests for comment. A representative for Sifma declined to comment. The NAFR didn’t immediately respond to a request for comment.
ICBC confirmed in a statement on Thursday that a ransomware attack at its ICBC Financial Services unit had disrupted some of its systems and that it was conducting a thorough investigation. Its head office and other domestic and overseas units weren’t affected, it said. On Monday, LockBit said that it had received a ransom payment from ICBC, without giving further details.
The extent of the disruption caused by the attack wasn’t immediately clear, though participants in the US$26 trillion Treasury market reported liquidity was being affected. Traders were still finding it hard to settle transactions more than a day after the attack.
ICBC is working with its US banking partners to help clear transactions as it seeks to resolve the cyber issues, one of the people said. Still, some participants were concerned about connecting with the bank digitally until they had resolved the security issues, said the person. In the immediate aftermath, ICBC held discussions about hiring Google-owned cybersecurity firm Mandiant for incident response, though no agreement to work together was reached.
If recent ransomware attacks are any indication, it could take weeks for ICBC to restore its operations to normal.
LockBit, a criminal gang with ties to Russia, specialises in using malicious software known as ransomware to encrypt files on its victims’ computers, then demanding payment to unlock the files.
Earlier this year, it took credit for an attack against ION Trading UK that paralysed derivatives trading across markets for everything from commodities to bonds and forced several banks and brokers to process trades manually. – Bloomberg
TAIPEI (Reuters) -Apple Inc supplier Foxconn reported on Tuesday a surprise 11% increase in third-quarter profit, boosted by strong demand for smart consumer electronics ahead of the year-end holiday shopping season in Western markets.
The Taiwanese company, the world’s largest contract electronics maker, said net profit for the July-September quarter rose to T$43.1 billion ($1.3 billion) from T$38.8 billion in the same period the previous year.
The profit beat a T$34.5 billion LSEG SmartEstimate, which gives greater weight to forecasts from analysts who are more consistently accurate.
Foxconn said revenue for the fourth quarter would slightly decline year on year, but did not give a reason and maintained its outlook for full-year revenue to also slightly decline.
The world’s biggest assembler of iPhones said it expects revenue for its smart consumer electronics division, which includes smartphones, to also fall slightly in the fourth quarter. The division makes up about half of Foxconn’s total revenue.
($1 = 32.3430 Taiwan dollars)
(Reporting by Yimou Lee and Sarah Wu; Editing by Anne Marie Roantree and Edwina Gibbs)
Getty ImagesForeign businesses have been pulling money out of China at a faster rate than they have been putting it in, official data shows.
The country’s slowing economy, low interest rates and a geopolitical tussle with the US have sparked doubt about its economic potential.
All eyes will be on a crucial meeting between Chinese leader Xi Jinping and US President Joe Biden this week.
But businesses appear to be already erring on the side of caution.
“Anxieties around geopolitical risk, domestic policy uncertainty and slower growth are pushing companies to think about alternative markets,” says Nick Marro from the Economist Intelligence Unit (EIU).
China recorded a deficit of $11.8bn (£9.6bn) in foreign investment in the three months to the end of September – the first time since records began in 1998.
This suggests that foreign companies are not reinvesting their profits in China, rather they are moving the money out of the country.
“China is currently facing slower growth and needs to make some corrections,” says a spokesperson for the Swiss industrial machinery manufacturer Oerlikon, which pulled 250m francs ($277m; £227m) from China last year.
“In 2022, we were one of the first companies to transparently communicate that we expect the economic slowdown in China to impact our business,” the spokesperson adds. “Consequently, we began early to implement actions and measures to mitigate these effects.”
China remains a key market for the firm. It has close to 2,000 employees across the country, which accounts for more than a third of its sales.
Oerlikon noted that the Chinese economy was still expected to post growth of around 5% in the next few years, “which is among the highest in the world.”
Since the onset of the pandemic, businesses like Oerlikon have contended with the challenges of operating in what is the world’s biggest market.
China had implemented one of the world’s strictest pandemic lockdowns through its “zero-Covid” policy.
This caused disruptions to the supply chains of many companies, such as technology giant Apple, which makes most of its iPhones in China. The firm has since diversified its supply chain by moving some production to India.
Mr Marro believes more companies have heeded calls for diversification this year, as tensions between China and the US rose with fresh export restrictions on raw materials and technology needed to make advanced chips.
“We aren’t seeing many companies pulling out of China. Many of the big multinational firms have been in the market for decades, and they’re not willing to give up market share that they’ve spent 20, 30 or 40 years cultivating. But in terms of new investment, in particular, we are seeing a reassessment.”
Businesses are also considering the impact of interest rates. China bucked the trend as many countries around the world raised rates sharply last year.
Many major central banks, including the US Federal Reserve and the European Central Bank, have been hiking interest rates to tackle inflation. The higher cost of borrowing, which promises higher returns, also attracts foreign capital.
Meanwhile policymakers in China have cut the cost of borrowing to support its economy and struggling property industry. The yuan has depreciated by more than 5% against the dollar and euro this year.
Rather than reinvesting China earnings back in the country, business are spending the money, the European Union Chamber of Commerce in China says.
It adds: “Those with excess cash and earnings in China have been increasingly transferring these funds overseas, where they will earn a higher investment return compared to investments in China.”
Some firms had withdrawn earnings from China as “part of their long-term cycles” of taking profits “once their projects reach a specific scale and profitability”, Michael Hart, president of the American Chamber of Commerce in China, observed.
“The withdrawal of profits does not necessarily indicate that companies are unhappy with China, but rather that their investments here have matured.”
Mr Hart says it’s “encouraging because it means companies are able to integrate their China operations into their global operations.”
Canada-based aerospace electronics company Firan Technology Group invested up to C$10m ($7.2m; £5.9m) in China over the last decade, and withdrew C$2.2m from the country last year and in the first quarter of 2023.
“We are not exiting China at all. We are investing and growing our business there and taking out any excess cash to invest elsewhere in the world,” says the firm’s president and chief executive Brad Bourne.
“We had surplus cash in China and bringing it back to help fund our recent US acquisitions was just prudent cash management, and it meant that our borrowing was reduced,” he adds.
Analysts say there is much uncertainty about what lies ahead – both in terms of interest rates and China-US ties.
China’s central bank could move to lower interest rates further this year to support its economy, says Dan Wang, the chief economist of Hang Seng Bank China.
Lowering interest rates could put more pressure on the already weakened yuan. “There is very limited room for monetary easing right now because of the pressure of currency depreciation,” she says.
“If economic sentiment improves next month, it’s safe to say that China will lower interest rates. But if sentiment doesn’t improve, the central bank will have a very difficult decision to make.”
Businesses are cautiously optimistic about the upcoming meeting between Presidents Xi and Biden, says the EIU’s Mr Marro.
“Direct meetings between the two presidents tend to exert a stabilising force on bilateral ties. We have also seen a flurry of US-China diplomatic engagement over the past couple of months, which has contributed to this feeling that both sides are aiming to put a floor under the relationship,” he says.
“That said, it doesn’t take much for things to fall apart again. Until companies and investors feel like they can navigate with more certainty, this drag on foreign investment into China will continue.”
The battered yen was stuck near a three-decade low against the dollar on Tuesday (Nov 14), struggling to find a floor as the Bank of Japan’s (BOJ) ultra-easy monetary policy settings remained at odds with the prospect of higher-for-longer rates elsewhere. The Japanese currency similarly slumped to a 15-year lowContinue Reading
