SINGAPORE: Singapore’s United Overseas Bank (UOB) reported on Thursday (Apr 27) a 74 per cent surge in core profit in the first quarter from a year earlier on the back of strong net interest and non-interest income growth. The lender’s core profit, which excludes one-off expenses, rose to a recordContinue Reading
It has been a tumultuous time for the life sciences and healthcare space in the Asia Pacific region over the last three years. A post-pandemic boom saw a rapid surge in private equity buyouts in the sector through 2020 and 2021, followed by a sharp correction through last year.
However, 2023 promises to be a year in which life sciences and healthcare regains its spot among the top priorities of investors, with several macroeconomic, demographic, and digital adoption trends buoying interest.
To gain deeper insights into what the future holds for this critical sector, FinanceAsia in partnership with DFIN created the Life Sciences & Healthcare Report 2023. Our report is based on a study of the most significant recent trends in the sector so far; as well as a glimpse into what the future holds via bespoke research involving key stakeholders.
We surveyed nearly 70 investors, legal and financial advisors who are actively engaged in the space, as well as professionals operating in life sciences and healthcare companies across the APAC region, to obtain informed insights on the opportunities and challenges that come with investments in the sector.
Here are some of the key takeaways:
Read the report for a comprehensive overview of the life sciences and healthcare space including:
The report is essential reading for investors engaged in or thinking of engaging with the life sciences and healthcare, companies operating in the sector looking for growth opportunities, as well as advisors serving the space.
¬ Haymarket Media Limited. All rights reserved.
TOKYO – Few professions are better at making straw-horse arguments than the economics trade. The reason: it’s always easier to refute an unserious argument than tackle the biggest questions of the day.
The arguments US leading economists Lawrence Summers and Paul Krugman are making these days about the rivalry between the Chinese yuan and US dollar are Exhibit A.
Take Summers, the former US Treasury secretary, who made headlines this week detailing why the yuan isn’t a threat to the dollar’s dominance as reserve currency anytime soon. Trouble is, virtually everyone already knows a currency that isn’t fully convertible or backed by deep capital markets can’t acquire significant reserve status.
The reason top economic minds do this, of course, is to avoid the proverbial elephant in the room. In this case, that’s the US national debt racing toward US$32 trillion.
Dysfunctional politics putting Washington on a path to possible default doesn’t help. Nor does a US Federal Reserve team losing global confidence with distressing speed.
The yuan isn’t the issue. It’s a fragile dollar problem that isn’t being treated, nurtured or reenergized at an epochal moment.
That hasn’t stopped the financial world from obsessing over questions with little relevance in 2023. Here, Summers is a case in point as he explains what everyone already knows about the challenges facing China’s currency.
“Is [China] really going to be a place where people are going to decide they want to hold reserves on a massive scale?” he rhetorically asked Bloomberg.
Summers adds that “there has never been a country where there was a strong desire to move as much capital out of the country as we’re seeing in China right now, albeit blocked by controls.”
Nobel laureate Krugman, meanwhile, makes a force-of-habit argument. The dollar’s dominance — and the power of incumbency — makes it somewhat untouchable as a linchpin of global finance and trade. To him, it would require “exceptional circumstances” for the dollar to be eclipsed in global circles.
Yet isn’t what’s afoot in Washington exactly that, as Congress threatens to renege on US government debt?
The last time Republicans in the House of Representatives played chicken with the debt ceiling didn’t end well. That was back in 2011, when Congress members hinted at letting the US default to buttress their fiscal hawk bona fides. Standard & Poor’s abruptly yanked away Washington’s AAA credit rating.
A dozen years on, this game is a far more precarious one. The trajectory of US debt is one problem. So is how the Fed’s campaign to tame the worst inflation in 40 years is causing collateral damage from Latin America to Africa to Asia.
Political chaos in Washington also raises the stakes. In the post-Donald Trump era, legislative polarization has hit a fever pitch — as evidenced by the default debate spooking world markets.
To be fair, Summers and his ilk aren’t oblivious to these toxic dynamics. Summers notes that “if the dollar loses its status, it will be because the United States is no longer respected and strong in the world. It will be because we’ve accumulated a set of untenable debts.”
Yet this seems far less of an “if” than most top US economists let on. Just ask officials here in Japan, which holds the world’s largest stockpile of US Treasury securities at about $1.1 trillion. Beijing holds just under $1 trillion of US debt.
Cumulatively, Asia’s top central banks are stuck with nearly $3.5 trillion of US debt at a moment when the US government isn’t operating effectively. From time to time, fears that America’s top bankers will start reducing their exposure to the dollar fuels mini-panics in currency markets.
It’s a long-standing source of paranoia, of course. Back in 1997, for example, then-Japanese prime minister Ryutaro Hashimoto dropped a bombshell on an audience in New York. “Several times in the past, we have been tempted to sell large lots of US Treasuries,” Hashimoto said, a comment that sent bond prices sharply lower.
At the time, the late Japanese leader cited contentious US-Japan auto trade talks as one such moment when Tokyo mulled dumping US Treasuries. Fourteen years later, in 2011, China’s state-run People’s Daily ran an editorial saying: “Now is the time for China to use its ‘financial weapon’ to teach the US a lesson” regarding its support for Taiwan.
Back in 2011, economists like Brad Setser, a former US Treasury staffer, began stressing that big stockpiles of US debt held by China and other geopolitical rivals represent a growing national security threat.
But then, officials in China also have raised concerns that Beijing is essentially trapped with its mountains of dollars. In 2009, for example, then-premier Wen Jiabao implored Washington to protect its AAA status.
“We have made a huge amount of loans to the United States,” Wen said. “Of course, we are concerned about the safety of our assets. To be honest, I am a little bit worried.”
Washington, Wen stressed, must “honor its words, stay a credible nation and ensure the safety of Chinese assets.”
Nearly a decade later, in 2018, Cui Tiankai, then China’s ambassador to the US, hinted that Beijing might reduce its Treasuries holdings due to concerns about losses. “We are looking at all options,” he said.
Also in 2018, Fan Gang, a top adviser to China’s central bank, talked publicly about diversifying away from the dollar.
“We are a low-income country, but we are a high-wealth country,” Fan said. “We should make better use of capital. Rather than investing in US government debt, it’s better to invest in some real assets.”
It’s tantalizing to think, too, of how America’s bonds held abroad are often the tail wagging the economic dog. In 2009, for example, then-US Secretary of State Hillary Clinton asked former Australian prime minister Kevin Rudd: “How do you deal toughly with your banker?”
In February of that year, in her first trip to China as a top US cabinet official, Clinton downplayed discussions over human rights and played up Washington’s hopes of prodding China to buy more government debt.
The Trump era did serious damage to global confidence in the dollar. Along with a record $1.8 trillion tax cut, Trump’s disastrous handling of Covid-19 necessitated $7.4 trillion of fresh government spending. Equally worrisome were Trump’s flirtations with defaulting on US debt to hurt China.
President Joe Biden has since drawn accusations of wielding the dollar as a tool in efforts to sanction Russia over its Ukraine invasion.
As strategist John Mauldin at Millennium Wave Advisors notes, “the Biden administration made an error in weaponizing the US dollar and the global payment system. That will force non-US investors and nations to diversify their holdings outside of the traditional safe haven of the US.”
But the coming fight over the debt ceiling could trump all. “A reason to think this time may be different,” says economist Will Denyer at Gavekal Research, “is the make-up of the Republican Party in the House of Representatives. The fractious caucus only elected Kevin McCarthy as speaker in January with a tiny majority after an epic 15 rounds of voting.”
It’s possible, Denyer says, “that Tea Party-type Congressional Republicans use their leverage over the party leadership to veto a compromise deal and impose a hostile negotiating stance. Hard-line ‘small government’ Republicans may argue on principle that destroying the government’s bond market credibility will make it harder for it to borrow and so help starve the beast.”
Strategist Brian Gardner at Stifel Nicolaus & Co adds that this “dysfunction is a clear signal.” Markets, he adds, “should be on guard as the summer approaches” because “brinkmanship over the debt ceiling could lead to market volatility.”
Yet this standoff between Republicans and the White House could trigger what Treasury Secretary Janet Yellen calls an “economic and financial catastrophe”, whereby US institutions shoot the reserve currency in the foot, irrespective of the status of the Chinese yuan.
Follow William Pesek on Twitter at @WilliamPesek
SINGAPORE: Home rental pressures may ease in the coming months because of a “significant” supply of new housing units, said the Monetary Authority of Singapore (MAS) on Wednesday (Apr 26).
Almost 40,000 residential units will be completed across the public and private housing markets this year, which is the highest number of annual completions since 2018.
This pace of completion will continue over the next two years, with nearly 100,000 public and private residential units coming on-stream over 2023 to 2025, the central bank added in its latest half-yearly macroeconomic review.
At the same time, rental demand will also be tempered by people vacating their rental units once their new homes are completed.
Anecdotally, real estate agencies have seen a decline in viewings for rental units and leasing enquiries since the start of 2023, said MAS.
The global economic uncertainties and slower growth may also further weigh on sentiments in the rental markets.
MAS said rents for Housing Development Board (HDB) and private residential housing units have risen sharply by 38 per cent and 43 per cent, respectively, since 2021.
This broad-based increase in home rents was largely due to an “exceptional demand-supply imbalance” brought about by the COVID-19 pandemic.
Pandemic-induced disruptions, ranging from manpower to construction materials, had led to severe delays in the completion of private and public residential projects.
An average of about 20,000 private and public residential units were completed each year between 2020 and 2022, about 22 per cent lower than the yearly average of 26,000 units from 2018 to 2019.
Insuring US Treasury notes against default now costs more than insuring Mexican debt, as House Republicans threaten to push the US into technical default rather than give the Biden administration more room for deficit spending.
If April tax receipts turn out to have been weaker than expected, default could hit as early as mid-June. US Treasury Secretary Janet Yellen has warned of “catastrophe.”
The cost of five-year credit default swaps (insurance against US default) now exceeds the cost of similar protection against Mexican foreign debt – something that hasn’t happened previously in financial history.
Barring an actual default six to eight weeks from now, the jump in US credit default swap spreads is a technical bad in a small and illiquid market. Gold remains stuck in a trading range around $2,000 an ounce. If the world really thought America’s credit had turned bad, gold would break out to higher levels.
The wrangle over Treasury default, though, adds to uncertainty about the US economy and financial markets. Those markets took a body blow in mid-March when depositors fled regional banks, forcing the Fed and Treasury to provide emergency liquidity and guarantee bank deposits.
Tightening financial conditions are pushing the US into recession.
UPS stock plunged by nearly 10% on April 25 after the delivery company reported much lower-than-expected volume for the first quarter. Revenue fell to US$22.9 billion compared with $24.4 billion in the first quarter of 2022. The company blamed lower retail sales and falling consumer demand.
The Conference Board meanwhile reported on April 25 that consumer expectations fell to the lowest level in more than a year.
US commercial banks tightened lending standards and reduced new lending after the March run on regional banks. First Republic Bank, one of the banks that suffered March deposit runs, lost another 10% on April 25 after its first-quarter results revealed a bigger deposit loss than anticipated.
Survey data from regional Federal Reserve banks meanwhile showed that the US is on the edge of recession. The Philadelphia Fed’s index of nonmanufacturing business activity (shown in green on the chart below) fell to its lowest level since the 2020 Covid lockdowns.
The Philly Fed index is widely considered one of the best leading indicators of general business activity.
$6 trillion of consumer stimulus in response to Covid kept the US economy growing for the past two years, but retail sales have been falling for two years after deducting inflation.
Follow David P Goldman on Twitter at @davidpgoldman
BARCELONA: Chinese fast-fashion retailer Shein plans to become more focused on sustainability, Executive Vice Chairman Donald Tang said on Tuesday (Apr 25), adding that consumers are no longer just concerned about affordability. Shein sells US$10 dresses and US$5 tops and has taken market share from other affordable fashion retailers. TheContinue Reading
ReutersStreaming giant Netflix says it will invest $2.5bn (£2bn) in South Korea over the next four years.
The firm’s co-chief executive Ted Sarandos made the announcement after he met South Korea’s President Yoon Suk-yeol in Washington.
Mr Yoon is currently on a state visit to the US where he is expected to meet President Joe Biden on Wednesday.
Netflix has seen success with South Korean productions, including the hugely popular show Squid Game.
Mr Sarandos said the money will be spent on making movies and television shows in Asia’s fourth largest economy.
“We were able to make this decision because we have great confidence that the Korean creative industry will continue to tell great stories,” he said.
The company was also “inspired by the President’s love and strong support for the Korean entertainment industry and fuelling the Korean wave,” Mr Sarandos added.
A Netflix spokesperson said the company did not “have anything to add at this time,” when asked by the BBC about other potential investments in the region.
In 2021, South Korean-made Squid Game became Netflix’s most-popular series of all time. It was streamed by 111 million users in the first 28 days after its launch.
The show tells the story of debt-ridden people competing for a huge cash prize in a series of South Korean children’s games, with a deadly twist.
Earlier this year, South Korean reality show Physical 100 became the platform’s most-watched non-English language show worldwide.
Netflix, which operates in more than 190 countries, now faces increased competition from streaming rivals including Amazon, HBO and Disney.
It has cut prices in tens of countries around the world in an attempt to attract more subscribers.
Last week, the company said its long promised crackdown on password sharing will begin in the coming months.
This means subscribers who want to share accounts with people outside their household will face an extra fee.
Netflix has been looking for ways to re-ignite growth, which has slowed sharply as households grapple with rising costs and it reaches what analysts see as a saturation point in some of its biggest markets.
NEW YORK – Central Asian countries increased imports from China in March by 55% over the year-earlier month, beating the 35% jump in Chinese shipments to Southeast Asia reported previously.
Former Soviet republics as well as Turkey and Iran all contributed to a near-record gain in Chinese exports to the region, a focus of Beijing’s Belt and Road Initiative.
China’s exports to the region have nearly tripled since 2018. The chart below includes Turkey and Iran in the Central Asian total.
Several factors contributed to the export boom, which included every country in the region.
China is investing heavily in energy, mineral resources and rail transport across the Asian continent, including a new rail line between China, Kyrgyzstan and Uzbekistan scheduled to start construction next year.
The rail project, which will link China to European markets, has been planned since 1997 but only won approval in 2022, after Russia backed the venture. Russia’s need for Chinese support in the Ukraine war outweighed longstanding strategic rivalries between the two powers.
“The CKU railway is crucial to China for two interconnected purposes—to advance its geopolitical interests and to secure favorable relations with Central Asian elites for their support over Chinese legitimacy in Xinjiang (East Turkestan),” Niva Yau Tsz Yan wrote in a March 2023 commentary for the Foreign Policy Research Institute.
“Russia’s war in Ukraine has made new trade routes bypassing Russia more profitable, and a new Uzbek government is looking to expand regional and international engagement,” Yan wrote.
Iran’s imports from China had fallen to just US$800 million a month during 2019-2022 from a 2014 peak of $2.8 billion a month. But seasonally-adjusted Chinese shipments to Iran more than doubled to $1.7 billion in March.
Chronically short of cash, Iran depends on trade credits from China, by far its largest trading partner. The March increase evidently reflected more Chinese financing, and came after Iran accepted Chinese mediation in restoring diplomatic relations with its regional arch-rival Saudi Arabia. A reasonable inference is that Iran was being rewarded for good behavior.
China’s exports to Russia continued to rise sharply, along with exports to Turkey, which acts as an intermediary for Chinese trade with Russia. China has avoided direct violation of American sanctions on Russia, but Turkey and former Soviet republics have resold sanctioned goods to Moscow. The sharp increase in China’s exports to Kazakhstan probably reflects this intermediation.
Reuters reported on March 27 that Kazakhstan “would require exporters to file additional documents when sending goods to Russia, following reports that Russian companies have been using local intermediaries to bust Western sanctions… After the West barred sales of thousands of goods to Moscow over its invasion of Ukraine, some Kazakh businesses started purchasing such items and reselling them to Russian firms.”
China’s export prowess isn’t entirely free of tensions, though. In March, Turkey imposed a 40% tariff on imports of Chinese electric vehicles (EV’s), hoping to protect a local manufacturer. The Turkish automaker Togg plans to release its first EV later this year with a sticker price of $50,000.
A comparable Chinese model, for example, BYD’s Song sedan, sells for $27,500 in China—which means that BYD would still undercut Togg’s price despite the 40% surcharge. Meanwhile, BYD has just released its $11,300 Seagull subcompact, which has no competitor in the price range anywhere in the world.
In the kaleidoscope of Central Asian politics, a myriad of local factors explains the jump in China’s influence in the region. But all of them line up like iron filings before a magnet. China’s capacity to provide physical and digital infrastructure as well as affordable consumer goods, and its capacity to finance trade and investment out of its current account surplus, explain its economic power and political influence in the region.
There’s another geopolitical consequence of China’s export prowess in Central and Southeast Asia: China’s exports to the Global South and BRICS countries in March reached a seasonally-adjusted annual rate of $1.6 trillion a year.
That’s nearly four times China’s exports to the United States and more than the combined total of China’s exports to the US, Europe and Japan, which reached a seasonally-adjusted annual rate of $1.38 trillion in March.
That represents a geopolitical point of no return of sorts, the moment when China’s economic dependence on the United States in particular and developed markets in general slipped behind its economic standing in the developing world.
Follow David P Goldman on Twitter at @davidpgoldman
US tech titans Tim Cook and Elon Musk are under fire for their business ties to China but they are not the only Western tech executives trying to protect their hard-won Chinese markets in an increasingly hostile political environment at home. US semiconductor production equipment heavyweights Applied Materials, Lam Research and KLA participated in the […]Continue Reading
Two of the worst-performing US tech stocks this week – Cisco and Tesla – have something in common: Both ran into a buzz-saw of Chinese competition. At the New York opening April 21, Telsa had lost more than 12% during the week and Cisco more than 8.1%. Tesla’s Chinese competitor BYD announced an $11,400 electrical […]Continue Reading
