Malaysia Aviation Group ( MAG ), the parent of Malaysia Airlines, announced on Thursday ( Aug 29 ) that due to a shortage of planes, labor, and parts, it would reduce network capacity by 20 % across its airlines this year. The party, which also operates ship Light and MuslimContinue Reading
Since the mid-1990s, the US Federal Reserve has had a somewhat shaky past in Asia.
Between 1994 and 1995, the US central bank past tightened with the same intensity as it did recently. The 1997-98 Eastern problems, which resulted from a runaway dollar rally destabilizing the region’s currency pegs, was caused by the short-term rate increase in 12 months.
Since then, the 2008″ Lehman impact” that the Fed was slow to see coming and the 2013 “taper kid” have overwhelmingly rocked Asian areas.
Asia also bore the brunt of the Fed’s 2022-2023 tightening period. Epic ripples of capital scurrying toward US assets as the currency’s surge in response to Fed Chairman Jerome Powell’s price hikes resulted in spectacular waves of funds.
However, could the Fed’s rate reductions cause a different sort of tumult in Asia? If analyst Stephen Jen is correct, it certainly was.
As Team Powell undoes its most recent price hike campaign, the CEO of Eurizon SLJ Capital anticipates Chinese companies to chuck about US$ 1 trillion in dollar-denominated assets.
In truth, Jen predicts something of an “avalanche” as a strengthening dollar sends tides of repatriating money China’s manner, upending dollar industry in the process.
Granted, Jen has warned of this dollar-dumping active for a couple of years today. In June 2023, for instance, Jen argued that” Taiwanese corporates continue to hoard cash. Foreign companies ‘ total investment is increasing as a whole. The economy’s higher have perhaps at present seem enticing to Chinese entities, but this construction is ultimately unpredictable”.
The scenario Jen has been advising about is “prospective rate cuts by the Fed and/or an economic reacceleration in China could lead to a precipitous fall” in the dollar-yuan rate” as corporate treasurers in China scramble to sell the dollars they do n’t need to have.”
Since the Covid-19 pandemic, mainland companies have gobbled up more than$ 2 trillion of overseas investment, a bet on higher-yielding assets than punters often find in China. As Powell begins ratcheting levels lower, those assets may grow less appealing.
Up to US$ 1 trillion will be on the move as a significant number of island companies decide to return funds, according to Jen. Interestingly, Jen points out that his guestimate may be” conservative”.
Then, as Powell declares” the time has come for legislation to change” toward less restrictive problems, Chinese selling dangers may be upon us. It’s worth noting, Jen adds, that companies swapping out of dollar assets could see the yuan , strengthening by up to 10 %.
Additionally, it’s important to point out that the resettlement fluid that is developing throughout China could reach businesses in Asia.
This is n’t a risk many have on their Bingo cards. Powell’s vow on August 23 to” we will do everything we can to help a strong work industry as we make more progress toward price balance” has frequently boosted Asia’s markets.
The same with Powell’s confidence that the US can achieve a so-called” soft landing”, a remarkably rare occurrence. There is good reason to believe that the economy will return to 2 % inflation while maintaining a robust labor market, Jen tells Bloomberg.
Asian bourses were cheering when they learned that Powell “has rung the bell for the start of the cutting cycle,” according to Seema Shah, principal global strategist at Principal Asset Management.
The real gains could be in Asia’s “laggard” markets, notes Chetan Seth, strategist at Nomura Holdings. We believe that the relatively safe harbor is likely to be markets and sectors that are uncrowded ( parts of ASEAN ) and more domestically driven markets ( India/ASEAN), as Seth writes in a recent note. Investors in this situation must be much more cautious and reduce their investment in Asian cyclical markets, like those in North Asia.
Yet other risks abound. Consider Jen to be one of the economists who worry that central banks from Washington to Tokyo have recently injected too much stimulus into the global financial system, causing inflation.
As Powell said in July:” Go too soon, and you undermine progress on inflation. Wait too long or do n’t go fast enough, and you put at risk the recovery. And so, we have to balance those two things. It’s a rough balance”.
Problem is that the costs of a policy error are rapidly rising due to the US’s high and rising national debt, which has recently surpassed US$ 35 trillion. Just a few months before Americans vote on November 5 to choose a new president, this milestone was reached.
Democratic nominee Kamala Harris provides details on spending plans that will add trillions of dollars to the public debt in one corner. Donald Trump, too. Trump makes hints that removing the Fed’s role as independent arbitrator of US interest rates, in addition to another multi-trillion tax cut that is currently being funded by the government.
Trump browbeat Powell into cutting rates in 2019 when the US did n’t need it during his first term as president, from 2017 to 2021. Trump also threatened to fire Powell, a previously unheard of threat from a US leader.
In a second term, the” Project 2025″ scheme that Republican activists cooked up for a Trump 2.0 White House could see the Fed’s power curtailed.
In such an uncertain world, though, the Fed pivoting toward monetary accommodation is n’t necessarily straightforward. The view driving this Asian stock rally is “broadly correct”, at least in the medium-term, says Tan Kai Xian, economist at Gavekal Research.
” Rate cuts will reverse the recent contraction in US liquidity, which will support US aggregate demand, after a lag”, Tan notes. ” But in the shorter term, rate cuts will squeeze corporates ‘ interest income, and therefore their profits. This will disproportionately affect large corporations with large cash reserves, which may result in their relative underperformance.
The effect, Tan notes,” will be bigger than commonly believed. Even though the path was indirect, thanks to businesses selling products to households in receipt of stimulus checks, handouts during Covid allowed US companies to build up sizable cash reserves.
When the Fed cuts interest rates, interest income will fall. At least before the lagged boost to aggregate demand kicks in, Tan says,” The near-term drag on corporate profits could discourage capital spending, which would have a dampening effect on US economic growth.” ” In the short term, then, rate cuts could weigh on large-cap US equities relative to bonds”.
Given that the US inflation rate is continuing to decline, Jen believes Powell may raise rates more forcefully than many investors anticipate. The global reserve currency may be under increased downward pressure due to Washington’s dual budget and current account deficits. That, Jen argues, could see the yuan appreciating more than many investors expect.
The yuan’s gains could be even bigger if the People’s Bank of China avoids moves to offset dollar liquidity. Odds are that the yuan will start to rise once the Fed starts cutting interest rates as soon as September 18? If the Fed makes any hints about further easing, the pressure will increase.
This could cause tension between PBOC Governor Pan , Gongsheng and Xi’s economic team. Beijing has been surprisingly tolerant of a rising yuan over the past year despite the fact that global export markets became more competitive.
Xi has been working to gain more confidence in the yuan and stop large property developers from defaulting on their foreign debts. A skyrocketing yuan that nullifies growth prospects may be even worse unwelcome.
The clouds on China’s economic horizon can be seen in this week’s$ 55 billion stock crash , in Temu-owner PDD Holdings. It’s a sign that China’s growth engines are still cooling despite Beijing’s effort to boost household demand.
Additionally, the external sector does n’t appear particularly promising. This week, Canada slapped a 100 % tariff on China-made electric vehicle imports, following the lead of the US and European Union.
Additionally, it is unlikely that the upcoming US election cycle will offer Team Xi a break. Both presidential candidates, Trump and Harris, are trying to outdo each other with anti-China rhetoric and trade policies.
All of this explains why China’s foreign exchange watchdog has been paying close attention to dizzying yuan-dollar movements. And why things might turn out differently than many investment funds currently believe.
” The pressure will be there” on the yuan to rally, Jen tells Bloomberg. We are talking about$ 1 trillion worth of fast money that could be involved in such a potential stampede if we just assume half of this amount is the money that is “footloose” and easily provoked by changing market conditions and policies.
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Singapore-headquartered Lighthouse Canton has appointed Stella Lau as managing director, wealth advisory where she will be strengthening the company’s client base and leading the growth strategy for North Asia.
A market veteran, Lau has over two decades of private banking and leadership experience. She was previously Greater China market group head at Deutsche Bank and has held similar roles, managing and expanding North Asia market teams at JP Morgan, UBS, and Credit Suisse.
Lau’s team will provide co wealth solutions to ultra-high-net-worth clients, families, and institutions.
In addition, Charlene Lin has been promoted to managing director, strategic growth – North Asia and Southeast Asia (SEA). A founding member of Lighthouse Canton, Lin has been pivotal in establishing the company’s presence across Asia since its inception in 2014, a statement said.
Shilpi Chowdhary, Lighthouse Canton’s group CEO, said in a statement: “Under the leadership of Stella and Charlene, I’m confident that we have a formidable team, deeply committed to delivering excellence and innovation. Their extensive experience and expertise are invaluable assets to our company, and I’m certain their teams will be instrumental in advancing our growth strategy.”
Rapid growth
In H1 2024, Lighthouse Canton reported a 89% increase in revenue compared to the same period last year to assets under management (AUM) of $3.7 billion.
The firm’s AUM is expected to cross $4 billion by the end of 2024 with growth in markets including Singapore, the Middle East, and India. Additionally, it has seen a 23% increase in hires since the start of the year and is continuing to make strategic appointments across business lines.
Lighthouse Canton employs more than 160 professionals across its offices in Singapore (based in Collyer Quay – pictured), Dubai, India, and London.
The firm offers wealth and asset management services to ultra-high-net-worth individuals, families, family offices, private accredited investors, and institutional investors.
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PropertyGuru Group ( PropertyGuru), a leading property technology company in Southeast Asia ( SEA ), has been acquired by Hong Kong-based EQT Private Capital Asia for$ 1.1 billion in cash.
TPG ( through TPG Asia VI SF and TPG Asia VI SPV, in its capacity as general partners of TPG Asia VI Digs ), which owns around 26.5 %, and KKR ( through Epsilon Asia Holdings II ), which owns around 29.6 % of the business. In order to help the bargain, both companies have entered into voting and aid contracts with the business and EQT Private Capital Asia.  ,
PropertyGuru’s board of directors, acting upon the advice of a particular commission, unanimously approved the deal and recommends acceptance of the acquisition by PropertyGuru’s owners, according to an August 16 news.
The offer is equal to$ 6.70 per share and represents a 52 % premium to PropertyGuru’s closing share price on May 21, 2024, the last unaffected trading day prior to media speculation regarding a potential transaction, and a 75 % and 86 % premium to the company’s 30-day and 90-day volume-weighted average share price, respectively, for the period ending May 21, 2024, the announcement said.  ,
The deal is expected to close in Q4 2024 or Q1 2025, subject to final problems, including acceptance by PropertyGuru’s shareholders and certificate of regulatory approvals.
Upon completion of the transaction, PropertyGuru’s shares will no longer trade on the New York Stock Exchange ( NYSE), and PropertyGuru will become a private company. PropertyGuru’s office will be in Singapore.
Freshfields Bruckhaus Deringer acted as the unique committee’s legal counsel, and Moelis &, Company is its financial consultant. Ropes &, Gray serves as EQT Private Capital Asia’s legal advisor, and Morgan Stanley Asia ( Singapore ) serves as its financial advisor. Latham &, Watkin is KKR and TPG’s legal advisor, and JP Morgan Securities Asia Private is their financial director.
PropoertyGuru Group has a consolidation program with members of BPEA Private Equity VIII, a purpose-driven international investment company, in order to have the business acquired by EQT Private Capital Asia.  ,
Development potential ,
The firm was founded in 2007 by Steve Melhuish and Jani Rautiainen, and provides online property markets for home seeking, real estate agents, home developers, banks and brokers across Singapore, Malaysia, Vietnam and Thailand. In a special purpose acquisition ( SPAC ) agreement with Bridgetown 2 Holdings, which Richard Li and Peter Thiel supported, PropertyGuru was listed on the NYSE in March 2022 and raised$ 254 million.  ,
Hari Krishnan, chief executive officer &, managing director, PropertyGuru, said in a statement,” We are pleased to embark on this new chapter with EQT. This agreement comes after decades of transformative growth, which TPG and KKR have supported, making us the industry’s top proptech platform.
Krishnan added:” As we continue to innovate and provide value to our consumers, customers, and stakeholders across the place, EQT’s international experience in building marketplaces and commitment to sustainable development will further improve our perception to power communities to live, function, and thrive in tomorrow’s cities”.
” PropertyGuru has firmly established itself as the leading property market system in Lake, and we are deeply impressed by the strong base it has built over the past 17 years as well as with its brilliant team,” said Janice Leow, partner in the EQT Private Capital Asia consulting team and head of EQT Private Capital SEA.
Leow continued,” We think our offer strategically positions PropertyGuru to fully exploit its long-term growth potential while offering shareholders compelling value and certainty.” With EQT’s significant experience in the technology, online classifieds and marketplace sectors, we aim to further strengthen PropertyGuru’s platform, driving enhanced innovation and deeper engagement with its consumers, customers and stakeholders”.
Buys Korean recycler, seeks$ 12.5bn raise
For an undisclosed sum, EQT Infrastructure VI purchased a KJ Environment from Genesis Private Equity. According to a media release, the goal is to establish” a sclaed and diversified end-to-end waste treatment scheme platform focused on plastic recycling and waste-to-energy in South Korea.”  ,
KJ Environment works across recyclable waste sorting, plastic recycling and waste-to-energy. It has locations in the Greater Seoul Metropolitan Area, which provide services to catchment areas that account for more than 50 % of the nation’s GDP and population.
The purchase is EQT’s second infrastructure investment in South Korea.
In the release, Sang Jun Suh, a partner in the EQT infrastructure advisory team, stated,” We look forward to using EQT’s extensive experience investing in sustainable waste and recycling solutions across geographies, combined with our strong local footprint and industrial network, to help KJ Environment become a true market leader in the waste treatment space.
The business strengthens EQT’s track record of supporting infrastructure companies in the Asia Pacific region by extending its global portfolio of businesses that engage in waste-related business. Since 2020, EQT Infrastructure has invested €5 billion ($ 5.52 billion ) of equity, including co-investment, in Asia Pacific companies. Around 11, 000 people work the portfolio managed by EQT’s infrastructure team in Asia Pacific.
The transaction is subject approvals and , is expected to close in Q4 2024. EQT was advised by JP Morgan on financials, Kim &, Chang for legal, and PwC for financial and tax.
With this transaction, EQT Infrastructure VI is expected to be 45-50 % based on target fund size and subject to customary regulatory approvals.
Meanwhile, EQT is looking to raise around$ 12.5 billion for EQT Private Capital Asia’s BPEA Private Equity Fund IX.
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Ms. Tan’s replacement is likely to provide balance and stability, but Mr. Thilan cited difficulties she may encounter.
The first is a fundamental decline in North Asia, particularly in China and Hong Kong, where about a fourth of DBS’s text is located.
In the meantime, other central banks are likely to follow suit, as are the Federal Reserve of the United States, who is scheduled to rapidly cut rates.
One of the biggest difficulties that she will face is “managing the bank company, which has experienced tremendous percentage growth over the past couple of years, to a place where profits are going to begin to start to fall,” Mr. Thilan said.
According to Prof. Loh, Ms. Tan will need to “burn the light at two stops.”
He said that means she has to “fortify privately” by ensuring that are solid systems to climate possible disruptions, and “expand directly” by doing more on the expense banking, wealth management and insurance, beyond ,
If interest rates start to come along, businesses ‘ interest-based revenue will drop, he said.
” So banks, no simply DBS, should now be really augmenting other income channels”.
On March 28, 2025, DBS announced the appointment of Tan Su Shan as the company’s second chief executive officer to take over from CEO Piyush Gupta. In the interval, Tan has become sheriff CEO of the institution,  , in addition to her place as team head of administrative banking.
After Gupta’s 15 years in charge, Tan, who joined Citi in late 2009, will become the first woman CEO in the company’s past. Following the review of both internal and external applicants, her appointment was made. In a company media release, Tan was cited as the strongest candidate in the lengthy development program attended by interior candidates.  ,
Headquartered in Singapore, DBS is one of the largest banks in Asia with offices in Hong Kong, India, Indonesia, Japan, Korea, Malaysia, Myanmar, mainland China, Philippines, Taiwan, Thailand, United Arab Emirates ( UAE ) and Vietnam. DBS even has appearance in Australia, the UK and the US. The bank provides services to consumers, small-medium enterprises ( SME) and corporates.
In her new position, Tan will take more than 35 years of experience in customer banking, wealth management and administrative banking. Based in Singapore, Tan has even worked in different financial centres such as Hong Kong, Tokyo and London.
Tan has worked for DBS since 2010, beginning her career there in 2010 when she started her career in the bank’s money management division. She now oversees the company’s customer banking, wealth management, and institutional banking divisions, which account for 90 % of the company’s revenue. Across these jobs, Tan had likewise helped apply DBS ‘ digilisation approach, and since 2014 has been president director of DBS Indonesia.
Tan has also been nominated for a seat on the Singapore legislature from 2012 to 2014, and he has also been appointed to a number of advisory boards.
The announcement came as DBS revealed Q2 2024 net profit up 4 % to S$ 2.8 billion ($ 2.1 billion ) with a return on equity of 18.2 %. First-half net profit was up 9 % to a record high of S$ 5.76 billion,  , driven by “broad-based growth”, according to the bank.  ,
Consumer banking and wealth management revenue increased by 18 % to S$ 5.06 billion for the first half of the 2024 financial year, partially offset by Citi Taiwan’s consolidation, which was completed in August 2023, to reach S$ 5.06 billion. Lower net interest income and higher loan-related fees, cash management fees, and treasury customer income were all factors that contributed to institutional banking income, which was” stable” at S$ 4.69 billion. Businesses trading revenue was much changed at S$ 433 million.
Despite experiencing regulatory issues with the Monetary Authority of Singapore following a number of interruptions, the banks recorded record profits of S$ 10.1 billion for the 2023 fiscal year.  ,
DBS president Peter Seah said in a media launch,” Under Piyush’s management, DBS has been transformed into a high-performing, high-returns organization recognised together for security and innovation”.
Seah continued:” Tan’s proper orientation, track record in building companies, familiarity with technology, leadership skill as well as strong customer control and communication abilities make her the best son. Important for us, she even embodies the DBS lifestyle. I’m pleased that a Singaporean with extensive international experience has emerged as the ideal leader and that Piyush may continue to leave us.
Tan has collaborated strongly with me for more than ten years to get the banks where it is today, according to Gupta in the same release. Since joining, she has been instrumental in the growth of our money management, consumer banking, and administrative banking operations, and she now holds personal ownership of the business. With her visit, we can be certain that DBS’s change will continue well into the prospect.
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Many nations are carefully avoiding Taiwanese subsea cables in the Indo-Pacific in light of growing concerns about espionage and political control.
Challenges surrounding deepwater cables – fiber optic cables laid on the lake ground, used for transmitting data across continents in the Indo-Pacific – are deeply entangled with political, technical, and security issues.
Subsea cables are essential for global contacts, transmitting over , 97 % of global data, including online traffic, monetary transactions, and state communications. The modern economy’s foundation is made up of this crucial infrastructure, making it both a source of contention and a critical asset.
Disruptions, proper or natural, impact local economies heavily reliant on quick and secure internet connectivity, particularly post-pandemic, and underscore the important political and operational hurdles faced by the global subsea cable industry.
While undersea landslides, tsunamis, and natural disasters can shift the bottom and cause significant damage to subsea cable networks, intentional sabotage is a more urgent issue.
Strategic disruptions, such as the deliberate trimming of cables, can remove countries or regions and have significant repercussions affecting international trade, economic markets, and important military and economic data flows. Various strategies can be used to gain proper leverage without compromising cables include espionage and data intercept.
Recent , reports , indicate that Chinese wire repair ships may get involved in tampering with foreign cords. Subsea cables are thought to be the source of nearby to$ 10 trillion in daily monetary transactions. Similarly, proper control over these wires is important, with problems potentially impacting , gas, electricity, and data , significantly .
Subsea cables ‘ deliberate targeting can be used as a hybrid warfare strategy where both state and non-state players use unconventional means of achieving strategic goals. In political conflicts, for instance, using intentional cable cutting as a coercive measure can be used to put pressure on without using blatant military force.
This tactic can impair administrative stability and economic stability, which shows how geopolitics and technology intersect in contemporary conflicts.  , In April 2024, for example, wires connecting Taiwan’s Matsu Island were cut, reportedly by Chinese vessels.
The disturbance immediately caused the local community to be cut off from access to the internet and telephone services, demonstrating the potential for regional strategic isolation as a result of this behavior.
The broader suggestion is the risk of Taiwan’s communications facilities, which could be a forerunner to more intensive strategies to destroy Taiwan’s stability.
Taiwan’s significant role in the world’s semiconductor industry could have a negative impact on global supply chains, affecting industries globally, and possibly causing a backlash from multinational corporations and global markets.
If cables are cut as a result of a military operation or as a result, tensions will escalate significantly and there could be a defense issue, especially with nations that have safety commitments to Taiwan.
More than 20 wires connected to Chinese firms have been operating in the Indo-Pacific region between 2021 and 2026, despite ongoing efforts to reduce reliance on Chinese deepwater sites.
There are restrictions on the restrictions that can be imposed on subsurface cables, an area where Taiwanese companies now dominate, in contrast to the US’s export controls that have slowed down Chinese manufacturing and development by years.
Also, while China’s deepwater cables share similar vulnerabilities, the risk of intentional disruption or spy emanating from China toward different countries is higher.
In recent years, subsea cables have played a crucial role in the , technology competition  , between the US and China. Washington has taken steps like Team Telecom to prevent Chinese companies from obtaining contracts, and it has intervened in several projects, including the Southeast Asia-Middle East-Western Europe 6 cable.
These efforts include granting Chinese companies financial incentives for their cable projects and imposing sanctions on Chinese companies, which would address concerns about potential espionage and security risks posed by Chinese-controlled infrastructure. Retaliatory measures from Beijing have been slammed for these actions, including cable approval delays.
For example, the , Southeast Asia-Japan 2 cable project, involving Singtel, Meta, and Japan’s KDDI, has been delayed due to slow permit approvals from Chinese authorities, citing national security concerns. Projects like the Apricot and Echo cables, for instance, are being developed to connect key regions , while avoiding the South China Sea, albeit at higher costs due to longer and more complex routes.
Countries like Japan, Australia and the US enhance subsea cable security through partnerships, regulatory measures, and strategic investments. Japan has  , proactively secured , its subsea cable infrastructure through partnerships with the US, Australia and Canada.
Japanese businesses are significant players in the sector, and the nation supports international laws to safeguard these assets. In its bilateral andnbsp, Digital Economy Agreements with Australia and the UK, Singapore has included rules governing subsea cables. To ensure secure data flows, these standards include criteria for screening and certifying cable vendors, and they may also serve as a reference point for similar initiatives.
The Philippines is set to become a key data hub with several upcoming cable projects, such as , Apricot, Bifrost, PLCN, and CAP-1, featuring landing points in the country. These new connections will increase the diversity of the route and lower the latency of data transmission between North and South America and Southeast Asia. To promote connectivity and economic growth, Indonesia and Malaysia are expanding their subsea cable infrastructure.
By engaging in regional forums on cable security while maintaining a balance between their relations with China and other world powers, these nations attempt to navigate geopolitical tensions. Through strategic partnerships and joint investments, Australia has focused on cybersecurity and developing emergency plans.
To leverage its tech industry, South Korea, a key player in the global telecommunications network, has addressed the , growing demand , for high-speed and reliable internet connectivity. For example, KT Corporation is developing a , 5.6k-mile , subsea cable across the Indo-Pacific region with Savills Korea, connecting to countries like Japan, Taiwan, Indonesia, the Philippines, and Singapore.
In addressing these issues, multilateral cooperation is of utmost importance. Regional partnerships like the Quadrilateral Security Dialogue are focusing on securing these critical infrastructures to counterbalance China’s influence in the Indo-Pacific through joint investments, sharing best practices for cybersecurity, and developing contingency plans for disruptions .
Additionally,  , organizations , like the International Cable Protection Committee offer platforms for stakeholders to discuss security issues and enhance accountability mechanisms .
Strong security measures must also be implemented through international cooperation. This , includes , deploying advanced monitoring systems to detect and respond to cable damages quickly, fortifying cables with protective sheathing, and establishing protocols for rapid repairs.
Additionally, strategic redundancy, where multiple cables provide alternative routes for data transmission, is crucial to ensure continuity in case of disruptions. Therefore, countries and organizations generally adopt four different strategies to deal with these disruptions: diversification of routes, strengthening international cooperation and coordinated response plans, developing advanced monitoring systems and establishing protocols for quick repairs, and putting together stringent rules to ensure secure data flows.
Addressing these issues will be crucial for the region’s future as the demand for high-speed internet and digital connectivity grows.
Pratnashree Basu , ( pratnashree@orfonline .org ) is an Associate Fellow with the Strategic Studies Program and Centre for New Economic Diplomacy, Observer Research Foundation, India.
First published by Pacific Forum, this article is republished with permission. Read the original here.
When FinanceAsia editorial board member, Sunil Veetil, took on his Singapore-based leadership role as head of Commercial Banking Sustainability for Apac at HSBC back in summer 2022, Asia was in the throes of pandemic uncertainty. Market to market, the approach of each governing authority proved to be heavily nuanced: Singapore had not long lifted restrictions to social gatherings and would soon abandon the mask mandate; while Hong Kong’s decision makers would deliberate for a further seven months before considering any such easing.
Yet, with hindsight being 20/20 (some may recoil at reference to the fateful numerical sequence), there was a sense of steadiness – albeit slow – in the unravelling of pandemic protocol which sits in stark contrast to today’s atmosphere of fast-paced-but-frequently-wavering global political and socioeconomic uncertainty. With over half of the world going to the polls this year – and a lot riding on upcoming election outcomes including France’s hung parliament and the final months of campaigning in the US; geopolitical complexities and tensions are pervading all market developments, not least the macroeconomic and inflationary outlook.
Reassuringly, however, Veetil is resolute in his resolve that global climate aspirations will forge ahead in spite of current conditions. “When you talk climate, you have to look long term,” he told FA. “Whilst there are short-term disruptions and changes – some of which have been positive; for example, the supply chain dispersion that has been taking place across the Asian region – it’s important to view climate from a longer perspective.”
He pointed to the outcomes of last November’s COP28 UN Climate Change Conference in Dubai, which served as a global stocktake of progress achieved by key economies towards the goals of the Paris Agreement, at the halfway point to their ultimate delivery by 2030. While the event publicly affirmed failure in capacity to limit global warming to 1.5 degrees Celsius by the end of this century; for the first time, it achieved consensus among all 196 heads of state and government officials to sanction the “beginning of the end” of the fossil fuel era, with efforts to eradicate their use by 2050. The conference laid the ground for a “swift, just and equitable transition, underpinned by deep emissions cuts and scaled-up finance”, a strategy which complements HSBC’s own ambitions to align its financing portfolio to net zero by 2050, as announced by the bank in 2020.
Climate management, Veetil explained, involves tackling a “perfect triangle” of challenges: politics, climate and the overall socio-economic picture. “The socio-economic impact of climate upon people is becoming all the more evident as we proceed… and to bring this all together, is the flow of capital.” He noted that while a lot of climate policy frameworks and trendsetting comes from Europe, the impact – “where the rubber hits the road” – is in Asia “and this is where the complexity is.”
Expanding on his comments for FA’s analysis of Asia’s debt capital market (DCM) activity, in which sustainable transactions were highlighted as playing an increasingly significant role within regional DCM dealmaking, Veetil said that typically, it continues to be the larger regional entities who lead the way in terms of raising significant capital to support sustainability aims. “The large tickets will always be driven by the sovereigns; and then it’s usually state-owned-enterprises (SOEs) or those large-cap private operators active in oil and gas or power and utilities, who are signing the big-ticket transactions.”
This seems to have been the case in 2024 so far, with Asia’s main players pioneering innovative climate transactions. In February, Japan followed up on its 2021 introduction of a transition finance framework by auctioning the world’s first sovereign climate transition bonds as a financing tool to support market growth alongside industry decarbonisation; while during the same month, HSBC participated in the first global multi-currency digital green bond offering, issued in Hong Kong.
“However, we are seeing green loans and sustainability-linked loans (SLLs) pick up at the mid-level and below this, in response to sustainable supply chain requirements. Of course, Asia is a supplier to the world.”
Veetil noted how European and North American buyers have become accustomed to outsourcing their emissions to Asia and that this had contributed some positive social and economic repercussions across the region, including an overall rise in income levels. With increasing pressure to report on and regulate sustainability, he explained that Asia-based manufacturers are not only on top of scope 3 metrics, but are pushing for capital expenditure (capex) to contribute to longer-term sustainability: to counteract those emissions that extend beyond the products themselves such as packaging, as well as manufacturing machinery.
“Take a textile manufacturer that supplies to one of the big fashion brands. It’s not just that they want a sustainable supply chain and a robust working capital requirement; they’re also looking at how to install a wastewater treatment plant or rooftop solar. They are actively seeking capex investment plus working capital that is sustainable.”
Additionally, he highlighted the emergence of a circular economy to facilitate long-term sustainability, as being a growing trend: “Look at the battery ecosystem for example, a huge industry is developing around the recycling of batteries – additionally the recycling of solar panels, turbines and so forth is being considered. The recycling industry is becoming larger as ultimately, unless there is a circular economy around it, resources will be wasted. New action is being taken to develop a fully circular product lifecycle.”
The role of tech
Veetil emphasised various strides made across the field of technology, as being key to the future direction of the sustainability market. He commended Japan’s move to funnel over 55% of the proceeds from its recent climate transition issuance into research and development (R&D). “The future impact of investment going into research is set to be significant,” he said, noting the market’s action to invest in and develop domestic hydrogen production.
“Hydrogen has real potential to drive transition across hard-to-abate sectors such as steel, construction and aviation. But currently the market is ‘grey’ as it requires coal power to extract it from H2O.” He added that China and India are also investing heavily in the development of hydrogen. “It’s a space to watch.”
Climate-related research and technology is one of the areas which HSBC’s New Economy initiative aims to support. Since June last year, the bank has launched two fundraising strategies in Asia to invest in early-stage high-growth and tech-focussed businesses, to promote regional innovation. The first strategy, a $3 billion New Economy Fund (NEF) targets opportunities in Hong Kong and the surrounding Greater Bay Area (GBA), while a more recently launched $200 million vehicle targets investment across Singapore and Southeast Asia. Last month, the latter signed its first dedicated social loan to support Vietnamese venture-backed biotech start-up, Gene Solutions, which aims to enhance the accessibility and affordability of essential healthcare services across Southeast Asia. Another recent contribution included a $30 million green and social loan to Indonesia’s acquaculture and intelligence start-up, eFishery, which works to empower smallholder fish and shrimp farmers through tech, by increasing feed efficiency and reducing waste.
Veetil agreed that there is a strong socio-economic angle to sustainability developments in Southeast Asia, offering the example of electronic vehicle (EV) two-wheelers: “In certain areas in Southeast Asia (such as Vietnam and Indonesia) – as well as India, the majority of the population can’t afford to buy cars. We are going to see EV two-wheelers becoming more prevalent, popular and impactful… In fact, this is already happening and will continue to do so in the short- to medium-term.”
He added that the technologies emerging around carbon capture also offer real potential, but they “haven’t yet reached a sweet spot for mass adoption.”
Regulatory developments
But perhaps the most influential factor set to shape the sustainability landscape to come, is regulatory development and with it, clarity around how to deliver and enact a shared vision.
“What I am monitoring most closely on the regulatory side of things, is progress around the development of a country taxonomy,” Veetil disclosed.
“Reporting requirements are evolving quickly. Markets such as Hong Kong and Singapore have been very much at the forefront of this, but huge strides are also being made in geographies such as China and India, with new reporting requirements being introduced for listed companies.”
Singapore’s Accounting and Corporate Authority (Acra) together with Singapore Exchange Regulation (SGX RegCo) have mandated that listed companies start disclosing their climate impact in a phased manner, from financial year 2025.
“Over the next three years, most companies based in Singapore will report their climate data, which will certainly have an impact on the corporate mindset operating in the region,” Veetil said.
“Similarly, regulation being introduced elsewhere, such as in Europe, is taking effect globally. Take for example the new European deforestation regulation that has been published; as well as the carbon border adjustment mechanism (CBAM), which will soon take effect.”
“This is where we need a unified body to monitor and manage the direction of shared sustainability efforts. Currently this is something that is missing.”
Veetil suggested that various international entities are exploring options; and he proposed that efficacy could be found through a consortium of international central banks; or an governmental body such as the United Nations (UN) forming a platform involving corporates and financial institutions.
“We live in a very seamless economy, regulations in one country will definitely have an impact on the other.”
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The Asia Pacific region is currently facing a significant gap in the race to fund decarbonisation – estimated at $US1.1 trillion by the International Monetary Fund (IMF).
However, this is not the only problem for a region whose coal-fired economies represent around half of global emissions, according to the International Energy Agency.
China alone accounts for 35% of global CO2 emissions, the agency says.
Speakers at the Sustainable Finance Asia Forum 2024 said that regulators will need to rebalance sustainable investment priorities – placing more emphasis on adaptation rather than mitigation – if the region’s most heavily polluting emerging economies are to meet their carbon zero targets.
Debanik Basu, the head of responsible investment and stewardship APAC at APG Asset Management, told a panel on harnessing transition finance for sustainable transformation that investment in mitigation (reducing greenhouse emissions at source) now represented the majority of transition funding.
He said the often more complicated task of climate adaptation – the need to change systems, behaviours and whole economies – was receiving scant attention.
“Currently the region is getting around $300 billion in transition finance so there’s a massive gap that needs to be addressed,” he told the conference. “Even within the small portion of finance that we are getting, more than 80 per cent of the funds are moving towards mitigation.
“Consensus estimates suggest that ideally it should be 50/50 between mitigation and adaptation.”
He said the other critical problem was that aspects of climate finance were not well understood and appreciated by the market overall, in particular within the agriculture and forestry segment.
“When you look at the NDCs (Nationally Determined Contribution) put out by a lot of countries, there are specific targets around climate change, but there aren’t explicit targets around forestry and agriculture,” he said.
“And even when there are targets, there is no clear roadmap. What all this means is that the institutional capacity is lacking. There are gaps in infrastructure and there are gaps in knowledge.
“As an investor, conversations with companies around biodiversity are at a very nascent stage.”
A question of taxonomies
Kristina Anguelova, senior advisor and consultant on green finance strategy APAC at the World Wildlife Fund, told the conference that regulation was moving in the right direction, guided by hubs such as Singapore and Hong Kong.
She added that the unofficial rivalry between Hong Kong and Singapore in terms of developing regulatory taxonomies was having a positive effect on the transition finance landscape in the region.
“I think the competition between Singapore and Hong Kong in this case is a good thing because it’s advancing regulation in the region quite a bit,” she said. “The Singapore Asia Taxonomy lays out transition taxonomy criteria across eight sectors.”
While the regulation is tailored to Singapore, she said she believed it would lay foundations for others to follow.
“It’s so important as a regulatory piece because it can serve as an incentive for investors to start to scale transition finance comfortably and confidently without the loopholes and the risks of potentially being accused of greenwashing,” she said.
In terms of biodiversity, she highlighted the nascent stage of biodiversity finance compared to climate finance, discussing the need for capacity building, regulatory clarity, and financial instruments to support nature-based solutions.
A case in point, she said, is the International Sustainability Standards Board (ISSB) which is developing standards aimed at developing a high-quality, comprehensive global baseline of sustainability disclosures focussed on the needs of investors and the financial markets.
“On biodiversity, I think we’re moving a bit slowly, but we’re getting there. Obviously coming from a science-based NGO, efforts can never be fast enough,” she said. “But the good news is that the ISSB will also be integrating the TNFD or the Task Force for Nature-related Financial Disclosures soon.
“Those jurisdictions that have adopted or committed to the ISSB will also be adopting those nature regulations.”
The challenge as always, she added, was that regulators had to strike a balance between mitigating financial risk and overregulating such that it slowed economic development.
Blended solutions
Building capacity, both speakers argued, would be critical to transition finance solutions to climate change and that new instruments, particularly in blended finance, were likely to be leading the charge.
“We are seeing beyond transition bonds to different types of instruments that are designed to go into blended finance structures such as transition credits which are based on the assumption that we can get carbon savings out of early retirement of coal-fired power plants,” Anguelova said.
One avenue that was currently being explored in a number of jurisdictions was concessionary capital: i.e. loans, grants, or equity investments provided on more favourable terms than those available in the market.
These terms could include lower interest rates, longer repayment periods, grace periods, or partial guarantees.
Of these instruments, Basu said, guarantees were evolving as one of the methods currently being pursued in several markets.
“What we are also seeing is that, apart from concessionary capital, a lot of public institutions are more comfortable with providing guarantees instead of direct capital because that then keeps the overall cost of capital down,” Basu said.
“It might be at a very nascent stage – and it is difficult to say if this is going to be the future – but it is developing,” he said.
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Over the past few weeks, there have been numerous new offers and advances in Asia’s tumor treatment.
This includes a $1.5 billion investment from UK-Swedish pharmaceutical giant AstraZeneca in Singapore, a listing on the Hong Kong Stock Exchange (HKEX) by a Chinese biopharmaceutical firm and an acquisition in Hong Kong by the New Frontier Group of the Hong Kong Integrated Oncology Center, a leading comprehensive private oncology medical platform.
AstraZeneca‘s investment was made in partnership with the Economic Development Board of Singapore, which is a department of trade and industry official, demonstrating that other institutions are discovering the potential for investment in this area.
Sunho Biologics ( China ), which is focused on the development and commercialization of biologics for the treatment of cancer and autoimmune diseases, was listed on the HKEX on May 24. The company’s shares, which had a last offer price of HK$ 13.5, increased 10 % on the day of the list, which is also a part of a wider pattern of more businesses looking to raise money via an IPO on the HKSE as the city’s market recovers from some very tough times.
The Nanjing City- based company, founded in 2018, offered 34.1518 million securities worldwide, with the Hong Kong government offering budgeting for 10 %, it was 10 times overstretched. CICC was the only sponsor, only general goordinator, only international coordinator, combined bookrunner and joint lead manager on the deal. The partnership between lovers Ke Geng and Ke Zhu was led by international laws company O’Melveny. It was O’Melveny’s sixteenth Hong Kong Investor completed for Chapter 18A biotechnology companies.  ,
The offering size was approximately HK$ 460 million ( approximately$ 60 million ).
Garri Zmudze, public companion at venture capital firm LongeVC, told FinanceAsia:” Asia is a growing opportunity for life research businesses and investors equally, because the place presents a unique set of circumstances for development”.
Zmudze added:” The region’s potential is reflected in a , flurry of deals in the cancer space in recent weeks”.
Next- generation cancer treatment
In recent years, cancer drugs have been quickly developing.
SunHo Biologics makes use of its understanding of immunology to create immunotherapies, including immunocytokines, to treat cancers and autoimmune diseases. It is in the middle of several trials, including Phase II of clinical trials for biliary tract carcinoma  , and colorectal cancer, and has three products it has developed in-house.
In order to increase the global supply of its ADC portfolio, AstraZeneca is building a manufacturing facility in Singapore for antibody drug conjugates ( ADCs ). In 2029, the manufacturing facility is expected to be operational.
ADCs  are the newest treatments that use targeted antibodies to deliver cancer-killing agents directly to cancer cells. The manufacturing of ADCs includes: antibody production, the synthesis of chemotherapy drug and linker, the conjugation of drug- linker to the antibody, and the filling of the completed ADC substance.  ,
Unfortunately, one of the factors influencing the investment in Asia Pacific is that there has been a significant rise in cancer incidences overall.
Over 35 million new cancer cases are expected to occur in 2050, an increase from the 20 million expected in 2022, according to the World Health Organization. With 2.5 million new cases accounted for 12.4 % of the total new cases, lung cancer was the most prevalent cancer worldwide.
The most prevalent cancer in Asia is likely to be caused by persistent tobacco use, which is now known as lung cancer.
GBA
Greater Bay Area ( GBA ) is one of the areas where cancer investments are projected to increase.
The Hong Kong Integrated Oncology Center ( HKIOC ) was recently purchased by the healthcare company New Frontier Group. The HKIOC provies cancer treatment services, early diagnosis, radiotherapy, systemic treatments, mental health and other rehabilitation services.
The company New Frontier owns the HEAL Medical Group, the Guangzhou United Familty Hospital, and the New Frontier Shenzhen United Family Hospital, and it also sees a” sizeable and growing patient population in the Greater Bay Area.” Collectively, they are referred to as the New Frontier Greater Bay Area Healthcare.
Life and health technology will be a part of the Shenzhenh- Hong Kong Science and Technology Innovation Co-operation Zone, according to Hong Kong CEO John Lee at the Asia Summit on Global Health held in Hong Kong in May.
Lee stated that the government of Hong Kong SAR is also strengthening I&T support in the upstream, midstream, and downstream sectors to spur the development of life and health science. The 16 life and health- related R&, D ( research and development ) centres established in our InnoHK research clusters are yielding impressive research outcomes”.
He added that Hong Kong’s government has committed to investing an additional$ 1.3 billion to further advance life and health technology and welcomed international talent to the country to work in the field.  ,  ,
Other investors , on the hunt
Private equity firms Carlyle and EQT recently closed large funds in Asia, which are, among other things, targeting Asian healthcare companies. Carlyle specifically targets Japanese companies after closing its most recent record buyout fund in the country.
In addition to Pureos BioVentures, there are a number of specialist, smaller investors in the industry who are looking to enter the market. LongeVC also looks at the wider “longevity” market and is backing “visionary biotech” in the US and markets like Japan.  ,
Expect more money to be made in this area, which will hopefully result in many lives being saved.  ,
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