Ladakh protests in freezing cold for statehood

Ladakh protestAuqib Javeed

In India’s higher- level Ladakh region, roughly 1, 500 Monks are protesting in thread- zero temperatures. The government made a long-standing requirement for a region split from Indian-administrated Kashmir in 2019 in line with their long-term commitment. But since 2020, they have usually taken to roads, accusing the government of “betrayal” and unkept guarantees. Auqib Javeed reports on what’s changed.

Ladakh, India’s northeastern- most area, is a plain inhabited by 300, 000 persons from the Muslim and Buddhist areas. Buddhists are the main religion in the Leh area, while Shia Muslims live there in the Kargil area.

The Buddhist area has long pleaded for a split place for its citizens, while those in Kargil have long desired to be integrated with the Muslim-majority region of India-administrated Kashmir.

The previous state of Jammu and Kashmir received special status and considerable autonomy under Article 370 of the constitution in the government of Prime Minister Narendra Modi’s administration in 2019.

Ladakh and Jammu and Kashmir, which are both officially administered lands, were then divided into two parts.

” We were demanding a separate place with a legislature”, says Chhering Dorjey Lakrook, a former Buddhist president from Leh. ” But we were granted simply a federally controlled country”.

The move also sparked fears that it would have an impact on the country’s culture and identity because it made it simpler for those from outside the area to purchase land in the area. People in Ladakh, who rely mostly on agriculture, were affected by the move.

According to India’s house government, as of 5 April 2023, no American firm had invested in Ladakh in the past three years, nor had everyone from outdoors purchased any property.

However, occupants are still concerned about an flow, as is the case in Jammu and Kashmir, where, according to data, 185 outsiders have purchased land between 2020 and 2020.

In 2020, Kargil and Leh districts joined hands and formed the Leh Apex Body ( LAB) and Kargil Democratic Alliance ( KDA ), aimed at addressing people’s concerns. Numerous civil society organizations have staged huge demonstrations against the federal government.

Ladakh protests

Auqib Javeed

Their needs include independence for Ladakh, work, security of their land and resources, and a political couch each for Leh and Kargil regions.

Additionally, they want the Sixth Schedule to be implemented, a constitutional clause that allows cultural people to form independent organizations that create laws governing area, heath, and agriculture. Nearly 97 % of Ladakh’s community is cultural.

Chhering Dorjey Lakrook, who served as president of India’s ruling Bharatiya Janata Party ( BJP) until 2020, claims that” The Sixth Schedule was intended to protect the rights of indigenous and tribal groups.” This, he adds, may save them from abuse by businessmen.

Locals claim that no progress has been made despite the national home ministry’s establishment of a committee to examine these demands.

Young people in the area are also concerned about the lack of state employment.

Since 2019, there has n’t been a single person hired in a senior government position, according to Padma Stanzin, the head of the Ladakh Students ‘ Environmental Action Forum ( Leaf ). ” We fear our work will be taken over by newcomers”, she adds.

Ladakh’s BJP MP Jamyang Tsering Namgyal did not respond to BBC’s ask for opinions.

A man holds up sign demanding implementation of the sixth schedule

Auqib Javeed

Ladakh, which borders both China and Pakistan, two nations that have strongly opposed India’s choice to withdraw Article 370, holds a significant geostrategic significance for the country.

While an ongoing armed rebellion against Delhi’s concept started in the late 1980s in the Indian-controlled Kashmir, the militancy never reached Ladakh.

Residents of Ladakh volunteered their help by providing American soldiers with food and other necessities during the Kargil War with Pakistan in 1999.

People are now unsure if they are willing to pay the price for being “loyal.”

” The nature of that voluntarism will not be if the state hurts the sentiments of the people”, says Sonam Wangchuk, an expert, entrepreneur and environment activist, who has worked for years to solve local community needs.

Mr. Wangchuk, who gained notoriety after Bollywood star Aamir Khan starred in a character based on him in the blockbuster Three Idiots in 2009, is fasting for 21 days to remind the government of its commitments to protect Ladakh’s environment and tribal indigenous culture.

People of Ladakh, he says, have offered support to Indian soldiers, including to personnel from the plains who have struggled to adapt to high altitude. ” Any kind of disturbance will impact this spirit”, he adds.

Ladakh educationist Sonam Wangchuk at a protest demanding statehood for the region on February 15, 2023 in New Delhi

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Experts say China and Pakistan would watch for any sign of “weakness” in the region.

” Unrest and discontent, especially if sustained, is something that Beijing and Islamabad could try to exploit”, says Michael Kugelman, director of Washington- based think- tank South Asia Institute at the Wilson Centre.

Beijing refused to acknowledge the declaration of Ladakh as a federally administered territory in 2019. The region lies along the disputed 3, 440km (2, 100 mile )- long de facto border along the Himalayas- called the Line of Actual Control, or LAC- which is poorly demarcated.

After their forces clashed in the Galwan river valley in Ladakh, which left at least 20 Indian soldiers dead, tensions between India and China have been high since then.

Both Delhi and Beijing increased troop movement following the clashes and constructed extensive military installations along the LAC. China launched incursions in Ladakh, claiming over 1, 000 sq km of India- claimed territory. India has repeatedly denied China’s claim.

Local grievances have grown worse as a result of Chinese soldiers ‘ incidents en route to Ladakh and preventing residents from grazing their herds.

A group of neighborhood herders were prevented from transporting their cattle to traditional grazing lands close to the LAC in January, sparking a fight between local Chinese People’s Liberation Army ( PLA ) soldiers.

Mr. Kugelman contends that while India cannot afford an unstable Ladakh, it is also impossible to change the things that were changed in 2019.

Delhi has always believed that any disputes and instability in the affected regions would be resolved with the repeal of Article 370 and any related actions.

” Changing the status of Ladakh and granting it statehood would undermine that position and raise questions about the merits of making those moves back in 2019,” he says.” That’s not the impression Delhi would like to convey,” he says.

This is most likely the reason India refuses to grant local government in Ladakh, according to Praveen Donthi, a senior analyst for the International Crisis Group, a Delhi think-tank.

Since the Galwan clash, the LAC has become unstable, he claims, and the government would probably prefer to tread cautiously.

Residents of Ladakh hope that the strength of their unity, which is the collective action by the Muslim and Buddhist communities, will eventually force the authorities to address their grievances.

” Our unity will compel the government to hear us and address our demands”, says Jigmat Paljor, a student- activist in Leh. ” They ca n’t ignore us for too long”.

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Asia feels the pinch of growing ‘food chokepoints’ – Asia Times

In recent years, global food security has suffered from overlapping problems caused by problems, political tensions, climate change, and the Covid- 19 pandemic, resulting in severe foods provide problems.

These problems have been made worse by a number of “food causeways,” such as those that Yemen-based Houthi soldiers have attacked merchant boats and have hampered food shipments through the Suez Canal.

The transport visitors through the Panama Canal has decreased expected to&nbsp, drought&nbsp, which likewise hit river transport systems like as the&nbsp, Mississippi River&nbsp, and the&nbsp, Rhine River.

The emphasis on particular transport routes makes the pressure on global food security even more pressing because the global food system is already becoming increasingly dependent on the movement of meals from a few key “breadbasket” exporting areas to food-deficit locations around the world – frequently through these “food chokepoints”

It furthermore impacts agricultural goods profitability, shipping schedules, as well as food supply and prices. Longer delivery periods even put perishable foods at hazard, while&nbsp, shipping disruptions&nbsp, such as changes to shipping schedules stress cargo management and street transport sectors, causing major delays.

What does Asia’s interpretation of this mean?

For both food- exporting and importing countries, challenges loom. Exporting nations may experience profit margin pressures, which lower the cost of production while importing nations may have to deal with potential increases in transportation costs, which could lead to higher food prices, increased price volatility, and altered consumption patterns.

Due to their reliance on European and Black Sea markets for important agricultural products and fertilizers, Southeast Asia, East Asia, and South Asia are more vulnerable. Import disruptions pose inflation risks, contributing to a cost- of- living crisis.

In countries already grappling with crises like extreme weather ( Pakistan ), conflict ( Bangladesh and Myanmar ), economic turmoil ( Sri Lanka ) and political uncertainties ( Thailand ), &nbsp, food price inflation&nbsp, exacerbates poverty, stalling socioeconomic growth.

The most under- and middle-income households, which are most likely to be affected, may also be at increased risk of malnutrition, which could turn back decades of development progress in Asia.

Trade disruption implications

The US announced plans for a task force&nbsp in late December 2023 to combat the Houthi attacks in the Red Sea, but it is unlikely that immediate redress for trade turbulence and food price inflation will occur.

Concerns about food and fertilizer supplies being manipulated are raised by ongoing supply chain disruptions, as demonstrated by the Ukraine-Russian war, combined with the escalating geopolitical tensions.

Amid recurrent crises, urgent reforms to food systems are essential. Governments and policymakers must prioritize&nbsp, preparedness and resilience- building&nbsp, at national and regional levels to address food security issues and mitigate future impacts.

Governments and policymakers should diversify their sources of supply chain disruptions in addition to the increasing national stockpiles that the numerous net food importing nations in Asia have.

A good example is Singapore, which, while importing over 90 % of its food, has reduced vulnerability to food price and supply fluctuations through contact with&nbsp, more than 180 countries and regions.

This strategy has been largely successful, resulting in Singapore enjoying the world ‘s&nbsp, second most affordable food, behind Australia. &nbsp, The average&nbsp, Singaporean household&nbsp, spends less than 10 % of monthly expenses on food, in contrast with the Philippines ‘ 38 %.

Additionally, the Philippines, which has a large food deficit, ranks low in affordability, importing&nbsp, nearly 80 %&nbsp, of its agricultural imports. Food inflation in the Philippines reached&nbsp, 8 % &nbsp, in 2023.

Facilitating food access

Governments across the country must develop early action plans and strengthen social safety nets to lessen the strain of the cost-of-living crisis. For lower-income households with lower incomes, initiatives like food relief, cash support, and food voucher programs can help ease the strain. Subsidies and tax measures, which can provide temporary relief, may also be considered.

With average households spending over a third of their income on food in countries like&nbsp, the Philippines, and lower- income households in countries like&nbsp, Indonesia&nbsp, spending up to 64 % on food monthly, addressing food price inflation is crucial to safeguard average and lower- income households from undernutrition.

To address the interconnected issues of food availability, access, and affordability, Asian governments reliant on food imports could sign agreements with agricultural exporting countries in the region such as&nbsp, grain and oilseed powerhouses&nbsp, Australia and New Zealand. Doing so can avoid risks posed by chokepoints.

Greater focus on intra- regional trading could also be encouraged, such as in Southeast Asia, which has large exporters of key agricultural products including&nbsp, rice&nbsp, ( Vietnam and Thailand ) and&nbsp, palm oil&nbsp, ( Malaysia and Indonesia ).

Increased intra- regional trade could reduce&nbsp, regional food import dependency&nbsp, while also increasing regional food accessibility, market stability, and economic development. This could be aided by initiatives to encourage investments in agricultural research and development in the area to increase production of other staple grains ( such as wheat ) and reduce reliance on imports.

Looking ahead

The Middle East’s ongoing supply chain disruptions serve as a reminder of how crucial it is to have resilient national and regional food supplies and agrifood systems, according to Asian governments and policymakers. Countries must try to address these interlinked issues at national and regional levels in both the short and long term in the face of persistent food price inflation and malnutrition.

The region has a better chance of preparing itself for the challenges that lie ahead in terms of food security by implementing policy measures like diversifying food imports and strengthening social safety nets.

Genevieve Donnellon- May is a Research Associate at the Asia Society Policy Institute, Melbourne, Australia. Paul Teng is a Senior Adjunct Fellow at Nanyang Technological University (NTU), Singapore’s Nanyang Technological University (NTS Center ), S. Rajaratnam School of International Studies ( RSIS), and the Centre for Non-Traditional Security Studies (NTS Centre ).

This article first appeared on RSIS Commentary, and it has since been republished with kind permission. &nbsp,

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AI’s rapid evolution | FinanceAsia

Asian listed technology stocks outperformed world indices in 2023. While lingering geopolitical worries and supply chain constraints muffled the industry’s early year outlook, the sector was buoyed by the near overnight mass adoption of generative artificial intelligence (AI).

The release of user-friendly chatbots found an immediate audience. Within two months of its official launch, ChatGPT reached 100 million monthly active users, making it the fastest-growing consumer application in history, according to Similarweb data. The popularity of the OpenAI-designed chatbot spurred other notable rivals, including Google’s Bard and graphic designer Midjourney. AI systems are now capable of producing digital art designs, college-level essays and software coding – all in just a matter of seconds.

Unsure which generative AI platform will ultimately reign supreme, investors have been adopting a “picks and shovels” approach, a mining analogy favouring equipment makers. The Philadelphia Semiconductor Index returned almost 50% in 2023. Asian tech companies followed, with the MSCI AC Asia Pacific Information Technology Index rallying more than a fifth, compared to a 10% gain for the MSCI World Index.

Looking into 2024, there is little to believe tech’s outperformance will reverse, said Mazen Salhab, chief market strategist, MENA for BDSwiss, speaking to FinanceAsia. Salhab foresees the trend continuing beyond the next 12 months, considering the urgency for corporations to leverage innovative technologies capable of addressing headwinds such as tightening labour dynamics and higher costs.

Given its technological reach, experts see generative AI’s transformative properties creating significant economic value across a spectrum of industries. Bloomberg Intelligence predicts generative AI sales to reach $1.3 trillion over the next decade from a market size of $40 billion in 2022, representing a compounded annual growth rate (CAGR) of 42%, with rising demand for AI products adding $280 billion in new software revenues. 

These numbers are hard to ignore, explained Hong Kong-based Robert Zhan, director of financial risk management for KPMG China, to FA. He added that companies harnessing AI would not only establish a competitive advantage for themselves, but would also unlock substantial client and shareholder values, enriching the entire business ecosystem.

Concentrated gains

Yet, despite the broad-based optimism, generative AI value creation has been narrowly focussed with select names. The market cap of US-listed Nvidia, the graphic processing unit (GPU) chipmaker behind chatbots like ChatGPT, tripled in 2023, breaching the trillion-dollar level and quickly becoming the industry’s benchmark for AI sentiment.

The excitement surrounding AI pushed Nvidia’s current price-to-earnings (P/E) multiple to 120 times, compared to Nasdaq’s market multiple of just 25 times, with analysts justifying AI premiums due to the sector’s rising income profile and robust sales outlook. While historical productivity cycles have often inflated speculative prices, even at the current trading multiples, Salhab doesn’t believe an asset bubble exists, arguing that visible efficiency gains are set to materialise in the near future.

Timing when those AI-related gains appear is riddled with obstacles for asset allocators. Chip designer Arm Holdings, which listed on the Nasdaq in September 2023, has been trading with a P/E as much of 200 times, nearly double that of Nvidia’s, reflecting the widening gap investors are assigning to companies with AI linked revenues.

Despite the elevated valuations, fund managers see generative AI investments as just one catalyst for the tech sector. 

The outlook is particularly promising for semiconductors, said Matthew Cioppa, co-portfolio manager of Franklin Templeton’s technology fund, in a conversation with FA. Cioppa highlights ongoing drivers such as proliferating demand for electric vehicles, internet of things (IoT), and cloud computing, noting that these technologies are at the early growth stages of their innovation, offering catalysts for semiconductor stocks.

The politics of chips 

There are also many political considerations for AI investors. 

As semiconductors serve as the underlying hardware for AI, experts say the technology will inevitably always be related to political decisions that can quickly rattle markets. In October 2023, the US tightened export controls on advanced chip sales to China, hampering Beijing’s AI ambitions and fuelling US-Sino tensions ahead of the US 2024 presidential election.

The US-China trade dispute has diminished the Chinese semiconductor market for US suppliers, acknowledged Cioppa. Although he argues that export restrictions are already priced into the market, Cioppa believes that the political fallout linked to semiconductor chips and AI technology remains a volatile factor that can never be ignored, especially when the world’s two largest economies are directly involved.

Nvidia’s share price has bucked the trend. While the company has thus far overcome trading hurdles by offering alternative chips, that balancing act appears vulnerable following the group’s third-quarter earnings announcement which mentioned a more challenging operating environment ahead. That caution is now being echoed by Nvidia’s Chinese customers who are also concerned about their own generative AI aspirations.

In late November 2023, e-commerce giant Alibaba reversed its decision to spin off its Cloud Intelligence Group, citing the US export controls of advanced Nvidia chips, while China’s Tencent said it would look to domestic semiconductor manufacturers to meet its demand. Even as Nvidia coordinates with the US government on developing approved chip designs compliant with the existing rules, the outcome and timing of decisions remains unclear.

This matters for any technical development, said KPMG’s Zhan. “[Because] geopolitics impacts which AI vendor is selected, companies will be cautious to ensure they meet local regulatory requirements, particularly across data privacy and security.”

Rapid development of Chinese-produced semiconductors may test market sentiment if incumbents like Nvidia underestimate those capabilities. While supply may meet chip demand in the current market, Nvidia believes those alternatives may not provide sufficient computing power to train the next generation of AI systems, as stated in the earnings report.

Technological challenges are also occurring alongside policymaker efforts to incubate a regulatory landscape that supports AI platforms without derailing its potential. In October 2023, London initiated a summit aimed at establishing an AI oversight committee, but soon discovered that Washington had similar intentions, reflecting a lost coordination opportunity. 

What regulations are ultimately introduced is uncertain, but it’s anticipated that numerous discussions and obstacles will arise in the years ahead, said Zhan. When asked what type of regulation works best, he shared: “I would like to compare AI to a human. Right now, AI technology is still in its infancy, so it makes sense that it should get more supervision and more controls to help it learn and grow. But as AI matures and learns, such controls should adjust proportionately according to the risk.”

It is a sentiment underscored by Franklin Templeton’s Cioppa, who said that “over time a combination of sovereign regulatory frameworks and private market solutions would effectively provide AI guardrails as not to stifle innovation or make it too difficult for smaller companies to compete with the mega cap companies on any advancements.”

2024 outlook

The uncertainties facing AI investors for the year ahead are magnified by higher capital costs such as elevated interest expenses as central bankers grapple with inflation, and also the increasing need for expensive data centres.

It will be interesting to see how AI stocks’ performance compare to non-tech companies in an overall weaker investment environment. Any company looking to bring AI into their businesses will have an expensive journey which could weigh on their earnings’ outlook.

As the market undergoes tapering, venture capital and private equity firms are adjusting their expectations. Hong Kong-based Alex Wong, head of M&A advisory at FTI Capital Advisors, told FA:

“Our clients, particularly those considering Hong Kong initial public offerings (IPOs), have recalibrated their expectations. Impacted by the weaker local market, some are exploring various alternatives at reduced exit valuations. Others are studying different listing venues, or altogether, deferring IPO plans and choosing direct exit strategies like trade sales.”

For fund managers preparing for the year ahead, these factors may bode well again for Asia’s technology stocks over non-tech names, particularly innovative companies backed by reliable cash flows and visible dividend payouts to shareholders. For investors that may mean holding onto 2023’s winner in 2024.

Peter Choi, a senior analyst at Vontobel, favours firms such as Taiwan Semiconductor Manufacturing Company (TSMC), the largest constituent for MSCI AC Asia Pacific Information Technology Index which returned more than a third to investors last year, highlighting that TMSC powers AI businesses not only for Nvidia, but also for tech giants such as Google and Microsoft.

Yet, no matter which AI-related companies lead stock market returns, the generative AI attention will unlikely fade, explained Andrew Pearson, managing director of Intellligencia, an AI and analytics company in Hong Kong and Macau.  

“Fundamentally, generative AI is anything that can be imagined even if it doesn’t currently exist, making it good marketing material inside a PowerPoint presentation or even a book,” said Pearson, who recently published The Dead Chip Syndicate. Ominously, he added: “There will always be an audience for something that carries a 10% chance of destroying the human race. It is too big to disregard at this point.”

For investors, there may be a sense of irony by sticking to the same investment strategy in 2024, as arguably the most prudent approach to capture the market upside for a constantly evolving technology, is to repeat what has worked before. Will this trade work again? We will find out over the next 12 months.

This article first appeared in the print publication Volume One 2024 of Finance Asia.


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Fire elite: India blasts into the MIRV nuke club – Asia Times

With Multiple Independently Targetable Re-entry Vehicle ( MIRV ), India’s most recent Agni- 5 test cements its position in the elite group of world powers, a significant step forward in improving nuclear deterrence in relation to China and Pakistan.

Many media outlets reported this month that India had safely completed the initial flight test of its Agni- 5 MIRV weapon. This step propels India into the elite class of nuclear power with MIRV technologies, including the US, UK, France, China, Russia and Pakistan. &nbsp,

The test was conducted on Abdul Kalam Island in the Bay of Bengal, off India’s north beach. Although India did not specify how many MIRVs were involved in the Agni- 5 check, it is believed to have carried between two and ten missiles.

The start of the Agni line, which is named after the Sanskrit word for “fire,” was hailed by Prime Minister Narendra Modi as a happy moment for the country. Home Minister Amit Shah and defence secretary Rajnath Singh praised the study’s commitment to Modi’s eyesight of a self-sufficient India.

The good energy, canister- launched Agni- 5 has a range of over 5, 000 kilometers, allowing it to pin regions deeply within the territories of possible adversaries like China and Pakistan.

Given the ongoing borders tensions with China and India’s geopolitical rivalry and tensions with Pakistan, which underscore the rocket’s role in national surveillance and deterrence, the capability is especially important.

By enhancing the resilience of its nuclear forces, complicating adversaries ‘ missile defence calculations, and highlighting India’s no-first-use nuclear plan with a credible second- hit capability, the integration of MIRV technology into India’s missile arsenal will affect the region’s proper balance.

India needs to move its MIRV missile program quickly because of Pakistan’s pursuit of MIRV technology and China’s evolving missile defenses.

Rajesh Basrur and Jaganath Sankaran mention in a May 2016 Stimson Center report that India’s MIRV program has been influenced by both perceived external threats from China and internal imperatives.

Basrur and Sankaran note that India’s MIRV program aims to ensure its security against China’s improving military capabilities, including China’s own MIRV and ballistic missile defense ( BMD) advancements.

In a region already rife with nuclear rivalries, skeptics question the escalation risks and the implications for crisis stability, claim claim those who support MIRVs ‘ ability to penetrate Chinese BMD systems.

MIRV missiles are “use it or lose it,” because putting numerous nuclear warheads on one missile makes it more vulnerable to a first strike that destroys a lot of a country’s ability to launch a second strike.

Basrur and Sankaran add that India’s MIRV capabilities are complicated by its long-standing nuclear policy, which is characterized by restraint and a formally no-first-use stance.

In addition, they discuss the relationship between civilian oversight of India’s nuclear weapons program and counterarguments to a minimalist nuclear deterrence posture.

They do, however, warn that technological advancement frequently outweighs strategic doctrinal clarity, which could prevent developments like MIRVs that do not fully conform to India’s minimalist nuclear doctrine.

India still faces strategic challenges in enhancing its nuclear disarmament strategy against China. Those constraints include the two sides ‘ economic interdependence, India’s desire to be a leader in the so- called” Global South” and China’s relative political and economic advantages.

India’s close economic ties with China, participation in multilateral initiatives led by China, such as the Shanghai Cooperation Organization (SCO ), and participation in China-led military exercises may restrain India’s flexibility and nuclear posturing, according to Asia Times in December 2022.

In October 2022, Asia Times reported that China is confident that its authoritarian system of government is capable of outperforming India’s democracy and that its technological prowess will continue to be a decade ahead of India.

Asia Times reported that Pakistan launched its second test of the Ababeel MRBM in October of that year at the Sakhi Sarwar range in Punjab province in November 2023. Like the Agni- 5, the Ababeel MRBM is also designed to carry MIRVs.

Pakistan’s ability to penetrate India’s new missile defense system was reportedly enhanced by the test launch, which was conducted to confirm a number of design and technical parameters and evaluate the performance of various subsystems.

India’s Agni- 5 may still have to overcome reliability concerns before it is fielded. Regarding India’s nuclear weapons ‘ effectiveness and its capacity to produce enough fissile material for a MIRV nuclear arsenal, it may be questioned due to its MIRV capability.

In a 2014 article in the peer-reviewed Asian Survey Journal, Frank O’Donnell and Harsh Pant point out that India’s MIRV-capable Agni-5 and Agni-6 will spark demand for more sophisticated and smaller warheads. According to O’Donnell and Pant, Indian scientists ‘ claims of hyperbolic capability may have undermined India’s commitment to developing missiles and a more extensive nuclear arsenal.

While the recent Agni- 5 test may have at least partially dispelled those doubts, Hans Kristensen and Matt Korda note in a July 2022 Bulletin of Atomic Scientists article that while the Agni- 5 has been tested eight times before, additional testing may be required before the missile reaches operational capability.

In her book Striking Asymmetries: Nuclear Transitions in South Asia, Ashley Tellis points out that India’s nuclear weapons’ small yields are the most important constraint on its arsenal. According to Tellis, adding more low-yield warheads to India’s stock would not help the country’s shortage.

India’s slow fissile material production, despite having an extensive nuclear infrastructure, owes to the fact that its nuclear capabilities are focused more on power generation than nuclear weapons production.

Tellis asserts that India has the ability to increase the production of weapons-grade plutonium in its civilian nuclear power plants and has done so in the past. In the event of a global fissile material cutoff treaty, she claims that India will keep producing a surge of materials.

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China’s manufacturing powerhouse Guangdong eyes technological transformation

Using a PIN to Face Challenges

Local and foreign producers have been asked to reevaluate their supply chain methods by rising costs and rising costs. Some businesses have relocated some of their activities to different areas, such as South Asia and Southeast Asia.

Chinese electronic vehicle manufacturers, for instance, have just received government support to establish export-oriented supply chains in response to US and European trade restrictions.

Wang Weizhong, government of Guangdong, noted that despite the challenges still present, the region has also improved the law-based, market-oriented setting to draw significant foreign-funded projects.

He claimed that more than 1, 900 of these companies opened stores in Guangdong in January this year, an increase of 106 % over the previous month.

” We does actively promote the high-end, intelligent, and efficient business. According to Mr. Wang,” we will diligently apply the government’s new round of large-scale equipment regeneration and deployment, as well as major policy measures like reducing logistics costs and trade-in of consumer goods,” he told CNA.

He added that Guangdong’s local technology potential has been in the top spot for the past seven times.

” We will view the creation of new quality productivity as a strategic move and a long-term move,” he said,” and this shows ) strong confidence in the development of Guangdong’s manufacturing industry.” &nbsp, &nbsp,

ATTRACTING TALENT AND Assets

The place has been a key force behind China’s financial reform and expansion. It is located at the intersection of China’s Greater Bay Area ( GBA ), a hub for rapid high-tech advancements that attracts significant foreign investment.

” The GBA will enable the agility of a lot of skills, including those from mainland China, Hong Kong, Macao, and even those from other parts of the world,” said one analyst. Therefore, it is difficult for Guangdong to maintain its current talent while attracting more talent from other regions, according to political scientist Professor Sonny Lo.

He thinks Guangdong continues to be a hotbed for foreign buyers as a result of increasing investments in technical knowledge and better communication to Hong Kong and Macao.

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Firmer, less peaceful language on Taiwan reunification – Asia Times

It was less than two days into 2024 when Song Tao, the director of China’s Taiwan Affairs Office, called on all Taiwanese to promote “peaceful reunification” with the mainland.

But down in the text, the New Year’s message posted to the office’s website had not-so-subtle wording, as Song warned “the motherland will eventually be reunified, and it will inevitably be reunified.”

The message came less than two weeks before Taiwan held its presidential and parliamentary elections and coincided with Chinese President Xi Jinping’s message that reunification was an all but foregone conclusion.

The thin rhetorical veneer of peaceful reunification has been gradually but significantly replaced with language that is more crisp in “advancing the cause of reunification.”

This week, upon releasing budget figures at the opening of the National People’s Congress, Premier Li Qiang dropped mention of “peaceful reunification” in his government report, according to a Reuters analysis of his speech.

Li reiterated China’s call for “reunification” with Taiwan but added emphasis that it wants to “be firm” in doing so and dropped the descriptor “peaceful”, which had been used in previous reports, Reuters noted.

To be sure, it was not the first time a top Chinese official had omitted the word “peaceful” when referring to Taiwan “reunification.” The firmer language has been repeatedly used by Chinese state officials and has been a mainstay in Chinese Communist Party (CCP) speeches, including in Xi’s speech before the 20th Party Congress in October 2022.

In the president’s words then, he and his countrymen “firmly” grasp “the leading position and initiative in cross-Strait relations, and unswervingly promote the great cause of the reunification of the motherland, which is the goal of work on Taiwan.”

In Xi’s China, the master historical narrative is much more important than the veneer of a peaceful transition. This makes the removal of the language a reflection of current realities and an affirmation that “rejuvenation” through peaceful or more violent methods is the primary focus of the state.

In this effort, China has been consistent dating back Xi’s speech at a 2012 “Road To Renewal” exhibition, where the restoration of China takes precedence over all other objectives. Taiwan is seen as a critical element, as Beijing has called its separation a “result of weakness and chaos in our nation” as noted in a 2022 White Paper, “The Taiwan Question and China’s Reunification in the New Era.”

Reunification is also extension of the “Chinese Dream,” which is a collection of national myths and collective traumas manufactured by the state to extend beyond memory, back to the ancient Sui Dynasty of the 6th Century and the glories of the Ming Dynasty, which lasted until 1644. Failure to hold Taiwan is a part of China’s trauma-based nationalism.

So injurious to the Chinese Dream is the threat of failure that “compatriots” in Taiwan who were delicately described as “brothers and sisters” in 1978 are more commonly associated with conspiring to commit the most serious crimes of secession and treason.

Dead now are the remnants of Jiang Zemin’s diplomacy aimed at peaceful Cross-Strait relations, echoed in his report to the 16th Party Congress in 2002, in which the word “peaceful” was used in the Taiwan context nearly a dozen times.

The election outcome in Taiwan was a setback for China, as Democratic Progressive Party (DPP) candidate William Lai won more than 40% of the vote – even though China’s Taiwan Affairs Office had warned on the Thursday before the January weekend election that he represented Taiwan slipping “ever further away from peace and prosperity, and ever closer to war and decline.”

Now, despite economic deflation, there are steep increases in China’s defense spending, up 7.2% for 2024 at US$230.6 billion. The surge in spending comes amid stern warnings about “external interference” and opposition to separatist activities aimed at promoting Taiwanese independence.

Long gone is a much milder approach, evidenced also in Hong Kong well prior to June 2020, when the promise of “one country, two systems” was that of a “high degree of autonomy.”

The decling rhetorical use of “peaceful reunification” also marks the broader realization that Taiwan has moved farther and farther from the control of mainland China. Taiwan’s investment in South Asia and Southeast Asia in 2022 was greater than investments the self-governing island made in mainland China.

Former Taiwanese President Tsai Ing-wen has not only moved Taiwanese companies back from China, but has worked to engineer trade away from the mainland into the broader Indo-Pacific.

Taiwan’s New Southbound Policy, which targets 18 countries, almost doubled between 2016 and 2022. And the breadth of Taipei’s defense-related procurement and related military aid from the United States and other aligned countries makes the island a much more potent foe than it was 20 years ago.

With this reality, Beijing has set its sights on a reunion along the coercive terms it sets. As Taiwan becomes less interconnected and dependent on the mainland, more threats and less diplomacy are likely from Beijing.

Instead, contingency planning will continue to increase, evidenced by the recent weighing of options to blunt the effect of US sanctions in the case of a Taiwan conflict or recent mock drills simulating an island invasion by the military. While the language might simply be the removal of old rhetoric from an old, abandoned foreign policy, it also is symbolic of this new, more dangerous and volatile era.

Mark S Cogan is an associate professor of peace and conflict studies at Kansai Gaidai University in Osaka, Japan. His research interests include Southeast Asia and the broader Indo-Pacific region, as well as security studies, peacebuilding, counter-terrorism and human rights. He is a former communications specialist with the United Nations, serving in Southeast Asia, Sub-Saharan Africa and the Middle East.

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IWD Deal Analysis: How IIX’s WLB6 Orange bond helps women’s livelihoods in Asia | FinanceAsia

In a growing regional trend, December 2023 saw the sixth issuance of Impact Investment Exchange (IIX)’s Women’s Livelihood Bond (WLB) Series, the $100 million Women’s Livelihood Bond 6 (WLB6).

Altogether the IIX, since 2017, has raised $228 million to support women’s economic empowerment in Asia, with the overall trend in deal size on an upward trend. FinanceAsia discussed the investors, the rationale and the processes involved in order to celebrate International Women’s Day (IWD) 2024 on Friday, March 9 and the drive towards diversity, equity and inclusion (DEI) across the region. 

The closing of WLB6 marked the world’s largest sustainable debt security and was issued in compliance with the Orange Bond Principles and aims to uplift over 880,000 women and girls in the Global South.

Global law firm Clifford Chance advised Australia and New Zealand Banking Group (ANZ) and Standard Chartered Bank pro bono as placement agents.

Proceeds from WLB6 will be used to promote the growth of women-focused businesses and sustainable livelihoods across six sectors: agriculture; water and sanitation; clean energy; affordable housing; SME lending and microfinance across India, Cambodia, Indonesia, Kenya and Vietnam. 100% of the $100 million proceeds designed to advance UN’s Sustainable Development Goals (SDG) 5: gender equality and 25-30% designed to advance SDG 13 — climate action.

Robert Kraybill, chief investment officer, IIX, told FA: “The Women’s Livelihood Bond (WLB) Series is a blended finance instrument that pools capital from public-sector development finance institutions and private-sector investors. The public sector investors provide risk-tolerant “first-loss” capital in the form of subordinated notes, while the private sector investors purchase the senior bonds.”

“The WLB Series targets a range of private sector investors seeking a combination of high impact with low risk and an appropriate return. From the outset, beginning with the WLB1, the bonds have attracted both family offices and institutional investors. Initially, this was skewed towards family offices. As the WLB issuances increased, we saw increased interest from institutional investors, such that over 90% of the WLB6 was placed with institutions,” added Kraybill. 

For WLB6, there were global investors on the deal including from the US, Europe and Asia Pacific (Apac). The WLB6 bonds comply with the EU and UK securitisation regulations, making it easier for European institutional investors to participate. For example, one of the investors was Dutch pension fund APG Asset Management which invested $30 million.

Kraybill said: “Throughout building the loan portfolios for the WLBs – from sourcing and screening to due diligence – we integrate traditional credit criteria with impact criteria. We look to invest in companies meeting our credit and financial criteria while delivering meaningful positive impact.”

“We are proud that we have not experienced any payment defaults or credit losses on any of the WLB loan portfolios, demonstrating the resilience of the high-impact women-focused businesses that we work with, even in the face of challenges posed by the Covid-19 pandemic. The first two bonds in the WLB Series – WLB1 and WLB2 – have matured and been fully retired, meeting all of their obligations to bondholders,” Kraybill added. 

The IIX, which is headquartered in Singapore and has offices in Australia, Bangladesh, Brunei, India, Indonesia, the Philippines, Sri Lanka and Vietnam, also tracks the impact outcomes generated by its investment throughout the life of the bonds and reports on the targets. WLB1 and WLB2 exceeded impact projections, according to IIX.   

Complex deal

Given the number of parties involved and a myriad of regulations and compliance, the deal was not easy to put together. 

Gareth Deiner, partner at Clifford Chance, explained to FA the law firm’s role in the deal: “We’ve been involved for several years on these transactions, and this is not the first woman’s livelihood bond that the IIX team has put together.”

Singapore-based Deiner continued: “Historically, we have acted on the trustee side, but we have been advising the lead managers of the transaction for the last three offerings. It’s approximately a three to four month execution process to make sure we get the documentation agreed and the structure in place. IIX do the underlying due diligence on the borrowers, which is necessary given that the financing is raised from the international capital markets. Together with their counsel, they work on the disclosure in the offering document for the bond transaction.”

“As counsel to the lead managers, we are responsible for the underlying contractual documentation for the notes and the offering, but it’s IIX who retain control over the loan documentation with the notes proceeds end-users, and putting the loan pool together. They’re doing due diligence on the on the underlying borrowers of the deal,” he explained. 

This is backed up by IIX’s due diligence. IIX’s Kraybill explained: “The financial due diligence conducted by our credit team is similar to that of other emerging market lenders. What sets us apart is the upfront impact due diligence and ongoing impact monitoring and reporting conducted by our impact assessment team. Our team screens potential investments against rigorous eligibility criteria to ensure they contribute to positive outcomes for underserved women and gender minorities in the Global South while often empowering women as agents of climate action.”

Navigating US legal rules and dealing with investors from around the world also added to the complexity. 

Deiner said: “Dealing with a wide range of investors, including qualified institutional buyers in the US, we needed to comply with US federal securities law, including limiting the sale of the notes to qualified purchasers under the US Investment Company Act. There were also certain structural considerations raised by the EU and UK securitisation regulation.”

“From a legal perspective, it was an interesting deal because there’s a wide range of highly technical substantive law, which required the input from specialists across the Clifford Chance network. We have the expertise across the globe and do a lot of sustainable financing work,” continued Deiner. 

“Recently we’ve advised on some market-leading and groundbreaking transactions in terms of bringing sustainability finance technology to capital markets transactions,” he added.

However, this deal, in particular, involved social governance goals. 

Deiner explained: “What we like about this particular transaction is that so much of the Environmental Social and Governance (ESG) agenda is about the environmental (E) angle, such as green bonds related to carbon transition and climate action. That encompasses sustainable  development goal 13 of the UN Sustainable Development Goals (SDG).”

“However, you rarely hear about sustainable finance transactions that focus on the S and the G in ESG, which IIX champions. Each of the sustainable development goals (SDG) has its own hue, its own colour. This transaction focusses on SDG 5, which is gender equality, and are referred to as Orange bonds – orange being the hue for SGD 5. In addition, IIX has developed its own framework and principles to really drive that S in the ESG,” he added.

Tracking societal impact

There is still a key issue on how to track the impact of where the money ends up.

IIX’s due diligence process includes interviews with beneficiaries and stakeholders of investees,  using its own digital impact assessment tool to incorporate input from a broad group of female beneficiaries. This verifies impact claims while giving a voice and value to the women it is assisting, according to Kraybill.

He continued: “Our selection process for projects funded through WLB6 closely aligns with the objectives of The Orange Movement. Each of the bonds in the WLB Series adheres to The Orange Bond Principles, which focuses on empowering women, girls, and gender minorities, particularly in climate action and adaptation.”

IIX looks at the potential of each project’s mission, vision, goals, and business structure, to evaluate alignment with the core values of the WLB Series and The Orange Movement. Its impact assessment team conducts due diligence to ensure selected projects meet criteria outlined by The Orange Movement and contribute to promoting gender equity and addressing climate challenges in emerging markets, according to Kraybill.

With the rise of bonds connected to ESG and DEI, the scrutiny from investors is also increasing, especially with the prevalence of greenwashing. 

Clifford Chance’s Deiner said: “The legal landscape for green bonds and sustainability-linked bonds has evolved considerably in recent years, particularly regarding due diligence. When a company issues a green bond under a green bond framework, substantial work is required to ensure the bond’s integrity. This diligence has become a critical factor in investment decisions, as investors need to be confident that the environmental credentials are genuine and not merely an instance of greenwashing.”

“One of the key parts of the Orange bond initiative is achieving transparency in the investment process and decision, and the subsequent reporting, as the proceeds are going to an issuer who is on-lending it again, to, for example, a microfinance lender. It’s a combination of seeking an investment return and a view on the credit profile. The funds have specific objectives regarding capital allocation, and the appeal of the Orange bond aspect aligns with this focus,” Deiner added. 

$10 billion goal

The IIX has an ambitious goal of mobilising $10 billion by 2030 and optimism abounds. 

Kraybill said: “We remain optimistic about reaching our ambitious goal through sustained collaboration and concerted action, empowering women and girls worldwide while fostering inclusive and sustainable development.”

“Partnerships with the Orange Bond Steering Committee organisations, like the Australian government’s Department of Foreign Affairs and Trade (DFAT), the UN Capital Development Fund (UNCDF), Nuveen, and others, are vital in this endeavour. Together, we aim to build a gender-empowered financing system, mobilise new capital, and accelerate progress toward gender equality and women’s empowerment globally,” Kraybill added.

The Orange Movement is also building “Orange Alliances” at regional and national levels to bring together gender lens investors and other stakeholders. IIX is conducting training programs to train and certify Orange Bond verification agents.

“We’re introducing an “Orange Seal” for MSMEs and other organisations, which enhances their gender, DEI, and climate bona fides. We have expanded our transaction tagging functionality to include innovative finance instruments that adhere to the Orange Bond Principles framework. Furthermore, we’re eagerly anticipating the launch of the Orange Loan Facility, alongside numerous other initiatives to further the Orange Movement’s mission,” Kraybill said. 

He said: “We remain optimistic about reaching our ambitious goal through sustained collaboration and concerted action, empowering women and girls worldwide while fostering inclusive and sustainable development.”

The next bond could potentially be much larger than WLB6’s $100 million. 

Clifford Chance’s Deiner is also optimistic: “There’s a flow of transactions that we’re going to see over the next 12 months, and this an area that people are paying more attention to. The transactions have grown considerably over the years. These transactions have involved deals from around $20 million up to the latest offering of $100 million. So, there is clearly increasing demand for these transactions each year.”

Standard Chartered declined to provide a comment for the article.


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IWD Deal Analysis: IIX’s WLB6 Orange Bond helping women’s livelihoods in Asia | FinanceAsia

In a growing regional trend, December 2023 saw the sixth issuance of Impact Investment Exchange (IIX)’s Women’s Livelihood Bond (WLB) Series, the $100 million Women’s Livelihood Bond 6 (WLB6).

Altogether the IIX, since 2017, has raised $228 million to support women’s economic empowerment in Asia, with the overall trend in deal size on an upward trend. FinanceAsia discussed the investors, the rationale and the processes involved in order to celebrate International Women’s Day (IWD) 2024 on Friday, March 9 and the drive towards diversity, equity and inclusion (DEI) across the region. 

The closing of WLB6 marked the world’s largest sustainable debt security and was issued in compliance with the Orange Bond Principle and aims to uplift over 880,000 women and girls in the Global South.

Global law firm Clifford Chance advised Australia and New Zealand Banking Group (ANZ) and Standard Chartered Bank pro bono as placement agents.

Proceeds from WLB6 will be used to promote the growth of women-focused businesses and sustainable livelihoods across six sectors: agriculture; water and sanitation; clean energy; affordable housing; SME lending and microfinance across India, Cambodia, Indonesia, Kenya and Vietnam. 100% of the $100 million proceeds designed to advance UN’s Sustainable Development Goals (SDG) 5: gender equality and 25-30% designed to advance SDG 13 — climate action.

Robert Kraybill, chief investment officer, IIX, told FA: “The Women’s Livelihood Bond (WLB) Series is a blended finance instrument that pools capital from public-sector development finance institutions and private-sector investors. The public sector investors provide risk-tolerant “first-loss” capital in the form of subordinated notes, while the private sector investors purchase the senior bonds.”

“The WLB Series targets a range of private sector investors seeking a combination of high impact with low risk and an appropriate return. From the outset, beginning with the WLB1, the bonds have attracted both family offices and institutional investors. Initially, this was skewed towards family offices. As the WLB issuances increased, we saw increased interest from institutional investors, such that over 90% of the WLB6 was placed with institutions,” added Kraybill. 

For WLB6, there were global investors on the deal including from the US, Europe and Asia Pacific (Apac). The WLB6 bonds comply with the EU and UK securitisation regulations, making it easier for European institutional investors to participate. For example, one of the investors was Dutch pension fund APG Asset Management which invested $30 million.

Kraybill said: “Throughout building the loan portfolios for the WLBs – from sourcing and screening to due diligence – we integrate traditional credit criteria with impact criteria. We look to invest in companies meeting our credit and financial criteria while delivering meaningful positive impact.”

“We are proud that we have not experienced any payment defaults or credit losses on any of the WLB loan portfolios, demonstrating the resilience of the high-impact women-focused businesses that we work with, even in the face of challenges posed by the Covid-19 pandemic. The first two bonds in the WLB Series – WLB1 and WLB2 – have matured and been fully retired, meeting all of their obligations to bondholders,” Kraybill added. 

The IIX, which is headquartered in Singapore and has offices in Australia, Bangladesh, Brunei, India, Indonesia, the Philippines, Sri Lanka and Vietnam, also tracks the impact outcomes generated by its investment throughout the life of the bonds and reports on the targets. WLB1 and WLB2 exceeded impact projections, according to IIX.   

Complex deal

Given the number of parties involved and a myriad of regulations and compliance, the deal was not easy to put together. 

Gareth Deiner, partner at Clifford Chance, explained to FA the law firm’s role in the deal: “We’ve been involved for several years on these transactions, and this is not the first woman’s livelihood bond that the IIX team has put together.”

Singapore-based Deiner continued: “Historically, we have acted on the trustee side, but we have been advising the lead managers of the transaction for the last three offerings. It’s approximately a three to four month execution process to make sure we get the documentation agreed and the structure in place. IIX do the underlying due diligence on the borrowers, which is necessary given that the financing is raised from the international capital markets. Together with their counsel, they work on the disclosure in the offering document for the bond transaction.”

“As counsel to the lead managers, we are responsible for the underlying contractual documentation for the notes and the offering, but it’s IIX who retain control over the loan documentation with the notes proceeds end-users, and putting the loan pool together. They’re doing due diligence on the on the underlying borrowers of the deal,” he explained. 

This is backed up by IIX’s due diligence. IIX’s Kraybill explained: “The financial due diligence conducted by our credit team is similar to that of other emerging market lenders. What sets us apart is the upfront impact due diligence and ongoing impact monitoring and reporting conducted by our impact assessment team. Our team screens potential investments against rigorous eligibility criteria to ensure they contribute to positive outcomes for underserved women and gender minorities in the Global South while often empowering women as agents of climate action.”

Navigating US legal rules and dealing with investors from around the world also added to the complexity. 

Deiner said: “Dealing with a wide range of investors, including qualified institutional buyers in the US, we needed to comply with US federal securities law, including limiting the sale of the notes to qualified purchasers under the US Investment Company Act. There were also certain structural considerations raised by the EU and UK securitisation regulation.”

“From a legal perspective, it was an interesting deal because there’s a wide range of highly technical substantive law, which required the input from specialists across the Clifford Chance network. We have the expertise across the globe and do a lot of sustainable financing work,” continued Deiner. 

“Recently we’ve advised on some market-leading and groundbreaking transactions in terms of bringing sustainability finance technology to capital markets transactions,” he added.

However, this deal, in particular involved social governance goals. 

Deiner explained: “What we like about this particular transaction is that so much of the Environmental Social and Governance (ESG) agenda is about the environmental (E) angle, such as green bonds related to carbon transition and climate action. That encompasses sustainable  development goal 13 of the UN Sustainable Development Goals (SDG).”

“However, you rarely hear about sustainable finance transactions that focus on the S and the G in ESG, which IIX champions. Each of the sustainable development goals (SDG) has its own hue, its own colour. This transaction focusses on SDG 5, which is gender equality, and are referred to as Orange bonds – orange being the hue for SGD 5. In addition, IIX has developed its own framework and principles to really drive that S in the ESG,” he added.

Tracking societal impact

There is still a key issue on how to track the impact of where the money ends up.

IIX’s due diligence process includes interviews with beneficiaries and stakeholders of investees,  using its own digital impact assessment tool to incorporate input from a broad group of female beneficiaries. This verifies impact claims while giving a voice and value to the women it is assisting, according to Kraybill.

He continued: “Our selection process for projects funded through WLB6 closely aligns with the objectives of The Orange Movement. Each of the bonds in the WLB Series adheres to The Orange Bond Principles, which focuses on empowering women, girls, and gender minorities, particularly in climate action and adaptation.”

IIX looks at the potential of each project’s mission, vision, goals, and business structure, to evaluate alignment with the core values of the WLB Series and The Orange Movement. Its impact assessment team conducts due diligence to ensure selected projects meet criteria outlined by The Orange Movement and contribute to promoting gender equity and addressing climate challenges in emerging markets, according to Kraybill.

With the rise of bonds connected to ESG and DEI, the scrutiny from investors is also increasing, especially with the prevalence of greenwashing. 

Clifford Chance’s Deiner said: “The legal landscape for green bonds and sustainability-linked bonds has evolved considerably in recent years, particularly regarding due diligence. When a company issues a green bond under a green bond framework, substantial work is required to ensure the bond’s integrity. This diligence has become a critical factor in investment decisions, as investors need to be confident that the environmental credentials are genuine and not merely an instance of greenwashing.”

“One of the key parts of the Orange bond initiative is achieving transparency in the investment process and decision, and the subsequent reporting, as the proceeds are going to an issuer who is on-lending it again, to, for example, a microfinance lender. It’s a combination of seeking an investment return and a view on the credit profile. The funds have specific objectives regarding capital allocation, and the appeal of the Orange bond aspect aligns with this focus,” Deiner added. 

$10 billion goal

The IIX has an ambitious goal of mobilising $10 billion by 2030 and optimism abounds. 

Kraybill said: “We remain optimistic about reaching our ambitious goal through sustained collaboration and concerted action, empowering women and girls worldwide while fostering inclusive and sustainable development.”

“Partnerships with the Orange Bond Steering Committee organisations, like the Australian government’s Department of Foreign Affairs and Trade (DFAT), the UN Capital Development Fund (UNCDF), Nuveen, and others, are vital in this endeavour. Together, we aim to build a gender-empowered financing system, mobilise new capital, and accelerate progress toward gender equality and women’s empowerment globally,” Kraybill added.

The Orange Movement is also building “Orange Alliances” at regional and national levels to bring together gender lens investors and other stakeholders. IIX is conducting training programs to train and certify Orange Bond verification agents.

“We’re introducing an “Orange Seal” for MSMEs and other organisations, which enhances their gender, DEI, and climate bona fides. We have expanded our transaction tagging functionality to include innovative finance instruments that adhere to the Orange Bond Principles framework. Furthermore, we’re eagerly anticipating the launch of the Orange Loan Facility, alongside numerous other initiatives to further the Orange Movement’s mission,” Kraybill said. 

He said: “We remain optimistic about reaching our ambitious goal through sustained collaboration and concerted action, empowering women and girls worldwide while fostering inclusive and sustainable development.”

The next bond could potentially be much larger than WLB6’s $100 million. 

Clifford Chance’s Deiner is also optimistic: “There’s a flow of transactions that we’re going to see over the next 12 months, and this an area that people are paying more attention to. The transactions have grown considerably over the years. These transactions have involved deals from around $20 million up to the latest offering of $100 million. So, there is clearly increasing demand for these transactions each year.”

Standard Chartered declined to provide a comment for the article.


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Volume One 2024 magazine out now | FinanceAsia

We are delighted to announce that the first volume of FinanceAsia’s 2024 bi-annual magazine, is now available for your perusal

In this edition, we celebrate all the winners the FinanceAsia Achievement Awards 2023 and explain the rationale behind why each institution won. In addition to the Deal and House Awards for Asia and Australia and New Zealand (ANZ); this year we added a new category, the Dealmaker Poll, which recognises key individuals and companies based on market feedback. 

 

In feature format, Christopher Chu examines the potential and reach of artificial intelligence (AI) in Asia – the fast-moving technology is presenting both huge challenges and opportunities for investors. While it remains caught in the cross-hairs of geopolitics and regulation, he examines how AI could be a game-changer for productivity.

 

Ryan Li explores the proposed breakup of Chinese giant Alibaba and how the firm’s ambitions fit in with wider developments across China’s tech sector.

 

Also in the magazine, Andrew Tjaardstra reviews IPO activity across key Asian markets in 2023 and looks ahead to how public markets might perform in 2024 – while it certainly hasn’t been an easy ride for the region’s equity markets over the last 12 months, there have been some bright spots, notably India and Japan, which are set to continue their momentum this year.

 

Finally, read Ella Arwyn Jones’ exclusive interview with Rachel Huf, the new Hong Kong CEO of Barclays. Huf shares her transition from lawyer to leader, offering insights around her career path and the strategic direction of the bank in the Special Administrative Region (SAR) over months to come. 

 

Click here to read the full magazine issue online. 

 


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Asia seeks 2024 redemption for IPOs | FinanceAsia

After a relatively poor 2022, while some Asian stock markets performed well in 2023, such as India and Japan, others including China, Hong Kong, Singapore and Australia languished as geopolitical tensions, rising interest rates and poor performing domestic economies knocked investor confidence.

There was also a downturn in mergers and acquisitions (M&A) in Asia Pacific (Apac), with 155 deals completed in 2023 with volumes down 23% compared to 200 deals in 2022, according to WTW.

Broadly, investors were spooked by a combination of higher for longer interest rates from the US Federal Reserve, a lacklustre economic performance in China post-pandemic with the property sector dragging confidence, and wider geopolitical tensions.

Will Cai, partner and head of Asia capital markets practice and co-chair of China corporate practice at law firm Cooley, told FinanceAsia: “2023 was a very challenging year for all major capital markets in Asia, with Japan as the only exception. There were several contributing factors: the slower-than-expected post-Covid-19 economic recovery in China, the current regional and global geopolitical tensions, as well as the high interest rates.”

He added: “High interest rates have a significant negative impact on capital market deals. The logic is very simple: if treasury bonds can provide 5% annual return, risk free, investors will expect a much higher return on high-risk equity deals – which unfortunately is not what many companies can deliver in a tough market. We probably need to see a moderate reduction on interest rates before equity investors return to the market.”

Amid the gloom, other avenues in the equity space beyond IPOs, performed relatively well, with banks needing to respond to changing client needs.

Kenneth Chow, co-head of Asia equity capital markets, Citi, said: “These are challenging market conditions and as a bank you need to be nimble and flexible. However, there are always opportunities in Asia, such as convertible bonds and block trades.”

Japan and India rising

There were arguably two Asian ‘star’ performers in 2023: Japan and India.

Despite a weak yen, Japan saw a breakout from years of deflation, corporate governance reform and a solid domestic economy, while India saw strong GDP growth of around 7% and a continuation of reforms.

Udhay Furtado, co-head of Asia equity capital markets, Citi, told FA: “Japan and India have recently emerged as IPO hotspots, while Indonesia has also seen positive momentum. There is an increasing interest in the energy transition story, including the makers of electric vehicles and batteries.” 

Japan, with IPO proceeds up 82% compared with 2022, was the standout Asian market last year.

Peter Guenthardt, head of Asia Pacific investment banking at Bank of America, said: “There are many opportunities in Japan with the fee pool increasing 20% in 2023, while overall fees were down by the same figure across Apac. The fee pool was twice the size of China this year. Japan could remain the largest fee pool in Apac in 2024.”

Guenthardt added: “In Japan, there has been an increase of IPOs, block trades and convertible bonds, with that trend set to continue. There has also been a rise in activist investors – for which it is the second most active market in the world.”

He continued: “Japanese companies are also looking to expand abroad for M&A opportunities, with the US being the most popular market and where sectors such as technology are particularly attractive.”  

In India, the market saw a big improvement in the second half of the year. While many companies conducted IPOs outside of India, the local stock markets saw the number of issuers increase by over 50% to 239, according to data from the London Stock Exchange Group (LSEG). With the second half of the year doing particularly well, this bodes well for 2024, with some experts tipping the world’s fifth largest economy to lead the way in IPOs globally this year. 

Citi’s Furtado said in a media release: “We hope to see a turn in the IPO markets, as we have been seeing in India in late 2023 and we also expect to see [a] continued pick up in convertible bond activity (given refinancing efficiencies), alongside a robust follow-on/ block calendar.”

2024 Hong Kong bounceback?

One of the big questions for Asia in 2024 is can Hong Kong, one of the pre-eminent financing hubs, return to something resembling its former glory after years of protest and pandemic turmoil. Any turnaround in Hong Kong should also indicate improved confidence in Chinese equities given that the majority of companies listed on the Hong Kong Stock Exchange (HKEX) are Chinese.

PwC is predicting HK$100 billion ($12.8 billion) of deals in 2024 with around 80 deals in the pipeline, and KPMG is expecting Hong Kong to return to the top five of the IPO global rankings.

While the fundamentals are still strong in the Special Administrative Region (SAR), a recent reliance on Chinese companies, which have been buffeted by domestic headwinds and rising US interest rates, has damaged the market. In addition, the potential implications of the SAR’s new national security law have rattled global investor appetite.

However, in a sign of optimism, already in 2024, two Chinese bubble tea firms have applied for listings on the HKEX suggesting that market appetite could be rebounding in China – especially for companies supplying consumer staples.

Although stock markets in mainland China are providing stiff competition to Hong Kong, foreign investors and Chinese firms are still attracted to Hong Kong’s greater flexibility. In addition, geopolitical tensions mean that Chinese and Hong Kong firms are becoming more cautious about listing in the US.

Stephen Chan, Hong Kong-based partner at Dechert, told FA: “2023 was relatively challenging for the Hong Kong IPO market, with the number of deals and proceeds raised having declined year on year. We have seen a number of potential listing applicants choose to delay their listing timetable in view of the underperforming stock price of recent new listings.”

A sluggish stock market performance, low valuations for newly listed companies and the macroeconomic environment contributed to potential listing applicants opting for the wait-and-see approach, with the SAR facing strong headwinds.

Chan added: “The US interest rates hikes saw investors opt for products with high interest rates and fixed income.” This dampened the demand for IPOs, and in turn affected the valuation of potential IPOs and hence weakened the urge for potential listing applicants, explained Chan. 

He said: “Increased borrowing costs and lower consumer spending in general – due to the high interest rate cycle – have also affected the operational and financial performance of the potential listing applicants. Improvements to both investor sentiment towards the equity market and companies’ operating and financial performance would be essential before companies could reconsider fundraising through IPO.”

Certain sectors have been performing better than others, including technology, media and telecom (TMT) and biotech and healthcare companies. These are likely to continue to lead the IPO market in terms of the deal count and deal size in Hong Kong, especially with January 1, 2024’s HKEX regulatory reform for the new Chapter 18C (known as the GEM reforms) for specialist technology companies, and an expanding market for biotech and healthcare under Chapter 18A which was launched in 2018.

Chan added: “The HKEX has taken the opportunity to introduce a number of modifications to improve the fundraising process including the new settlement platform, FINI, which will shorten the time gap between IPO pricing and trading and hence reduce the market risk and modernise and digitalise the entire IPO process.”

“The GEM listing reform aiming to enhance attractiveness for SMEs to seek listings. . . will also boost the number of deal counts for the Hong Kong IPO market and provide SMEs with development potential a viable pathway for pursuing listing in the main board in the future.”

A continuation of the return of visitors to around 65% of pre-pandemic levels to the SAR in 2023 should also help build momentum in the local economy. In addition, the SAR has been reaching out to the Middle East for investment and is increasing its trade cooperation with Asean countries.

Asia outlook

While China appears to still be struggling to turn its economy around, Asia will continue its overall growth trajectory as the middle class grows, technology evolves and connectivity improves. The relatively young populations of Asean countries such as Indonesia, Vietnam and Thailand will also continue to provide a boon for investors.

Cooley’s Cai said: “In terms of deal counts, there were still relatively more biotech deals in 2023. Part of the reason is that biotech companies must raise capital regardless of market conditions (and therefore, the price). We also see companies from the ‘new consumer’ sectors looking to IPO. We believe these two sectors likely can do well in 2024.”

He continued: “We hope 2024 will be better than 2023, but we may need to wait a bit longer for a booming market.”

There is certainly a long way to go before seeing the region’s previous robust IPO levels.

“2024 is going to be a volatile year with the upcoming elections in the likes of the US and India, but there is a strong pipeline of deals if risk appetite returns, which will partly depend on the pace of monetary loosening,” said Citi’s Furtado.

Alongside a host of elections, there are ongoing conflicts in the Middle East and Ukraine, meaning there is much uncertainty over global supply chains, oil prices and the inflation trajectory.

While investors will be hoping that inflation can be kept under control so the US Fed can start cutting rates sooner rather than later, solid economic fundamentals and growth in many large countries in the region should provide confidence in Asia’s equity markets moving forward.

This article first appeared in Volume One 2024 of the FinanceAsia print magazine which is available online here


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