Stock Market Today: Asian Shares Gain, Except in China, After Wall St Regains Its Stride

(Nov 19): Japan’s ruling party named Daishiro Yamagiwa as the new chairman of its group that promotes semiconductors, as it sets up a new mechanism to boost funding for the key industry.

Yamagiwa, who formerly served as economic revitalisation minister, replaces Akira Amari, a Liberal Democratic Party heavyweight who championed Tokyo’s renewed push for chips until he lost his seat in parliament in last month’s national election.

The appointment comes after Prime Minister Shigeru Ishiba pledged more than ¥10 trillion (RM289.17 billion) of fresh public support for Japan’s semiconductor and artificial intelligence sectors. Those outlays are in addition to the roughly ¥4 trillion Japan has secured for the industries in the last three extra budgets, including ¥920 billion for Rapidus Corp in Hokkaido, according to the industry ministry. Rapidus aims to mass produce advanced logic chips by 2027.

“Semiconductors can be a choke point for future industries and we shouldn’t be wondering whether Rapidus will be able to win or not,” Yoshihiro Seki, secretary general of the LDP group, said to reporters on Tuesday. “We have to make it succeed and win no matter what.”

The LDP group is likely to press ahead with legislation needed to enable the new funding mechanism in a regular parliamentary session next year. The LDP and its coalition partner Komeito lost their majority in last month’s election and they now need support from opposition parties to implement their policy measures.

Yamagiwa resigned from his ministerial post in 2022 due to alleged ties to the Unification Church, a group whose influence in Japan came under fire following the assassination of former Prime Minister Shinzo Abe. Yamagiwa’s website says he has severed those ties.

In addition to the legislative hurdle, Ishiba’s chips pledge is set to rely on a complex mix of funding measures, according to the draft of an economic stimulus package seen by Bloomberg. The government is expected to announce the package later this week. 

A breakdown of the funding methods in the draft:

¥2.2 trillion through transfers from the fiscal investment and loan special account to the energy special account; will also issue special bonds linked to the energy account as needed

¥1.6 trillion by utilising money returned to the national treasury, using leftovers in existing funds for chip support, and selling government-owned shares in Shoko Chukin Bank

¥2.2 trillion by using green transformation bonds and tapping money returned to the national treasury through reviewing existing industry ministry funds

At least ¥4 trillion worth of financial support through investment and guaranteeing private sector loans

As for how the funds will be allocated, about ¥6 trillion will be used for next generation chip development and mass production of power chips, and at least ¥4 trillion will be used to offer financial support via investment or debt guarantees, according to the draft. It also says the government aims to submit new legislation necessary to enable the new framework in a regular parliamentary session next year.

Source: Theedgemarkets

Reviewing the seasonal performance of US equity in December

(Nov 19): A €350 million (RM1.65 billion) program seeking to ease the financial burden of climate disasters for the world’s most vulnerable countries has disbursed only €5.2 million in two years, according to the managers of the fund.

The Global Shield was launched at the United Nations climate talks in Sharm El-Sheikh, Egypt, with the support of the Group of Seven countries, led by Germany, in 2022. Its bespoke approach to designing aid packages that fit a country’s needs is taking years.

“Climate risk management is not only about risk transfer and risk retention; it’s about understanding risk first,” said Astrid Zwick, a co-director of the Global Shield secretariat.

Climate finance is a central part of COP29 talks this week in Azerbaijan, where countries are due to replace an existing annual US$100 billion (RM446.96 billion) finance pledge with one delivering far more to help poorer nations build green economies and resilience to global warming. Already, developing countries have said rich nations have been slow to deliver on past funding promises.

The Global Shield wants to be a complement to a UN-backed fund for loss and damage from climate change, which currently only has about US$700 million in it. That sum is nowhere close to the estimated cost of damages caused by climate change, which some analysts see being as much as hundreds of billions of dollars a year.

The Germany-led fund aims to make disasters less financially devastating for countries by, among other things, helping pay premiums for insurance policies covering climate-related extreme weather events. It also sets aside money for early warning systems, national disaster relief funds and emergency management training.

Since its initial announcement, 17 countries are working toward securing support from the program. So far only one, Ghana, has publicly announced it’s unlocked funding for insurance coverage. The African country purchased its first-ever sovereign drought insurance with US$1 million in financing from the German government and the Global Shield. The policy was issued by African Risk Capacity.

The Global Shield said on Monday it has disbursed the remainder of the €5.2 million to pay for insurance premiums for Pacific island countries.

Pakistan, which had been hit by extreme flooding in 2022, was expected to be the first country to receive funding from the Global Shield, but it’s taken the country nearly two years to do the analysis needed to secure support. Madagascar, which has been hit by 48 cyclones in the last 15 years and has more than a third of its population undernourished, said it needs US$773 million each year for its resilience needs. Insurance programs on their own won’t be enough. “We need to diversify instruments of risk financing,” said Rabevohitra Bako Nirina of Madagascar’s disaster management unit.

The many steps involved with unlocking funds from the Global Shield have raised scepticism about the commitment of developed nations to helping the poorest countries grapple with the impacts of global warming.

Harjeet Singh, engagement director with the Fossil Fuel Non-Proliferation Treaty Initiative, said there should now be a renewed focus on the UN’s loss and damage fund, which is designed to provide immediate assistance in the aftermath of disasters.

“The reluctance of developed nations to provide substantial funding [to loss and damage] has led to significant delays,” he said. “The Global Shield's dismal progress starkly contrasts with the optimistic assurances initially made by developed countries.”

Source: Theedgemarkets

Korea's household credit increased by the most in three years in the third quarter of the year as home-backed loans continued to jump in the face of tightened lending criteria and high rates, central bank data showed Tuesday.

Outstanding household credit reached 1,913.8 trillion won ($1.372 trillion) at the end of September, up 18 trillion won from three months earlier, according to the preliminary data from the Bank of Korea (BOK).

The third-quarter growth marks a rise for the second consecutive quarter after the 13.4 trillion won advance in the April-July period and the sharpest gain since the third quarter in 2021, according to the data.

Household credit refers to credit purchases and loans given to households by financial institutions.

The rise in household loans came despite high borrowing costs, driven by the BOK's series of interest rate hikes to bring inflation under control, and tightened lending criteria.

Of the total, household loans stood at a record high of 1,795.8 trillion won at the end of September, up 16 trillion won from three months earlier. The third-quarter gain also marks the largest in three years.

Mortgage loans increased by 19.4 trillion won during the third quarter of the year, accelerating from the previous quarter's 16 trillion won rise, and other types of household loans fell 3.4 trillion won over the cited period, compared with the previous quarter's 2.7 trillion won slip.

Last month, the country's central bank slashed its key rate by a quarter percentage point to 3.25 percent amid moderating inflation and slackening domestic demand.

The BOK delivered seven consecutive rate hikes from April 2022 to January 2023. (Yonhap)

Source: Koreatimes

SINGAPORE - South-east Asia’s top-performing stock market in 2024 is likely to continue its momentum into 2025 as Singapore unveils measures to revive its stock market, according to analysts at Morgan Stanley.

The Straits Times Index, comprising the 30 biggest listed companies, hit a 17-year high on Nov 19, bringing its year-to-date gains to 17 per cent.

It has outperformed regional peers, with the MSCI index of Asean stocks up 10 per cent over the same period.

Analysts are bullish on the overlooked market in the near term, citing the Monetary Authority of Singapore’s (MAS) efforts to boost stock markets and the US election uncertainty favouring defensive positioning.

In August, MAS said it had formed a review group to recommend steps to strengthen the development of the equities market in the Republic, which hosts more than US$4 trillion (S$5.4 trillion) of assets under management.

“The combination of seemingly stronger political will and low market expectations drives our conviction that soon-to-be announced initiatives will likely have a meaningfully positive market impact, even if their exact details are still to be fleshed out,” Morgan Stanley analysts said in a note.

Singapore is one of the most preferred markets in Morgan Stanley’s Asia equity strategy, ranked second only to India in its Asia-Pacific ex-Japan market allocation.

The brokerage said the new measures will likely lift stock trading liquidity through capital infusion, with valuations potentially rising as much as 20 per cent to narrow the gap with global peers.

Singapore stocks currently trade at 10.68 times its forward earnings, a commonly used valuation metric, below Malaysia’s Bursa Index at 15 times and Australia’s ASX 200 at 18 times.

Singapore Exchange, UOB, Singtel, Sembcorp Industries and CapitaLand Investment are part of Morgan Stanley’s Singapore focus list.

Goldman Sachs upgraded Singapore stocks to “market weight” earlier this week, citing its constructive view on banks, technology and telecom sectors. 

Source: Straitstimes