Markets – Clement Tan

September 9, 2023October 15, 2023

G20 nations soften Russia condemnation to reach Delhi summit compromise, draw Ukraine’s ire

By Clement Tan | September 9, 2023 | CNBC.com

NEW DELHI — The Group of 20 nations on Saturday overcame differences in references to the war in Ukraine, reaching a consensus on a joint declaration that paves the way for frameworks on debt resolution, and country-specific climate financing solutions among other pledges aimed at enhancing development in the Global South.

In an 83-paragraph joint communique aimed at deepening the integration of the needs of developing economies into the multilateral forum’s agenda, the Delhi declaration omitted words from the last year’s statement that overtly condemned Russian aggression against Ukraine — instead highlighting the human suffering and other negative impacts of the war in Ukraine that have complicated recovery efforts in the aftermath of the Covid-19 pandemic.

The wording of “most members strongly condemned the war” was among the changes. Instead, G20 member states agreed to lean on the tenets of the United Nations charter on territorial integrity and against the use of force.

“Considerable time was spent — especially in the last few days — in regard to geopolitical issues, which really centered around the war in Ukraine,” Indian Foreign Minister Subrahmanyam Jaishankar said Saturday at a press conference following Prime Minister Narendra Modi’s initial announcement of the consensus on a joint declaration.

July 24, 2023October 15, 2023

China vows to ‘adjust and optimize’ property policy in ‘tortuous’ economic recovery

By Clement Tan | July 24, 2023 | CNBC.com

China’s top leaders pledged to “adjust and optimize policies in a timely manner” for its beleaguered property sector, while elevating stable employment to a strategic goal, along with other pledges to boost domestic consumption demand and resolve local debt risks.

Chaired by President Xi Jinping, the Communist Party’s top decision-making body said it would implement a “counter cyclical” policy and stick largely to a prudent monetary policy and pro-active fiscal policy, according to a readout published late Monday of a quarterly meeting of the Politburo.

The July Politburo meeting typically sets the tone for China’s economic policies for the second half of the year, with market watchers eagerly awaiting firmer guidance on policy support for faltering growth in the world’s second-largest economy.

“Currently, the economy is facing new difficulties and challenges, mainly due to insufficient domestic demand, difficulties in the operation of some enterprises, many risks and hidden dangers in key areas, and a grim and complex external environment,” Xinhua quoted the Politburo as saying.

The post-pandemic economic recovery will proceed in a “wave-like” fashion in a “tortuous” process, it added. The Chinese phrase for risk appeared at least seven times in the readout, underscoring the government’s focus on its containment.

June 13, 2023October 15, 2023

Is Japan Inc finally serious about corporate governance reform?

By Clement Tan | June 13, 2023 | CNBC.com

For the first time in decades, Japan stocks are back in vogue.

In the last few weeks, the benchmark Nikkei 225 and Topix indexes touched their highest levels in more than 30 years as foreign investors pour into Japanese equities with a consistency rarely seen in at least a decade.

After what turned out to be a false dawn a decade ago, when “Abenomics” first raised hopes of corporate governance reform in Japan, many seem to think better of the latest measures by the Tokyo exchange.

“The recent Tokyo Stock Exchange initiative is a game-changing moment, because it’s going to challenge a lot of companies that are trading on less than one-time price-to-book to improve profitability and support their share price,” said Oliver Lee, a Singapore-based client portfolio manager, at Eastspring Investments.

The Tokyo Exchange Group recently finalized its market restructuring rules. Among the latest measures was one that directed listed companies to “comply or explain” if they are trading below a price-to-book ratio of one — an indication a company may not be using its capital efficiently.

The exchange warned such companies could face the prospect of delisting as soon as 2026.

Part of the optimism in Japanese stocks stems from how specific and tangible the Tokyo exchange’s requirements are this time round. Warren Buffett’s bullish calls on Japanese equities has also helped boost confidence among foreign investors.

There is hope this would press Japanese companies’ notoriously resistant management — which typically view shareholders as enemies — for greater capital efficiency and profitability. It could in turn lead to a domino effect among other Japanese companies once the big players start to make changes.

March 21, 2012April 5, 2012

Investors eye China services as the next big thing

By Clement Tan

HONG KONG, March 21 (Reuters) – As Chinese leaders encourage the country’s 1.3 billion people to open their wallets to boost domestic demand, hotel chains, supermarkets and other service providers offer investors a fresh tilt at the country’s growth story.

Beijing is targeting a 4 percentage point rise in the service industry’s contribution to GDP by 2015, up from 43 percent in 2010. Still well below the U.S. service sector, which makes up about two-thirds of the world’s largest economy.

For investors with longer-term horizons, services that cater to a growing middle class offer an opportunity to cash in on a shift in consumption patterns as Chinese consumers move increasingly up the value chain, say analysts.

“There’s a lot of pent-up demand for services due to supply constraints,” said David Cui, Bank of America-Merrill Lynch’s Shanghai-based chief China equity strategist.

Policy-makers want increased domestic spending to offset a reliance on exports, and have outlined plans to narrow the rural-urban divide and boost wages for 158 million migrant workers. The services sector is vital for future job growth.

Supermarkets, logistics firms and tourism companies focused on domestic travellers offer good opportunities, says Cui, who recently authored a report on China’s services sector, though analysts warn that stock picking is still vital.

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June 13, 2011April 5, 2012

Chinese investors shrug off U.S. accounting scandal fallout

By Ai Peng Soo and Clement Tan

SHANGHAI/SHENZHEN, June 13 (Reuters) – For the two dozen Chinese retail investors gathered at the dimly lit public hall of a brokerage firm in Shanghai, the accounting scandals involving U.S.-listed Chinese companies are far from the hot topic of the day’s trading as they swap strategies over tea and cigarettes.

Many of the investors, mostly retirees, have not even heard about the saga over fake numbers among some Chinese firms that has shaken U.S. investors and stunned regulators there.

Even those who have read about the news in scattered media reports were more interested in China’s monetary tightening or tips on the favoured sector of the day than in concerns the companies they have invested in might be hiding similar bombshells in their books.

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