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    The Week in Asia – August 2020

    Published On: 28 August 2020

    Asia House Advisory takes a look at the top developments in Asia this week affecting trade, investment and public policy.

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    FRIDAY 28 AUGUST 2020


    Ant Group files for blockbuster IPO

    Alibaba fintech affiliate Ant Group, operator of China’s largest digital payment network, has filed to sell shares on the Hong Kong Stock Exchange and Shanghai’s STAR Market, in what could be the largest ever IPO on record. The company has said it wants to sell at least 10 per cent of its shares in a dual offering. The company is valued at US$200-300 billion. At a projected US$30 billion the offering could surpass the US$29.4 billion raised by Saudi Aramco in 2019. The move is expected to reduce Chinese regulatory pressures on Ant, who has previously come under scrutiny for its money market fund.


    Facebook to challenge Thai government order

    Facebook has said this week that it will challenge an order from the Thai government to block a popular page focussed on the country’s monarchy. The company on Monday halted access in Thailand to the page Royalist Marketplace, a private Facebook group with more than one million followers. In the last month, there has been a rise in demonstrations demanding the reining in of the monarchy’s power. Facebook has engaged with the Thai Ministry of Digital Economy and Society over concerns of increasing pressure to comply with requests to take down politically charged content. A statement from Facebook raises concerns over the company’s ability to reliably invest in Thailand.


    RCEP meeting this week goes ahead without India

    The 8th Regional Comprehensive Economic Partnership (RCEP) Ministerial Meeting was held on Thursday under the chair of the Vietnamese Ministry of Industry and Trade. The meeting was attended by the economic ministers of 15 member countries and aimed to encourage the signing of an agreement by the end of this year. Ministers acknowledged the increased significance of RCEP amid the economic uncertainty caused by the coronavirus pandemic. Notably, Indian participation was absent from the meeting. Despite the meeting taking place, prospects for an early agreement remain murky, with division on how to respond to India’s unwillingness to remain part of the agreement.


    Japan and UK to sign free trade deal by September

    Recent updates suggest that Japan and the United Kingdom will sign a bilateral free trade agreement as early as September. The deal is likely to follow the preferential tariffs in the Economic Partnership Agreement between Japan and the EU. The deal will likely minimise the impact of Brexit on Japanese businesses in the UK and help to maintain over US$14 billion dollars’ worth of exports and imports between the two countries. The deal will be the UK’s first trade agreement with a key trading partner since leaving the EU and could serve as a blueprint for other trade negotiations. Existing preferential tariffs under the Japan-EU agreement are applicable to Japan-UK trade through the end of this year, after which higher tariffs could take effect if a UK-Japan trade deal is not signed.


    JP Morgan to pay US$1 billion to buy remaining stake in China International Fund Management

    JP Morgan Chase will pay US$1 billion to become the first foreign company to fully own a mutual fund business in China. A statement released by the Shanghai United Assets and Equity Exchange this week said that the US banking group will buy the remaining 49 per cent of China International Fund Management (CIFM). The price represents a premium of more than 50 per cent compared with a recent valuation of the company. Recent reforms in China’s growing investment industry are aiming to encourage further interest from global financial businesses. The buyout will be the first time a foreign company will fully own such a business in China.





    Australian Prime Minister to introduce legislation seeking more power over China deals: Prime Minister Scott Morrison will next week introduce legislation enabling the federal government to override state decisions between a foreign power and state governments, in a move widely seen as aimed at curbing infiltration by China.

    India’s GDP report for April-June quarter: India will release its GDP report for the April-June quarter on Monday, the first quarter of the fiscal year 2020-2021. General consensus remains at around a 19.2 per cent year-on-year contraction.




    HONG KONG: The city will be relaxing it social distancing rules, with restaurants to resume dine-in services until 9pm and cinemas and certain sport facilities to reopen this week.

    INDIA: New Delhi will double the daily number of tests to 40,000 from next week.

    JAPAN: The Tokyo metropolitan government has extended a request to establishments serving alcohol to shorten business hours until 15 September.

    SOUTH KOREA: The Bank of Korea cut its GDP growth forecast to -1.3 per cent this year and kept its key rate unchanged at 0.5 per cent. The government has extended the Phase 2 social distancing measures in the Seoul area for at least another week. Face masks are now mandatory in both indoor and outdoor public spaces.

    INDONESIA: Jakarta will reopen cinemas with strict health and safety measures in place. Bali has dropped plans to reopen to foreign tourists this year.

    THAILAND: The Cabinet approved additional funding to promote domestic tourism.

    MALAYSIA: The country’s Minister of Tourism has said that Malaysia may keep its borders closed to international tourists until the second quarter of 2021.

    MYANMAR: The country reported 70 new infections on Wednesday, the biggest daily rise in the country after weeks without any domestic transmission of the virus.


    These COVID-19 insights are taken from Asia House Advisory’s focussed monitoring service, one of the ways in which Asia House is providing analysis on economic and public health policy measures taken by governments across Asia and the Middle East. Please reach out to Ed Ratcliffe, Head of Advisory, at ed.ratcliffe@asiahouse.co.uk for further details on this and our other advisory services.

    Asia House Advisory helps organisations understand new operating environments and meet business-critical challenges. Find out more.



    FRIDAY 21 AUGUST 2020


    US suspends Hong Kong extradition and tax treaties

    The US State Department on Wednesday notified Hong Kong of the suspension or termination of three bilateral agreements. The actions are a further response to the imposition of a controversial security law in Hong Kong in June. Last month, US President Donald Trump ordered an end to Hong Kong’s special status under US law. This new set of actions end or suspend extradition and tax treaties in place between the two countries. The US this month also imposed sanctions on Hong Kong leader Carrie Lam and other current Hong Kong and mainland China officials. US-China tensions continue to rise, with bilateral ties deteriorating to their worst level in decades.


    US announces fresh sanctions against Huawei

    US Commerce Secretary Wilbur Ross announced on Monday a fresh set of sanctions on Huawei. Under the new sanctions, companies will have to obtain a license before selling Huawei microchips made using US equipment or software. The sanctions will make it harder for Huawei to access crucial supplies. The move is the latest in a series of actions the Trump administration has taken over the last 15 months against the company. In recent weeks, US President Donald Trump has also said he will ban US companies from undertaking financial transactions with other major Chinese technology companies.


    Indian opposition parties seeking Facebook probe

    Government opposition parties in India are seeking a probe into Facebook’s policy on hate speech and harmful content in the country. The country’s main opposition party, the Indian National Congress, has asked for a joint parliamentary committee probe and for an enquiry into Facebook’s top management in India. Allegations have surfaced around Facebook’s ‘hate speech’ rules, and the company has been accused of favouring the ruling Bharatiya Janata Party by not applying those rules to them. India is a major market for Facebook, with over 346 million users on Facebook itself and 400 million on Facebook-owned messaging platform WhatsApp. Over the last few months Facebook has invested heavily in the country. The recent calls for a probe are the latest in a long line of requests for greater scrutiny on the company in India.


    Indonesia puts capital relocation project on hold

    Indonesia has officially placed its ambitious plan to relocate its capital from Jakarta to the island of Borneo on hold, in order to focus on fighting the COVID-19 pandemic. Planning Minister Suharso Monoarfa has said that planned construction in the new city will be shelved until Indonesia ‘sees the light at the end of the tunnel’ on the outbreak. The project could face a start delay until 2023; civil servants were originally expected to start moving to the new capital by 2024. Though the relocation project was expected to bring about positive impacts on the domestic economy, funding COVID-19 relief efforts are now the priority.


    South Korea discontinues anti-dumping duties on Japanese valves

    South Korea has discontinued its anti-dumping duties on pneumatic valves made in Japan following a World Trade Organization (WTO) ruling that the measure violated international rules. South Korea had imposed duties between 12 and 23 per cent in August 2015 as a five-year measure, citing harm to domestic producers. Japan then took the issue to the WTO in March 2016, and a dispute settlement body ruled largely in Japan’s favour in April 2018. Seoul’s duties on the goods expired this week. Japan currently exports around US$35 million of these valves to South Korea each year. The Japanese trade ministry has credited the end of the duties to the WTO’s dispute-resolution procedures. Trade tensions between the two countries have continued over the last two years.




    Japanese and US defence ministers to meet: Japanese Defence Minister Taro Kono and US Secretary of Defence Mark Esper will meet in Guam on 29 August for their first meeting in seven months.

    Bank of Korea to meet: South Korea’s central bank will meet on 27 August. The bank is likely to maintain interest rates, though a ‘second wave’ of COVID-19 cases may move sentiment towards an easier macroeconomic policy.




    HONG KONG: The city has extended social-distancing measures for another week. Dining in at restaurants will only be allowed before 6:00pm, with a maximum of two people per table. The city also revised down its annual GDP forecast to a 6-8 per cent contraction.

    JAPAN: The economy contracted 7.8 per cent in Q2 from the previous quarter.

    SOUTH KOREA: Seoul reinstates lockdown measures as the number of cases continues to rise.

    THAILAND: The government is expected to extend its state of emergency through the end of September in response to the country’s first locally transmitted case of COVID-19 in nearly three months. The Cabinet also approved a US$6.87 billion borrowing plan to meet a revenue shortfall in the fiscal year to September. GDP shrank 12.2 per cent in Q2 year-on-year.

    SINGAPORE: The government announced a further US$5.8 billion in support for businesses and residents after GDP contracted more than expected.

    MALAYSIA: The economy contracted 17.1 per cent year-on-year in Q2.

    NEW ZEALAND: The government has postponed general elections, originally scheduled for 19 September, to 17 October due to concerns over the spread of COVID-19.

    PHILIPPINES: The central bank raised the real estate loan limit of universal and commercial banks to 25 per cent in a bid to support the economy. The strict lockdown in Manila has been eased.


    These COVID-19 insights are taken from Asia House Advisory’s focussed monitoring service, one of the ways in which Asia House is providing analysis on economic and public health policy measures taken by governments across Asia and the Middle East. Please reach out to Ed Ratcliffe, Head of Advisory, at ed.ratcliffe@asiahouse.co.uk for further details on this and our other advisory services.

    Asia House Advisory helps organisations understand new operating environments and meet business-critical challenges. Find out more.


    FRIDAY 14 AUGUST 2020


    ByteDance in talks with Reliance for India TikTok investment

    Chinese company ByteDance, which owns TikTok, is in early discussions with Indian conglomerate Reliance Industries over an investment in TikTok’s India business. This comes after the Indian government banned TikTok, among other Chinese apps, on 29 June, due to rising tensions between the two countries. Before the ban, India was TikTok’s largest market outside of China, with more than 200 million users. The company’s business in India is reportedly being valued at more than US$3 billion. Reliance, which is also the parent company of telecommunications giant Jio Platforms, could benefit from a deal with TikTok by allowing it to make deeper connections with consumers through another platform. ByteDance has assured employees that it is in conversations with the Indian government to resolve concerns around the ban.


    Shares in Hong Kong media group Next Digital triple

    Shares in Next Digital, the Hong Kong media group controlled by Jimmy Lai, jumped 344 per cent on Monday. Citizens bought the stock in a display of solidarity after Lai was detained for allegedly breaching Hong Kong’s new national security law. Next Digital’s publications are some of the city’s most popular and Lai’s major tabloid, Apple Daily, is known for its criticism of the Chinese and Hong Kong governments. The arrest comes amid debate around Hong Kong’s future as a major global financial centre.


    Google to end direct responses to data requests from Hong Kong authorities

    Google announced today that it will stop responding directly to data requests from Hong Kong authorities. This will mean that Google may treat Hong Kong as it does mainland China in such matters. The move follows the imposition of the national security law in Hong Kong, which has drawn international concern, including from technology companies around data privacy. Google notified Hong Kong police that it would direct officials pursuing requests for data through a Mutual Legal Assistance Treaty with the US. Google, along with other major technology companies, first suspended the processing of government requests for user data in Hong Kong in July.


    SoftBank reports US$12 billion quarterly profit

    SoftBank this week reported a net profit of US$12 billion for Q2, up from a net loss in Q1. However, SoftBank chief Masayoshi Son has said that the company will remain in crisis mode, with securing cash remaining the primary focus. SoftBank has also announced it will set up a new US$555 million fund to invest in established technology companies such as Facebook, Apple, and Amazon. Profits for this quarter were boosted by the sale of a stake in the recent Sprint and T-Mobile merger. Since March, the company has reduced US$14 billion in net debt and has lifted its stock by 137 per cent.


    Thai Union doubles stake in Russian joint venture

    Thai Union Group, the world’s biggest seller of canned tuna, has doubled its stake in an operator of Russian seafood units to 90 per cent. The deal is part of Thai Union’s bid to make further inroads into the European market. The doubling of the stake in TUMD Luxembourg moves it from a joint venture to a regular subsidiary, which will allow for Thai Union to use the company’s manufacturing and distribution network for significant opportunities in Europe and emerging markets. Thai Union currently generates 40 per cent of its revenue in the US and 30 per cent in Europe




    Indonesia and South Korea to mutually open borders: The two countries announced this week that a travel corridor between the two countries will open from Monday. The arrangements will only cover business and official trips.

    Japan Q2 GDP results next week: Japan will report figures for its second quarter GDP growth. GDP is widely expected to have contracted by more than 20 per cent in Q2, a much greater contraction than the -2.2 per cent recorded in Q1.




    JAPAN: Prefectural governors have asked the central government to increase the amount of extraordinary grants for local governments to fund COVID-19 relief efforts. Okinawa remains under a state of emergency until 15 August.

    AUSTRALIA: Fresh restrictions have been announced in Melbourne, including on retail and construction during a six-week lockdown.

    SINGAPORE: The country revised its annual economic growth projection to a range of -5 to -7 per cent, from the previous -4 to -7 per cent.

    MALAYSIA: The economy contracted 17.1 per cent year-on-year in Q2, reflecting the impact of the pandemic and resulting national lockdowns on the economy.

    NEW ZEALAND: The city of Auckland has been put back under lockdown following the report of the country’s first infection in more than three months. The lockdown in the city has been extended for 12 days.

    JORDAN: Jordan closed its land trade border with Syria for a week after a rise in COVID-19 cases in the country.


    These COVID-19 insights are taken from Asia House Advisory’s focussed monitoring service, one of the ways in which Asia House is providing analysis on economic and public health policy measures taken by governments across Asia and the Middle East. Please reach out to Ed Ratcliffe, Head of Advisory, at ed.ratcliffe@asiahouse.co.uk for further details on this and our other advisory services.

    Asia House Advisory helps organisations understand new operating environments and meet business-critical challenges. Find out more.


    FRIDAY 7 AUGUST 2020


    Trump targets TikTok and WeChat in new executive orders

    US President Donald Trump signed executive orders on Thursday targeting Chinese tech platforms TikTok and WeChat, requiring American firms to stop doing business with the companies within 45 days. The move is the latest measure by the Trump administration in its stand-off with Beijing over technology and trade issues. Microsoft on Sunday confirmed that it is continuing with talks to purchase TikTok’s business in the US, Canada, Australia, and New Zealand, with hopes that a deal will be concluded by 15 September. If the deal goes ahead, it may also lead to increased regulatory scrutiny for Microsoft, something it has largely managed to avoid in comparison to other major technology companies like Google, Facebook, and Amazon.


    Samsung to move PC production from China to Vietnam

    Samsung Electronics has announced it will end its personal computer production in China and is looking to shift production to Vietnam to cut costs and remain competitive. Samsung’s plant in the city of Suzhou could close as early as this month, with part of the facilities to be converted into a research and development centre. Samsung previously operated three smartphone factories in China which were shut down at the end of 2019, with the capacity being transferred to Vietnamese facilities or contracted out.


    Bharti Airtel teams up with Amazon on cloud services

    Indian telecommunications company Bharti Airtel closed a deal with Amazon Web Services this week. The deal will see Airtel, the country’s second largest mobile operator, offer customers cloud services including data migration and analytics. The move comes after India’s biggest telecoms company, Reliance Jio, signed a similar partnership with Microsoft’s Azure platform. Major global technology companies are looking to deepen their presence in the growing Indian digital market, particularly in light of the COVID-19 pandemic. The deal will likely intensify the fight for market share in the industry.


    Toyota posts net US$1.5 billion profit

    Toyota Motor Corp this week posted a net profit of US$1.5 billion for the three months ending in June, despite the impact of the COVID-19 pandemic. The numbers are down 74 per cent from the previous year, but come as most other industry leaders posted losses. Volkswagen Group recorded a net loss of US$1.9 billion, with Nissan and Honda also reporting losses. Toyota has achieved a string of monthly sales increases since April in China, which, coupled with a recovery of sales in the US, has helped company growth. Toyota has lifted its annual sales target to 9.1 million vehicles, up from 8.9 million in May.


    More Southeast Asian countries report Q2 GDP contractions

    This week the Philippines reported a 16.5 per cent plunge year-on-year in Q2 GDP, a record contraction that moves the country into technical recession. Indonesia also posted a 5.32 per cent year-on-year drop, the first contraction in 20 years. Hope for strong rebounds in the second half of the year look increasingly unlikely as lockdowns continue or are re-imposed in major cities in both Indonesia and the Philippines. Elsewhere in the region, Singapore recorded a 12.6 per cent contraction in Q2 and Hong Kong a nine per cent contraction. Economic contractions have been larger than forecast across the board, reflecting the impact of large-scale social distancing measures and their impact on economic activity. Though governments in the region have implemented broad stimulus packages, economic activity has yet to return to full capacity.




    Indonesia to begin human trials for COVID-19 vaccine: Human trials for a potential COVID-19 vaccine are due to start in Indonesia next week, as part of a collaboration between Indonesian state-owned pharmaceutical company Bio Farma and Chinese company Sinovac Biotech Ltd.

    Highest-level US visit to Taiwan: US Health and Human Services Secretary Alex Azar is expected to travel to Taiwan. It will be the highest-level US visit to Taiwan since 1979.




    HONG KONG: Hong Kong economy contracts nine per cent in Q2, the fourth consecutive quarter of year-on-year contraction.

    JAPAN: In his first press conference in seven weeks, Prime Minister Shinzo Abe reiterated that there is no immediate need to declare another state of emergency in Japan, despite a recent surge in infections. The country began reopening its borders on Wednesday to foreign residents.

    INDONESIA: Indonesia reports a 5.32 per cent economic contraction in Q2.

    AUSTRALIA: The State of Victoria declared a state of disaster and imposed a nightly curfew in Melbourne until 13 September.

    VIETNAM: The Vietnamese government has dispatched a team of experienced medical workers to Danang in an effort to stem the rising number of infections.

    PHILIPPINES: The country reported a 16.5 per cent contraction in Q2, moving the country into a technical recession.

    These COVID-19 insights are taken from Asia House Advisory’s focussed monitoring service, one of the ways in which Asia House is providing analysis on economic and public health policy measures taken by governments across Asia and the Middle East. Please reach out to Ed Ratcliffe, Head of Advisory, at ed.ratcliffe@asiahouse.co.uk for further details on this and our other advisory services.


    Asia House Advisory helps organisations understand new operating environments and meet business-critical challenges. Find out more.