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    The Week in Asia

    Published On: 29 May 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 29 MAY 2020


    Singapore and Japan announce hefty stimulus measures 

    Singapore announced a US$23 billion stimulus package this week – a much higher figure than expected – as countries across the region seek to boost their economic recovery from COVID-19. Japan also announced a US$1 trillion addition to its economic recovery plan. The new measures bring both countries close to the top of the list of economic support relative to GDP. However, though the two countries have brought in extraordinary spending to combat the economic damage caused by the pandemic, others in the region are unlikely to be able to implement such comprehensive support packages. Indonesia, Thailand, and Malaysia do not have such deep reserves, and while they will be able to reach for ultra-cheap loans with interest rates at record lows, this may threaten their fiscal sustainability.


    Hong Kong’s stock exchange wins key derivatives licensing agreement

    Hong Kong’s stock exchange group (HKEX) took a step towards diversifying its revenues from equities and stock markets this week, finalising a key derivatives licensing agreement. The deal will allow HKEX to offer futures and options contracts based on 37 of Morgan Stanley Capital International’s (MSCI) equities indices, mostly in Asia, from June. MSCI has trillions of dollars of assets tied to its benchmarks. HKEX took the agreement from rival Singapore Exchange Group (SGX), sending SGX’s shares tumbling this week. SGX has warned that the loss of the contract could hit 2021 profits by 10 – 15 per cent.


    India’s Bharti Telecom seeking US$1 billion from stake sale

    Bharti Telecom, parent company of telecommunications powerhouse Bharti Airtel, is looking to sell a US$1 billion stake in a move to try and cut debt. Bharti Telecom, which is backed by Indian businessman Sunil Bharti Mittal and Singapore telecom company Singtel, is looking to sell a 2.75 per cent stake in the company through a block deal. This comes as sentiment towards the troubled telecoms sector in India improves, especially after the flood of investment into rival Reliance Jio over the last few weeks by Facebook and private equity firms. Following a difficult few years for the sector, Bharti Airtel, Vodafone Idea, and Reliance Jio are the only remaining private carriers in the country – and are now betting on an upswing in fortunes as revenues increase amid growing mobile traffic in the country.


    Nissan, Renault, Mitsubishi set out survival plan

    Nissan Motor, Renault, and Mitsubishi Motors this week set out plans to deepen their car making alliance in an effort to boost survival planning amid the COVID-19 pandemic. The three companies said they would implement new policies to increase efficiency and cut costs, but ruled out the possibility of a full merger. The companies will seek to cut investment costs per vehicle model by up to 40 per cent through greater use of common platforms and parts. This also comes as Nissan announces the reopening of its US plants on Monday. The focus of the companies will also shift away from maximising sales volume, and rather focus on efficiency and competitiveness. The alliance has also set reference regions, in which each company will take the lead in particular regions of the world – Nissan will focus on China, North America and Japan; Renault on Europe, Russia, South America, and North Africa; and Mitsubishi in Southeast Asia and Oceania.


    New Hong Kong security law sparks protests

    China’s legislature on Thursday approved a controversial national security law on Hong Kong. The decision will pave the way for some laws to be directly enacted in Hong Kong, bypassing the city’s legislature. The move has prompted widespread concern about eroding freedoms in Hong Kong, as the law is aimed a prohibiting secession, subversion of state power, terrorism activities, and foreign interference. Yesterday, crowds gathered in the city to protest the new law, sparking concerns once again within the business community around the future of the city as an international trade and finance hub.




    China to tighten coal import restrictions: China is expected to promote the use of domestic coal, by tightening import rules. This will likely start with shipments from Australia.

    India and Australia to hold virtual summit: The two countries will hold a virtual summit on 4 June, with a focus on strengthening defence ties and cooperation on trade in the Indo-Pacific. Indian Prime Minister Narendra Modi and his Australian counterpart Scott Morrison are expected to sign the Mutual Logistics Support Agreement during the summit.



    Some major rounds of economic support packages have been announced this week, with Japan and Singapore topping the list and substantially increasing the depth of support given to businesses to weather the pandemic. There has been growing debate about whether other countries in the region – which do not have such deep reserves and as strong financial fundamentals – will be able to emulate such packages.

    Across the Middle East, economies have begun to open up once again following the Eid-al-Fitr holidays. Saudi Arabia will lift its nationwide curfew, except in Mecca, from 21 June. Dubai has lifted most restrictions on businesses and reopened retail stores, gyms, cinemas, and more.

    China’s National People’s Congress finished this week. Notably, Premier Li Keqiang did not announce an economic growth target, due largely to the disruptions caused by the COVID-19 pandemic. The national economy contracted by 6.8 per cent in the first quarter of 2020, and the country is only now beginning to ease its lockdown and resume production.


    FRIDAY 22 MAY 2020


    China’s National People’s Congress forgoes 2020 economic growth target

    The National People’s Congress (NPC) – the annual legislative meeting that will shape China’s policy trajectory for the year ahead – convened today, 22 May. The session, delayed for two months due to the COVID-19 pandemic, usually runs for 10 days but is expected to be shorter this year. As predicted by many, Premier Li Keqiang confirmed that China will not set an economic growth target for 2020. This comes as the national economy contracted 6.8 per cent in the first quarter due to the economic disruption of lockdown measures. However, the congress has given Chinese leaders an opportunity to highlight their success in containing the virus and underscoring the leadership of the Chinese Communist Party, particularly as it faces growing international backlash over the initial handling of the crisis. Key points to come from the opening of the meeting include a 6.6 per cent increase in defence spending this year, a controversial national security act tightening China’s purview of Hong Kong, and a commitment to reducing unemployment.

    Asia House Advisory have pulled together some of the things to watch at this year’s NPC in this handy infographic.


    Philippines proposes tax on digital platforms

    Lawmakers in the Philippines have proposed a tax on digital platforms such as Netflix and Facebook. The proposal would help boost government coffers which are under pressure to support COVID-19 relief efforts. The Philippines has seen huge growth in its digital economy over the last three months, as nationwide social distancing restrictions have forced people to move online. The tax measures could raise up to US$500 million. Currently, advertisements on digital platforms do not pay the 12 per cent value added tax that local retailers do. However, criticism of the proposal has centred around concerns that taxes levied on digital platforms would instead be borne by consumers.


    Diageo looking to take Indian unit private

    Diageo is looking at options to delist its India arm, United Spirits, by buying out minority shareholders, according to recent reports. Diageo currently owns around a 56 per cent stake in the company but has started talks with investment banks on a delisting offer. This could prove beneficial for the company by simplifying the governance standards it has to meet as a listed company – particularly given the heavy regulation in India’s alcohol sector. Pernod Ricard, the other big industry player, has kept its Indian arm unlisted. The move comes soon after mining company Vedanta Resources announced the delisting of its Indian unit, to try and simplify its corporate structure amid the COVID-19 pandemic.


    New Nomura chief to boost focus on private markets

    Nomura Holdings announced on Tuesday that it plans to boost business with unlisted companies, including offerings for start-ups, in a bid to diversify revenue. This comes as quarterly earnings fell sharply due to the economic impact of the COVID-19 pandemic. Under new chief executive Kentaro Okuda, the company is looking to achieve new growth in private equity, private debt, and infrastructure, along with new offerings in digital bonds and security tokens. The move is part of a broader shake-up at Japan’s largest brokerage and will make Nomura one of the first big companies in the country to shift its strategic focus to private markets.


    State-backed Peking University Founder Group in dollar bond test case

    A court case involving Peking University Founder Group, a state-backed technology conglomerate, is threatening to shake up around US$100 billion of debt issued by Chinese companies. Administrators of the company have said they will not recognise around US$1.7 billion in “keepwell” deeds – letters of support that offer foreign investors assurance that parent companies in China will make good on US dollar bonds sold by offshore subsidiaries. If the court rules in favour of the company, it could prompt a repricing in billions of dollars of other keepwell bonds. The outcome of the case will have huge implications for issuers and investors in China-US dollar credit, and could change how investors look at China’s dollar bond markets.




    Manufacturing data across Asia to be released next week: Japan, Korea, Taiwan, Singapore, and Thailand are expected to release manufacturing production data for April next week. This will provide indicators on what GDP growth will look like this quarter. China’s industrial production data is also due to be released.

    South Korea to launch Asia Region Funds Passport next week:  South Korea will join Japan, Thailand, Australia, and New Zealand in implementing the passport next week, which will pave the way for greater cross-border sales of eligible publicly-offered local funds.



    This week has seen an extension of social distancing measures across the region, even as lower-risk businesses begin to reopen. Governments are also beginning to outline longer-term planning. Singapore has announced a three-phase reopening to begin from 1 June, and similar longer-term policy and economic planning is expected to come out of both China and Vietnam’s annual policymaking sessions this week.

    Countries across the Middle East have re-imposed full or close to full nationwide lockdowns for the duration of Eid-al-Fitr celebrations in a bid to prevent further spread of COVID-19. This includes closure of most commercial activity, tightened curfews, and a ban on all gatherings.

    Economically, governments this week have announced further stimulus packages. India and Indonesia have announced broad economic recovery packages aimed at supporting sectors of the economy that have been particularly hard hit by the shutdowns in response to the pandemic. Others are seeking creative ways to fund recovery efforts. The Philippines has proposed a tax on digital platforms to boost government funds; the Bank of Japan will hold an unscheduled policy meeting this week to implement new support measures; and South Korea is creating a US$8.2 billion special purpose vehicle to directly purchase commercial paper.


    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 for further details on this and our other advisory services.


    FRIDAY 15 MAY 2020


    UK sets out aims for Japan trade deal

    The UK has published its negotiating objectives for a free trade agreement with Japan ahead of upcoming talks. Professional and financial services, as well as manufacturers of textiles and clothing, are among the industries expected to be the biggest winners if trade barriers with Japan are lowered, according to a UK government statement. The deal will also ‘aim to secure cutting edge provisions on digital trade.’ The UK hopes the deal – which could increase trade flows by US$18 billion – will be based on the current EU-Japan trading agreement. Successful negotiations with Japan will be an important step in the process for the UK’s accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. The UK hopes to join CPTPP, which was finalised under Japan’s leadership.


    Jio strikes third major deal in as many weeks

    Reliance Industries’ telecoms firm, Jio, has agreed to its third deal in three weeks, with Texas buyout firm Vista Equity Partners purchasing a US$1.5 billion stake in the company. This follows deals with both Facebook and Silver Lake Partners over the last three weeks, bringing the total run of US investment into Jio close to US$8 billion. Given the complex regulatory environment for foreign companies looking to enter the market, such deals provide an opportunity for companies looking to tap into the potential of India’s fast-growing internet market.


    Bain Capital focuses on two mega deals in Japan this week

    Bain Capital made moves to drastically increase its presence in Japan this week. It has completed a US$871 million deal to acquire Showa Aircraft Industry and has also bid to acquire Nichii Gakkan for US$1 billion. The deal with Showa Aircraft Industry will buy Bain a specialised materials business, a motorcycle showroom, and more than one million square metres of western Tokyo; while the bid for Nichii Gakkan would give the company a huge share of Japan’s care homes. The Japanese market has long appeared to offer attractive opportunities for private equity firms, but it has only recently become a viable option as more Japanese companies become comfortable discussing options such as take-private deals and leveraged buyouts.


    Indonesia raises health insurance premiums

    Indonesian state-owned insurer BPJS Kesehatan said this week that it will raise premiums for health insurance. Premiums for some policies will be nearly doubled, with only premium increases to the lowest rates being subsidised. BPJS Kesehatan gives universal health coverage for around 223 million people across Indonesia, making it the biggest single-payer health insurance in the world. It has faced cash flow issues for years, and the COVID-19 pandemic has exacerbated these issues. The new premiums aim to allow the company to continue operations and repay liabilities to hospitals it has previously defaulted on.


    Toyota warns of profit collapse

    Japanese auto company Toyota has warned of an 80 per cent collapse in operating profits over the next 12 months. Recent forecasts suggest that the shock from the COVID-19 pandemic on vehicle sales will be far bigger than that of the 2008 global financial crisis. Toyota has, however, pledged to maintain pre-pandemic levels of capital and research spending, totalling over US$10 billion, as it expects a complete recovery in demand in the US and Europe in early 2021. Investments will be focused on future planning – looking at issues such as self-driving technology and smart cities. Despite the weak outlook, Toyota is one of few automakers to release a full-year forecast – competitors have withheld guidance due to the uncertainty from national lockdowns implemented across the world.




    China to hold National People’s Congress (NPC) on 22 May: China will go ahead with its most important political event of the year on 22 May, after it was postponed due to COVID-19. Analysts expect the NPC to see new policy measures announced aimed at boosting China’s economic recovery from the coronavirus crisis.

    73rd World Health Assembly: China has firmly opposed a proposal made by a number of countries to the World Health Organization this week to invite Taiwan as an observer to the upcoming World Health Assembly, which convenes on 18 May. In a press briefing, a Chinese government spokesman said that the insistence on discussing Taiwan-related proposals could undermine the joint international response to COVID-19.



    This week has seen the easing of social distancing measures in some countries across the region while others have re-imposed measures. As national lockdowns continue, governments are grappling with balancing public health considerations with economic realities. Countries like India, Singapore, South Korea, and the UAE began to restart parts of their economies this week in a bid to boost recovery. More economic recovery measures have been announced – the UAE has unveiled a two-phase economic recovery plan focusing on the private sector and the digital economy; India has announced a US$270 billion economic stimulus package; and Oman, Thailand, and Saudi Arabia have all cut national budgets to boost funds to fight the pandemic.

    New Zealand, South Korea, Hong Kong, and Australia have eased social distancing measures, but there has been a (small) spike in cases as people start venturing out once more. Seoul has had to shut down its bars and clubs once again after a new cluster of cases was identified, and Hong Kong reported two new cases, breaking a 24-day streak of no new infections. These new cases, along with the first new cases reported in the epicentre of the outbreak – Wuhan – in over a month, have raised concerns that social distancing measures may need to remain in place for longer than anticipated.

    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 for further details on this and our other advisory services.



    THURSDAY 7 MAY 2020 [This week’s edition is published on Thursday due to the Friday Bank Holiday in the UK]


    Volkswagen sees strong recovery in China

    Volkswagen has seen a strong recovery in car sales in China as the country eases lockdown measures. Demand for its cars in China is almost as high was it was at this time in 2019, with the company suffering just a two per cent fall in sales in April. Country head Stephan Wöllenstein has predicted that annual results could be very close to forecasts made before the start of the COVID-19 pandemic. However, such results are unlikely to be seen in Europe, where economic growth and a recovery of demand is likely to be much slower. Certain sectors in Asia, including the auto industry, could see fairly strong recovery over the coming months.


    Leading Philippine broadcaster ABS-CBN ordered to close

    The National Telecommunications Commission, the Philippines’ national telecoms agency, did not renew the operating licence of ABS-CBN, the country’s biggest broadcaster. President Duterte has clashed with the network in the past and the effective closure of the network, announced on Tuesday, has again raised concerns around press freedom in the Philippines. ABS-CBN is a 66-year-old entertainment and media conglomerate that operates 21 radio and 38 television stations and employs nearly 7,000 people. Legislators have, however, pushed to get ABS-CBN back on air and are hoping to give a provisional franchise to the company during this month’s parliamentary session.


    US private equity firm takes US$750 million stake in India’s Reliance Jio

    US private equity firm Silver Lake has agreed to invest US$750 million in telecom business Jio, a part of Indian mega-corporation Reliance Industries. Jio has attracted 388 million 4G telecom subscribers since its launch in 2016 and has grown to be one of the country’s biggest players in the industry. The deal will value Jio at US$65 billion and comes just weeks after Facebook announced US$5.7 billion deal with the company. The investment further strengthens parent company Reliance Industries’ position in the country and may build Jio up to rival Silicon Valley’s big tech companies. Reliance also announced a rights issue worth US$7 billion – the largest ever in India – as a further effort to fundraise. Given the complex regulatory landscape in India for foreign investors, deals like this may become a more common path for companies looking to grow in the Indian market.


    China’s Kingsoft Cloud tests US market

    Kingsoft Cloud, the Xiaomi-backed cloud services company, has launched an IPO that could raise more than US$500 million. The IPO will be the first by a Chinese company in the US since Luckin Coffee’s fraud debacle last month. It will also test US investor appetite for Chinese public offerings, particularly as the market deals with the fallout from the COVID-19 pandemic. The IPO will mark the biggest offering in the US since 3 March and comes as regulatory scrutiny of US-listed Chinese companies continues to increase. Kingsoft Cloud may see strong results given the growing demand for cloud services as global lockdowns continue.


    Samsung could see end to family dynasty

    Lee Jae-yong, the de-facto head of Samsung Group, said this week that management of the electronics giant is unlikely to be kept within the family. This would mean the end of three generations of control over the technology company. Like many family-owned groups in South Korea, Lee has faced allegations of corruption in recent years. He is currently facing a retrial for bribery of the country’s former president. Though there has been some scepticism over this announcement, national regulations are making it more difficult to retain control within a single family in such companies.




    US and China to discuss Phase One trade deal: The US and China are likely to discuss progress in implementing the Phase One trade deal next week. This follows growing trade tensions and threats from US President Donald Trump regarding the future of a trade agreement between the two countries.

    Zhu Guangyao, former Chinese Vice Minister of Finance, briefed Asia House today on the impact of COVID-19 on China’s economy and global ties – including its relations with the US. Read more.


    Car manufacturers to re-open operations in India: As India emerges from the lockdown, the auto industry is looking to restart operations in the country. Honda is looking to re-open its factories in Rajasthan next week, subject to the availability of manpower to resume operations.



    Countries across the region continue to ease out of strict lockdown measures. Following weeks of low infection rates, countries including South Korea and New Zealand are returning to some level of normality with businesses across the country reopening with safe social distancing measures in place. Others in the region have eased curfews to better accommodate those fasting during the month of Ramadan.

    As the lockdown continues well beyond a month, and first quarter growth figures are starting to be released, it is clear that economic recovery this year is unlikely. Several economies such as Indonesia, the Philippines, and Hong Kong have recorded their lowest first quarter growth figures in at least 10 years. New stimulus packages are likely to be announced in the coming weeks as countries remain in partial lockdown, in a bid to boost the economy and support demand.

    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 for further details of this and our other advisory services.



  eyes Hong Kong listing

    Chinese technology company is considering a secondary listing of as much as US$3 billion in Hong Kong. is one of the largest e-commerce groups in the region and a major competitor to Alibaba. After raising US$1.8 billion in its original IPO in 2014, the company is looking at a second listing as its founder and chairman Richard Liu steps back from a number of companies linked to The listing was originally expected for the second half of this year, but may be delayed due to the uncertainty around COVID-19. A secondary listing of the company would provide a boost for Hong Kong’s capital markets, which have suffered a slowdown in big ticket deals since Alibaba’s US$13 billion transaction in 2019. has been one of the few companies to power through the worst of the COVID-19 pandemic, and expects to see double-digit revenue growth in Q1.


    SoftBank warns of US$9.6 billion investment losses from COVID-19 impact

    SoftBank has warned of a loss of more than US$9.6 billion on investments outside of its Vision Fund, as the economic impact of the COVID-19 crisis continues to pressure the firm’s investments, particularly WeWork. The widened loss forecast comes two weeks after SoftBank flagged a US$17 billion loss on its technology fund due to its exposure to the market turmoil sparked by the pandemic. SoftBank has been hit hard by the COVID-19 outbreak, with many of the companies in its portfolio deeply affected by the lockdown restrictions implemented globally. WeWork in particular has been impacted significantly, with many tenants refusing to pay rent or requesting termination of lease agreements.


    Indian asset market sees rollercoaster week

    The Indian asset management market has seen a rollercoaster of a week. Franklin Templeton, a US-based asset manager, sent shockwaves through the industry by winding up six local debt funds that managed more than US$3 billion. The move sparked a large sell-off, with fund managers reporting that investors were rushing to cash out of other vehicles. This follows a move by domestic investors to pull US$264 million out of Indian mutual funds in February. The Reserve Bank of India has this week stepped in with a US$6 billion infusion designed to stop further contagion. The country’s asset management industry is likely to see further pain, as economic activity slows due to the nationwide lockdown in place to combat the spread of the COVID-19 outbreak.


    Malaysian media organisations seek share of tech companies’ ad revenue

    Malaysian media organisations have asked the Malaysia Competition Commission to compel major international technology companies, such as Google and Facebook, to be required to pay for news content. According to the head of the Malaysian Newspaper Publishers Association, media organisations are asking for a share of the advertising revenue tech companies generate using media content from the country. Earlier this month, the Australian government released new regulations requiring Google and Facebook to pay media companies in Australia for publishing their news. Other Asian governments have also looked at requiring such companies to pay taxes on all revenue generated in country, regardless of whether or not those companies have a physical presence there.


    Nissan warns of nearly US$900 million loss

    Nissan has warned it faces a loss of nearly US$900 million for the fiscal year that ended in March 2020. With cities across the world in lockdown, the company saw year-on-year sales in March in the US, Europe, and China fall around 50 per cent in each market. This performance will put further pressure on Nissan’s global alliance with Renault and Mitsubishi Motors. All three companies are currently burning through cash reserves to weather the crisis, which had seen the shutdown of most of their plants and dramatically cut sales globally. Nissan is currently in discussions with Japanese banks for a credit line to shore up its finances, but if the pandemic continues, the company’s finances could become shakier. Auto makers worldwide have been hit by the pandemic and the national lockdowns that followed. Other carmakers are likely to see similar forecasts.




    China to begin trialling payments in new digital currency: China will begin trialling e-RMB payments in four major cities from next week. The digital currency has been formally adopted into the monetary systems of Shenzhen, Suzhou and Chengdu, as well as the Xiong’an New Area, with some government employees and public servants to receive their salaries in the digital currency from May.

    India to see considerable easing in national lockdown: India’s nationwide lockdown is scheduled to end on 3 May. Next week will likely see a considerable easing in social distancing restrictions, with a particular focus on the relaxation of measures to restart the economy.




    This week and next week see the expiration of many nationwide lockdowns in the region, though it is likely that some form of social distancing measures will be enforced for at least another month. Australia, New Zealand, Hong Kong and China, among others, have eased some restrictions as the daily rate of infections continues to decline. In the Middle East, many countries have eased certain social distancing restrictions – such as curfews – to cater for the fasting month of Ramadan, which began last week.

    Governments are continuing to adjust national budgets to move more funds to COVID-19 relief efforts. As the crisis continues, national leaders are increasingly looking for creative ways to fund relief measures. This week, the Bank of Japan announced a commitment to buy an unlimited amount of government bonds and quadruple its purchase of corporate debt; South Korea approved a second supplementary budget to fund cash payments; Indonesia put its capital relocation project on hold to shift some of its funds to relief measures; and Oman’s central bank has asked banks to allow loan deferments of three months for those affected by COVID-19.

    These COVID-19 insights are taken from Asia House Advisory’s focused 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 for further details on this and our other advisory services.

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