Aurelia Butler

(Reuters) – A look at the day ahead in Asian markets from Jamie McGeever, financial markets columnist.Asian stock markets will open strongly on Wednesday if the previous day’s China- and U.S.-fueled momentum doesn’t wilt, as investors brace for a triple whammy of major central bank policy decisions over the coming 72 hours.On the regional data front, Australian consumer inflation grabs the spotlight. Economists expect inflation to have slowed in June and over the second quarter, which could lean investors toward thinking interest rates have peaked at 4.10%.It’s not often China is the source of much optimism for investors these days, but that it exactly where markets find themselves after the country’s top leaders on Monday pledged to ramp up support for the struggling economy. China’s blue chip equity index rose nearly 3% for its best day this year, and Chinese property stocks surged 8% for their biggest rise this year too. Hong Kong’s main property stocks index jumped 14%, the biggest rise since March last year. Beijing’s top policy-making Politburo said it will implement macro adjustments “in a precise and forceful manner” to support an economy undergoing a “tortuous” post-COVID recovery. Fine words and sentiment, but as analysts at Investec note, no details on actual policies were forthcoming. This is what will determine China’s recovery, so until more clarity emerges, investors’ optimism may fade as quickly as it appeared. The mainland property index is still down 13% this year and the Hong Kong-based index is down 25%. Maybe they are cheap enough to draw in buyers, but the problems run deep.That said, MSCI’s Asia ex-Japan equity index on Tuesday ended a six-day losing streak and rallied 2%. The MSCI World index rose for the 10th session of the last 12, reaching its highest level since April last year, and the S&P 500 also climbed to a new 15-month high.Surprisingly strong U.S. consumer confidence, growing faith in an economic ‘soft landing’, and the Artificial Intelligence buzz around juicy earnings reports from Big Tech firms all contributed to the latest Wall Street rally.Strong results from Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOGL) after the bell will only strengthen the upbeat tone in Asia on Wednesday too.All this comes ahead of the first of three major central bank policy decisions this week – the Federal Reserve is expected to raise rates 25 basis points on Wednesday, followed by a similar move from the European Central Bank on Thursday and the Bank of Japan holding the line on Friday.Here are key developments that could provide more direction to markets on Wednesday:- Australia inflation (June)- Singapore industrial production (June)- U.S. interest rate decision (By Jamie McGeever) More

The ECB started steering its corporate bond purchases towards “greener” issuers last year, but that came to a virtual standstill this month as the bank, worried about runaway inflation, stopped its flagship debt-buying programme altogether.It had said it would tilt the reinvestment of proceeds from bonds that mature towards greener issuers, but now that the bank is no longer reinvesting those proceeds, its so-called ‘green tilt’ has ended. Greenpeace said this meant the ECB was falling foul of the Paris Agreement under which countries committed to curbing an increase in global temperature, an oft-cited guiding principle for the euro zone’s central bank. “One year after, these climate commitments have been broken,” Greenpeace said in a joint report with academics at three UK universities. “The ECB should start selling bonds of weak climate performers and buying bonds of strong climate performers.” ECB board member Isabel Schnabel hinted at such a move earlier this year, but that debate has yet to gain traction. The ECB declined to comment on Tuesday.Greenpeace added the ECB’s current system to score companies’ environmental performance on measures such as past emissions, reduction goals and disclosure was vulnerable to greenwashing – the practice of passing off a business as greener than it actually is.The report flagged as “particularly concerning” the ECB’s holding of bonds issued by German utility companies E.ON, which gets half of its revenues from fossil fuel, and EnBW Energie, which it said generates almost 40% of its power using coal.Germany last year pushed to accelerate the building of its liquid natural gas (LNG) infrastructure, following Moscow’s invasion of Ukraine and a sudden drop in piped Russian gas imports, although it has been scaling down those plans.”We think it doesn’t make sense for the ECB to support such investments (in LNG) since they are not consistent with climate neutrality,” Daniela Gabor, a professor at the University of the West of England in Bristol and one of the authors of the report, told Reuters.ECB President Christine Lagarde said in February the central bank “should not be accomplice to greenwashing” and would rely on its own analysis and that of internal experts to that effect.Gabor and her co-author estimate that, using stricter criteria including companies’ absolute emissions, their climate profile and any expansion plan in fossil fuel, the ECB’s bond purchases have been far less green than the central bank’s own scoring system implies. Analysts at the Anthropocene Fixed Income Institute (AFII) had earlier estimated the ECB could radically cut the carbon footprint of its corporate bond portfolio by selling just 50 billion euros ($54.30 billion) of polluting companies’ debt.A separate report, published by the Inspire network of researchers earlier this month, argued the ECB could even bring down inflation by helping finance investments that mitigate the impact of climate change and natural disasters.Greenpeace activists recently scaled Deutsche Bank (ETR:DBKGn)’s headquarters in Frankfurt to protest against climate investment policies at its DWS unit, which is the object of an investigation into so-called greenwashing. DWS’s former CEO has called the allegations “unfounded”. They staged a similar protest at the ECB in 2021. More

Good morning. We begin today with a mysterious development in Chinese elite politics. China has announced the replacement of foreign minister Qin Gang, one month after the former high-flying favourite of President Xi Jinping abruptly vanished from public view.China’s state news agency Xinhua said on Tuesday that the rubber-stamp parliament, the National People’s Congress, had removed Qin and replaced him with the country’s most senior diplomat, Wang Yi, his predecessor as minister. The terse statement did not give further details.The affair has threatened to become an embarrassment for Xi, who analysts say handpicked Qin for the foreign minister role late last year.Qin abruptly vanished from public view on June 25 as he was preparing to attend a meeting of south-east Asian nations. The foreign ministry said at one point that his absence was due to “health reasons”, but it subsequently refused to give further explanation despite being constantly questioned about the matter at its daily press briefings.Jude Blanchette, a China expert at the Center for Strategic and International Studies think-tank, said the situation was “unique” because Qin was a trusted subordinate of Xi. “This doesn’t mean Xi’s power has been shaken, just that he occasionally makes a bad bet,” said Blanchette. Read the full story.Confusion around Chinese diplomacy: Analysts, diplomats and officials are trying to make sense of Qin’s sudden disappearance, which threatens to complicate US efforts to revive dialogue and China’s bid to win back investors. What are your thoughts on Qin’s shock departure? Email me: [email protected]. And check out China Focus, the FT’s hub that brings together our best work on Asia’s biggest economy. Here’s what else I’m keeping tabs on today:Economic data: Australia releases its June consumer price index. Results: Earnings season continues with reports from companies including Nissan, Rio Tinto, Airbus, Deutsche Bank and Meta. Blinken in the Pacific: US secretary of state Antony Blinken dedicates a new US embassy in Tonga, a Pacific island deemed strategically important by Washington as it competes with Beijing for influence in the region. Storm season: Super Typhoon Doksuri is hurtling towards east Asia and is likely to be the most powerful typhoon to land in China so far this storm season. In Taiwan, authorities suspended annual military drills and warned that Doksuri could be the most damaging typhoon to hit the island in nearly four years. (Reuters) Five more top stories1. PacWest, one of the hardest-hit lenders from the regional banking crisis, has agreed to merge with Banc of California. The deal is a sign that the fallout from the collapse of Silicon Valley Bank continues to reverberate across the industry. Here are more details on the merger. 2. Exclusive: US national security officials are scrutinising an Abu Dhabi sovereign wealth fund’s planned $3bn takeover of New York-based Fortress Investment Group, amid concerns in Washington over the UAE’s ties to China, people close to the situation told the FT. Read the full story.3. Spotify slumped to a €302mn loss last quarter as the group racked up costs axing podcasts and cutting jobs, overshadowing the record number of new users signed up during the period. After investing heavily in an ambitious push into podcasts during the pandemic, Spotify has retreated over the past year as investors have grown impatient with the strategy. Alphabet results: Google parent Alphabet’s revenues surpassed analysts’ forecasts in the second quarter, sending shares up in after-hours trading after showing signs of resilience in its digital advertising business4. The risk of a crash landing for the global economy has receded, the IMF’s chief economist said as the multilateral lender predicted 3 per cent growth this year. But Pierre-Olivier Gourinchas cautioned that advanced and emerging economies were not “out of the woods yet”. Read the full interview with Gourinchas.5. GlobalFoundries has criticised subsidies that Berlin is planning to offer TSMC, the world’s biggest contract chipmaker, for a planned plant in the east German city of Dresden. The US chip company’s chief executive warned the funds to its Taiwanese rival would distort competition, he told the FT.Explainer

At a highly anticipated meeting of Xi Jinping’s 24-member politburo on Monday, China’s leaders produced a statement calling for strong “countercyclical” measures to support the world’s second-largest economy. While markets welcomed Xi’s acknowledgment of growth headwinds, the readout from the meeting provided few details. The FT has parsed the Politburo’s statement for clues on what Beijing’s economic measures mean in practice.We’re also reading . . . Sam Altman interview: The OpenAI chief is on a collision course with regulators. He says the public sector has a “lack of will” to lead innovation. Fentanyl: In less than a decade, Mexico’s drug cartels have created a highly profitable business to feed US demand for the synthetic opioid.Oppenheimer: Christopher Nolan’s atomic bomb biopic is a great film about the wrong man, writes Janan Ganesh. Chart of the day

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Today’s India is an “illiberal democracy”. Freedom House, the US think-tank, puts it at the same level as Hungary, but it rates the components differently: political rights, notably electoral politics, are healthier in India than in Hungary, but civil rights are weaker. Worse, the latter have deteriorated substantially under BJP rule since 2014. Martin Wolf breaks down India’s illiberal trend in his latest column. Take a break from the newsThe marketplace is awash with wireless earbuds at every price point, but these ones don’t play music. The QuietOn earbuds provide glorious silence in the most unobtrusive way possible, making them perfect for bedtime or long-haul flights. This week’s HTSI features these “sleep buds” and other essential gadgets.

QuietOn 3.1 sleep buds, £225

Additional contributions by Tee Zhuo, Darren Dodd and David Hindley More

SINGAPORE (Reuters) – Singapore sovereign wealth fund GIC, one of the world’s biggest investors, plans to continue investing in China despite geo-political tensions after chalking up its best showing in eight years in the financial year ended March.Its group chief investment officer Jeffrey Jaensubhakij told Reuters GIC was keen to invest in Chinese companies that do business within China and do not export to the United States.”There are some ‘China for China’ type of investments that still make sense,” he said.GIC’s annualised 20-year real rate of return – its main performance gauge – for the year ended March 2023 stood at 4.6%, the highest since 2015, according to its annual report released on Wednesday. This compares with 4.2% over the same period a year ago.The group, which counts e-commerce giant Alibaba (NYSE:BABA) and fintech affiliate Ant Group among its Chinese investments, said its diversified portfolio and cautious investment stance helped cushion its portfolio’s performance from the market correction in 2022. GIC said exposure to China was important for a diversified portfolio.”It is a place that we believe that global investors which hope to build a diversified portfolio must have exposure or presence,” GIC’s Chief Executive Officer Lim Chow Kiat said.GIC’s continued commitment to China comes as Beijing scrambles to re-energise a flagging post-pandemic recovery.Chinese shares rose this week after its leaders pledged to step up support for the economy. Financial regulators told major global investors in a rare meeting last Friday that China was prioritising economic growth and would stay open to foreign capital, sources familiar with the matter said.GIC said China now has more regulatory clarity and business confidence is returning. Its views follow that of smaller investment firm Temasek which earlier this month offered a positive outlook on China’s tech sector. BIG ON INFRASTRUCTURE, PRIVATE CREDITGIC invests $10 billion to $20 billion a year in infrastructure assets, a portfolio that has grown five-fold since 2016, as the investment provides diversification and steady, inflation-protected returns, said Ang Eng Seng, GIC’s Chief Investment Officer for Infrastructure.GIC is also looking to allocate more capital to private credit, a nascent asset class which has delivered strong returns in a higher interest rate environment with tighter liquidity from banks, Jaensubhakij said.GIC is the world’s seventh-biggest sovereign investor with $690 billion in total assets, according to research firm Sovereign Wealth Fund Institute. The U.S is GIC’s biggest market, making up 38% of its portfolio, while Asia excluding Japan contributed 23%.The share of emerging market equities in GIC’s portfolio rose to 17% by end of March from 16% a year earlier. Real estate rose to 13% from 10%, while nominal bonds and cash dropped to 34% from 37%. GIC’s Lim warned of continued inflation pressure that has caused bond markets to plunge over the past year.”The underlying inflation driver has not completely gone away,” he said. “There is still pressure for inflation rates to be at elevated levels above whatever the central banks desire.” More