Aurelia Butler

Good morning. Fumio Kishida, Japan’s prime minister, has moved to restore the country’s status as a nuclear-powered nation for the first time since the 2011 Fukushima crisis, accelerating the restart of reactors and signalling the construction of new plants. Kishida’s decision to throw his political weight behind the nuclear power sector is intended to rein in soaring energy costs for households and companies and to support Japan’s nuclear technology manufacturers. “As a result of Russia’s invasion of Ukraine, the global energy situation has drastically changed,” Kishida said on Wednesday. “Whatever happens globally, we need to prepare every possible measure in advance to minimise the impact on people’s lives,” he said, adding that the government would aim to come up with concrete plans for the nuclear sector by the end of the year.Thank you to those of you who took yesterday’s poll. Fifty-four per cent of respondents said they think Elon Musk will win his legal battle with Twitter. And thanks for reading FirstFT Asia. — EmilyFive more stories in the news1. Thai PM suspended after legal challenge Prayuth Chan-ocha has been suspended from office after the country’s constitutional court agreed to hear a petition brought by the opposition which argues that he has exceeded his legally mandated eight-year term. The prime minister will be temporarily relieved of his duties while the petition is considered, the court said yesterday. 2. China probes defeat by Evergrande youth football team Chinese authorities have ordered tighter supervision of local leagues and an investigation into alleged match-fixing following a defeat suffered by an under-15s team from the youth academy of distressed property developer Evergrande. The team was winning 3-1 until the 68th minute but ended up losing 5-3.3. Singapore fines Noble $9.1mn for ‘misleading’ financial statements The announcement by the city state’s accounting authority concludes its probe of a high-profile accounting scandal that brought Noble, a commodities business, to the brink of collapse. It also flagged “stern warnings” given to two unnamed former directors of the group.4. Crisis of confidence in Chinese property Investors are pricing in almost $130bn in losses on Chinese property developers’ dollar debt, with two-thirds of the more than 500 outstanding dollar bonds priced below 70 cents on the dollar as concerns mount that the country’s housing market will face a protracted crisis unless Beijing implements a large-scale bailout.5. Biden to cancel $10,000 of student debt for millions of Americans The plan includes cancelling $10,000 of repayments for anyone earning less than $125,000. Those in receipt of Pell Grants, which are given to those in particular financial need, will qualify for $20,000 worth of forgiveness.The day aheadAnniversary of Myanmar crackdown Today marks five years since the country’s military launched a crackdown that led to the Rohingya refugee crisis. Related listen: In this episode of Rachman Review, Gideon Rachman explains how social media platforms put profits before people. In Myanmar, military leaders used social media as a tool to demonise the Rohingya Muslim minority.Jackson Hole Economic Symposium The gathering of central bankers starting today in Wyoming will be closely watched as the beast of inflation runs rampant around the world. In this useful explainer, Colby Smith and Sam Lerner examine whether the Federal Reserve can tame the highest inflation in about 40 years without causing sharply higher unemployment.European Central Bank minutes We will get the minutes from policymakers last meeting.What else we’re reading and listening toBangladesh is being ‘killed by economic conditions elsewhere’ Power blackouts and high import prices are fuelling fears that the country’s previous economic gains could be reversed by global crisis. Previously one of the world’s poorest countries, Bangladesh has become the third-largest garment exporter, according to World Trade Organization data.A stalemate after six months of war Ukraine and Russia are at a stalemate across much of the 2,400km front line and Russian forces are entrenching themselves for the winter ahead. Both sides are so dug in that “there are no prospects for peace at all — only a ceasefire,” according to a person close to the Kremlin.Afghanistan one year later On the latest episode of our Behind The Money podcast, south Asia correspondent Ben Parkin explains how Afghanistan’s economy has changed in the year since US forces left the country and the Taliban retook control of the government.A UK government under Truss The Conservative party leadership contest has less than two weeks to run, with several polls suggesting that Liz Truss is likely to become the UK’s next prime minister. Should she win, who is likely to feature in her cabinet?What kind of great power will India become? James Crabtree reviews three books that offer insights into New Delhi’s relationship with the US and China. India’s response to the war in Ukraine did not pan out the way many in the west might have hoped, he writes. Technology We’re in an era when the unpredictability of people meets the as-yet not fully capable autonomous car. In this moment, which I’m calling the Human-Autonomy Clash, there’ll be crashes, there’ll be anger, writes Dave Lee. More

MOSCOW (Reuters) – Consumer prices in Russia declined for the seventh week running, as the rouble’s appreciation in the past few months and a drop in consumer demand slow the pace of price growth, although households’ expectations of future inflation increased. The consumer prices index (CPI) dipped 0.15% in the week to Aug. 22 after easing 0.13% a week earlier, the federal statistics service Rosstat said on Wednesday.Russians focus closely on inflation among economic trends as rising prices eat into living standards. Annual inflation reached 15.1% in July, far above the central bank’s 4% target. As of Aug. 22, annual inflation slowed to 14.60% from 14.87% a week earlier, the economy ministry said on Wednesday.Although the economy has avoided the meltdown many predicted after Moscow sent its forces into Ukraine six months ago, with higher prices for its oil exports cushioning the impact of Western sanctions, hardships are emerging for some Russians.In annual terms, inflation remains high but is slowing after prices of nearly everything, from vegetables and sugar to clothes and smartphones, jumped sharply after Russia began what it calls a “special military operation” in Ukraine on Feb. 24. GRAPHIC – Inflation in Russia surged to 20-year high in 2022 The CPI has extended its decline even after the central bank slashed its key rate by 150 basis points to 8% last month and indicated it was ready to consider further monetary easing to limit the depth of an economic recession.A sound harvest could pave the road for a decline in the CPI in August and September, which in turn could cement expectations for further rate cuts and steer yields of OFZ government bonds lower, said Dmitry Polevoy, head of investment at Locko Invest.But perceived inflation remains higher than the headline CPI figure as people tend to focus on prices for particular goods and services.In the first seven months of 2022, prices for sanitary pads and soap rose more than 40%, while prices for flight tickets rose nearly 32%, Rosstat figures show. GRAPHIC – Consumer prices in Russia rose sharply in 2022https://graphics.reuters.com/RUSSIA-INFLATION/klvykwylxvg/chart.png Russian households said their observed inflation on average declined to 20.5% in August from 22.2% in July but inflation expectations for the year ahead rose to 12.0% from 10.8%, the central bank said in a report on Wednesday.”The official consumer price index is considered to be half as low as ‘people’s’ inflation but in some cases this gap can be larger,” said Pavel Sigal, first vice-president at Opora Rossii, a non-governmental organisation that represents the interests of small- and medium-sized businesses. (This story refiles to fix typo in chart, no changes to the text) More

European and US government debt sold off on Wednesday as investors cranked up their expectations of how high central banks will raise interest rates to curb inflation.The moves, which were particularly pronounced in UK and European markets, came on the eve of a multi-day economic symposium for policymakers in Jackson Hole, Wyoming. The event, hosted by the Kansas City arm of the US Federal Reserve, is closely watched by investors for signals from central bankers on the future direction and pace of monetary policy. The yield on the UK’s two-year gilt, which is particularly sensitive to changes in interest rate expectations, jumped 0.22 percentage points to 2.90 per cent, reflecting a significant drop in its price. The benchmark 10-year gilt yield added 0.12 percentage points to 2.69 per cent.Those sharp moves came as pricing in money markets indicated investors were expecting the Bank of England to lift borrowing costs to almost 3 per cent by November, up from projections just a week ago of 2.6 per cent and a current base rate of 1.75 per cent. Data released last week showed that UK inflation rose to a more than 40-year high in July.Antoine Bouvet, senior rates strategist at ING, said the UK Debt Management Office’s announcement on Tuesday that it will sell £1.5bn in short-term gilts on Thursday has added to the unease. The sale comes during a time when liquidity, or the ease of buying and selling bonds, has been worsening across European fixed-income markets due to summer holidays and heightened economic uncertainty. “It’s nothing massive by any stretch of the imagination but it shows that when you add supply to an illiquid, very nervous market, the impact can be quite sizeable,” Bouvet said.The more volatile moves in gilts become, the worse liquidity will get, he added. “It’s a bit of a chicken and egg scenario.” Short-dated eurozone bond prices also dropped, with the yield on the two-year German Bund adding 0.08 percentage points to 0.90 per cent and Italy’s equivalent debt instrument rising 0.05 percentage points to 1.87 per cent.Investors were on Wednesday expecting the European Central Bank to implement 1 percentage point of interest rate rises by October, from a current deposit rate of zero. The ECB raised interest rates by half a percentage point in July, its first increase in more than a decade.The big rise in bond yields and rate expectations highlights how a surge in natural gas prices in Europe and the UK is increasing concerns about already highly elevated levels of inflation. The European gas benchmark rose 15 per cent on Wednesday to a new closing high of €300 per megawatt hour while the UK price advanced by 13 per cent to £5.58 per therm. That compares with €200 and £3.49 respectively at the start of August. In the US, the yield on the benchmark 10-year Treasury note hit its highest level in almost two months, rising 0.06 percentage points to 3.11 per cent ahead of the Jackson Hole central bankers’ conference that starts on Thursday. The two-year yield rose 0.07 percentage points to 3.40 per cent.The event is often used by policymakers to provide guidance on its future policy stance, and investors will be watching for insight on how aggressively the central bank will raise interest rates through the rest of the year.“Caution is the name of the game on equity markets with expectations that aggressive policies to tame roaring inflation will continue despite fresh signs that the US economy is slowing,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.Minneapolis Fed president Neel Kashkari, previously perceived as a more dovish US central bank policymaker, said on Tuesday night that the combination of “maximum employment” and “very high inflation” made the Fed’s approach “very clear: we need to tighten monetary policy to bring things into balance”.US stock markets were more muted. Wall Street’s benchmark S&P 500 stock index erased some of its early gains to close 0.3 per cent higher amid thin volumes. The technology-heavy Nasdaq Composite rose 0.4 per cent.Europe’s regional Stoxx 600 ticked up 0.2 per cent. In Asian markets, Hong Kong’s Hang Seng closed down 1.2 per cent and China’s mainland CSI 300 gauge shed 1.9 per cent, as concerns grow about the indebtedness of the country’s mammoth housing market. More

LONDON (Reuters) -AstraZeneca’s Chief Executive Pascal Soriot warned on Tuesday new U.S. legislation capping drug prices would reduce the ability of companies to recoup their investment on developing new drugs and hurt innovation.In a Reuters Newsmaker interview, he said the British drugmaker’s top-selling cancer therapy Tagrisso as well as its potential blockbuster Enhertu would likely be negatively affected by the new law in the coming years.Last week, a landmark law that included provisions to tackle the rising cost of medicines was passed in the United States, in a rare legislative defeat for the powerful pharmaceutical industry that set a precedent for curbing drug prices in the world’s most lucrative market for medicines.The act will for the first time allow the federal Medicare health plan for the elderly and disabled to negotiate prices on up to 20 drugs a year. It also sets limits on drug price increases for Medicare and caps out-of-pocket costs for those enrolled in the programme.The price negotiation portion of the legislation, which will kick off from 2026, poses a significant challenge, Soriot said. He said it was unclear how such negotiations would play out, and that it appeared to be structured as less of a negotiation and more of an “imposition of price.”With the current system of patent protection, pharmaceutical companies are able to recoup their investment in developing a drug drugs over nine to 11 years, Soriot said. In many cases, such as AstraZeneca (NASDAQ:AZN)’s cancer drug Enhertu, companies secure regulatory approval to treat patients who have received other therapies first, otherwise known as a later-line indication. Then, they often seek approval as a first-line indication, which is a much larger pool of patients who haven’t been treated with any therapies before.The problem is the clock on patent protection that allows drugmakers to charge premium prices starts with the first approval.With this new legislation, companies will be disincentivised to go after later-line indications so that they maximise the number of patients they can treat for as long as possible to recoup their investment. “That’s unfortunate because patients will suffer,” Soriot said, adding companies will have no choice because they have to protect their ability to invest in future drugs. More

An interest rate decision in South Korea grabs the spotlight in Asia on Thursday, as wider market sentiment continues to be clouded by rising U.S. bond yields, a buoyant dollar and deepening concern over China’s economy. South Korean won vs US dollar: https://tmsnrt.rs/3CsAhKm With inflation near its highest in 24 years, the Bank of Korea is expected to raise its base rate a quarter percentage point to 2.50%. A bolder move to 2.75% would put a rocket under the won and lift it from this week’s 13-year lows against the dollar.China is going the other way. Not only is Beijing cutting interest rates, Reuters exclusively reported on Wednesday that China’s foreign exchange regulator is warning banks against aggressively selling the Chinese currency.This would be a new sign of official discomfort with recent weakness of the yuan, which is languishing at a two-year low against the dollar. Due to the greenback’s broad strength – including against most Asian currencies, – the steady grind higher in U.S. bond yields and renewed weakness in equities, financial conditions in emerging markets are beginning to tighten again.The 10-year Treasury yield hit a two-month high of 3.12% on Wednesday, and the S&P 500’s rise of around 0.5% was pretty weak considering it had fallen 3.5% over the past three sessions.On the corporate front, Asia-focused insurance group AIA releases half yearly earnings, while attention could turn to shares in India’s NDTV Ltd after their jump to a 14-year high on Wednesday, after billionaire Gautam Adani’s conglomerate moved to take a near 30% stake in the media group.HSBC is also under the spotlight, after China’s Ping An Insurance Group said it supported calls to restructure the global banking giant. Ping An is HSBC largest shareholder with an 8.3% stake worth around $10.3 billion.Key developments that should provide more direction to markets on Thursday: Japan producer price inflation (July)BOJ board member Nakamura speech, press conferenceSouth Korea rate decision More