Economy

The Financial Services Commission said it found two global investment banks were engaged in the practice of naked short-selling transactions, which involves selling shares without borrowing them first.The FSC did not identify their names.South Korea has been widening a probe into global investment banks to weed out illegal short-sellers from the local stock market after it imposed a full ban on short-selling in November through the end of June 2024.In December, it said it would fine two unnamed global investment banks and one local brokerage 26.5 billion won ($20.2 million) in total for naked short-selling.($1 = 1,313.2200 won) More

SINGAPORE (Reuters) -Japanese stocks have made a blazing start to 2024, surging to three-decade highs as a weaker yen and expectations of interest rates staying low have re-ignited the strongest rally for years. A 6% gain in the Nikkei over the past two weeks is the best start to the year in a generation, according to LSEG data, and comes on the heels of a 28% jump last year — the biggest annual gain in 10 years.As chart levels break, dealers say hedge funds are rushing to chase the momentum and that the index’s 1989 peak of 38,957 is in sight as more cash from home and abroad flows in.Foreigners were net sellers in the first week of January, if derivative trade is taken into account, but were buyers of cash equities according to exchange data and sales desks say this week was even busier and that sellers have been scarce.Last year drew 6.3 trillion yen ($43.5 billion) worth of net equity buying from foreigners, the largest in data stretching back a decade.”Since the start of the year we see nine times more volume than December,” said Tareck Horchani, head of prime brokerage dealing at Maybank Securities in Singapore, with buying heavy in the technology sector.”This flow is coming from long-short equity funds … global investors who were hesitant to buy Japan in last quarter of 2023 now have more conviction to invest,” he said. The attraction is a domestic economy emerging from decades of deflation, an export sector supported by a weak yen and an expectation – strengthened by a deadly earthquake off the west coast in January – that monetary policy will stay supportive. Core inflation seems to be settling in just above 2% and the Bank of Japan has given no indication of being in a hurry to arrest it – keeping the yen cheap by historical standards and traders expecting rates to stay negative until at least April.That setup, Nomura analysts noted, has deterred selling – in contrast with world markets which have dipped 0.5% so far this year.”The absence of sellers in the market may continue to support strong share prices for the time being,” they said.”We think the Nikkei 225’s rise is unlikely to stop even at 35,000. Our forecast range for January–March is 33,000–37,000.” Kenji Abe, a strategist at Daiwa Securities, said his year-end forecast is 40,000. The index closed at 35,577 on Friday. (T)STRENGTH TO STRENGTHInvestors also feel a shift in market leadership over the past few months is breathing new life into the rally.In 2023, many foreign money managers said that a push by the Tokyo Stock Exchange to improve corporate governance and tighten up Japan Inc’s notoriously flabby balance sheets drove stock buybacks, cross-holding sales, price gains and investment.Now, however, the precision-instrument sector, comprising “hidden jewel” companies making semiconductors or software, is gaining fastest, said Richard Kaye, Japan-based portfolio manager at asset manager Comgest.He said large foreign investors, who brokers estimate remain under-exposed to market that had disappointed for many years, are taking note.”We have six large long institutions looking at our fund right now, if that’s representative of who’s buying what and why.”In a presentation this week, portfolio managers at Santa Fe-based Thornburg Investment Management listed chipmaking-equipment builder Disco (OTC:DSCSY) Corp among companies offering exposure to the “picks and shovels” of the AI gold rush.Its stock price has doubled since May 2023.To be sure, the speed and scale of recent gains invites reversal and technical indicators are flashing warning signs. Nikkei volatility has spiked and the relative strength index hit 73.63, with readings above 70 suggesting overheating.Thornburg’s Brian Burrell also said that a rise in the yen and rotation out of exporters’ stocks present risks.But there are signs the gains are durable.Bank of America noted a weakening yen and anticipation of wage increases mirrored the backdrop to a rally that lifted the Nikkei almost 20% between April and June last year and said overhauled tax breaks could spur buying by domestic investors.”Strength begets strength,” said Pepperstone analyst Chris Weston. “Find a market that’s strong and massage your entry points.” ($1 = 145.0100 yen) More

Politico, CNN and Punchbowl first reported that congressional leaders had agreed on what is called a “continuing resolution” or “CR,” that would fund the government – extending two deadlines through March 1 and March 8. A spokesperson for the Senate’s Democratic majority leader, Chuck Schumer, said a text of the spending deal is expected to be posted online on Sunday. A second source, speaking on condition of anonymity, told Reuters the earlier reports were accurate.Funding expires on Jan. 19 for some federal agencies, including the Department of Transportation, while others like the Defense Department face a Feb. 2 deadline.The top Democrat and Republican in Congress reached a $1.59 trillion deal on Jan. 7 to fund the government through the current fiscal year, but if they fail to pass it by Jan. 19, parts of the federal government would begin to shut down.Some lawmakers have said a short-term funding bill was needed to allow bipartisan negotiators from the House and Senate time to agree on full-year fiscal 2024 spending bills and for Congress to enact the legislation.On Thursday, Schumer took the first procedural step to pass a stopgap funding bill through the Senate early next week to give lawmakers more time to pass the full-year bill.The U.S. came close to a partial government shutdown last autumn amid opposition by the hardline House Republicans who ousted former Speaker Kevin McCarthy over reaching a bipartisan stopgap spending deal with Schumer. More

WINNIPEG, Manitoba (Reuters) – Canada is considering a cap on the number of international students allowed to live in Canada, Immigration Minister Marc Miller said according to a CTV report, as the government faces criticism for a housing affordability crisis.Canada depends on immigration to drive its economy and support an aging population and Prime Minister Justin Trudeau has been ramping up annual immigration. The housing crisis has been blamed on an increase in migrants and international students fueling demand for homes just as inflation has slowed construction.Miller said in a taped interview with CTV Question Period that the Liberal government is considering a cap on international students in the first and second quarters this year.”That volume is disconcerting,” Miller is quoted by CTV as saying, referring to the number of international students in Canada. “It’s really a system that has gotten out of control.”He did not say how much of a reduction in international students the government is considering.Miller’s spokesperson could not be immediately reached.Official data show there were more than 800,000 foreign students with active visas in 2022, up from 275,000 in 2012. The interview with Miller is scheduled to air on Sunday. Canada is a popular destination for international students since it is relatively easy to obtain a work permit.The Liberal government floated the idea of capping the number of foreign student visas in August, but Housing Minister Sean Fraser said then that the government had not yet made a decision of whether to pursue that option.Miller said he planned to discuss the problem with provincial counterparts.Trudeau’s Liberals have seen their popularity plummet after more than eight years in office, with polls placing them well behind the official opposition Conservatives led by Pierre Poilievre, who have criticized the government for not properly managing the housing issue. More

On Saturday, it was disclosed that domestic retail investors now hold over twelve percent of Paytm’s shares. Additionally, domestic institutional investors have raised their stakes to more than six percent. Mutual funds, including prominent names such as Mirae and Nippon India, have collectively grown their investment in Paytm to nearly five percent.The company’s founder, Vijay Shekhar Sharma, has also increased his ownership to over nine percent following a recent transaction with Antfin. This move signifies a growing confidence among Indian investors in the fintech firm’s prospects.Despite some international investors scaling back, the foreign institutional presence in Paytm remains substantial. Notably, Softbank (OTC:SFTBY) and Berkshire Hathaway (NYSE:BRKa) have reduced their holdings, with the latter selling off its entire stake in December.The bolstered investor interest coincides with Paytm’s announcement on Friday of a thirty-two percent increase in its second-quarter revenue compared to the same period last year. This robust performance highlights the company’s growing financial health and may underpin the recent investor enthusiasm.The shift in Paytm’s investor base, marked by a rise in domestic stakes, aligns with broader market trends where local investors are increasingly participating in the growth of Indian technology firms.This article was generated with the support of AI and reviewed by an editor. For more information see our T&C. More

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With inflation in the euro zone now seemingly under control, investors have been betting that the ECB will slash borrowing costs from record highs this year, starting possibly as soon as March.Lane openly entertained the thought of a “sequence of rate cuts” but he emphasised that crucial wage data would only become fully available by the ECB’s June 6 meeting — confirming the timeline exclusively reported by Reuters in December. “By our June meeting, we will have those important data,” the Irish economist told Italian daily Il Corriere della Sera. “But let me emphasise, we do have other data that we will be looking at every week.”Money markets currently price in at least 150 basis points worth of cuts this year, taking the interest rate that the ECB pays on banks’ deposits to 2.5%. The ECB’s rate rise in September was in part “an insurance” against inflation coming back, Lane said, adding this would be taken into account when the time comes to ease policy.But he also stressed that cutting rates too fast could fuel a new wave of inflation, forcing the ECB to then raise rates even more.”A false dawn, too rapid a recalibration, can be self-defeating,” he said. More

The country’s economic growth is being propelled by a robust services sector and a strong manufacturing base, especially in the electronics segment. This has been instrumental in cementing Vietnam’s role in the global technology supply chain.China has emerged as a top investor in Vietnam’s technology sector, overtaking traditional leaders like Japan and South Korea. This surge in investment is a testament to Vietnam’s growing importance as a hub for tech manufacturing.Additionally, Vietnam’s adoption of a global minimum tax rate of 15% for large corporations is anticipated to bolster its tax revenue streams. This move is part of a wider international effort to ensure that multinational enterprises pay a fair share of taxes.While the economic forecast is positive, Vietnam still faces challenges such as trade volatility and inflation. However, inflation is expected to remain at a moderate level, which may help stabilize the economy amidst global uncertainties.This article was generated with the support of AI and reviewed by an editor. For more information see our T&C. More