Japan business lobby chief says rapid forex fluctuation undesirable
TOKYO :The head of Japanese business lobby Keidanren, Masakazu Tokura, on Tuesday said rapid foreign exchange fluctuation is undesirable and that currencies must stabilise as much as possible to reflect economic fundamentals.
Tokura was speaking after the U.S. dollar fell below 140 yen.
He also welcomed Japan and the United States engaging in tariff talks earlier this month.
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Business Times
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- Business Times
Tariff tensions cloud global property outlook, but Apac a bright spot amid uncertainty
[SINGAPORE] Heightened uncertainty stemming from US tariff policies could weigh on the global real estate market, but experts said pockets of opportunity remain in the Asia-Pacific, especially in the living, logistics and healthcare sectors. Speaking to The Business Times, Chad Phillips, global head of real estate at asset manager Nuveen, noted that real estate values worldwide have corrected by around 16 per cent since 2022, following interest-rate hikes that year. This not only helps to de-risk the asset class, but it also puts the property investment market in a relatively strong position, even as tariff uncertainties weigh on the economy and real estate, said Phillips. Additionally, real estate supply has been kept largely in check, and occupancies remain high in most property types, said Vincent Chew, portfolio manager of PGIM Real Estate's Asia core strategy. The cost of capital is also stabilising and 'debt is plentiful across a diverse array of lenders', he added. Heightened uncertainty may therefore dampen the market's near-term outlook, but Chew believes that it will not derail real estate recovery and growth. 'We remain confident that 2025 is a good vintage to go into the next cycle of investing.' A NEWSLETTER FOR YOU Tuesday, 12 pm Property Insights Get an exclusive analysis of real estate and property news in Singapore and beyond. Sign Up Sign Up Apac rising stars According to BlackRock head of Apac real estate Hamish MacDonald, the Apac region as a whole offers a 'compelling investment landscape', especially sectors that are still in the early stages of institutionalisation. 'Many of these strategies are what we refer to as the 'Apac lag' – roughly a decade behind the growth trajectory seen in the US,' said MacDonald. He sees 'enduring demand' in living and select residential segments, last-mile logistics, as well as alternative sectors such as life sciences, self-storage and childcare centres. These are all underpinned by long-term demographic and structural trends, he added. For instance, Phillips pointed out that the significant presence of Gen Z youth and rising life expectancy in the region has resulted in stronger demand for niche asset classes, such as purpose-built student accommodation (PBSA), as well as senior living and healthcare facilities. Nuveen has therefore allocated significant capital to Australia's PBSA sector, driven by a growing middle class and expanding demographic of 15-to-19-year-olds. There is strong potential in the Japanese senior living sector as well, since the country's public insurance system covers 90 per cent of costs for residential care services, said Phillips. Logistics in the making Despite current trade tensions, Phillips also sees a bright future for the logistics markets in South Korea, Japan and Australia, fuelled by steady e-commerce growth and constrained new supply. But experts warn that the sector is not entirely immune to macroeconomic risks. Chew noted that sentiment towards logistics has become increasingly cautious due to the impact of tariffs on industries exporting to the US and potential disruptions to supply chains. That said, market dynamics can vary greatly. Demand in Australia, for example, should see relatively minimal impact since exports to the US are quite low, said Chew. Just last month, PGIM Real Estate and Cadence Property Group acquired the last-mile logistics and infrastructure asset St Mary's Intermodal Terminal in Sydney for A$145 million (S$120.6 million). Investor appetite has also grown for data centres, fuelled by the rise of artificial intelligence (AI) and growth in data consumption, among other factors. Markets such as Japan, South Korea, Australia and Singapore are well-positioned to benefit from the data centre boom, thanks to AI, cloud computing and 5G roll-out, said Josh Daitch, ESR group chief investment officer. 'Rising concerns around data sovereignty in Apac are accelerating demand for locally hosted data centres,' he added. He also noted that data centres, as a nascent asset class, are trading at a relative discount to traditional logistics real estate. 'This is reminiscent of the emergence… of the logistics sector, which used to trade at discounted cap rates before investors evolved their understanding of the long-term strategic value and stability of the asset class.' On the home front, Nuveen chief investment officer and Apac head for real estate Louise Kavanagh believes that the office sector, in particular, will be supported by low vacancies and limited new supply in the coming years. 'For all of the issues which (the sector) faces, demand far outstrips supply for the highest-quality assets in the best locations,' said Chew. 'Generally, occupiers want less space, but the space they do want needs to be high-specification.' Andrew Lee, BlackRock's head of investments for Singapore real estate, added that the living sectors – especially serviced apartments – may be less exposed to macro volatility. This is thanks in part to structural shortage in supply and strong demand from expatriates as well as various longer-term visitors, he said. Beyond traditional real estate, Phillips said the current environment is especially conducive to debt strategies. 'Increased bank regulation and capital rules, higher funding costs and the retail focus of commercial banks are working in favour of non-bank lenders gaining further traction in the (Australia and New Zealand) debt market,' he explained. 'Add to it the current economic uncertainty, higher cash rates, equity pricing volatility and capital shortages, and it provides an opportune time for commercial real estate debt investment.' Nuveen now sees stronger demand for its credit products and core products, with investors drawn to their stability and income components. This has brought a return of investor interest to Australia's necessity-based retail sector, with investment activity growing in the past years as yields adjusted to the 6 to 7 per cent range, said Phillips.
Business Times
an hour ago
- Business Times
Canadian G7 summit gears up around geopolitics
THE G7 was founded half a century ago to facilitate shared macroeconomic initiatives in response to 1970s challenges, including the then-energy shock, and the ensuing international recession. However, the body has evolved into much more of a powerful geopolitical actor in the decades since. This core fact will be crystal clear at the Canadian-hosted leadership summit from Sunday (Jun 15) to Tuesday in Kananaskis, Alberta. Top of Prime Minister Mark Carney's major priorities for the event is 'protecting our communities and the world' which he defines as 'strengthening peace and security, countering foreign interference and transnational crime'. To this end, key topics at the G7 include: preserving Ukraine's long-term prosperity and security; regional peace and stability in the Middle East; cooperation to increase security and resilience across the Asia-Pacific region; building stability and resilience in Haiti and Venezuela; supporting enduring peace in Sudan and the Democratic Republic of the Congo; and strengthening sanctions and countering hybrid warfare and sabotage. Big agenda It is a big agenda, and one that requires deep global partnerships. This is why Carney, US President Donald Trump, UK Prime Minister Keir Starmer, French President Emmanuel Macron, German Chancellor Friedrich Merz, Italian Prime Minister Giorgia Meloni, Japanese Prime Minister Shigeru Ishiba, European Commission President Ursula von der Leyen, and European Council President Antonio Costa will be joined by a host of other world leaders. These include Australian Prime Minister Anthony Albanese, Ukrainian President Volodymyr Zelenskyy, South African President Cyril Ramaphosa, Brazilian President Luiz Inacio Lula da Silva, Indonesian President Prabowo Subianto, and Indian Prime Minister Narendra Modi. Mexican President Claudia Sheinbaum may also attend. The strong geopolitical flavour of the Canadian G7 underlines the group's often under-appreciated importance as an international security lynchpin. The G7's involvement in this multitude of geopolitical dialogues is controversial given its original macroeconomic mandate. For instance, Beijing strongly objects to any G7 discussion of security issues in Asia. China and some other non-Western countries assert that the G7 lacks the legitimacy of the United Nations to engage in these international security issues, and/or is a historical artefact given the rise of new emerging market powers who are not members. However, it is not the case that the international security role of the G7 is new. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up An early example of the lynchpin function the body has played was when it helped coordinate Western strategy towards the then-Soviet Union. Moreover, following the September 2001 terrorist attacks, the then-G8 (including Russia) assumed a key role in the US-led 'campaign against terrorism'. To be sure, economic issues will also be on the agenda in Canada, but these will often be shaped by security issues and geoeconomic in nature. The second of Carney's major agenda priorities, for instance, is 'building energy security and accelerating the digital transition' including 'fortifying critical mineral supply chains'. This agenda has come to higher prominence since Moscow's military invasion of Ukraine in 2022 which exposed the huge reliance of the EU, in particular, on Russian energy. Since then, there has been an intensified emphasis by advanced industrialised economies, not only Europe, to diversify dependence for raw materials driving a recent series of major trade deals, including the EU-Mercosur agreement. In recent days, much media attention has focused on Carney's invitation of Modi, signalling a potentially significant shift in Canada-India relations. There had been a souring of ties since Trudeau accused New Delhi of carrying out the killing of a Sikh separatist leader, Hardeep Singh Nijjar, in British Columbia in 2023. Nijjar had called for creation of a separate state for Sikhs in India. Four Indian nationals have since been arrested in connection to his murder. However, an even bigger diplomatic challenge for Carney will be Trump and seeking to preserve alliance unity, especially given the disruptive impact of the US president's agenda on issues such as tariffs. Carney will be very well aware that, in 2018, when Canada last hosted the G7 summit, tensions between his predecessor as prime minister, Justin Trudeau, and Trump boiled over. So much so that the US president refused to sign the end-of-summit communique, and called for Russia's re-entry into the club. Trump criticised other G7 leaders, including Trudeau, as having 'acted so meek and mild' but 'very dishonest and weak' in an extraordinary outburst. Moreover, upon leaving the Canadian event, Trump went on to heap praise on North Korean dictator Kim Jong-Un who he met soon afterwards at the so-called Singapore summit. This show of positive feedback came despite little, if any, new concessions from Pyongyang at the time over its nuclear programme in talks with Trump in a process that collapsed a year later in Vietnam. The potential for problems may be just as high in coming days, if not higher, with Trump taunting Canada, for months now, with jibes of wanting it to become the 51st US state. So Carney, who only took office on Mar 9 after a career as a central banker, faces a potentially very challenging event to host successfully. Far from serving as an annual affirmation that the G7 club is largely aligned, as in the past, this year's diplomacy may see very significant splits. This could potentially be over the major flashpoints that include not only tariffs, but also Ukraine. As in 2018 at the last Canadian G7, it is even possible that Trump may again call for a return of Russian to the club, when it was the G8. Yet, most other G7 members are strongly opposed to this and there is little sign that Moscow, which joined the then-G8 summits from 1997 to 2014, will be invited back to the club while President Vladimir Putin remains in office. Seeking consensus This context makes it difficult for the Canadians to frame a 'Trump-proof' G7 agenda. However, despite disagreements over Ukraine, Ottawa may seek to highlight consensus at this week's foreign ministers meeting over foreign issues including stability in the Asia-Pacific region, the crises in Haiti and Venezuela, and peace and security opportunities and challenges in Africa. Even this agenda carries risks, however, given the Trump team's berating of the failure of numerous key states to spend more on defence, a theme that is likely to figure again later this month at the North Atlantic Treaty Organization leadership summit in the Netherlands. This list of states includes Italy, despite the close relationship between Meloni and Trump. Taken together, this year's G7 could therefore see big diplomatic fireworks again. While some of the club's disagreements pre-date Trump, his presidency has widened these schisms in a way that poses the biggest threat to Western unity in living memory. The writer is an associate at LSE IDEAS at the London School of Economics
Business Times
15 hours ago
- Business Times
Chinese carmakers vow to make timely supplier payments as backlash to price war grows
[SHANGHAI] Major Chinese car manufacturers have pledged to make payments to suppliers within 60 days, responding to a recent outcry from steelmakers over long payment times as well as regulatory pressure as the backlash to a punishing price war grows. Chinese authorities issued new rules in March that require big companies to settle most payments with suppliers within 60 days, which became effective June 1. However, suppliers had been worried that there were loopholes for the rules to be circumvented. Automakers issuing pledges on Wednesday (Jun 11) included BYD, Chery and state-owned automakers BAIC and SAIC as well as smaller players like Xpeng and Xiaomi. Chery in its statement, for example, said it would strive to speed up the turnover of capital in the supply chain. But like other automakers, it did not mention how much of an improvement this would represent. The pledges come after China's industry ministry summoned automakers to a meeting last week where they were told to put an end to the price war and excessive competition – factors which have put tremendous pressure on the industry's supply chain. Even so, the China Iron and Steel Association felt compelled to publish a statement on Tuesday that said steel companies were struggling with little profit margin and mounting liquidity pressure as some automakers have been asking for price cuts of more than 10 per cent since last year and delaying payments by months. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up The association also asked Chinese automakers to learn from the steady and healthy partnerships that Japanese automakers have with their suppliers, which leave a certain amount of profit for suppliers and ensure product quality and innovation. Tension has been high in China's auto industry as the price war which began in early 2023 has shown little sign of abating. In May, Great Wall Motor chairman Wei Jianjun worried openly about the deepening price war. He even said that the industry had its own version of property developer Evergrande which was liquidated last year after a major debt crisis, although he did not mention a specific auto company. This month, Chinese auto dealers also complained, calling on automakers to stop offloading too many cars on dealerships, saying the intense price war was damaging their cash flow, driving down their profitability and forcing some to shut. Yang Hongze, chairman of Autolink, a supplier of intelligent vehicle technologies, said he welcomed the automakers' pledges. 'It is a pleasant but difficult change for the industry to move towards a healthy development and grow together,' he said. But he added he would like more clarity from automakers about whether payments would be made in cash or commercial paper, and what would be considered the start date for the 60-day period to pay. In their pledges, BAIC and SAIC vowed not to pay suppliers with commercial paper. It was not immediately clear from their statements how often they had used commercial paper as a form of payment. The companies did not immediately respond to Reuters requests for comment. Commercial paper has been commonly used in the property sector, popular among developers because it is not categorised as interest-bearing debt. It promises suppliers a payment on a future fixed date, usually within one year, though the suppliers sometimes sell the paper before maturity at a discount in the secondary market. REUTERS
