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Fitch Sees AI, Private Credit, Sovereign Risk as Main Themes for Asian Investors

Institutional investors across Asia consider AI disruption, private credit growth, and sovereign risk as major credit risk drivers, Fitch Ratings said in a recent release.Overspending in AI and digital infrastructure has become a main theme for investors, as it introduces completion risk, high capital expenditure, and pricing pressure, Fitch said.While AI increases efficiency gains, it also carries risks from labor displacement and declining tax bases, mainly in developed markets, the rating agency said.For private credit, heightened asset competition and opacity risks due to the use of layered finance structures could muddy leverage and creditor positioning, Fitch said.Investors call for stronger oversight in private credit, especially in terms of rating criteria and market practices, according to Fitch.The rating agency also sees lingering macroeconomic volatility due to Gulf tensions and supply chain disruption, with a proposed peace deal moving focus to the conflict's residual and indirect effects.

ASX 200Hang SengNikkei 225Shanghai Composite^SZSE

AI Demand, Hormuz Reopening Stabilize Credit Conditions for Asia-Pacific Sectors, S&P Says

S&P Global Ratings expects a stable credit environment for Asia-Pacific sectors amid solid AI demand and the reopening of the Strait of Hormuz, according to a Wednesday release.A drop in headline oil prices provides some relief to the region, which is a net energy importer, and offers upside growth potential, S&P's Asia-Pacific head of credit research, Eunice Tan, said.The region's issuers showed a net rating outlook bias of -2% as of May, improving from -3% in March, S&P said.AI demand anchors the region's tech and upstream electronics producers, with resulting growth offering a buffer against energy shocks, the rating agency said.However, second-order shocks could lead to a mixed recovery, with a slow turnaround in non-energy flows adding pressure on input costs and protracting disruptions for petrochemicals, agriculture, transportation, and manufacturing, Tan said.A notable decline in AI-related optimism or heightened geopolitical tensions could also quickly hit financing conditions, S&P said.

Nikkei 225TYO:290ATYO:9434

Japanese Shares Remain Elevated on Strong Momentum by AI Shares, Local Econ Data

Japanese equities continued their positive run for the third session in a row on Wednesday, closing with gains lifted by AI-related shares and favorable domestic economic data.The Nikkei 225 closed up 0.59%, or 412.64 points, to 70,474.96.Consumer confidence in Japan improved marginally in June, with the index measuring sentiment rising to 33.8 from 33.6 in the previous month, beating the 34.1 consensus forecast tracked by Investing.com, data released by the Cabinet Office on Wednesday showed.Also, operating conditions across Japan's manufacturing sector improved in June, with the final au Jibun Bank Japan Manufacturing Purchasing Managers' Index (PMI), compiled by S&P Global, coming in at 54.8, compared with the 54.5 recorded in the previous month, according to data released on Wednesday.On the corporate side, Japan has selected a consortium backed by SoftBank Corp.(TYO:9434) to spearhead a five-year national project developing a homegrown multimodal AI platform, with total public investment expected to reach 1 trillion yen.Also, Synspective (TYO:290A) has secured a subsidy for the Global South Future-Oriented Co-Creation program for small-scale demonstration and feasibility study projects in Japan, according to a Wednesday filing on the Tokyo Stock Exchange.

Japan's Consumer Confidence Improves Marginally in June

Consumer confidence in Japan improved marginally in June, with the index measuring sentiment rising to 33.8 from 33.6 in the previous month, according to data from the Cabinet Office on Wednesday.The latest reading beat the 34.1 consensus forecast tracked by Investing.comThe overall livelihood index climbed month on month to 32 from 31.2, while the income growth index remained steady at 40.3.The employment index increased to 38.4 from 38.3, while willingness to buy durable goods rose to 24.6 from 24.4.Looking ahead, 93.3% of respondents expect prices to go up, down from the previous 93.5%, while 2.2% anticipate a decline, up from 1.9% in the prior survey.Those who expect prices to stay the same accounted for 2.5% of the respondents, down from 2.6% previously.

Market Chatter: Mercosur Bloc Launches Trade Deal Talks with Japan

Mercosur, a South American trade bloc, is in talks with Japan on an economic partnership agreement that would expand market access for agricultural and non-agricultural goods, Reuters reported Tuesday.The talks were announced at the Mercosur leaders' summit in Paraguay, following two rounds of meetings with Japanese officials in January and March, and the proposed deal is expected to create a free trade area covering 400 million people with a combined gross domestic product of $7 trillion, the report said.The bloc, which includes Argentina, Brazil, Paraguay, and Uruguay, implemented a trade deal with the European Union on May 1 and plans to launch negotiations ⁠with China to join the bloc.(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)

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Fitch Says Asia Investors Eye AI, Private Credit, Sovereign Risks

Fitch Ratings said institutional investors across Asia are increasingly focused on risks related to artificial intelligence, private credit and sovereign credit, according to a Tuesday press release.The ratings agency said investors are closely monitoring rising spending on AI infrastructure, execution risks and pricing pressure.It warned that rapid adoption of artificial intelligence could displace workers and erode tax bases, particularly in developed markets.Fitch said investors also remain concerned about intensifying competition and limited transparency in private credit, particularly in the U.S. middle-market lending sector.However, it does not expect the asset class to pose a systemic risk on its own.On sovereigns, Fitch said investors are assessing Indonesia's policy credibility, fiscal transparency and the role of its new sovereign wealth fund, Danantara, while continuing to view Japan and South Korea as relatively resilient despite longer-term fiscal and structural challenges.The agency added that geopolitical tensions in the Gulf continue to pose downside risks, although the direct credit impact has so far been modest.

US Markets36d ago

Japan Taps SoftBank-Backed Noetra for AI Push Worth Up to 1 Trillion Yen

Japan's government has selected a SoftBank Corp.-backed (TYO:9434) consortium to lead a national effort to develop a homegrown artificial intelligence model, with total government investment poised to reach 1 trillion yen over five years.The Ministry of Economy, Trade and Industry (METI) and the New Energy and Industrial Technology Development Organization (NEDO) named Noetra Inc. and the National Institute of Advanced Industrial Science and Technology (AIST) as the implementers of its "Multimodal Platform Model Development Project for AI Robots and Physical AI," according to a press release on Tuesday.It follows a review of 15 proposals submitted during a public tender that ran from March 24 to April 22.The project spans fiscal years 2026 through 2030, with contracts initially signed for the first two years and continuation subject to an annual stage-gate review, NEDO said.Under the arrangement, Noetra will develop and supply "an internationally competitive" multimodal platform model while taking into account the needs of Japanese model development and utilization.AIST will work with domestic and international research institutions to carry out advanced technological development and contribute to the development of what METI described as "a future-oriented, competitive platform model."The AI model is expected to handle a range of data, including language, audio, images, videos, sensor data, and more.The government has already earmarked 387.3 billion yen for the program in its fiscal 2026 budget, funded through GX Economy Transition Bonds, according to METI's budget outline published in April.Noetra is a joint project led by SoftBank Corp., the telecommunications and internet subsidiary of SoftBank Group (TYO:9984). It counts NEC Corp. (TYO:6701), Honda Motor (TYO:7267), Sony Group (TYO:6758), Mitsubishi UFJ Financial Group (TYO:8306), Sumitomo Mitsui Financial (TYO:8316), Mizuho Financial Group (TYO:8411), Nippon Steel (TYO:5401) and Kobe Steel (TYO:5406) as partners.Back in April, METI disclosed its ambition for Japan to capture 30%, or 20 trillion yen, of the global AI robotics market by 2040.The announcement comes amid a broader rally in Japanese AI-linked stocks that pushed the Nikkei 225 to its sharpest quarterly increase on record as of Tuesday. SoftBank Group recently overtook Toyota Motor (TYO:7203) as Japan's most valuable listed company.The Japanese initiative follows a similar push from neighboring South Korea, which also unveiled plans to build semiconductor facilities and AI data centers on Monday, enlisting chipmaker SK Hynix (KRX:000660), Samsung Electronics (KRX:005930) and internet firm Naver (KRX:035420).

Nikkei 225KRX:000660KRX:005930KRX:035420TYO:5401TYO:5406TYO:6701TYO:6758TYO:7203TYO:7267TYO:8306TYO:8316TYO:8411TYO:9434TYO:9984

US Markets36d ago

Japan's June PMI Caps Best Quarterly Performance Since First Quarter of 2014

Japan's manufacturing activity rose for the sixth straight month in June as customer demand and sales grew at their strongest pace in nearly four and a half years.The headline S&P Global Japan Manufacturing Purchasing Managers' Index (PMI) climbed to 54.8 from 54.5 in May. This marks the second-fastest pace of expansion since January 2022, according to a press release on Wednesday.On a quarterly basis, the data revealed that conditions during the second quarter of the year soared to their highest levels since the first quarter of 2014.The broad improvement in the manufacturing output was attributed to new order growth and sales that booked their strongest since 2022.Annabel Fiddes, S&P Global Market Intelligence's economics associate director, noted that strong demand for artificial intelligence-related products contributed heavily to the sruge in total new orders.However, supplier delivery times slowed down substantially during the month. Ongoing tensions in the Middle East have triggered shipping delays, resulting in widespread material shortages.Firms continued to draw down existing inventories to meet demand as stocks of finished goods fell for the 22nd consecutive month, S&P Global said.Selling prices were raised as a direct result of profit margin pressures, while manufacturers expanded their payrolls to accommodate larger order backlogs. This brought sector employment growth to its strongest pace since April 2018, matching a peak last seen in January 2022.The manufacturing momentum aligns with recent official labor data. The Ministry of Internal Affairs and Communications reported that Japan's unemployment rate held flat at 2.5%. While the number of jobless individuals ticked up by 20,000 to 1.85 million year over year, the broader labor market remained strong, with the total number of employed persons expanding by 520,000 to reach 68.9 million.Meanwhile, manufacturers remain confident that production output will continue to rise over the coming year, buoyed by the structural demand for AI chips and infrastructure investments.However, the central bank warned that the country's inflation could consistently exceed its 2% target as oil and energy prices rise. Bank of Japan Governor Kazuo Ueda recently indicated that the board is leaning toward continued interest rate hikes to counter these inflationary pressures, as Middle East transit security remains volatile.

Japanese Shares Open Higher for Third Day

Japanese equities opened higher for a third straight session on Wednesday, buoyed by a rally in semiconductor stocks and U.S. economic data showing stable job openings and improved consumer confidence.The Nikkei 225 gained 712 points or 1% to open at 70,774.28.Brent crude steadied just above $73 a barrel, as markets weighed expectations that a U.S.-Iran ceasefire would hold.Elsewhere, Qatar confirmed the arrival of U.S. envoys in Doha for peace talks aimed at easing tensions over the strategic Strait of Hormuz, according to various media reports.

Japan's Factory Activity Growth Accelerates in June

Operating conditions across Japan's manufacturing sector improved in June, with the final au Jibun Bank Japan Manufacturing Purchasing Managers' Index (PMI), compiled by S&P Global, coming in at 54.8, according to data released on Wednesday.The finalized reading, which acts as a principal indicator of overall factory conditions, missed the flash estimate of 54.9 and compared with the 54.5 recorded in the previous month. A reading above 50 indicates an improvement in sector performance, while a figure below signals a deterioration.New order growth hit its highest level since January 2022 as manufacturers continued to build up their inventories amid the Middle East conflict.Input cost inflation among manufacturers was unchanged from May's 44-month record, and was among the quickest on record since the survey began in 2001.

Japan's All Big Industry Capex Plans Rise 11.5% in Q2, Tankan Survey Shows

Capital expenditure plans among Japan's large enterprises across all industries expanded 11.5% for the current fiscal year, according to the Bank of Japan's (BOJ) second-quarter Tankan survey released on Wednesday.The reading far exceeded the consensus forecast of a 1% increase tracked by Trading Economics, and compared with a 3.3% rise projected in the previous quarter's survey.The survey reflects the fixed investment appetite of the country's largest companies, encompassing both the manufacturing and non-manufacturing sectors.Capital spending plans among large manufacturers rose 10.1%, up from 2.7% in the previous quarter, while capex plans among non-manufacturers increased 12.3%, versus 3.6% in the first quarter.

Japan's Large Manufacturers' Sentiment Improves in Q2, Tankan Survey Shows

Business confidence among Japan's largest manufacturing companies improved in the second quarter, with the headline Large Manufacturers Index coming in at 22 points, according to the Bank of Japan's quarterly Tankan survey released on Wednesday.The reading, which measures how confident large factory business leaders feel about the economy in the coming quarter, beat the consensus forecast of 16 tracked by Investing.com, and compared with the 17 points recorded in the first quarter.

Japan's Large Non-Manufacturers' Sentiment Improves in Q2, Tankan Survey Shows

Business confidence among Japan's largest non-manufacturing companies improved in the second quarter, with the headline Large Non-Manufacturers Index coming in at 37 points, according to the Bank of Japan's (BOJ) quarterly Tankan survey released on Wednesday.The reading, which measures how confident large non-manufacturing business leaders feel about the economy in the coming quarter, beat the consensus forecast of 36 tracked by Investing.com, and compared with the 36 points recorded in the first quarter.

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Asia Markets37d ago

Tech Rebound Lifts Asian Stock Markets

Asian stock markets largely gained on Tuesday, following strong overnight rallies on Wall Street and a rebounding tech sector.Shanghai and Tokyo finished in the green, although Hong Kong fell back. Other regional exchanges were similarly mixed.In Japan, the Nikkei 225 opened higher on New York cues and held ground, finishing up 0.9% as traders again waded back into AI- and semiconductor-related shares.The benchmark Nikkei 225 rose 594.21 to 70,062.32, although losing issues outnumbered gainers 121 to 103.Leading the upside was advanced materials maker Taiyo Yuden, up 8.3%, while IT conglomerate NEC declined 3%.In economic news, Japan's industrial production in May rose 0.5% from April, but was down 1.7% on the year, reported the Ministry of Economy, Trade and Industry.In Hong Kong, the Hang Seng Index opened lower and drifted, closing down 0.6% despite a firming tech sector.The broad gauge Hang Seng fell 145.66 to 22,881,02 as losing issues outnumbered gainers 78 to 15. The Hang Seng TECH Index gained 1.8% on the day, but the Mainland Properties Index fell 1%.Leading the upside was computer maker Lenovo, gaining 8.2%, while Nongfu Spring declined 8.4%.On the mainland, the Shanghai Composite rose 0.5% to 4094.40.In economic news, mainland China's manufacturing purchasing managers index logged at 50.3 in June from 50.0 in May, and striking modestly above the mark that separates growth from contraction, reported the National Bureau of Statistics.The nation's non-manufacturing PMI posted at 50.2 in June, up from 50.1 in May.On the other regional exchanges, the South Korean KOSPI rose 1%; the Taiwan TWSE gained 2.5%; the Australian ASX 200 declined 0.5%; the Singapore Straits Times Index fell 0.7%, and the Thai Set advanced 0.9%. In late trading in Mumbai, the Sensex was down 0.3%The MSCI All Country Asia Pacific Index rose 0.7% on the day.

Asia37d ago

Update: Seven Japanese Firms Secure Certification for India-Sourced Low-Carbon Ammonia Plan

A consortium of seven Japanese companies, led by IHI (TYO:7013), has received government certification for its plan to utilize low-carbon ammonia produced in India, under a price-gap support scheme tied to Japan's Hydrogen Society Promotion Act.IHI will offtake ammonia from a project with ACME Group in Odisha and supply it to the partners for use in power generation and industrial feedstock, aiming to cut environmental impact, according to a statement on Tuesday.IHI will also develop domestic infrastructure and use the fuel at its own facilities, while planning to expand the supply chain safely across sectors in Japan and abroad.The other Japanese companies are Kobe Steel (TYO:5406), Sumitomo Chemical (TYO:4005), Nippon Beet Sugar Manufacturing (TYO:2108), Hokkaido Electric Power (TYO:9509), Mitsubishi Gas Chemical (TYO:4182), and UBE (TYO:4208).Earlier, Nikkei Asia reported that Tokyo and New Delhi are set to finalize support for a massive green ammonia venture between IHI and ACME during Prime Minister Modi's meeting with his Japanese counterpart later this week.

Nikkei 225TYO:2108TYO:4005TYO:4182TYO:4208TYO:5406TYO:7013TYO:9509

Asia37d ago

Japan's Nikkei Clocks Gains Tracking Positive Movement on Wall Street

Japanese shares closed with gains on Tuesday, tracking the positive momentum on Wall Street and taking cues from the yen weakening to its lowest level against the dollar in nearly four decades.The Nikkei 225 closed up 0.86%, or 594.21 points, to 70,062.32.The US stocks rose on Monday, lifted by the technology stocks, with the S&P 500 breaking a five-day losing streak.The yen slipped to its lowest point since 1986 at 161.98 per dollar, surpassing its 2024 intervention threshold and heightening market vigilance for possible official action, Bloomberg News reported Tuesday.Japan's Finance Minister Satsuki Katayama has said authorities are ready to respond appropriately at any time to the falling yen, as per news reports.Back home, Japan's industrial production fell 1.7% year over year in May, missing expectations of a 2.2% expansion, according to preliminary data from the Ministry of Economy, Trade and Industry (METI) released on Tuesday.Also, new housing construction starts in Japan rose 33.9% year over year in May to 57,877 units, beating the consensus forecast of a 31.8% increase, according to official data Tuesday.On the corporate side, Honda Motor (TYO:7267) is exploring raising over 400 billion yen through a euro-denominated bond sale to fund compensation payments to parts suppliers following its revised electric vehicle strategy, Nikkei Asia reported Tuesday.Also, Toyota (TYO:7203) posted its fourth consecutive decline in worldwide monthly sales for May, with group-wide volume falling 7.4% year over year to 885,207 vehicles, according to a statement on Tuesday.

Nikkei 225TYO:7203TYO:7267

International37d ago

Japan's Construction Orders Fall at Softer Rate in May

New orders for construction work received by Japan's major contractors fell 6.7% year over year in May, according to data from the Ministry of Land, Infrastructure, Transport and Tourism (MLIT) on Tuesday.The reading tracks total order values across 50 representative construction firms.The pace of drop in May softened from the 32.3% contraction recorded in April. However, it missed Trading Economics' forecast for an 8% rebound.