This past Sunday saw an interesting dissection of Asia’s financial market by Bloomberg’s editors, highlighting everything from ugly earnings across several industries to a promising crypto spring.
One of the most worrying aspects of this week’s briefing was the spate of bad news regarding earnings reports across a variety of sectors. Over in Japan, Sony Corp. saw its shares take a dive as it lowered its expected profit for the fiscal year due to struggling sales of its Xperia smartphones. Meanwhile, in South Korea, investors were far from pleased with LG Chem Ltd., which plummeted nearly 6% following a slump in earnings that was due in part to a decline in demand for electric vehicle batteries. It seems that manufacturers are feeling the impact of the ongoing trade war between the US and China, as the two nations continue to impose tariffs on each other’s goods. With the uncertainty surrounding the current economic climate, investors are becoming increasingly cautious when it comes to putting money into specific industries.
One positive note in the briefing came in the form of the current success of cryptocurrencies. Since the beginning of this year, Bitcoin has risen by more than 50%. This resurgence has largely been caused by a combination of investor excitement and increasing adoption by mainstream platforms. Major firms like Fidelity have been adding Bitcoin to their offerings, and Facebook has been hard at work creating its own cryptocurrency, which is set to launch in 2020. As the demand and infrastructure for cryptocurrencies grows, so does the price. Even in countries like China, where the government has banned cryptocurrency exchanges and initial coin offerings, investors are finding ways to get in on the action.
However, it’s worth noting that there are risks associated with cryptocurrencies. For one, the market is extremely volatile – the price of Bitcoin has already gone through several booms and busts over the years. There are also concerns over regulation, with many governments around the world still uncertain about how to handle these digital assets. Some cryptocurrencies, like Facebook’s Libra, have come under fire from politicians who worry about their potential to act as a channel for money laundering.
Another trend worth keeping an eye on is the increasing amount of investment flowing into artificial intelligence (AI). China, in particular, has been putting a lot of resources into developing its AI industry, with major players like Baidu and Alibaba creating research divisions specifically focused on the technology. Japan’s SoftBank has also been investing in AI, as seen with its purchase of robotics firm Boston Dynamics. Governments in the region are also prioritizing AI, with China’s State Council releasing a directive earlier this year that laid out plans to make the country a leader in the sector by 2030.
Finally, the briefing highlighted the ongoing protests in Hong Kong and their potential impact on the city’s financial sector. Though the Hong Kong stock market remains largely unaffected at the moment, there are concerns that prolonged unrest could lead to companies relocating elsewhere, damaging the city’s economy. Hong Kong has long been a hub for international businesses, and any loss of confidence in its stability could cause long-term damage.
Overall, the Sunday briefing painted a mixed picture of the Asian financial market. Though there are concerns over declining earnings in certain industries, there are also exciting developments in the world of cryptocurrency and AI. It’s worth keeping an eye on these trends to see how they develop over the coming months, and how they may affect global markets in the long term.