China’s Loong Shot

Insight: This year’s Chinese New Year holidays, ushering in the Year of the Dragon (or Loong as it is known locally), boasted a welcome rebound in domestic and outbound travel. More than 61 million rail trips were made in the first six days, the highest in the last five years. Visa-free travel policies also made Southeast Asian countries like Singapore and Thailand popular travel destinations, while platforms like Trip.com and Meituan saw growth in sales. All pointing to increased spending on hospitality, consumer goods, and food and beverage. Is this a sign that China’s sluggish economy is turning a corner in 2024?

Impact: Stifled consumer spending has been a major concern for the Chinese government, and the Chinese New Year Holidays are often seen as an important benchmark to gauge the public’s spending appetite. However, although travel saw an encouraging uptick, per-trip spending did not exceed pre-Covid levels and big-ticket spending on housing and automobiles remains low. Sales of new homes in 25 representative Chinese cities fell by 27% year-on-year as consumers remain cautious about big investments. The People's Bank of China this week announced an unprecedented 0.25% reduction in the benchmark five-year loan prime rate to support the ailing sector. However, the CSI 300 Index has only shown modest post-holiday gains, suggesting investor confidence has not yet returned. All eyes will be on March’s Two Sessions government meeting to see what policy levers the government may pull next. 

21 million

The estimated spend in USD by online shopping platform Temu on three 30 second ads during the Super Bowl on February 12. Temu, which is operated by the Chinese e-commerce company PDD Holdings, is rapidly gaining market share in the U.S. and Europe even as its business practices are increasingly being called into question by regulators.

Insight: Japan’s space agency JAXA and Mitsubishi Heavy Industries (MHI) successfully launched their jointly developed H3 rocket last weekend. The rocket’s predecessor, the H2A, boasts a whopping 98% launch success rate in an age where rockets built by private companies routinely explode spectacularly. Plagued by lengthy development issues, the future of the H3 looked shaky for a time, but this successful launch has carried Japan’s space business hopes into the stratosphere. The global space business is projected to grow to USD 1trillion by 2040.

Impact: The H2A’s success rate was also coming at great (literal) cost, and one of MHI and JAXA’s primary goals with the H3 is to reduce development costs by half while maintaining the H2A’s stellar reliability. Japan hopes with the H3 it can start going toe-to-toe with dominant U.S. players like SpaceX in this lucrative sector. However, the H3 still needs to prove it can perform critical functions, such as carrying satellites into orbit – a feature the recent launch did not test. MHI also estimate that achieving cost competitiveness could take another 10 to 15 launches.

Insight: The ‘Jokowi’ effect has won the current Defence Minister Prabowo Subianto the Indonesian presidency. Implicit backing by outgoing but still wildly popular President Joko ‘Jokowi’ Widodo, and the inclusion of Jokowi’s son as his vice-presidential running mate, gained Subianto a projected 58% of the vote in Southeast Asia’s largest economy – enough to avoid a run-off with either of his two rivals.

Impact: In return, the new president will continue with his predecessor’s policies and protect his legacy. For the rest of the world, this means first and foremost continued development of the country’s nickel industry and nickel exports, at a time when excess supplies and softer demand for EVs have tanked the nickel price. Meanwhile, enhanced social spending and civil service pay rises should buoy domestic demand. On both fronts, that makes Indonesia an interesting prospect for both FDI and portfolio investors.

The Intercept dives into the issue of trusted media creating native ads for the fossil fuel industry.

Insight: In December, investigative news organization The Intercept released analysis that found seven of the world’s largest and most trusted news outlets received substantial revenue from the oil and gas industries to run advertorials, podcasts and even sponsored events carrying messages that often directly conflicted with their own reporting on climate matters. The analysis found that Bloomberg, The Economist, the Financial Times, the New York Times, Politico, Reuters, and the Washington Post all used their internal brand studios to create advertising content for oil and gas companies between 2020 and 2022.

Impact: Paid advertising is commonly used by companies as part of their wider media strategy. However, The Intercept cites a 2018 Boston University study finding that just one in 10 people recognized so-called ‘native advertising’ as advertising rather than actual reporting. Critics say this calls the ethics of native advertising into question, even as the figure appears to also confirm its effectiveness. Native advertising spend continues to grow year on year across industries, but The Intercept’s report shows PR and marketing professionals in Asia and beyond will need to be mindful of increased scrutiny around key ESG issues and a possible backlash when making media recommendations to clients.

Read more in The Intercept