Japan doubles down on industrial policy

Insight: Two interesting announcements over the past week suggest that the new government in Tokyo plans to be more interventionist in the private sector, as well as in foreign and fiscal policy. First, new guidelines from the anti-trust watchdog open the way to mergers in strategic sectors facing fierce foreign competition, even if there are only a few domestic players. Shipbuilding is top of the list, but parts of the automobile value chain could also benefit. Second, the government is designating six new “national strategic technologies” that will get public research funds and tax breaks to encourage private sector investment. The list includes AI, robotics, quantum computing, semiconductors, biotech and nuclear fusion. 

Impact: Japan is no slouch when it comes to industrial policy. After all, its companies, large and small, are used to the Ministry of Economics, Trade & Industry (METI), the powerful industry ministry directing (sorry, coordinating) their strategic aims. Under new premier Sanae Takaichi, however, an outright effort to create national champions is now apparently underway. Having seen many of its former world beaters in consumer electronics lose ground to South Korean and Chinese competition, Japan is determined to remain (or once again become) a player -- both in future industries, like AI, and sunset sectors that may suddenly have a future again, such as green ships. Of course, the state tends to pick losers as often as it does winners. But given the explicit government support for industry across Asia and, especially, in China, Japan has little choice but to play the same game.

Singapore unexpectedly raised its 2025 GDP forecast to 4% after exports jumped 25% and AI-linked electronics output surged 68%. A stronger-than-expected third quarter reflects how front-loading, trade diversion and a slower US tariff rollout have funnelled extra flows through the city-state — underscoring how resilient, and how AI-driven, Southeast Asia’s trade corridors have become. 

Insight: Southeast Asia’s IPO markets are staging quite a comeback. In the first 10.5 months of this year, the region saw 102 IPOs raising US$5.6 billion — a 53% jump in proceeds despite fewer listings than last year. The story isn’t volume but scale: average deal sizes have more than doubled to US$55 million, powered by “blockbuster” listings across real estate, financial services and consumer sectors. Singapore Exchange and Ho Chi Minh Stock Exchange led in value, with four deals surpassing US$500 million and 11 IPOs debuting with market caps above US$1 billion. Bursa Malaysia and Indonesia Stock Exchange dominated by volume, with Malaysia’s bourse alone accounting for 48 listings, with many PE-backed companies choosing to go public.

Impact: This is more than just general market optimism; it reveals how capital in Southeast Asia is reorganizing around scale, resilience and geopolitical hedging. Larger, PE-backed IPOs are clustering in Singapore and Vietnam as investors seek scale, stability and listing venues less exposed to domestic volatility or tariff risk. Cross-border flows are increasingly steering toward hubs that sit at the intersection of liquidity and geopolitical neutrality, while smaller markets like Thailand feel the drag of political uncertainty and weaker pipelines. In a year defined by rewiring supply chains and US-China tensions, Southeast Asia’s IPO revival is really a story of geopolitical arbitrage where capital is concentrating in markets that offer the safest home.

Insight: China’s dinner table is undergoing changes, with beef consumption declining for the first time in a decade and pork plateauing despite rock-bottom prices. Instead, Chinese consumers are trading down to cheaper proteins -- particularly chicken. The shift is driven by stagnant spending, health-conscious younger urbanites choosing food delivery over banquet halls, and an overall cultural pivot from "eating well" to "eating sensibly".  

Impact: This dietary shift isn’t just about pinching pennies and it's reshaping China’s cultural and environmental landscape. The decline of banqueting culture, embodied by shrinking demand for Moutai liquor, signals a generational rupture: younger Chinese now prize convenience and health over face and feasting. Call it accidental environmentalism, but China consumers’ swap of carbon-intensive beef for low-emission chicken is helping to lighten the planet’s load.

If you have ignored or not had the time to catch up on the diplomatic row over Taiwan between China and Japan, here is an excellent summary that details the background, the tit-for-tat diplomatic and economic measures, and assesses the long-term consequences. While China has more economic leverage – rare earths, again – its bullying of Japan is only going to drive the latter (back) into the arms of the US. So, both sides stand to lose.  

Read the full analysis here