Business

China Being Left Behind by Japan in the Race for Investor Capital

China is being left behind in the race for investor capital, with China’s prospects hampered by long-standing concerns about economic development and geopolitical tensions with western nations.

According to Bloomberg, a Goldman Sachs Group Inc. research citing statistics for the first six months of the year, foreign purchase of Japanese shares has surpassed that of Chinese rivals for the first time since 2017. Despite a rapid rally, long-only managers continued to sell stocks in China and Hong Kong on a net basis in July, while purchasing shares in Japan, Morgan Stanley strategists noted in a report last week.

The tide is turning in Japan’s favour, as global funds pour into a market that they previously avoided owing to fears about earnings growth. Even after the Bank of Japan changed its supportive posture, investors are looking for alternatives to Chinese equities due to a lack of confidence that Beijing’s pledges to rescue a faltering economy would bear fruit.

“The BOJ meeting and the Politburo meeting were two major policy events in Asia in the last week of July, neither of which changed our view of Japan equities outperforming China,” said Frank Benzimra, head of Asia equity strategy at Societe Generale SA. “The reason is that we are seeing more signs that Japan’s monetary policy normalisation will be extremely gradual, which means the yen will not rapidly re-appreciate.”

Allianz Oriental Income, a US$1 billion Asia-focused fund, has been increasing its holdings of Japanese shares at the expense of China as part of a regional reallocation. According to a factsheet, Japan’s weighting in the fund was 40% at the end of June, five times its China exposure.

In the last year, the fund has returned 14%, outperforming 96% of its rivals. As of the end of 2022, their weightings for Japan and China were 25% and 16%, respectively.

Even if the Bank of Japan abandons its yield-curve management, the yen will rise, as “the stock market will fare better than people can imagine,” according to Stuart Winchester, senior portfolio manager for the fund.

Worlds Third Largest Economy

An MSCI Inc. index of Japanese companies has risen 21% in 2023, owing to the country’s corporate governance improvements and Warren Buffett’s endorsement.

The market, which is second only to China in terms of size in the Asia Pacific region, has proven to be a lucrative alternative for global investors at a time when China’s economy is showing signs of a Japan-style stagnation. The MSCI China Index is up 0.5% year to date.

According to Morgan Stanley and Goldman Sachs Group Inc. strategists, the BOJ’s recent policy tweak removes an overhang, paving the path for stocks to advance higher. According to official data, global funds purchased 196 billion yen ($1.38 billion) in Japanese stocks in the week ending July 28. Since the end of March, they have been purchasers in all but one week.

“Japan is the world’s third-largest economy, so having some exposure in an investment portfolio has a lot of advantages,” said Oliver Lee, client portfolio manager at Eastspring Investments. Because Japanese enterprises have expertise in manufacturing and automation, the country is “well placed to benefit from some of the geopolitical tension in the region through the diversification of supply chains,” he says.

In contrast, there are concerns that the current surge in Chinese shares will be sustained, despite the government’s uncommon vow to revitalise the capital market. Morgan Stanley downgraded the country’s shares to equal-weight last week, advising investors to take profits after the recent surge. Japan is its top global equity selection.

Rise in Japanese Sticks

To be sure, some are urging caution following the rapid rise in Japanese stocks, citing concerns about the yen’s prospects and the market’s sensitivity to the global risk-off environment observed following the rating of the US by Fitch Ratings. The MSCI Japan index has fallen 2.7% since reaching a 33-year high on August 1. The index gained for the eighth month in a row in July.

Valuations are also starting to look less appealing, with Japanese stocks trading at close to 15 times one-year future earnings, compared to 10 times for their Chinese counterparts.

Nonetheless, given investors’ rebalancing of portfolios in favour of Japan, optimism in the country’s equities is expected to persist for the time being.

“We have been max weight in Japan for some time now and are happy with our current weighting,” said Joshua Crabb, head of Asia Pacific equities at Robeco Hong Kong Ltd. His portfolio has more than 40% exposure to Japan and 16% exposure to China.

Taiwanese investors are similarly enthusiastic about Japanese stocks. Yuanta Securities Investment Trust Co., the island’s largest fund company by assets managed, capitalised on the opportunity in July by launching Taiwan’s largest Japan stock fund.

“Japan’s outperformance would continue at a moderate pace,” said Rie Nishihara, JPMorgan Chase & Co.’s chief Japan equities strategist. “We’ll see how the market reacts further, but it appears to have digested the yield curve control revision as evidence of ending deflation and a smooth transition.”

Business

PepsiCo Reduces Revenue Projections As North American Snacks And Key International Markets Underperform.

(VOR News) – In the third quarter of this year, Pepsi’s net income was $2.93 billion, which is equivalent to $2.13 per share. This was attributed to the company.

This is in stark contrast to net income of $3.09 billion, which is equivalent to $2.24 per share, during the same period in the previous year. The company’s earnings per share were $2.31 when expenses were excluded.

Net sales decreased by 0.6%, totaling $23.32 billion. Organic sales increased by 1.3% during the quarter when the effects of acquisitions, divestitures, and currency changes are excluded.

Pepsi’s beverage sales fell this quarter.

The most recent report indicates that the beverage and food sectors of the organization experienced a 2% decline in volume. Consumers of all income levels are demonstrating a change in their purchasing habits, as indicated by CEOs’ statements from the previous quarter.

Pepsi’s entire volume was adversely affected by the lackluster demand they encountered in North America. An increasing number of Americans are becoming more frugal, reducing the number of snacks they ingest, and reducing the number of times they purchase at convenience stores.

Furthermore, Laguarta observed that the increase in sales was partially attributed to the election that occurred in Mexico during the month of June.

The most significant decrease in volume was experienced by Quaker Foods North America, which was 13%. In December, the company announced its initial recall in response to a potential salmonella infection.

Due to the probability of an illness, the recall was extended in January. Pepsi officially closed a plant that was implicated in the recalls in June, despite the fact that manufacturing had already been halted.

Jamie Caulfield, the Chief Financial Officer of Pepsi and Laguarta, has indicated that the recalls are beginning to have a lessening effect.

Frito-Lay experienced a 1.5% decline in volume in North America. The company has been striving to improve the value it offers to consumers and the accessibility of its snack line, which includes SunChips, Cheetos, and Stacy’s pita chips, in the retail establishments where it is sold.

Despite the fact that the category as a whole has slowed down in comparison to the results of previous years, the level of activity within the division is progressively increasing.

Pepsi executives issued a statement in which they stated that “Salty and savory snacks have underperformed year-to-date after outperforming packaged food categories in previous years.”

Pepsi will spend more on Doritos and Tostitos in the fall and winter before football season.

The company is currently promoting incentive packets for Tostitos and Ruffles, which contain twenty percent more chips than the standard package.

Pepsi is expanding its product line in order to more effectively target individuals who are health-conscious. The business announced its intention to acquire Siete Foods for a total of $1.2 billion approximately one week ago. The restaurant serves Mexican-American cuisine, which is typically modified to meet the dietary needs of a diverse clientele.

The beverage segment of Pepsi in North America experienced a three percent decrease in volume. Despite the fact that the demand for energy drinks, such as Pepsi’s Rockstar, has decreased as a result of consumers visiting convenience stores, the sales of well-known brands such as Gatorade and Pepsi have seen an increase throughout the quarter.

Laguarta expressed his opinion to the analysts during the company’s conference call, asserting, “I am of the opinion that it is a component of the economic cycle that we are currently experiencing, and that it will reverse itself in the future, once consumers feel better.”

Additionally, it has been noted that the food and beverage markets of South Asia, the Middle East, Latin America, and Africa have experienced a decline in sales volume. The company cut its forecast for organic revenue for the entire year on Tuesday due to the business’s second consecutive quarter of lower-than-anticipated sales.

The company’s performance during the quarter was adversely affected by the Quaker Foods North America recalls, the decrease in demand in the United States, and the interruptions that occurred in specific international markets, as per the statements made by Chief Executive Officer Ramon Laguarta.

Pepsi has revised its forecast for organic sales in 2024, shifting from a 4% growth rate to a low single-digit growth rate. The company reiterated its expectation that the core constant currency profitability per share will increase by a minimum of 8% in comparison to the previous year.

The company’s shares declined by less than one percent during premarket trading. The following discrepancies between the company’s report and the projections of Wall Street were identified by LSEG in a survey of analysts:

SOURCE: CNBC

Business

Old National Bank And Infosys Broaden Their Strategic Partnership.

(VOR News) – Old National Bank, a commercial bank with its headquarters in the Midwest, and Infosys, a firm that specializes in information technology, have recently entered into a strategic expansion of their link, which has been in place for the past four years.

This expansion is more likely to take place sooner rather than later, with the likelihood being higher.

For the purpose of making it possible for Old National Bank to make use of the services, solutions, and platforms that are offered by Infosys, the objective of this expansion is to make it possible for the bank to transform its operations and processes through the application of automation and GenAI, as well as to change significant business areas.

This lets the bank leverage Infosys’ services, solutions, and platforms.

Old National Bank Chairman and CEO Jim Ryan said, “At Old National, we are committed to creating exceptional experiences for both our customers and our fellow employees.”

This statement is applicable to Old National Bank. Infosys is carefully managing the business process innovations that it is putting us through, putting a strong emphasis on efficiency and value growth throughout the process to ensure that it is carried out efficiently.

This is a routine occurrence throughout the entire operation. Because of Infosys’ dedication to our development and success, we are incredibly appreciative of the assistance they have provided.

Old National has been receiving assistance from Infosys in the process of updating its digital environment since the year 2020, according to the aforementioned company.

Ever since that time, the company has been providing assistance. The provision of this assistance has been accomplished through the utilization of a model that is not only powerful but also capable of functioning on its own power.

Infosys currently ranks Old National thirty-first out of the top thirty US banks.

This ranking is based on the fact that Old National is the nation’s largest banking corporation.

It is estimated that the total value of the company’s assets is approximately fifty-three billion dollars, while the assets that are currently being managed by the organization are valued at thirty billion dollars.

Dennis Gada, the Executive Vice President and Global Head of Banking and Financial Services, stated that “Old National Bank and Infosys possess a robust cultural and strategic alignment in the development, management, and enhancement of enterprise-scale solutions to transform the bank’s operations and facilitate growth.”

This remark referenced the exceptional cultural and strategic synergy between the two organizations. Dennis Gada is the one who asserted this claim. This was articulated explicitly concerning the exceptional cultural congruence and strategy alignment of the two organizations.

We are pleased to announce that the implementation of Infosys Topaz will substantially expedite the transformation of Old National Bank’s business processes and customer service protocols. We are exceedingly enthusiastic about this matter. We are quite thrilled about this specific component of the scenario.

Medium-sized banks operating regionally will continue to benefit from our substantial expertise in the sector, technology, and operations. This specific market segment of Infosys will persist in benefiting from our extensive experience. This phenomenon will enable this market sector to sustain substantial growth and efficiency benefits.

SOURCE: THBL

Business

American Water, The Largest Water Utility In US, Is Targeted By A Cyberattack

The largest regulated water and wastewater utility company in the United States stated Monday that it had been the target of a cyberattack, forcing the company to halt invoicing to consumers.

American Water, The Largest Water Utility In US, Is Targeted By A Cyberattack

American Water, based in New Jersey and serving over 14 million people in 14 states and 18 military facilities, said it learned of the unauthorized activity on Thursday and quickly took precautions, including shutting down certain systems. The business does not believe the attack had an impact on its facilities or operations and said employees were working “around the clock” to determine the origin and scale of the attack.

water

The corporation stated that it has alerted legal enforcement and is cooperating with them. It also stated that consumers will not be charged late fees while its systems are unavailable.

According to their website, American Water operates over 500 water and wastewater systems in around 1,700 communities across California, Georgia, Hawaii, Illinois, Indiana, Iowa, Kentucky, Maryland, Missouri, New Jersey, Pennsylvania, Tennessee, Virginia, and West Virginia.

SOURCE | AP