Good morning, I’m back to Firstft Asia. In today’s newsletter:
Masayoshi’s son comes up with the idea of a US sovereign wealth fund
China’s cost-conscious tourists gather in Hong Kong
Japanese pride and pain
The son of Softbank founder Masayoshi came to the idea of establishing a US Joint Sovereign Fund to make large investments in high-tech and infrastructure across the United States.
What we know: This idea was raised at a very high political level in Washington and Tokyo. This includes discussions with his son and Scott Bescent of the US Treasury Department. The plan has not yet crystallized into a formal proposal, but the idea has come up several times in recent weeks as Japanese negotiators and the Trump administration are heading towards a trade deal.
The Fund Works: Under the proposed wealth fund structure, the US Treasury and the Japanese Treasury will become co-owners and operators of funds, each of which have significant interests. They may then open the vehicle to other limited partner investors and offer ordinary Americans and Japanese people the opportunity to own slices.
One person familiar with the argument said that the fund would have to be “huge” to be effective in its investment ambitions. It was $300 million in initial capital and was heavily leveraged.
What is the appeal of the Joint Fund? “The theory is that Bessent is looking for a source of revenue for the Treasury that doesn’t involve raising taxes, and while this joint fund may sound, it would theoretically provide it,” one person explained the situation. People added that Japan “wants a properly governed contract that protects Japan from ad hoc decisions in elliptical office politics.”
Read more about my son’s joint fund ideas.
Here is the other thing I keep tabs today:
Economic Data: Singapore has published its Industrial Production Index for April.
Country Garden: The Chinese developer is holding a hearing scheduled for today at Hong Kong’s High Court.
Southeast Asia: The 46th ASEAN Summit will begin in Kuala Lumpur, Malaysia.
Five more top stories
1. US oil executives warn that the 10-year shale boom has ended as Trump’s tariffs boost costs and falling oil prices narrows down profits. Oil companies are cutting spending and idling drilling rigs, but analysts are cutting production forecasts despite the US president’s pledge to “unleash” production.
2. The region is so dependent on trade with Beijing that US pressure on Latin America to cut trade with China could lead to economic disasters, according to the American organisation’s retirement manager. “The worst thing that happens in Latin America is “forced to make a choice” between the US and China,” said Louis Almagro, executive director of the Political Forum for the past decade. Read the full interview.
3. The EU is ready to “quickly and decisively” move forward in trade talks with the US, but Trump needs to return to its original 90-day negotiation period, European Commission’s Ursula von der Leyen said yesterday after a call with the US president. The debate comes two days after Trump said he would impose a 50% tariff on EU imports from June 1st. Here we will explain in detail the “good call” between the two leaders.
4. Russia will carry out its biggest air attack on Ukraine, shattering hopes that the record prisoner exchange completed yesterday could lead to a halt of hostilities. At least 12 people were killed and dozens more injured in Sunday’s overnight attack.
5. Movie fans flocked to see Disney’s Lilo and Stitch and the eighth article in Paramount’s Mission: The Impossible franchise. North American cinemas were raked up for over $260 million until Sunday, setting a record for Memorial Day holiday weekend.
On Wednesday, we took part in a subscriber-only webinar to face off between the US and China, an insight into the most important geopolitical competition of our time. Sign up now and ask the panel questions.
Detailed news
Hong Kong welcomed over 34 million visitors from China last year, increasing 27% in 2023 © May TSE/SCMP/REUTERS
Chinese tourists are gathering in Hong Kong, but the number of visitors from the mainland is increasing (34 million last year), and the city’s tourism industry is struggling. Chinese tourists will be less likely to prefer to eat or sleep across the borders of the adjacent cheap deep Shenzhen, but they will narrow down the revenues of the retail, restaurant and hotel sectors of Asian financial hubs. According to economists, the rise of cost-oriented day trips indicates “structural changes” among travelers in mainland China.
We’re reading too. . .
The day’s map
Last year, Heineken’s sales rose nearly 20% to less than 700 million litres as the entire mainland beer market contracted in China. Dutch lager makers are using a partnership with China’s largest brewer, China Resource Beer, to enter the country’s growing premium market.
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Take a break from the news
The surge in travel to Japan is everywhere, leading to massive tourism complaints, and FT’s Tokyo Director Leo Lewis wrote about “the pride and pain of the Japanese.”
At Lawson convenience store in Kawaguchiko, tourists flock to take photos of Mt. Fuji ©Alamy
