Good morning and welcome back to FirstFT Asia. In today’s newsletter:
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AI fears hit US software and private capital shares
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Behind Trump’s truce with China
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Why Japan is mining the Pacific Ocean floor
We start with AI jitters on Wall Street, where US software stocks were hit with a fresh burst of selling yesterday that cascaded to private capital groups with heavy exposure to tech companies.
What to know: Wall Street’s S&P 500 index ended the session down 1 per cent and the tech-heavy Nasdaq Composite lost 1.1 per cent. Software stocks that have been hit hard in recent weeks by fears around AI disruption were among the worst performers yesterday, with Workday, CrowdStrike and Datadog down 6 per cent, 10 per cent and 11 per cent, respectively.
Private capital shares hit: US private capital giants, which have extended loans to software companies and are also holders of their equity, were caught up in yesterday’s sell-off. Ares, Apollo and Blackstone all fell at least 5 per cent while KKR lost 9 per cent. The rout came days after Blue Owl sent shivers through the industry by permanently halting investor withdrawals in one of its funds.
AI’s threat to software: The moves came after Jenny Johnson, chief executive of $1.7tn US asset manager Franklin Templeton, told the FT that “you really have to question if enterprise software companies can thrive” as new models begin to commoditise their business.
UBS analysts led by Samantha Meadows said: “Coding has become the first domain where AI demonstrably outperforms humans at scale and as a result, the software sector . . . has emerged as the most immediate pressure point.” Read the full story.
Here’s what else we’re keeping tabs on today:
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Economic data: South Korea reports January PPI and the consumer sentiment index for February.
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China: Markets reopen after the Lunar Year holiday.
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Thailand: The Asia-Pacific Forum on Sustainable Development, an annual UN intergovernmental forum to review progress on sustainable development goals regionally, begins in Bangkok.
Five more top stories
1. Lord Peter Mandelson has been arrested on suspicion of misconduct in public office following claims he leaked confidential UK government memos to Jeffrey Epstein and received cash from the paedophile American financier. His arrest marks a dramatic fall from grace for a politician credited as one of the architects of New Labour.
2. Danish shipping giant Maersk and Swiss-based MSC are to temporarily take control of two key ports on the Panama Canal after their Hong Kong-based operator was ejected last month, the Panamanian government said yesterday. Panama’s Supreme Court last month annulled a contract with conglomerate CK Hutchison Holdings as operator of the ports after legal challenges.
3. Mexico’s military intelligence followed a girlfriend of Nemesio “El Mencho” Oseguera to locate the cartel kingpin, who then died after a shootout with security forces. The killing of Oseguera, leader of the Jalisco New Generation Cartel and one of the world’s most wanted drug traffickers, is a major coup for Mexican President Claudia Sheinbaum.
4. Washington ordered the departure of non-essential diplomats and their family members from Lebanon as concerns mount of a potential US military conflict with Iran. Trump has threatened to strike the Islamic republic unless a deal is reached curbing Tehran’s nuclear programme.
5. Novo Nordisk shares tumbled 16 per cent yesterday after the latest weight-loss drug from Europe’s pharmaceuticals champion disappointed in a key trial. Investors ditched Copenhagen-listed Novo after the company’s latest once-weekly injection achieved less weight loss than a treatment developed by US rival Eli Lilly.
The Big Read
What’s behind Trump’s trade war truce with China? US allies are trying to work out if the White House is pursuing a tactical détente related to the country’s dependence on rare earths or if it is placing less emphasis on security issues. Demetri Sevastopulo spoke to administration officials and US-China experts to find out.
We’re also reading . . .
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Ukraine war: Relentless drone surveillance has created a fast-expanding “kill zone” — where anything that moves can be instantly destroyed.
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Korean equities: South Korean retail traders are flocking to leveraged ETFs to profit from the domestic stock market boom, despite the risks involved.
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Europe vs America: The two sides of the Atlantic are locked in a struggle over what “western civilisation” means, writes Anne-Marie Slaughter.
Map of the day
Japan is embarking on an ambitious effort to retrieve rare earth elements from the ocean floor near Minamitorishima, an atoll 1,900km south–east of Tokyo that is part of the country’s exclusive economic zone. The project could help loosen China’s grip over the metals vital to missiles, radar systems and drones.
Take a break from the news . . .
Can AI liberate us from the tyranny of email? Electronic mail is fast becoming a test bed for AI’s much-touted productivity-boosting power. Clara Murray reviews a suite of new tools to help us streamline inbox management.
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