Once seen as America’s greatest economic challenger, Japan is now looking to team up with the world’s biggest economy by appealing directly to US executives to invest in the Asian country’s emerging tech sectors including artificial intelligence (AI), semiconductors and clean energy.
Speaking in Washington at a lunch with American CEOs, Prime Minister Fumio Kishida said Japan welcomes American collaboration in “critical and emerging technology” and assured them that any investment would flow both ways.
“The economic growth our country obtains through your investments shall serve as the funding source of further investments into the United States by Japanese entities,” he said Tuesday.
Kishida is in the US ahead of a Wednesday summit with President Joe Biden expected to focus on defense and economic ties.
Last year, Japanese foreign direct investment to the US exceeded $750 billion, Kishida said, making Japan the biggest foreign investor in America and creating more than 1 million jobs.
Shortly before the lunch, Microsoft (MSFT) announced it plans to invest $2.9 billion to increase its cloud computing and AI infrastructure in Japan, and open its first Microsoft Research Asia lab in the country. It is reportedly the company’s largest ever investment in Asia’s second largest economy.
Microsoft’s vice chairman and president, Brad Smith, attended the event along with more than a dozen other executives including IBM (IBM) Vice Chairman Gary Cohn; Micron Technology (MU) CEO Sanjay Mehrotra; Boeing (BA) Defense, Space & Security CEO Ted Colbert and Pfizer (PFE) CEO Albert Bourla.
The closer business ties between Washington and Tokyo come as the two countries seek to modernize their political and military alliance. Both are eyeing regional threats from North Korea’s weapons testing and burgeoning relations with Russia to China’s aggression in the South China Sea and toward Taiwan.
Speaking to CNN in Tokyo ahead of his trip, Kishida said spiraling geopolitical tensions have pushed the world to a “historic turning point” and are forcing Japan to change its defense posture.
Working together on chips
At the lunch event, hosted by the US Chamber of Commerce in Washington, the prime minister praised US-Japan joint investment in the semiconductor industry. Rapidus, a Tokyo-backed chipmaker, is working with IBM to bring advanced chip technology to Japan.
“In the semiconductor field, Rapidus is partnering with a US company in research and development of next-generation chips. And there will surely be more such opportunities for collaboration between Japan and the United States,” he said.
Earlier this month, Japan’s industry ministry approved subsidies worth up to 590 billion yen ($3.9 billion) for Rapidus. That’s on top of some 330 billion yen ($2.17 billion) in subsidies already pledged by the government.
Utilizing technology from IBM, Rapidus is building a semiconductor fabrication plant, or fab, on the island of Hokkaido. It aims to start pilot production of two-nanometer chips from April 2025, with mass production intended to begin in 2027, the chipmaker previously told CNN.
Japan once dominated the global semiconductor industry, but it lost its lead years ago to the likes of TSMC, Intel (INTC) and Samsung.
Rapidus is meant to mark the country’s comeback in chipmaking. It comes as Washington adds increasing restrictions on the types of semiconductors that American companies are able to sell to China.
The tech rivalry between the world’s two largest economies has been heating up in recent years. Over the past year, the US has enlisted its allies in Europe and Asia, including Japan, to restrict sales of advanced chipmaking equipment to China.
On Tuesday, Kishida also sought to dispel doubts about the strength of the Japanese economy, which lost its position as the world’s third largest economy to Germany earlier this year.
“We are hopeful that 2024 will be the year for the Japanese economy to completely break free from the deflationary sentiment and cost-cutting, scaling down mentality that had weighed heavily on our nation,” he said.
Last month, Japan brought an end to its era of negative interest rates with its first rate hike in 17 years, marking a historic shift away from an aggressive monetary easing program that was implemented years ago to fight chronic deflation.Japan seeks investment in AI
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
