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Need for stability is behind Japanese investment spree, says US ambassador – Financial Times

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The war in Ukraine, Covid-19 and the rise of China will force multinational companies to embrace a new version of globalisation, where cutting costs comes second to a “predictability premium”, the US ambassador to Japan has said.

In an interview seven months after his arrival in Tokyo, Rahm Emanuel said recent supply chain upheaval and Beijing’s regulatory unpredictability had exposed the dangers of over-reliance on China, drawing Japanese companies to invest in the US.

A two-month spree of multibillion-dollar investment pledges in the US by some of Japan’s biggest companies, including Toyota, Panasonic and Honda, was just the start, said Emanuel, a former chief of staff for Barack Obama who has close ties to US president Joe Biden.

“You really have a different iteration of globalisation emerging,” he said. “The last 20 years have been organised around cost and efficiency. That’s being either balanced against or replaced by stability and sustainability.”

The ambassador, who has taken an unusually hands-on approach to attracting Japanese investment to the US, said his view on the new economic landscape was formed through exchanges with more than a hundred chief executives at companies including Honda, Takeda, NEC, Nissan and Hitachi.

Companies were facing historic uncertainty about market growth, inflation and the terms of competition, Emanuel said.

“We all know the term ‘risk premium’, well, there’s a predictability premium out there . . . business people and governments; that’s all they’re talking about,” he said.

The Biden administration is offering generous incentives to attract multinationals to build supply chains for chips, batteries and other key technologies in the US in order to eliminate dependency on China.

A critical pillar of that US strategy is the recently passed Inflation Reduction Act, Biden’s flagship climate, tax and healthcare bill that offers tax credits of up to $7,500 for electric vehicles assembled in North America.

Emanuel said the Chips and Science Act, a bill passed last month that aims to provide incentives for the reshoring and growth of a domestic semiconductor industry, was another key element in US plans to attract stabilising investment around strategic technology.

The US this week threatened China’s access to high-end processors from Nvidia, telling the chipmaker it would need special licences to sell the products to Chinese customers.

The Nvidia case illustrates the speed at which a form of economic decoupling between the US and China has been imposed on the market.

Emanuel said delegations of top US politicians would be visiting Japan in the coming months to explain the full implications of the chips act to chief executives throughout Japan’s semiconductor production chain.

While companies were still attracted to the growth opportunities in China, Emanuel also said they were rapidly moving to reduce risks in the supply chains. “Do multinationals want access to the China market? Yes. Do they want to be dependent on China sourcing? Not a chance,” he said.

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How rising interest rates impact insurers' investment decisions – Canadian Underwriter

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Recent interest rate hikes aimed at curbing inflation, and the potential for more rate hikes next year, has the insurance industry keeping an eye on its investment returns.

But while the transition from a low-interest-rate environment to a higher-rate environment will create short-term challenges, it also creates a long-term opportunity, noted Gord Dowhan, CFO at Wawanesa Insurance in a recent Canadian Underwriter interview.

“Over time…higher interest rates can create an opportunity for us to increase our yield moving forward,” Dowhan said. “As bonds mature, it gives us the opportunity to invest at a higher rate.

“You’ve seen this experience in Europe and elsewhere, where they were at zero percent and negative interest-rate environments in some cases. Having higher rates is healthier than being in that environment [of extremely low or negative interest rates], and there’s definitely an opportunity for us to pick up yield and investment returns within our investment portfolio as those instruments mature.”

For an insurer’s portfolio, Dowhan noted a rising interest rate environment makes certain investment instruments more attractive. And his firm has some of these in place, including preferred shares, limited recourse capital notes, and floating-rate or variable-rate debt.

“We’re also looking at real estate and infrastructure investments. From a rate-reset, preferred-share perspective, this gives us the opportunity to increase our yield; the dividend yield resets regularly based on five-year government bond yields,” he said.

“In a rising rate environment, this gives us an opportunity to increase our returns. Floating-rate, or variable-rate, debt has become increasingly attractive as rates rise. We’ve invested in and will continue to invest in floating-rate debt and look for opportunities to grow our portfolio there.”

What’s more, Dowhan said that during high inflationary periods, real estate and infrastructure tend to outperform other asset classes.

“The underlying instruments within these products, leases and other revenues that produce revenue streams linked to inflation, is one reason why they typically outperform other asset classes during periods of high inflation,” he told CU. “So, opportunities exist for us to enhance our yield in the long term and continue to deliver value for our policyholders.”

This article is excepted from one that appeared in the August-September issue of Canadian Underwriter. Feature image by iStock.com/porcorex

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Landa Sees More Growth, EPac Gets New Investment And More | Label and Narrow Web – Label & Narrow Web Magazine

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Demonstrating its commitment to supporting its growing customer base and interest from future customers, Landa Digital Printing is aggressively expanding its global team and business development infrastructure with the appointment of several new sales professionals.

New Landa appointments include:

  • Bill Lawver, Inside Sales Representative
  • Michael Weyermann, Regional Sales Manager – Northeast
  • Steve Smith, Regional Sales Manager – Southeast
  • Danny Green, Regional Sales Manager – Mideast
  • Michelle Weir, Regional Sales Manager, Southwest

Sharon Cohen, chief business officer, Landa Digital Printing, comments, “We are delighted to have secured the talent and experience of Bill, Michael, Steve, Danny and Michelle. Their highly relevant backgrounds will be instrumental in supporting our growth plans across North America, while also supporting the wider team to ensure continued high customer satisfaction, innovation and success.

Meanwhile, Amcor has announced a further strategic investment of up to $45 million in ePac Flexible Packaging. The investment will increase Amcor’s minority shareholding in ePac Holdings LLC.

Amcor’s executive vice president of strategy and development, Ian Wilson, comments, “This additional investment reflects our confidence in ePac’s entrepreneurial team and their proven ability to rapidly scale in the high growth, often higher value short run segment. Since our initial investment last year, we have been deeply impressed with ePac’s focused and innovative business model centered around deploying a very high level of digitalization and customization. ePac’s proven digital technologies enable the delivery of exceptional service levels and significantly reduced lead times. These specializations are designed to meet the unique speed to market and service needs of locally based small to medium customers, skill sets that are highly transferable to areas of Amcor’s core business.

Here are the highest-trafficked news items for the week ending on September 23:

1. Landa announces five senior additions to NA sales team
2. Amcor expands investment in ePac Flexible Packaging
3. FLAG enjoys productive Labelexpo Americas
4. Mondi invests in new research and development center in Germany
5. S-OneLP recognized as Global Label Award winner

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Britain outlines tax incentives for new investment zones – Reuters UK

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LONDON, Sept 23 (Reuters) – British finance minister Kwasi Kwarteng outlined what he called an “unprecedented set of tax incentives” for businesses in newly-announced investment zones, saying the government would also liberalise planning rules for specified agreed sites.

The government said there were potential investment zones in England so far but it would work with the devolved administrations in Scotland, Wales and Northern Ireland to deliver them around the United Kingdom.

“On purchases of land and buildings for commercial or new residential development, there will be no stamp duty to pay whatsoever,” Kwarteng told lawmakers in a fiscal statement on Friday.

“On newly-occupied business premises, there will be no business rates to pay whatsoever. And if a business hires a new employee in the tax site, then on the first 50,000 pounds ($55,800) they earn, the employer will pay no National Insurance whatsoever.”

The government said more detail on how a liberalised planning offer in the zones would work in due course.

Areas interested in becoming investment zones include Liverpool and Greater Manchester in northwest England, Somerset and Plymouth in the southwest, Sunderland and the Tees Valley in the northeast and Southampton and Essex in the south and east.

The government also said infrastructure projects would be accelerated, aiming to get as many as possible under construction by the start of 2023.

The list of projects to be accelerated included nuclear energy sites Hinkley Point C and Sizewell C, oil fields search as Cambo Phase 1, and several train lines, stations and roads.
($1 = 0.8961 pounds)

Reporting by David Milliken and Alistair Smout, editing by Elizabeth Piper

Our Standards: The Thomson Reuters Trust Principles.

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