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China’s Grim Milestones, Japan Moonshot: Saturday Asia Briefing

While US stocks hit an all-time high, it’s shaping up to be the most miserable January for China’s markets in years. Here’s a shortlist of milestones reached this week.

  • Chinese stocks are the worst-performing major market so far this year.
  • Economy-wide prices last quarter marked the longest deflationary streak since the Asian Financial Crisis in the late 1990s. 
  • Tokyo has overtaken Shanghai as Asia’s biggest equity market.
  • Mutual funds closures are at a five-year high.
  • Food prices in China have fallen for six straight months.
  • India’s equity valuation premium over China is at a record high. 

Read about China’s deflation problem here and about the outlook for stocks here.

Still, at least China’s economy met the government’s growth target of around 5% last year. Or did it? Some number crunchers aren’t so sure.

China’s doldrums have far-reaching effects. Chinese travelers made 170 million trips overseas in 2019, spending some $248 billion from plane tickets to designer brands. After Covid ended, hoteliers, shopkeepers and tour guides waited eagerly for them to come back. They haven’t.

When the present looks bleak, it’s easy to get a feeling of nostalgia for the past. In China, that may be helping fuel a craze for Shanghai, thanks to Hong Kong director Wong Kar-wai’s first TV series, Blossoms Shanghai, set in the city in the 1990s.

Speaking of looking back, the best short call of 2023 wasn’t made by a hedge fund or activist firm but by a first-year medical resident running a blog named after a SpongeBob SquarePants character. 

While China may be down in the dumps, Japan is showing signs of getting back its mojo. 

Former soccer star turned angel investor Keisuke Honda plans to raise up to $100 million for a fund dedicated to Japanese startups, supplementing a wave of money that has begun to flow to the nation’s entrepreneurs. 

Japan became the fifth nation to land a probe on the moon when its SLIM lander, nicknamed “moon sniper,” touched down just after midnight Tokyo time on Saturday. Unfortunately, a problem with the solar panels may cut the mission short.