AI spending and higher-for-longer rates: What Asian investors should watch

Taiwan Semiconductor Manufacturing Company (TSMC) reported a record third-quarter net profit of US$23.5 billion on Oct 15, its sixth straight record quarter. It should have lifted markets. Instead, Asian tech hardware was hammered, memory chipmakers fell sharply and credit default swaps on major AI financiers hit record highs. With heavy capital spending meeting sticky inflation and costlier borrowing, investors want to know whether the debt-fuelled AI expansion is running into a wall.

In this episode of Market Focus Weekly, a podcast by The Business Times, Howie Lim speaks with Ray Heung, senior investment strategist at Standard Chartered Bank, about the gap between the AI narrative and market reality.

Why listen

• Bubble or real investment  Heung says the jury is still out, but Standard Chartered leans towards the view that the spending is real. He explains why he sees CoreWeave’s bond yield of 15 per cent as a company-specific issue for now, and why he would rather wait for clearer guidance from big tech.

• How long rates stay high The US 10-year yield overshot 5.3 per cent last week before slipping back below 5 per cent. Heung explains why his base case is a range of 5 to 5.25 per cent, and how that squeezes Asian companies carrying US dollar debt.

• Oil and energy importers  Heung outlines why economies from India to the Philippines face import bills and currency pressure, and why he still expects relief over six to 12 months.

• China’s disconnect Third-quarter growth beat forecasts but equities fell. Heung says the missing piece is a large demand stimulus, and explains why current mortgage subsidies are modest.

• Indonesia, France and the tech washout Hueng calls the tech sell-off a valuation reset rather than a structural change, and explains what MSCI’s warning on Indonesia means for other emerging markets.

• Signposts for the next month Heung names the dollar, the October Federal Reserve meeting, the Bank of Japan decision and China’s Fifth Plenum.

This is a measured read on a market caught between strong earnings and rising funding costs. Listen now.

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Written and hosted by: Howie Lim (howielim@sph.com.sg)

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With Ray Heung, senior investment strategist at Standard Chartered Bank

Edited by: Howie Lim & Claressa Monteiro

Produced by: Howie Lim & Rachna Raghu

A podcast by BT Podcasts, The Business Times, SPH Media

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