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Source: Yahoo Finance

Bond investors weighing up a crucial exchange offer by one of Hong Kong's biggest property developers face a classic game theory dilemma: their best option depends on what everyone else does.

New World Development Co., an embattled property company, has given investors an early deadline of Nov. 17 to accept a plan to swap some of its outstanding bonds for up to $1.9 billion of new debt.

The new bonds will force some investors to book heavy losses but will also offer extra comfort from the cash flows of the company's Victoria Dockside project, a crown jewel. Investors sticking with the old notes will take more risk but could see their bonds zoom higher on a successful debt swap.

The guessing game is a sign of the uncertain outlook for New World Development, once one of Hong Kong's most successful property companies but now an increasing source of worry for investors and bankers nervous about the city's tottering real estate market.

New World executives have worked hard over the past two weeks to convince investors the smart move is to accept the offer. Chief Financial Officer Edward Lau has held late-night talks with investors at New World Tower, the company's headquarters in the center of Hong Kong's financial district, according to multiple investors.

Executives have also held meetings at the Singapore offices of HSBC Holdings Plc, one of the banks working on the deal, investors said.

One of the lead banks told some investors on Monday they've received strong indications of interest for the swap, without providing any more details, according to an email seen by Bloomberg.

"Bondholders will lose something but in such a scenario, losing less is winning," said Glen Ho, Asia-Pacific contingency planning and insolvency leader at Deloitte.

New World didn't respond to a request for comment.

New World rose to prominence during Hong Kong's long real estate boom but as a city-wide slump has worsened over the past few years, the company has been left more exposed than some of its biggest rivals. In September, New World posted its second year of losses in a row.

The company has already made major progress on easing debt repayment pressure, agreeing an $11 billion loan refinancing with banks earlier this year. New World's next step relies on the bond funds and high-net-worth individuals holding its perpetual bonds, which offer juicy yields to compensate for the fact that they never mature.

New World has offered to issue $1.6 billion of perpetuals in exchange for its old notes at a price of 50 cents on the dollar, meaning it could buy back as much as $3.2 billion of outstanding notes. It also plans a $300 million debt swap for its conventional bonds, which will come at a lower haircut.

The tricky part for investors is figuring out whether other bondholders will go along for the ride. If New World is able to cut $3.2 billion of its perpetual bond obligations in half, the chance of investors in the old notes once again earning coupons would rise — and bond prices may jump in response.

A successful swap could also reduce hurdles to the company raising equity, a key step in its attempts to reduce its debt burden and reassure investors. The founding Cheng family has been in talks with investors about matching a planned capital injection worth around HK$10 billion ($1.3 billion), although talks have recently stalled on disagreements over how much control the family should give up.

It wouldn't be a surprise if the bond swap was a step toward a broader debt restructuring at the company, said Zerlina Zeng, head of Asian strategy at research firm CreditSights.

The new perpetual bonds will be issued by a special purpose company, meaning they will not have a dividend stopper that can force New World to suspend dividend payments on its shares. Coupons on four of its outstanding perpetual bonds were put on hold earlier this year.

Although investors officially have until Dec. 2 to respond, the better terms they will get by the early-bird deadline on Monday mean most investors are likely to make their decision by then.

Source: Bloomberg Europe

Oil extended a decline after slumping on Wednesday on a flurry of signs that a long-awaited surplus has finally arrived.

West Texas Intermediate dropped toward $58 a barrel, after plummeting more than 4% in the previous session, while Brent closed below $63. Producer group OPEC — which has been restoring idled capacity this year — said that global supplies ran ahead of demand in the third quarter.

Elsewhere, a key market indicator — WTI's prompt spread — flipped briefly into contango, a pricing pattern that signals ample near-term supplies, and the US Energy Information Administration raised its US production forecast for next year. More bearish signals may come later Thursday when the International Energy Agency issues its monthly report.

Crude has retreated this year on widespread expectations for a glut, with the IEA already predicting that there will be a record surplus in 2026. The slump has been driven by rising supplies from OPEC and its allies including Russia, as well as production increases from drillers outside the alliance.

"There's a lot of oil supply that's coming back from the OPEC+ countries that have been holding supply back," Chevron Corp. Chief Executive Officer Mike Wirth said in an interview with Bloomberg TV.

Source: Bloomberg Europe

BofA Securities said Japanese equities were set for strong gains through the first half of 2026, backed by solid corporate results, policy support, and potential wage growth, though near-term external risks still warranted caution.

The bank said in a recent note that 57% of companies had reported earnings that beat expectations in the ongoing first-half results season, with net profits rising 9.8% year-on-year. It expected upward revisions to EPS forecasts and full-year guidance as companies' assumptions on the yen and profits appeared conservative.

Share buyback activity remained limited, but BofA expected announcements to increase toward the fiscal year-end, supported by strong profits and rising valuations. It also saw wage negotiations in spring 2026 leading to higher pay, reinforcing domestic demand and equity market sentiment.

On the macro front, the report said Prime Minister Sanae Takaichi's administration was pursuing proactive fiscal measures in 17 strategic fields, such as semiconductors, energy transition, and defense, marking a shift from short-term budget balance goals toward sustained growth. A possible Lower House dissolution around spring 2026 could help solidify the government's policy agenda.

Still, analysts warned of risks from U.S. economic data following the end of the government shutdown, saying strong employment or inflation readings could delay Federal Reserve rate cuts and weigh on global liquidity.

The rally in high-beta and AI-linked stocks could lose momentum, though past cycles suggested these names might regain strength by early 2026. BofA advised investors to maintain core holdings in AI stocks while rotating into undervalued sectors with improving earnings visibility.

The strategists highlighted companies such as Hitachi, Murata Manufacturing, and Sumitomo Electric among firms showing earnings upgrades and manageable valuations, suggesting opportunities remained even as momentum slowed.

BofA said the combination of earnings growth, policy catalysts, and structural reforms continued to underpin a favorable medium-term outlook for Japan's equity market.

Japan's Nikkei 225 index is trading up 30% so far in 2025, having benefited from optimism over looser fiscal conditions under Takaichi, while a weak yen also supported exporters.

Source: Investing

Japan's wholesale prices rose 2.7% in October from a year earlier, slowing from the previous month due in part to falling import costs, central bank data showed on Thursday.

The rise in the corporate goods price index (CGPI), which measures the price companies charge each other for their goods and services, compared with a median market forecast for a 2.5% increase. It followed a revised 2.8% increase in September.

The yen-based import price index fell 1.5% in October from a year earlier after a revised 1.1% drop in September, the data showed.

The wholesale price data is among factors the Bank of Japan scrutinises as a leading indicator of consumer inflation, which is the central bank's main gauge in setting monetary policy.

The BOJ exited a decade-long, massive stimulus programme last year and raised interest rates to 0.5% in January on the view Japan was on the cusp of sustainably achieving its 2% inflation target.

While consumer inflation has exceeded 2% for well over three years, Governor Kazuo Ueda has stressed the need to move cautiously in hiking rates further to ensure price rises are driven by solid domestic demand rather than raw material costs.

Source: Investing

Australian unemployment declined in October and the economy added more jobs than anticipated, suggesting the labor market remains tight and vindicating the Reserve Bank's decision to leave interest rates unchanged last week.

The jobless rate fell to 4.3% from 4.5% in September and was better than the predicted 4.4%, data from the Australian Bureau of Statistics showed Thursday. Employment advanced by 42,200 — led entirely by full-time roles — more than double the expected 20,000 gain.

The currency and yields on policy-sensitive three-year government bonds climbed as chances for a rate cut by June fell to less than 50% from 74% before the release. Stocks extended losses.

Jobs data are crucial for the RBA's rate-setting board as the resilience of the labor market, and worries about its tightness potentially rekindling price pressures, have been among factors driving a cautious approach in the current easing cycle.

The central bank kept borrowing costs unchanged at 3.6% on Nov. 4, highlighting concerns about lingering inflation pressures. Governor Michele Bullock signaled further easing is unlikely in the near-term after three rate cuts this year.

The RBA expects the jobless rate will sit at 4.4% through its forecast horizon while employment growth is seen slowing this year and next. The forecasts released last week assumed the cash rate at 3.4% in mid-2026, implying just one cut between now and June.

Source: Bloomberg Europe