The World Has A Decade To Save The Biggest Tropical Carbon Sink

Political

Economic

Summary:

The Congo Basin, a region of tropical forest larger than India, is at a point where further damage may rob the world of a crucial bulwark against climate change.

That's the conclusion of the first comprehensive scientific report about the state of the environment in a region that stretches from Cross River in Nigeria to the Rift Valley in East Africa. An executive summary of the 800-page report, authored by 177 experts from across the basin and beyond, was released Monday for the COP 30 climate summit in Belém, Brazil.

The region's forests currently absorb 600 million tons of planet-warming carbon dioxide a year, equivalent to Germany's emissions. That makes the basin the world's biggest tropical carbon sink. But deforestation is threatening to upend the forests' ability to remove carbon from the atmosphere, a shift that would endanger the world's climate.

"If we don't get a handle on it in the next decade, it will be out of control," Lee White, Gabon's former environment minister, said in an interview. "There's a huge problem developing that we aren't solving and a huge opportunity that we're missing."

Two decades ago, the Congo Basin absorbed 4.5 billion tons of carbon, almost equal to what the US emits, according to White. But slash-and-burn agriculture, where farmers set fires to create room for crops, an increase in logging and rising demand for charcoal are shrinking the forests.

"The Congo Basin stands at a decisive crossroads," the scientists said in the report, which was inspired by a similar publication on the Amazon region released at the 2021 COP meeting. It's home to "unparalleled biodiversity, but it's also a region of rapid population growth, persistent poverty, weak governance and competing demands for development."

The Amazon in some ways serves as a warning for the Congo Basin. The forest covers an area twice, but parts of the region have become a source of emissions rather than a sink, mainly due to deforestation. The world's other carbon sinks, including permafrost and northern forests, also are under threat as the planet warms.

In addition to its role battling climate change, the Congo Basin is a key driver of rainfall patterns across Africa, including Egypt and water-stressed nations across east, west and north Africa. About 70% of the precipitation that falls over the basin is recycled into the atmosphere and then falls again across the broader region.

"If you lose the Congo Basin, you lose the water," said White, a British scientist who found his way to Gabon's cabinet after coming to the country to do doctoral research in 1989.

While he lost his post as environment minister in a military coup a few months after the Science Panel for the Congo Basin's creation in 2023, his fellow scientists chose him as envoy, a recognition of his role in pioneering attempts to win carbon-offset funding to reward Gabon for keeping its forests intact.

The state of African forests vary from Gabon, where about 90% of the land is covered by trees, to the Democratic Republic of Congo, where slash-and burn agriculture is prevalent and the forest is under pressure from a population of more than 100 million people.

"There is an urgent need to banish the persistent contradiction that defines the Congo Basin economies," the scientists wrote in their report. "Forests and renewable resources sustain millions and state revenues are heavily tied to non-renewables — mining and oil."

The scientists called for a range of interventions to halt the forests' decline in the region, including more sustainable-farming practices and innovative climate finance. The latter is a top issue at COP30, with Brazil's newly created Tropical Forest Forever Facility receiving roughly $5 billion in pledges ahead of climate talks kicking off on Monday. Nations with tropical forests will receive a fee for every hectare conserved, and the Democratic Republic of Congo is among those that would benefit the most.

"The Congo Basin has historically received less international forest finance than the Amazon or Southeast Asia," they said. "Closing this gap requires a portfolio approach," which would include higher outlays from governments and increasing proceeds from the sale of carbon and biodiversity credits.

"With the right incentives, through carbon markets and other mechanisms, the Congo Basin should receive tens of billions of dollars for carbon storage," they said.

Source: Bloomberg Europe

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Winkelmann

Forex

Economic

The big push to build capacity to cater for artificial intelligence (AI) applications has morphed into a bubble of technology stocks and related infrastructure, data centres included.

From the US to South Korea, companies in the AI supply chain are seeing their shares trade at historic highs. The valuations are equivalent to levels last seen in 2000, when the dotcom bubble burst.

For instance, the Korea Exchange is the best performing securities exchange in the world this year on account of the euphoric share price rise of SK Hynix and Samsung Electronics. These companies manufacture memory chips for AI applications and supply directly to Nvidia Corp, which manufactures the high-powered graphics processing units that add value to AI-driven data centres.

The stock exchanges of Hong Kong and Taiwan have also benefited from the AI boom. Companies like e-commerce champion Alibaba Group Holding Ltd, smartphone manufacturer Xiaomi Corp — both from China — and Taiwan Semiconductor Manufacturing Co Ltd (TSMC) have anchored the bullish runs in their respective bourses this year.

The hype around AI-related stocks and infrastructure is due to the large spending by technology companies to build infrastructure. Google, Meta, Amazon and Microsoft are spending billions to procure servers, processors and high bandwidth memory chips to build data centres. The four tech giants are spending US$700 million (RM2.9 billion) on data centres this year alone, and the forecast is that data centre spending will reach US$3 trillion by 2029.

The data centres cater for a wide variety of uses. However, in the AI era, they are seen as essential for AI start-ups to power and train their large language model (LLM) applications.

The AI start-ups, which include the likes of OpenAI and Anthropic, get their money from investors who believe their applications will be the foundation for the next technology revolution. Up to the third quarter of this year, venture capitalists have poured almost US$200 billion into AI start-ups, which is more than 50% of the total money invested by the VCs.

However, there has not been a successful model for profitability so far. Billions are being invested in AI start-ups but none have given any returns to investors. Even OpenAI, the owner of ChatGPT, is burning through billions every year.

Which brings us to the question of whether AI start-ups will continue to draw new money from investors. And consequently, will the demand for data centres continue to grow?

Although the Malaysian stock exchange has remained rangebound at the 1,600-point level, the country has benefited from riding the AI wave. This is on account of the country being the leading hub for data centres in the region for two years in a row.

According to a research report, Malaysia will be a leading data centre hub in Asia-Pacific in the next few years. On this score, the government has approved 143 data centres to be built in Malaysia since 2021.

But how many will actually be built eventually, considering that the valuations of AI start-ups are said to be in a bubble now? Will the start-ups continue to draw money from investors?

Even now, the infrastructure built to cater for data centres is more than the actual demand. The latest disclosure in parliament reveals that as at end-June, the uptake of electricity by data centres is only 47% of the declared demand of 1,276mw.

Deputy Minister of Investment, Trade and Industry Liew Chin Tong told parliament last week that there had been a review of the energy demand requirements for data centres with the view to divert resources elsewhere and ensure that Tenaga Nasional Bhd does not end up with "stranded assets".

Unlike other stock markets in Asia, the AI bubble has not had an impact on the Malaysian stock market as a whole.

Some technology companies saw their share prices recover this year. But it is mainly because the stocks were deeply oversold due to the tariff issues in the first half of this year. The closest to a direct AI play is YTL Power International Bhd (KL:YTLPOWR), which has built a data centre powered by Nvidia chips and whose share price is currently off its peak.

Construction giants Gamuda Bhd (KL:GAMUDA) and IJM Corp Bhd (KL:IJM) have won contracts to build data centres. But the data centre job wins merely add on to their already huge order books and have not had much impact on their share prices.

One of the few winners of the data centre play is MN Holdings Bhd, which specialises in building the electricity infrastructure, such as substations, for data centres. Its share price is at an all-time high, with investors anticipating more job wins related to data centres.

In the US, even the most bullish of tech investors admit that the AI play is in a bubble. They feel that the billions being poured into AI start-ups are not sustainable.

Jeff Bezos of Amazon.com Inc, however, describes the hype over AI as a "good bubble" because it leaves behind infrastructure that allows for continued development of the technology. Those who echo Bezos' optimism point to the sprouting of e-commerce platforms following the dotcom bust in 2000 that revolutionised the business-to-business and business-to-consumer sectors by allowing products to be delivered at a fraction of the prevailing cost.

The emergence of Facebook and Google disrupted the advertising and media industries by giving companies easier access to their target customers. However, the naysayers point out that the tech revolution following the dotcom bust came with early profitability for those who still remained in the space. Within a few years, the profits generated from e-commerce activities were more than the cash burn.

The same is not happening with the AI hype. They feel that too much money is being poured into building expensive platforms in the hope that the technology will eventually be used by the general public.

So far, AI applications have not cut down the operating costs of companies and have not been able to replace people. Even in call centres, where AI is used to perform repetitive responses, the human touch is still required. The most frequent users of AI are software programmers.

The fear is that the AI platforms will eventually turn into other technology platforms such as blockchain, virtual reality and the metaverse, which has not seen overwhelming demand.

When there are no profitable applications or a super app that draws demand, the question of sustainability comes into play. In this respect, if the hype around AI fades, the need for data centres will come into question.

Source: Theedgemarkets

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Economic

Stocks

Market Overview: Asia Begins Week in Green

After a week marred by investor fears over inflated valuations in AI and tech stocks, Asia-Pacific markets rebounded strongly on Monday, with South Korea’s Kospi Index jumping 2.98% to 4,071.47. This surge was largely fueled by a strong performance from the financial sector, notably banks and insurance firms. The Kosdaq, South Korea’s small-cap index, also climbed 0.86%, indicating broader investor optimism.

Japan's Nikkei 225 rose 0.96% to 50,759.11, buoyed by easing concerns over rate hikes and supported by a moderate gain in the Topix index of 0.33%. Government bond yields continued to creep higher, with 10-year Japanese bonds reaching 1.695% a high last seen in October reflecting shifting expectations on monetary tightening.

China Inflation Data Beats Forecasts

Investor sentiment was also shaped by fresh macroeconomic data from China. The Consumer Price Index (CPI) in October grew 0.2% year-on-year, surpassing economists’ forecasts of 0.0%. This marked the first uptick since June, signaling a modest return of demand-side inflation.

Meanwhile, the Producer Price Index (PPI) contracted 2.1% year-on-year, slightly better than the expected 2.2% drop, offering a softer deflationary signal from the manufacturing side.

These inflation indicators gave mixed signals. While the rise in CPI could suggest a nascent recovery in domestic consumption, the continuing decline in producer prices shows that industrial pricing power remains weak.

China’s Shanghai Composite Index closed marginally lower at 3,996.26 (-0.03%), and the CSI 300 dropped 0.26%, highlighting investors' lingering concerns about economic momentum and regulatory headwinds.

BOJ Minutes Hint at Policy Shift

The Bank of Japan’s October meeting minutes revealed a more hawkish tilt, with policymakers suggesting that conditions for a rate hike “have almost been met.” Still, the central bank emphasized the need to assess how deeply inflation expectations are embedded in the economy.

This cautious tone implies the BOJ is nearing the end of its ultra-loose monetary policy era, though any actual rate hike would likely be gradual.

Other Regional Performances

Australia’s S&P/ASX 200 rose 0.60%, while India’s Nifty 50 climbed 0.33%, reflecting a broader risk-on mood across the region. Hong Kong’s Hang Seng Index rebounded 0.61%, helped by stabilizing sentiment in tech and property stocks.

In the U.S., Friday's session closed mixed. While the S&P 500 and Dow Jones Industrial Average edged up slightly (0.13% and 0.16%, respectively), the Nasdaq Composite dipped 0.22%, continuing its tech-led decline.

Despite the partial recovery, consumer sentiment remains fragile. A University of Michigan survey showed sentiment nearing record lows, and Challenger, Gray & Christmas reported the highest October layoff numbers in 22 years warning signs that the labor market may be weakening.

U.S. futures turned positive Sunday evening as lawmakers reportedly neared a deal to fund the government through January, which could end the longest U.S. shutdown on record.

Market Sentiment and Outlook

The sharp rise in Asian indices, especially the Kospi, suggests a short-term relief rally following heavy tech-driven losses. The unexpected rise in Chinese consumer inflation has tempered deflation fears slightly, though concerns remain over corporate earnings and central bank policies.

The BOJ’s cautious tone and improving Chinese macro indicators could support further gains. However, risks tied to high U.S. tech valuations, weak global consumer confidence, and lingering geopolitical uncertainties (such as the prolonged U.S. government shutdown) remain key downside factors.

If corporate earnings remain resilient and inflation data continues to stabilize, this bounce may extend. But volatility is likely to persist, especially in the AI and tech sectors, which are still considered overbought by some analysts.

Source: CNBC

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Economic

Stocks

Market Overview

The S&P 500 and Dow Jones Industrial Average barely gained last Friday, each up just over 0.1%, while the Nasdaq Composite dropped by 0.21%, extending a sharp 3% weekly decline its worst performance since April. U.S. futures opened stronger on Sunday evening, signaling potential investor optimism despite earlier volatility.

Meanwhile, China's October Consumer Price Index rose 0.2% year-on-year, its first uptick since June, surpassing analysts’ flat expectations. This suggests a slow return of inflation in the world’s second-largest economy, which could impact commodity and equity markets globally.

The U.S. government shutdown now the longest in history appears close to resolution, as enough Senate Democrats signaled support for a deal to keep the government funded through January. However, delays in economic data releases, such as the monthly jobs report, continue to leave markets operating in partial uncertainty.

Valuation Fears Reignite Bubble Concerns in AI Stocks

Investors and strategists are increasingly voicing concern about the concentration of capital in a handful of AI-driven tech stocks. DBS CEO Tan Su Shan remarked on the sheer volume of capital tied up in just seven major tech names, warning that it’s “inevitable” for questions to arise about when not if a correction will hit.

Goldman Sachs CEO David Solomon added that markets are likely to see a 10–20% correction within the next 12–24 months. While he didn’t suggest a specific trigger, elevated valuations, high interest rates, and geopolitical risks were implied as potential culprits.

Pullback or Opportunity?

Despite the drop, some analysts urge caution against panic. UBS strategist Kiran Ganesh noted that company earnings remain largely positive, offering reassurance that fundamentals still support valuation especially for firms with solid profit margins and revenue growth. Glen Smith of GDS Wealth Management even labeled the dip a “buying opportunity,” particularly for oversold names identified through metrics like the 14-day Relative Strength Index (RSI).

Historically, November is the best-performing month for the S&P 500, averaging a 1.8% gain, according to the Stock Trader’s Almanac. However, this year’s performance has been clouded by macroeconomic uncertainty, high-profile shutdowns, and sector-specific overextensions, particularly in tech.

Moreover, without timely government data (e.g., employment figures), the Federal Reserve is effectively flying blind making its policy path harder to forecast. Investors may continue to see volatility until data clarity and economic direction improve.

While the tech pullback raises eyebrows, it may be premature to interpret it as the start of a deeper downturn. With fundamental earnings still strong and macro indicators mixed, this market behavior could simply represent a healthy rebalancing after months of concentrated gains in AI and big tech. Investors may benefit from exercising patience and selectively watching oversold opportunities rather than retreating in fear.

Source: CNBC

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Economic

Rise of the Family Office Model and Its Imitators

Originally, family offices were exclusive vehicles designed to manage the fortunes, estates, and philanthropic interests of ultra-high-net-worth individuals (UHNWIs). These private wealth management entities handle everything from investment strategies to legacy planning, offering confidentiality and personalized financial services. However, the booming global wealth landscape, coupled with the mystique of family offices, has attracted opportunists who mimic the structure to gain access to deals, capital, or influence.

According to Ronald Diamond, who leads Diamond Wealth and a co-investment syndicate of over 100 families, the phenomenon of "fake family offices" is rising at an exponential rate. These imposters often present themselves at investment summits or private funding rounds, masquerading as representatives of wealthy families while having no actual capital backing. Their goal may range from extracting insider information and accessing exclusive networks to outright scams.

Why This Scam Works

Family offices operate in a notoriously opaque and loosely regulated part of the financial industry. Unlike hedge funds or institutional investors, they do not always register with financial authorities or publicly report their activities. This lack of transparency makes it easy for bad actors to mimic the model without triggering regulatory alarms. The allure of family offices perceived as long-term, patient capital from elite circles also makes investors and startup founders more likely to trust them.

The rise of these imposters has led to calls for more rigorous due diligence. Experts suggest that individuals and firms engaging with supposed family offices should verify their legitimacy by checking for credible deal history, confirmed wealth sources, and legitimate legal or investment structures. Some authentic family offices are now taking proactive steps to distinguish themselves, such as establishing formal registration or engaging with reputable networks.

Implications for the Investment Ecosystem

The proliferation of fake family offices undermines trust in the private wealth investment space. Entrepreneurs and fund managers risk wasting time and resources or, worse, falling victim to fraud. As the global pool of wealthy individuals expands and more capital flows into private markets, the need for safeguards, verification processes, and perhaps light-touch regulation becomes more urgent.

While the family office model remains a valuable and legitimate tool for managing intergenerational wealth, its growing misuse by imposters is a concerning trend. The rise of fake family offices reflects broader vulnerabilities in an increasingly complex and opaque private investment landscape. Stakeholders are advised to remain vigilant, prioritize transparency, and apply strict due diligence to protect capital and reputation.

Source: CNBC

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Economic

Temporary Inflation Driven by Holidays

The unexpected increase in China’s Consumer Price Index (CPI) was attributed to higher seasonal demand for travel, food, and transport during the October Golden Week. Core CPI, which excludes food and energy, rose by 1.2%, reflecting a broader (though still mild) recovery in consumer sentiment. Service prices also edged up 0.2%, contributing to the overall CPI gain. However, economists including those from Goldman Sachs warn that this rise is likely transitory, rather than signaling a fundamental shift in the inflation trend.

Despite the short-term CPI rise, factory-gate deflation has now persisted for 37 consecutive months. The broader GDP deflator continues to fall marking the longest deflationary stretch since 1993. A Bloomberg investigation further suggests the official CPI may understate real declines, especially in daily necessities and goods that impact the average consumer. This discrepancy signals deeper economic malaise.

Risks of a Deflationary Spiral

Deflation can stall economic activity by encouraging consumers to postpone purchases, shrinking profit margins, and inflating real debt burdens. This scenario threatens a self-reinforcing cycle of reduced spending and investment, further stalling growth. Even with China likely to hit its 5% real GDP growth target for 2025, nominal growth is slowing due to weak price levels.

Beijing has launched campaigns like the “anti-involution” initiative to curb destructive price competition across sectors such as EVs and food delivery. However, progress has been limited due to fears that aggressive intervention could jeopardize jobs and short-term growth. With price growth hovering near zero or negative for much of the year, the government had already set its inflation target at around 2%, its lowest in over two decades.

Market Sentiment and Outlook

Bloomberg Economics’ Eric Zhu notes that the brief inflationary blip is not a structural shift and that entrenched deflation remains the dominant risk heading into Q4. This sentiment aligns with a cautious economic outlook where consumer demand and pricing power remain subdued.

While China’s October CPI data offers a brief reprieve from deflation, the underlying pressures persist. Structural demand weakness, factory-gate deflation, and cautious policy responses suggest the economy is still navigating a fragile recovery path. The CPI increase is unlikely to alter the broader deflationary trajectory unless underpinned by more sustained consumer and investment momentum.

Source: Bloomberg

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Commodity

Market Overview

Gold’s upward momentum is being driven by renewed investor caution amid signs of economic fragility in the United States. Spot gold rose by 1.1% in early Singapore trading, continuing Friday’s gains. Silver, platinum, and palladium also advanced in tandem. The price of gold now stands at around $4,045.96 per ounce.

Last week ended relatively flat for gold, but recent economic indicators have shifted sentiment. A key measure of US consumer sentiment dipped close to record lows, signaling waning optimism amid ongoing inflationary pressures and the disruptive effects of the federal government shutdown. This decline in sentiment increased interest in traditional safe-haven assets like gold.

Economic Sentiment & Fed Outlook

According to Bloomberg, even though the political deadlock in Washington appears to be resolving, the prolonged data blackout has hampered the Federal Reserve’s ability to make informed policy decisions. If a resolution allows for the release of delayed economic reports, it could prompt the Fed to consider easing monetary policy earlier than expected particularly if the data confirm a slowdown.

Vasu Menon, investment strategist at Oversea-Chinese Banking Corp., notes that once the shutdown risk subsides, investor focus will quickly return to the Fed’s monetary path. A softer economic outlook, confirmed by data, could pave the way for rate cuts or a dovish shift.

Gold’s Technical and Sentiment Picture

Despite falling approximately 8% from its all-time high above $4,380 in mid-October, gold remains up more than 50% year-to-date. The overall bullish sentiment persists due to enduring factors such as geopolitical risk, economic uncertainty, and robust demand from central banks and retail investors.

The Bloomberg Dollar Spot Index held steady, suggesting that gold’s rise wasn’t driven by a weaker dollar but rather a flight to safety due to macroeconomic anxieties.

Trade Recommendation

Entry: $4,030 – $4,050

Target Price (TP): $4,120

Stop Loss (SL): $3,980

Gold’s current trend suggests a continuation of moderate upward movement, especially if upcoming US data confirm economic deceleration. Watch for any dovish signals from the Fed or renewed geopolitical tension, both of which could accelerate gains. However, caution is advised around the $4,100 resistance area, which may trigger profit-taking unless broader momentum builds.