Barrier lake overflows in Hualien as Typhoon Fung-wong unleashes floods | East Asia Tonight (Nov 13)

Key Concepts

• Tropical Storm Fong Wong: A storm that caused significant flooding and landslides in Taiwan.
• Barrier Lake Overflow: A natural dam formed by debris that overflowed, leading to flooding.
• Labor Shortage in Taiwan: A growing issue due to an aging population and low birth rate, leading to retirees re-entering the workforce.
• South Korea Truck Attack: A tragic incident where a truck collided with pedestrians at an outdoor market.
• China-Europe Annual Forum: Discussions on trade, AI, sustainability, and resetting relations between China and the EU.
• Baidu AI Chips and Ernie Model: Baidu's unveiling of new AI semiconductors and an updated large language model to compete in the AI market.
• Hong Kong and Shanghai Hotels Outlook: Cautious optimism for luxury hospitality, with growth in Europe and Southeast Asia, and stabilization in Greater China.
• Taiwanese Workforce Aging: The impact of a large aging population on the labor market and the need for adaptation.
• Japan Bear Attacks: A record number of attacks leading to a change in gun laws, allowing police to use rifles.
• South Korean College Scholastic Ability Test (CSAT): A high-stakes exam for university admissions.
• Hermes Birkin Bag: A record-breaking sale of a custom-made bag for Jane Birkin.
• TeamLab Bio Vortex Kyoto: An immersive digital art exhibition in Kyoto.

Taiwan: Flooding and Cleanup After Tropical Storm Fong Wong

Tropical Storm Fong Wong made landfall in southern Pingong County, Taiwan, bringing intense rain and causing widespread flooding. The storm has since weakened into a low-pressure area. Authorities have issued warnings for continued rainfall, particularly in Taipei, and a risk of landslides in mountainous regions.

Key Details:

• Injuries and Evacuations: 95 people were injured, and approximately 8,300 individuals were evacuated from coastal and mountainous areas.
• Impact on Infrastructure: Schools and offices were closed for two days.
• Mingli Village Hard Hit: This village in Halian County experienced severe flooding due to an overflow from a newly formed barrier lake on Matayan Creek. The lake formed after the collapse of the original creek bank, causing debris to dam the creek.
• Ongoing Cleanup: Cleanup efforts are extensive, especially in the northeast, with areas like Su'ao in Yilan experiencing floodwaters reaching up to one story high. Thousands of homes were flooded, leaving behind mud and damaged belongings.
• Rescue Operations: Rescue teams are actively pumping water from low-lying streets, and heavy machinery is being used to clear mud from roads. Troops have been deployed to clear debris and deliver essential supplies.
• Power Restoration: Power companies are working to restore electricity to affected households, with most power now back online after initial outages affecting thousands.
• Government Support: Premier Su Tseng-chang has pledged government support for affected families and urged local officials to expedite damage assessments for compensation.
• Continued Risk: Engineers are assessing the stability of riverbanks, bridges, and slopes. Officials warn of continued risks of landslides due to unstable ground and potential further rainfall. The cleanup is expected to take weeks.

South Korea: Truck Attack in Buson Market

A tragic incident occurred in Buson City, southwest of Seoul, when a truck plowed into pedestrians at a busy outdoor market.

Key Details:

• Fatalities and Injuries: At least two people, both women in their 70s, died. 18 others were injured, with nine in critical or urgent condition and nine requiring non-urgent medical attention.
• Incident Description: Eyewitnesses reported the truck reversing approximately 30 meters before accelerating forward for 150 meters, hitting pedestrians.
• Driver Status: The driver was detained at the scene and tested negative for alcohol and drugs. The driver claims the vehicle malfunctioned, while officials are reviewing security camera footage.

China and Europe: Annual Forum on Trade and Cooperation

China and the European Union have commenced their annual forum in Brussels, marking 50 years of diplomatic ties and aiming to address trade strains, AI, and sustainability.

Key Points:

• Trade Relations: China is the EU's third-largest trading partner. The forum aims to find ways to mitigate the impact of trade policies and address current global and geopolitical economic challenges.
• Areas of Discussion: Discussions include cooperation on sustainable development, security, AI, and Electric Vehicles (EVs) under the existing EU-China comprehensive agreement on investment.
• Economic Growth: Despite headwinds, there are signs of increased economic growth, with trade volumes showing a growth of around 3% compared to the previous year.
• China's Ambassador to the EU: Emphasized the need for further collaboration rather than competition, citing different political systems and approaches to the world stage. Stated there is no reason for the two sides to be enemies.
• Business Uncertainty: A report from the China Chamber of Commerce to the European Union indicated that over 80% of surveyed Chinese enterprises operating in Europe expressed heightened levels of unpredictability and uncertainty. However, many remain confident in continued investment.
• EU's Stance on Imports: The EU is planning to crack down on cheap Chinese parcels entering the bloc, potentially imposing duties as early as next year to enhance competitiveness and address concerns about market flooding. This is expected to elicit a strong reaction from Chinese businesses.

China: Baidu's AI Advancements

Chinese internet search pioneer Baidu has unveiled new AI chips and an updated version of its flagship large language model, Ernie, to compete with market leaders.

Key Details:

• Ernie 5.0 Model: An updated version of Baidu's AI flagship model, positioned against rivals like Deepseek, Gemini, and OpenAI's GPT-5. While not always achieving the highest scores in tests, it demonstrates Baidu's commitment to the AI sector.
• New AI Semiconductors: Baidu introduced two new AI chips, the M100 and M300, scheduled for release in 2026 and 2027, respectively. These chips aim to provide powerful, low-cost, and controllable AI computing power to support China's self-sufficiency efforts. Specifications are yet to be disclosed.
• Founder Robin Li's Concerns: Baidu founder Robin Li addressed worries about an "AI bubble," criticizing "unhealthy, unsustainable structures" where chip makers benefit most from AI, rather than app developers.
• Competitive Pressure: Baidu faces pressure from open-source models and AI-native apps. Its revenue in the previous quarter dropped to a three-year low due to fierce competition.

Business and Markets

Greater China Markets

• Shanghai Composite: Ended the day 0.73% higher.
• Shenzhen Component: Performed better, up 1.8%, driven by new energy stocks.
• Hong Kong Hang Seng Index: Climbed for the fourth consecutive session.
• JD.com: Exceeded market expectations with a 14.9% year-on-year revenue increase, benefiting from steady consumer spending, government subsidies, and lower prices. Its Hong Kong shares closed down 0.25%, while US-listed shares were up over 5% in pre-market trade.
• Tencent: Reported a better-than-expected 19% growth in the third quarter, surpassing projections of 5%. Its Hong Kong shares were down 0.15% before the results were announced.
• Investor Focus: Investors are scrutinizing earnings from leading Chinese tech companies for insights into their AI adoption and spending plans.

Hamza Aayob (Pharaoh Capital) on China's Tech Sector

• Divergent Approaches: China and the US have different approaches to tech. While US earnings have been robust, China's earnings growth is also around 11%, with expectations of acceleration in the coming year, particularly in tech.
• Market Segments: The market is divided into the "new economy" (digital, tech) and the "old economy."
• Government Support: China is providing top-down support for the private sector, recognizing its role in economic growth and debt reduction.
• Investor Confidence: Investors are increasingly confident in the ability of Chinese big tech companies to perform in terms of earnings and productivity, similar to their US counterparts. Pharaoh Capital remains bullish on Chinese big tech.

Japan: SBI Shinsei Bank IPO

• Planned Listing: Japanese lender SBI Shinsei Bank is reportedly planning an initial public offering (IPO), potentially one of the country's largest listings this year.
• Share Offering: The bank aims to sell approximately $2.4 billion worth of shares, valuing the bank at around $6.5 billion.
• Background: SBI Shinsei Bank was delisted two years ago when its parent, SBI Holdings, repaid outstanding debt to the Japanese government. The bank had received a 370 billion yen (approximately $2.4 billion) lifeline in the 1990s after the country's bubble economy burst. This debt was fully repaid only a few months ago.
• Market Timing: Analysts believe the timing is favorable for a bank listing in Japan, given the performance of Japanese financial stocks this year.

Japan: Wholesale Prices and Inflation

• October PPI: Japan's wholesale prices rose more than expected in October, with the producer price index (PPI) increasing by 2.7%, exceeding market forecasts by 0.2 percentage points.
• Inflationary Pressure: The figures are likely to put pressure on the Bank of Japan to consider resuming rate hikes as early as December.
• Inflation Outlook: Analysts anticipate wholesale inflation to slow if Prime Minister Fumio Kishida's plans to lower utility prices are approved.
• Fiscal Policy: The Japanese government is expected to announce a stimulus package this month, signaling an expansionary fiscal policy. This has put pressure on the Japanese yen, making imports more expensive and contributing to upward inflation pressure.

US Markets and Government Shutdown

• End of Shutdown: Markets in Asia ended mostly higher after President Trump signed a funding bill, ending the longest US federal government shutdown in history.
• Nikkei 225 (Tokyo): Ended the day 0.4% higher.
• Kospi (Seoul): Up by 0.5%.
• Investor Focus: Attention is now shifting to the US Federal Reserve's outlook following Washington's reopening.
• Gold Rally: Gold has been rallying, partly due to expectations of further rate cuts.
• Economic Data Void: The shutdown prevented the release of official jobs and inflation data for October, leading investors to rely on private statistics.
• Gold Prices: Currently up by 0.82% in Asian trade, trading at $4,232.89 per ounce.
• US Index Futures: Dow Jones futures are flat, while S&P 500 futures are down 0.16%.

Simon Marx (Washington DC) on Post-Shutdown Recovery

• Immediate Reopening: Hundreds of thousands of federal government workers will return to work, and furloughed civil servants will be rehired.
• Resumption of Payments: Food and nutritional assistance payments will resume immediately.
• Flight Disruptions: Flight schedules may not return to normal for several days. The transportation department is extending cutbacks in flights at 40 airports nationwide due to a broader shortage of air traffic controllers. The duration of these disruptions remains uncertain.

Hong Kong and Shanghai Hotels: CEO Interview

Benjamin Vusho, CEO of Hong Kong and Shanghai Hotels, expressed cautious optimism for 2026 luxury demand, with Japan and Southeast Asia leading the growth.

Key Points:

• Geographical Balance: The Peninsula Hotels portfolio is geographically balanced, with 50% in Asia-Pacific.
• Growth Drivers: Strong growth is currently coming from their three hotels in Europe (London, Istanbul, Paris). The US and Middle East markets are also showing significant interest. Saudi Arabia and the GCC region are contributing to global growth.
• Asia-Pacific Outlook: Cautiously optimistic, with very strong and encouraging results from Tokyo and the Japanese market.
• Greater China: Moderate growth is observed due to a lack of full recovery since 2018. However, Shanghai is showing signs of increased interest from luxury consumers, and Hong Kong has seen a much better-than-expected recovery in the last three months.
• Southeast Asia: Hotels in Manila and Bangkok are performing robustly.
• Luxury Experience: Vusho emphasizes creating memorable experiences beyond the hotel room, focusing on guest interactions and moments created, which he believes differentiates The Peninsula Hotels.
• Michelin Recognition: All 12 Peninsula hotels have earned prestigious Michelin Key hotel recognition.

Taiwan: Addressing Labor Shortages with an Aging Workforce

Taiwan is facing a significant labor shortage due to its aging population and low birth rate, prompting companies to re-evaluate their hiring strategies and consider older workers.

Key Issues and Trends:

• Retirement Waves: Taiwan is projected to lose nearly 6.7 million working-age people in two retirement waves. The first began in 2023 with baby boomers, and the second will follow with Generation X in approximately 16 years.
• Low Birth Rate: A contributing factor to the difficulty in hiring, compounded by young people spending longer in education and the attractiveness of better-paying tech jobs and flexible gig work.
• Rise of Older Workers: Employment among those of retirement age has increased by about a third over the past decade.
• Need for Adaptation: Analysts suggest businesses need to adapt by offering flexible hours, lighter workloads, and more senior-friendly environments.
• Current Employment Rate: Only 10% of individuals aged 65 and above are currently employed, a rate lower than in comparable aging societies like South Korea, Singapore, and Japan.
• Annual Retirements: Approximately 110,000 people retire in Taiwan each year, a record high that strains the labor market.
• Company Mindset Shift: Companies like Wellp Prime are making seniors a part of their long-term plans, requiring a shift in perspective.
• Personal Motivation: For retirees like Jeremy Hang, returning to work offers more than just income; it provides purpose, connection, and mental/physical activity.

Victoria Jen (CNA) on Solutions:

• Bringing Seniors Back: Making it easier for seniors to continue working through flexible or part-time jobs.
• Improving Childcare: Enabling more women to stay in or return to the workforce. Taiwan has low female participation rates after age 30.
• Boosting Productivity: Increasing output per worker through automation, AI, and digitalization, with Taiwan's tech sector well-positioned to lead.
• Immigration: Allowing more skilled professionals and easing pathways for migrant workers in sectors like healthcare and caregiving to fill critical gaps, requiring political will and integration policies.
• Long-Term Goal: These measures aim to slow the labor shortfall, sustain growth, and buy time for longer-term changes like raising the birth rate.

Malaysia: Rapper Namewei Released on Bail in Influencer Murder Investigation

Malaysian rapper Namewei has been released on police bail pending the completion of an autopsy report in the murder investigation of Taiwanese influencer Iris Sierin.

Key Details:

• Namewei's Release: Released on a two-week police bail after spending nine days assisting the probe.
• Incident: Iris Sierin's body was found in a five-star residential suite in Kuala Lumpur on October 22nd. Namewei was present at the time and has maintained his innocence.
• Legal Status: The Attorney General stated there is insufficient evidence to charge Namewei or link him directly to Sierin's death, ordering the police to continue their investigation.
• Case Reclassification: The case was reclassified from sudden death to murder.
• Autopsy Report: Sierin's body remains at the KL General Hospital, awaiting the full autopsy report.
• Passport Status: Namewei's passport has not been surrendered to the police, and he has pledged not to flee. He has also posted bail for two separate drug-related offenses.

Japan: Police Authorized to Use Rifles Against Bears

Following a record number of deadly bear attacks, Japanese police are now authorized to use rifles to kill bears, a significant change to the nation's strict gun laws.

Key Developments:

• New Rules: The new regulations took effect today, expanding police rifle use beyond traditional crime-fighting.
• Record Attacks: Since April, bear attacks have resulted in 13 fatalities, the highest toll on record, with over 200 attacks reported in the same period.
• Special Police Units: Special police firearms units, including snipers and emergency coordinators, are being deployed to hard-hit areas in northeastern Japan (Iwate and Akita prefectures).
• Previous Measures: Municipalities could previously commission hunters for emergency bear shootings. Police relied on evacuation, area security, and patrolling school routes.
• Encouraging Hunters: Authorities are encouraging retired police and military personnel to obtain hunting licenses.

Mitch Ishida (CNA) on the Significance:

• Hunter Shortage: There are 150,000 licensed hunters nationwide, but many do not actively hunt, are aging, and find the compensation for dealing with dangerous wildlife unappealing.
• Increased Compensation: Many towns and cities are raising offers to hunters due to the life-or-death nature of bear encounters.
• Police Training: Police corps in Akita and Iwate prefectures have been trained by veteran hunters on bear behavior and rifle usage.
• Daily Incidents: Bear-related incidents are reported daily across Japan, including sightings on airport runways and university campuses, leading to flight delays and lockdowns.
• Pet Incidents: Recent incidents include pet dogs being captured by bears and never found.

Personal Safety Measures:

• Anti-Bear Spray: In high demand and selling out quickly, made with chili pepper ingredients.
• Bells and Whistles: Used to deter bears with loud sounds, also experiencing stock shortages.
• Tourist Purchases: Foreign tourists are also buying these products for hiking.
• Awareness: Experts warn of fake videos on social media and emphasize the need for caution.

South Korea: College Scholastic Ability Test (CSAT)

Over half a million South Koreans have completed the College Scholastic Ability Test (CSAT), a high-stakes exam often referred to as the "test of a lifetime."

Key Details:

• Test Takers: The number of test takers increased by 6% compared to last year, making it the largest cohort in seven years. This is attributed to the "golden pig" birth year of 2007, which saw a mini baby boom.
• Significance: A top score is considered a crucial step towards a good university, a solid career, and a comfortable retirement.
• Support Measures: Rush hour was staggered, extra public transport was provided, police escorted latecomers, and flights were grounded during the English listening section to ensure a focused environment for test-takers.
• Results: Results are scheduled to be released on December 5th.

Japan: Record-Breaking Hermes Birkin Bag Sale

A custom-made Hermes Birkin bag, originally created for actress Jane Birkin in the 1980s, has been sold for a record $10 million USD.

Key Information:

• Bag's Significance: The bag is considered an era-defining design of the 20th century.
• Origin Story: Jane Birkin requested a stylish yet functional bag from Jean-Louis Dumas of Hermès for use as a young mother, with space for baby bottles. Dumas sketched the concept on a flight.
• Current Owner: The bag was acquired at a Sotheby's auction in Paris by a Japanese company that buys and sells secondhand luxury goods.
• Valuation's Plans: Valuance has no immediate plans to profit from the bag and will first exhibit it globally, starting at one of its stores in Tokyo's Omotesando district.

Japan: TeamLab Bio Vortex Kyoto Exhibition

An immersive art space in Kyoto, TeamLab's Bio Vortex exhibition, offers visitors new experiences that blur the lines between observer and artwork.

Key Features:

• Scale and Content: Showcases approximately 50 immersive digital artworks in a 10,000 square meter space.
• TeamLab's Approach: Known for blending art with technology and nature, as seen in their Tokyo and Osaka museums.
• Kyoto's Uniqueness: This exhibition aims for a more immersive experience, incorporating elements beyond just visual engagement, such as fragrance.
• Permanent Museum: This is TeamLab's latest and largest permanent museum since its founding over two decades ago.
• Global Reach: TeamLab has expanded its collections internationally, with museums in New York and Singapore.
• Guinness World Record: TeamLab Planets in Tokyo set a Guinness World Record for the most visited museum by a dedicated art group, with 2.5 million visitors in its 2023 fiscal year.