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MUMBAI/CHENNAI: Just as the microfinance sector appears to be emerging from a prolonged asset-quality stress cycle, a weaker monsoon forecast threatens to create fresh challenges. With the India Meteorological Department (IMD) downgrading its southwest monsoon forecast to “below normal” — potentially the weakest in 11 years — concerns are resurfacing for India’s over ₹3-lakh-crore microfinance […]

The article Weak Monsoon Forecast Raises Fresh Concerns For India’s Rs 3 Lakh Crore Microfinance Sector appeared first on Latest India news, analysis and reports on Newspack by India Press Agency).

The yen traded near 159.92 per dollar in Asian dealings, close to the level widely viewed by traders as a possible trigger for official action. The move erased much of the currency’s rebound after Japan’s ¥11.7 trillion intervention campaign earlier this year, leaving markets alert to fresh warnings from the Ministry of Finance.

Dollar demand strengthened after renewed fighting in the Gulf raised fears of wider disruption to energy supplies and trade routes. The US currency benefited from its reserve status, while risk-sensitive currencies came under pressure. The dollar index held around 99.27, supported by geopolitical uncertainty and firm US labour indicators that have reduced expectations of near-term monetary easing by the Federal Reserve.

Japan’s authorities have intensified verbal warnings as the yen weakens. Finance Minister Satsuki Katayama has said the government is ready to respond appropriately to excessive currency moves, language that traders typically read as a signal that intervention remains on the table. Officials have also stressed coordination with the United States, a politically sensitive point because unilateral currency action can draw scrutiny from trading partners.

The yen’s slide reflects a combination of external pressure and domestic policy constraints. Japan remains heavily dependent on imported energy, much of it priced in dollars. Higher oil prices therefore worsen the trade position and add pressure to household costs, while a weaker yen raises import bills further. Brent crude climbed towards $95 a barrel as Gulf tensions fed concerns over supplies, adding another layer of strain for Japan’s economy.

Attention is now focused on Bank of Japan Governor Kazuo Ueda, whose next policy signals will be watched closely ahead of the June 15-16 policy meeting. Markets have increased bets that the central bank could raise interest rates from 0.75% to 1%, especially as imported inflation pressures build. Any move would mark a further step away from the ultra-loose policy framework that kept Japan’s rates far below those of other major economies for years.

Still, the Bank of Japan faces a difficult balance. A rate increase could support the yen and help restrain inflation expectations, but policymakers remain cautious about tightening too sharply while domestic demand stays uneven. Wage growth has improved, yet household purchasing power remains vulnerable to higher energy and food costs. A premature tightening cycle could hurt consumption just as companies pass on higher input costs.

The interest-rate gap with the United States remains central to the yen’s weakness. US policy rates are still high by comparison, keeping dollar assets attractive to global investors. Stronger US jobs data has strengthened the argument that the Federal Reserve may keep policy restrictive for longer, or even consider further tightening if inflation risks intensify. That has limited any relief for currencies trading against the dollar.

Other major currencies also softened. The euro slipped as investors assessed rising energy-driven inflation in the eurozone and the possibility of a European Central Bank rate increase at its June 11 meeting. Sterling edged lower, while the Australian and New Zealand dollars were weighed down by weaker risk appetite. Cryptocurrency markets also came under pressure as investors moved away from volatile assets.

For Japan, the 160 level carries market and political significance. Authorities intervened when the yen breached similar levels in 2024 and again used large-scale buying this year to slow the currency’s decline. The effectiveness of intervention, however, depends on whether monetary policy and global market conditions move in the same direction. Without a narrower yield gap or a broader fall in the dollar, direct yen purchases can lose impact quickly.

The Tokyo-based maker of NAND flash memory and solid-state drives has become one of the most closely watched stocks on the Tokyo Stock Exchange after a sharp rally tied to demand for data-centre storage, AI servers and high-performance memory systems. Its market capitalisation has climbed into the tens of trillions of yen, placing it near Toyota and behind SoftBank Group in a reshuffled ranking that would have seemed unlikely when Kioxia priced its initial public offering at 1,455 yen a share in December 2024.

The shift marks a wider challenge to the long-standing dominance of Japan’s manufacturing champions. Toyota, the global carmaker that symbolised the strength of Japan Inc. for decades, has been displaced from the top position by SoftBank during the latest AI-led surge, while Kioxia has risen rapidly from a former Toshiba memory unit backed by Bain Capital into a central player in the market’s technology rotation.

Kioxia’s climb reflects investor expectations that memory will remain a bottleneck in AI infrastructure. Generative AI systems require vast amounts of storage and high-speed data movement, pushing demand beyond the older cycle driven mainly by smartphones and personal computers. Data-centre operators, cloud companies and chip designers are competing for components needed to train and run large AI models, giving memory producers stronger pricing power after years of volatility.

The company’s earnings have strengthened sharply. Kioxia has projected operating profit of about 1.3 trillion yen for the April-June quarter, a figure that puts it among the most profitable listed companies in Japan. Its latest annual results showed strong momentum in revenue, margins and cash generation, helping ease earlier concerns about debt and cyclicality. Rating upgrades to investment grade have added to the perception that the balance sheet is improving at a time when investors are rewarding semiconductor exposure.

Kioxia’s origins give its rise broader industrial significance. The company traces its roots to Toshiba’s memory business, which was sold to a Bain-led consortium in 2018 after Toshiba’s financial crisis. The group was renamed Kioxia in 2019, drawing on the Japanese word for memory and the Greek word for value. Its public listing in 2024 valued it below 800 billion yen, after earlier IPO attempts were delayed by weak valuation conditions and pressure in the memory market.

That cautious debut contrasts sharply with its current status. Shares have multiplied as investors reassessed the role of NAND flash in AI systems, especially as large-scale data centres require higher storage density, faster access and more energy-efficient hardware. Kioxia has also been developing advanced BiCS FLASH technology and promoting next-generation SSDs for AI storage infrastructure.

The rally has also lifted questions over valuation risk. Memory chips remain one of the semiconductor industry’s most cyclical segments, with prices exposed to shifts in capital spending, inventory levels and customer demand. A sharp rise in market value leaves Kioxia vulnerable if hyperscaler investment slows, if competitors add capacity faster than expected, or if customers push back against higher pricing.

Competition is intense. Samsung Electronics, SK Hynix, Micron Technology and SanDisk remain key players across memory markets, with SK Hynix holding a dominant position in high-bandwidth memory used in AI accelerators. Kioxia’s strength is more closely tied to NAND flash and SSDs, where demand from AI infrastructure has broadened the market but does not eliminate the risk of oversupply once new capacity comes on stream.

Toyota’s relative decline in the rankings does not point to operational weakness alone. The carmaker remains one of the world’s largest manufacturers by sales and a major profit generator, but investors have been rotating away from traditional industrial leaders towards companies with direct AI exposure. Concerns over electric-vehicle competition, currency movements and the cost of future technologies have weighed on auto valuations, even as Toyota continues to command global scale in hybrid vehicles and supply-chain management.

SoftBank’s ascent has further highlighted the changing market narrative. Its exposure to Arm and AI-related investments has drawn investors seeking Japan-based access to global AI infrastructure. Together, SoftBank and Kioxia now represent a market story centred on chips, data centres, software platforms and computing capacity rather than the export-led industrial model that long defined Japan’s equity market.

Foreign investor flows have amplified the shift. Japan’s equity market has benefited from corporate-governance reforms, stronger capital returns and renewed interest in companies linked to the AI supply chain. The Nikkei 225 has reached record territory, though the rally has been uneven, with gains concentrated in a limited group of technology-linked names while broader market performance has been more mixed.

Kioxia’s next test will be whether it can convert favourable pricing and sold-out capacity into durable earnings. Investors will look for clearer shareholder-return plans, disciplined capital expenditure and evidence that AI storage demand can remain strong beyond the current investment wave. The company’s contemplated US share listing would widen access to global technology investors and could further raise its profile if market conditions remain supportive.

The shift reflects a sharp change in investor preference after months of underperformance by Hong Kong equities against mainland peers. Mainland investors sold about HK$3.6 billion of Hong Kong shares through the trading links last month, the first monthly net outflow since June 2023 and one of only a small number of monthly selling episodes since the southbound channel became a key route for mainland money into the city’s market.

The move is striking because southbound buying has been one of the strongest supports for Hong Kong stocks over the past year. Mainland funds poured into high-dividend banks, telecoms groups, energy companies and internet platforms during earlier phases of the rally, helping offset caution among global investors. That support is now weakening as domestic funds chase companies tied to AI infrastructure, chips, optical modules, software and computing power.

Onshore AI shares have delivered a stronger performance than Hong Kong’s technology benchmarks this year. The CSI Artificial Intelligence Index has risen sharply, while the Hang Seng Tech Index has lagged, weighed down by concerns over platform margins, heavy spending on AI models and pressure from subsidy battles in e-commerce and online services. The divergence has encouraged active money managers and retail traders to reassess whether Hong Kong-listed internet giants still offer the most attractive exposure to China’s technology story.

The change in flows also comes as Beijing’s industrial policy continues to favour advanced manufacturing, domestic semiconductors, large language models and high-end computing. Companies linked to AI servers, data centres, optical communications, robotics and chip design have become favoured market proxies for China’s effort to reduce dependence on foreign technology. That policy backdrop has helped support valuations even as questions persist over earnings visibility, capital expenditure demands and competition.

Cambricon Technologies, Zhongji Innolight, Kingsoft Office, iFlytek and other mainland-listed technology names have been among the companies watched closely by investors seeking domestic AI exposure. Hong Kong still hosts major technology groups such as Tencent, Alibaba, Baidu, Meituan and Xiaomi, but the market’s heavyweight structure makes it more exposed to mature platform businesses than to the faster-growing AI hardware and infrastructure supply chain favoured by onshore traders.

Hong Kong’s role as a fundraising centre remains intact despite the outflow. The city has continued to attract listings from technology, healthcare, robotics and semiconductor-related companies, while mainland firms still view it as the most practical offshore venue for raising international capital. Several AI and chip-linked companies are preparing or considering Hong Kong share sales, suggesting the city remains central to China’s capital market architecture even as secondary-market money rotates elsewhere.

The weakness in southbound appetite also reflects broader caution over Hong Kong valuations after a strong earlier advance. Investors who bought the market for dividends and policy support are locking in gains while seeking higher-beta opportunities at home. The shift does not necessarily point to a structural rejection of Hong Kong stocks, but it does show that mainland money is becoming more selective after helping drive earlier momentum.

Regulatory pressure on offshore investment channels may also be influencing behaviour. Authorities have tightened scrutiny of unauthorised cross-border trading accounts and offshore brokerage activity, reinforcing the appeal of regulated domestic routes. While Stock Connect remains an approved mechanism, wider efforts to keep capital within supervised channels have added another layer of sensitivity around outbound allocations.

Market analysts say the key question is whether the AI-led onshore rally can broaden beyond a narrow group of highly valued companies. China’s AI supply chain is benefiting from state support, falling model costs and growing enterprise adoption, but investors face risks from crowded positioning, uneven profitability and rapid technological shifts. Several AI-linked companies still trade more on expectations than on proven earnings, leaving the sector vulnerable to volatility if sentiment turns.

The reported move, if confirmed, would mark a significant shift in the composition of India’s external buffers at a time when oil prices, foreign portfolio outflows and import demand are combining to test the country’s balance of payments position. The RBI has not publicly confirmed any gold sale of that scale, and the latest available reserve data show a fall in the value of gold holdings rather than a definitive disclosure of physical bullion sales.

India’s foreign exchange reserves fell to $681.4 billion for the week ended May 22, down $7.5 billion from the previous week. Foreign currency assets declined by about $3 billion to $543 billion, while the value of gold reserves dropped by roughly $4.5 billion. The fall came as the rupee traded near record lows, having weakened by more than 4 per cent since the outbreak of the US-Iran conflict and the accompanying rise in energy prices.

The rupee has been under sustained pressure from higher crude oil and liquefied natural gas costs, wider hedging by importers and withdrawals by overseas investors from domestic equities. Brent crude has traded in the mid-$90 range, raising concern over India’s import bill because the country depends heavily on overseas energy supplies. Any prolonged disruption in Gulf shipping routes would add to inflation risks and intensify demand for dollars from refiners and importers.

The RBI has intervened through state-run banks to slow the currency’s decline, with traders indicating that the central bank has been uncomfortable with disorderly depreciation. The rupee was around 95 to the dollar this week after briefly sliding close to 97 in May. The central bank’s policy decision due this week is being watched for signals on whether it will rely mainly on liquidity tools, dollar sales and administrative measures, or consider a firmer monetary response.

The reported $12 billion gold-related action has drawn attention because India’s gold holdings have expanded in importance within the reserve portfolio. The central bank held about 880.5 tonnes of gold at the end of March, with gold accounting for nearly 17 per cent of total foreign exchange reserves. The physical stock has been broadly steady around 880 tonnes since mid-2025, suggesting that changes in the dollar value of gold reserves can reflect price movements, accounting effects and reserve operations as well as outright sales.

Gold has become a larger part of central bank reserves worldwide as monetary authorities seek diversification away from dollar assets and protection against geopolitical shocks. India has also moved more of its bullion to domestic vaults, reducing custody risks linked to overseas storage. That strategy had been seen as a long-term strengthening of sovereign reserve control, making any suggestion of sizeable gold liquidation politically and financially sensitive.

The government has moved separately to curb foreign exchange outflows. Import duties on gold and silver have been lifted sharply to about 15 per cent from 6 per cent, reversing earlier tariff relief and increasing the landed cost of precious metals. Rules around some bullion imports have also been tightened, while appeals have been made to households to reduce discretionary gold purchases.

Fuel prices have also been raised as state-run retailers pass through part of the increase in international crude costs. Petrol and diesel prices have risen after several years of limited retail adjustments, adding to household costs but reducing the burden on public-sector oil marketing companies. The step is intended to limit under-recoveries at fuel retailers and reduce the fiscal strain that would otherwise build if global prices stay elevated.

The combined policy response reflects the strain of a classic external shock: a weaker currency lifts import costs, higher oil prices widen the trade deficit, and investors demand higher compensation for risk. India enters this phase with substantial reserves, moderate inflation by past crisis standards and a financial system that remains broadly stable, but the speed of the rupee’s decline has revived comparisons with earlier episodes of currency stress.

For markets, the key question is whether the central bank can preserve confidence without exhausting liquid dollar assets or signalling panic. A calibrated use of reserves can smooth volatility, but heavy intervention may raise doubts if investors see it as a defence of a particular exchange-rate level. The RBI’s challenge is to keep currency markets orderly while allowing enough flexibility for the rupee to adjust to the oil shock and global risk aversion.

Ancestral halls and the scholars who never left

In Shunde’s Yang’e Village in southern Guangdong Province, Julian and Absalom step into the cultural space of a community – once the Lu Ancestral Hall, where scholar Lu Cang founded an academy after retiring from office. It is a small village but home to 14 civil and military jinshi scholars during the Ming (1368-1644) and Qing (1644-1911) dynasties, a reflection of its long-held reverence for education. A jinshi was the highest and most prestigious rank in China’s imperial civil service examination system – a scholar who passed the final court-administered exam. But the village’s living heritage does not stop at books. Here, the lion dance – an intangible cultural heritage item – passes down from old masters to children. “If they want to learn, we just provide the opportunity for the kids,” said lion dance coach Feng Jianhua. “So, they can carry forward our millennia-old culture.”

The village that gave the world kung fu

Few know Bruce Lee’s ancestral home stands in Jun’an, Shunde. Guangdong has long been the heartland of southern Chinese martial arts. Locals greet each other not with “Have you eaten?” but “Have you had your night porridge?” – a phrase that means “Have you been practicing kung fu?”

Luo Dezhi, a fifth-generation inheritor of Shaolin Wing Chun and Bruce Lee’s fellow disciple, has trained for over 50 years. “For a martial artist, virtue comes first, then a strong body,” he said. “Kung fu represents traditional Chinese culture – to strengthen the body, protect oneself, and help others.”

Soft gold from village waterways

A century ago, merchant He Mingshi shipped xiangyunsha – gambiered Canton gauze, known as “soft gold” – from Shunde’s villages down the Pearl River Delta to countries abroad, like Malaysia.

The saying goes: “A tael of gold for a tael of silk.” Today, this UNESCO-recognized intangible cultural heritage is still made by hand. “It’s way harder than it looks,” Absalom said as he tried the process. Inheritor Chen Hongfa watched and smiled. From Shunde, Guangdong, the craft reaches the world.

UNESCO gastronomy inside towns

Shunde is one of only a handful of UNESCO Cities of Gastronomy worldwide. Within Guangdong – a province famous for Cantonese cuisine – Shunde is widely regarded as its birthplace. “About ten years ago, they converted this place into a food street,” a fish skin vendor said. Now, visitors come for crispy African crucian carp skin, fried milk (a recipe unchanged since 2002), and Shunde raw fish slices. “This is the best choice I’ve made this year so far,” Absalom said. “I would never imagine tasting this in a village.”

More than a series – a travel companion

Village Voyage is more than a television feature. It is a living travel guide – a “road book” that maps Shunde’s hidden gems through detailed itineraries, rich photo essays, and short-form videos. The series expands beyond the screen with guest vlogs and first-person POV footage, placing viewers directly into the boat, the kung fu training hall, and the bustling food street. For armchair travelers and policymakers alike, it offers an immersive, replicable vision of rural development. Whether you seek cultural roots, martial arts legacy, merchant wisdom, or the simple warmth of a village meal, this series delivers it all, through the quiet rituals of daily life: a bowl of porridge, a punch practiced at dawn, a piece of silk dried in sunlight.

An open, confident rural China is not a relic. It is a flight or train ride away.

Hashtag: #CGTN

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