Masayoshi Son floats idea of US-Japan sovereign wealth fund

Good morning and welcome back to FirstFT Asia. In today’s newsletter:

• Masayoshi Son floats idea of a US-Japan sovereign wealth fund

• China’s cost-conscious tourists flock to Hong Kong

• The pride and pain of Japanophilia

SoftBank founder Masayoshi Son has floated the idea of creating a joint US-Japan sovereign wealth fund to make large-scale investments in tech and infrastructure across the US.

What we know: The idea has been raised at very high political levels in Washington and Tokyo, including in discussions between Son and US Treasury secretary Scott Bessent. The plan has not yet crystallised into a formal proposal, though the idea has come up several times in recent weeks as Japanese negotiators and the Trump administration edge towards a trade deal.

How the fund could work: Under the suggested wealth fund structure, the US Treasury and the Japanese ministry of finance would be joint owners and operators of the fund, each with a significant stake. They would then open the vehicle to other limited partner investors, and could potentially offer ordinary Americans and Japanese the chance to own a slice.

One person familiar with the discussions said that to be effective in its investment ambitions the fund would have to be “enormous” — with potentially $300bn in initial capital and then heavily leveraged.

What is the appeal of a joint fund? “The theory is that Bessent is looking for revenue streams for the Treasury that do not involve raising taxes, and however far out this joint fund may sound, it would in theory provide that,” said one person briefed on the situation. The person added that Japan wanted “a properly governed covenant that protects Japan from the ad hoc decisions of Oval Office politics”.

Read more about Son’s joint fund idea.

Here’s what else I’m keeping tabs on today:

• Economic data: Singapore publishes the April industrial production index.

• Country Garden: The Chinese developer has a winding up hearing scheduled for today in Hong Kong’s High Court.

• South-east Asia: The 46th Asean Summit begins in Kuala Lumpur, Malaysia.

Five more top stories

1. US oil executives are warning that a decade-long shale boom is ending, as Trump’s tariffs push up costs and falling crude prices squeeze profits. Oil companies are cutting spending and idling drilling rigs, while analysts slash output forecasts, despite the US president’s pledge to “unleash” production.

2. US pressure on Latin America to cut trade with China could lead to economic disaster because the region is so dependent on trade with Beijing, according to the outgoing head of the Organisation of American States. Luis Almagro, secretary-general of the political forum for the past decade, told the FT that “the worst thing that can happen to Latin America is to be forced to choose” between the US and China. Read the full interview.

3. The EU is ready to advance trade talks with the US “swiftly and decisively” but needs Trump to return to his original 90-day negotiation period, European Commission president Ursula von der Leyen said yesterday after a call with the US president. The discussion came two days after Trump said he would impose 50 per cent tariffs on EU imports from June 1.

4. Russia has carried out its largest aerial attack on Ukraine, shattering any hopes that a record prisoner exchange completed yesterday could lead to a cessation of hostilities. At least 12 people were killed and dozens more injured in Sunday’s overnight attack, which the Ukrainian air force said was the single-largest aerial assault of the war so far.

5. Movie fans flocked to see Disney’s Lilo and Stitch and the eighth instalment of Paramount’s Mission: Impossible franchise, giving Hollywood hope for a return to box office growth after years of disappointment. Cinemas in North America raked in more than $260mn through Sunday, setting a record for the Memorial Day holiday weekend.

Join us for a subscriber-only webinar on Wednesday for insights into the most consequential geopolitical rivalry of our time: the US-China showdown. Register now and put questions to our panel.

News in-depth

Chinese tourists are flocking to Hong Kong, but beneath the rising number of visitors from the mainland (34mn last year), the city’s tourism industry is struggling. Chinese tourists are spending less — with some preferring to eat and sleep across the border in neighbouring and cheaper Shenzhen — squeezing revenues for the Asian financial hub’s retail, restaurant and hotel sectors. The rise of cost-conscious day-trippers marks a “structural shift” among mainland Chinese travellers, economist said.

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Map of the day

Last year, as the overall mainland beer market shrank in China, Heineken’s sales volumes increased nearly 20 per cent to just under 700mn litres — almost enough to serve a pint to everyone in the country. The Dutch lager maker is using its partnership with China Resources Beer, China’s biggest brewer, to push into the country’s growing premium market.

Take a break from the news

As a surge in travel to Japan has led to complaints of overtourism, the FT’s Tokyo bureau chief Leo Lewis writes about the “pride and pain of Japanophilia”.