23/05/2025

BIZ & FINANCE FRIDAY | MAY 23, 2025

17 S’pore: Technical recession risk after Q1 contraction

Vietnam retroactively cuts subsidies for some solar, wind farms HANOI: Vietnam’s state power utility has cut previously agreed subsidised prices it pays for electricity from some solar and wind farms which now risk defaulting on their debts with banks, according to an investors’ petition seen by Reuters. The document, dated May 16 and sent to Vietnam’s top authorities, follows a first letter in which most of the same signatories warned of billions of dollars of investment at risk because of retroactive changes to subsidies implemented by Vietnamese authorities even as they target a massive expansion of renewables capacity. Starting with January invoices, a subsidiary of Vietnam’s power utility EVN “unilaterally withheld a portion of its payments by applying a provisional tariff of its own proposal”, the document said. “This has caused us to breach commitments to banks and both local and international lenders, face the risk of default under pressure of monthly debt repayments, and suffer cash shortages.” Among the 16 foreign signatories are private equity fund Dragon Capital, the Vietnamese subsidiary of Philippines’ ACEN energy group, and investors from Thailand, Portugal, the Netherlands, South Korea, Singapore and China. – Reuters “Our understanding is that the US side probably meant the agreed basic principles that currency rates should be set by markets and excessive volatility and disorderly movements are not desirable,” Mimura told reporters. – Reuters US agrees with Japan that dollar-yen reflects fundamentals OTTAWA: US Treasury Secretary Scott Bessent and Japanese Finance Minister Katsunobu Kato agreed on Wednesday that the dollar-yen exchange rate currently reflects fundamentals, the US Treasury Department said, a rare and explicit statement on the market situation. President Donald Trump’s focus on addressing the huge US trade deficit and his past remarks accusing Japan of intentionally maintaining a weak yen have led to market expectations that Tokyo will face pressure to strengthen its currency’s value against the dollar to give US manufacturers a competitive advantage. Bessent and Kato “reaffirmed their shared belief that exchange rates should be market determined and that, at present, the dollar-yen exchange rate reflects fundamentals”, the Treasury Department said in a statement. They met on the sidelines of the G7 finance ministers gathering in Canada. In a rather contradictory statement, however, the department also said that, as in their previous meeting in April, they did not discuss foreign exchange levels. Asked about the Treasury’s claim that the two agreed exchange rates reflect fundamentals at a subsequent news conference, Kato said that he was not in a position to comment but added that he did not discuss ‘exchange-rate levels’. “We agreed that currency rates should be set by markets,“ he said. Later on Wednesday, Japan’s top currency diplomat Atsushi Mimura clarified that Kato and Bessent neither discussed currency targets nor current rates.

SINGAPORE: Singapore could slip into a technical recession this year, a government official said yesterday after final GDP data confirmed the city-state’s economy had contracted in the first quarter even before US tariffs were announced. The trade-driven economy grew by 3.9% in the first three months of 2025 from the same period a year earlier, the Trade Ministry said. On a seasonally adjusted basis, the economy contracted by 0.6% in the January-March quarter. It was possible that Singapore could enter a technical recession, defined as two consecutive quarters of contraction, Trade Ministry permanent secretary Beh Swan Gin told a press conference. “However, that doesn’t necessarily equate to full-blown economic recession, which will be, of course, year-on-year numbers,”

o Global economic outlook remains clouded by significant uncertainty: Trade Ministry

Singapore previously warned of the risk of a recession and job losses due to the fallout from US tariffs, with the trade minister last week saying the growth forecast may need to be further adjusted. Despite having a free-trade agreement and running a trade deficit with the United States, the wealthy financial hub has been slapped with a 10% baseline tariff rate by Washington. Other Southeast Asian countries have been threatened with much higher tariffs, although they have been delayed until July and an interim 10% tariff is in place for now. There will also be indirect impacts on Singapore, one of the world’s most open economies and a shipping hub, if the US tariffs constrict global trade. – Reuters has

director Edward Robinson told the press conference that the central bank’s policy stance remained appropriate. The MAS eased policy at reviews in January and April this year. Maybank economist Chua Hak Bin expected the MAS to maintain current policy settings at its July review, as growth appeared resilient and early second quarter data has been encouraging. “The probability of a MAS shift to a neutral bias seems higher in 2026 than 2025 if a recession scenario does unfold as front-loading dissipates and the US-China trade war re-escalates,” he said.

he added. The ministry maintained its growth forecast for 2025 at 0% to 2%, after last month cutting it from 1% to 3% following the US announcement of global tariffs. While recent moves to reduce trade tensions had slightly improved Singapore’s external demand outlook, the environment remained challenging, the ministry said in a statement. “The global economic outlook remains clouded by significant uncertainty, with the risks tilted to the downside,” it said. Monetary Authority of Singapore (MAS) deputy managing

People walking outside office buildings during lunchtime in the financial district of Raffles Place in Singapore yesterday. – AFPPIC

SingTel announces S$2 billion buyback plan SINGAPORE: Singapore Telecommunications (Singtel) medium-term target for “asset recycling’”to S$9 billion, up from the S$6 billion set last year. goodwill and Optus Enterprise’s fixed network assets. Citi analysts noted that the share buyback programme was

profit amid higher prices and growing subscriber numbers. Singtel expects high-single-digit growth in earnings before interest and taxes (EBIT) for fiscal 2026 (excluding associates), following a 20% EBIT jump this year. The company also flagged potential indirect headwinds from global trade tensions, though its services-driven model shields it from the direct impact of trade tariffs. Singtel declared a final dividend of 10 Singapore cents per share, up from 9.8 cents last year. – Reuters

announced yesterday a S$2 billion (RM6.6 billion) share buyback plan and an expanded target for monetising assets, sparking a surge in its shares to their highest in nearly nine years. Southeast Asia’s largest telecom operator said it will buy back S$2 billion worth of its shares over the next three years. And after having recently sold a 1.2% stake in India’s Bharti Airtel for S$2 billion, Singtel said it raised its

The company said it has already achieved over half of the original goal. Singtel shares jumped as much as 3.6% yesterday to S$3.99, their highest level since October 2016. Net profit for the year ended March 31 soared five-fold to S$4.02 billion, supported by one-off divestment gains and the absence of last year’s S$1.47 billion impairment charge related to

announced earlier than expected – a move likely reflecting management’s confidence in its divestment pipeline. The partial sale of Singtel’s Comcentre HQ was the largest contributor to its S$1.5 billion exceptional gain for the year. Post-tax contributions from associates climbed 13%, largely bolstered by Bharti Airtel, which nearly doubled its latest quarterly