27/06/2025

BIZ & FINANCE FRIDAY | JUNE 27, 2025

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Hong Kong intervenes to defend currency peg HONG KONG: Hong Kong’s de facto central bank said yesterday it bought US$1.2 billion (RM5 billion) worth of Hong Kong dollars after the local currency hit the weak end of its trading band. The city’s currency is pegged in a narrow range of 7.75-7.85 to the greenback, and the Hong Kong Monetary Authority (HKMA) intervenes at both ends to underpin the peg. HKMA’s intervention comes after the Hong Kong dollar hit the weak side of the band for the first time in two years last Friday. “Depending on the direction of capital flows and the supply-demand conditions for the Hong Kong dollar, the weak-side Convertibility Undertaking (CU) may be triggered again in the future,” Eddie Yue, chief executive of the HKMA, said in a online statement. “As the aggregate balance declines, Hong Kong dollar interbank rates may increase ... The HKMA will continue to closely monitor market developments and the external environment to ensure the orderly operation of the Hong Kong dollar markets.” The aggregate balance, the key gauge of cash in the banking system, will shrink by HK$9.42 billion today, HKMA said in a separate statement. If the Hong Kong dollar remains weak and triggers additional intervention by HKMA, local currency liquidity is likely to shrink further. “This is encouraging carry trades to stay long USD/HKD, and it could take time for Hong Kong dollar liquidity conditions to normalise, with more Hong Kong dollar buying interventions needed to reduce the aggregate balance,” said DBS strategist Chang Wei Liang. Hong Kong interbank rates rose across the board yesterday following the HKMA move. The Hong Kong dollar experienced sharp swings over May and June, as foreign and Chinese capital flocked to blockbuster share offerings or to pick up undervalued stocks in the Asian financial hub. The resulting strength in the currency triggered by the inflows pressured the HKMA to sell Hong Kong dollars to protect the peg, flooding the banking system with cash and driving the local interest rates sharply lower. The plunging domestic interbank rates spurred speculative positions that used Hong Kong dollar borrowings to bet on other markets.

Japan hits M&A record of US$232 billion in first half

borrow money for energy transition, which have already been finalised. “We still can use the guarantee. So now it is up to us whether we want to use it or not,“ Butarbutar said. The rest of the US commitment can be channelled through bilateral cooperation between the two countries, though this funding will no longer be a part of JETP, he said. – Reuters The long-standing trend of Japanese firms looking abroad for growth opportunities in the face of a shrinking home market has continued despite heightened uncertainty in the global economy. Japanese financial institutions, such as insurer Dai-ichi Life and Nomura Holdings, announced major deals and bankers say demand remains robust across industries. “Debates over tariffs and foreign conflicts mean that some investment decisions are taking longer than usual and some customers have become more cautious, but we consider appetite for investment itself to remain very strong,” Nitta said. Japanese firms themselves have also become more attractive acquisition targets as global firms have reconsidered their supply chains and distribution of resources over the past two years, Nitta added. However, there are some hurdles that could slow dealmaking in Japan. Uncertainty around the global economic outlook has made assessing companies’ future prospects more difficult, leading to a disconnect in valuation expectations between buyers and sellers. This has caused an increasing number of deals to fail, said Atsushi Tatsuguchi, head of the M&A advisory group at Mitsubishi UFJ Morgan Stanley Securities. As part of the corporate reform drive, firms are under rising pressure to offload non-core business units, with private equity funds increasingly the destination for the hived off parts. Convenience store operator Seven & I Holdings – itself the target of a buyout bid from Canadian rival Alimentation Couche-Tard – sold off a bundle of its superstores and other peripheral business units to Bain Capital for some US$5.5 billion in March. “Carve-outs of operating companies’ non-core assets will continue to be a trend in the near term,” said SMBC Nikko Securities senior deputy head of M&A advisory Yusuke Ishimaru. Bankers say there is a strong pipeline of potential deals involving private equity firms. Potential deals to be announced in the second half include an acquisition of Japanese cybersecurity firm Trend Micro which has a market value of ¥1.32 trillion (RM36 billion). – Reuters

relatively insulated from global volatility despite the broader geopolitical and macroeconomic uncertainty, helping to underpin deals momentum, they say. A cohort of Toyota Motor group companies and telecoms giant Nippon Telegraph and Telephone took private listed subsidiaries in deals worth US$34.6 billion and US$16.5 billion respectively, among the largest transactions globally. “There are many other deals like these on the way and their number is increasing,” said Kei Nitta, global head of M&A at Nomura Securities. SoftBank Group also led a new fundraising of up to US$40 billion into OpenAI in the biggest private tech funding round in history.

of foreign and activist investor interest, while Japan’s low interest rates – which support deals – mean the appetite for more deals remains strong, bankers say. The deals involving Japanese companies more than tripled in value in the first half, while in the same period Asia M&A value reached US$650 billion, more than double the amount year-on-year, LSEG data showed. Bankers say government calls for better corporate governance, including the privatisation of listed subsidiaries, as well as outbound acquisitions by Japanese firms seeking new growth avenues will keep igniting mega deals. Moreover, Japan has been

TOKYO: Japan is driving Asia’s M&A rebound in 2025 with a record US$232 billion (RM981 billion) worth of deals in the first half, and bankers expect the trend to sustain fuelled by multi-billion dollar take-private arrangements, outbound investments and private equity activity. Management reforms to tackle chronic low valuations among Japanese firms are spurring a flurry o Asia deals double to US$650 billion in strong rebound

China Airlines crew members receiving training at a centre in Taoyuan, Taiwan. – REUTERSPIC

China Airlines to expand fleet with up to 13 new jets TAIPEI: Taiwan’s China Airlines plans to acquire up to 13 new aircraft from aviation giant Airbus in a move to expand its fleet, the company said on Wednesday. China Airlines said the five A350-900s – used for long-haul flights – could be leased for a total of US$1.148 billion or bought for up to US$1.965 billion. Five of them will be leased from the Air Lease Corporation for 10 to nearly 12 years. The remaining three A321s are still being negotiated.

The airline’s board have agreed to buy or lease eight Airbus A321neo and five Airbus A350-900 aircraft, according to two company announcements. Last week, HKMA said the outlook for the direction of the Hong Kong dollar and for interbank rates remains uncertain due to carry trades and other factors. – Reuters US withdrawal from coal phase-down plan to have limited impact on Indonesia: Official The investment is aimed at supporting the airline’s operational development and enhancing the flexibility and competitiveness in its global presence”, it said. The airline also ordered 14 Boeing aircraft in May, with the option to buy another nine planes, after China backed out of a deal to buy Boeing planes due to US tariffs on Chinese products. – AFP

JAKARTA: The withdrawal of the United States from an international collaboration to help developing countries move away from coal will have a limited impact on Indonesia, the country’s top official for the initiative said yesterday. The United States withdrew from the Just Energy Transition Partnership (JETP) of 10 donor nations this year as part of President

which have helped provide electricity to its citizens at the lowest prices in the region. Butarbutar said the US had committed US$60 million in grants to Indonesia – which will now not be received. However, half of the US$2 billion in proposed financial contributions were US guarantees to the World Bank that would have helped Indonesian firms

severe as many people thought,” Paul Butarbutar, acting head of the JETP Indonesia Secretariat told the Financial Times Energy Transition Summit Asia conference. The nation of more than 275 million has repeatedly referenced its low per-capita emissions compared with richer nations, and lack of inexpensive financing to justify reliance on its abundant coal reserves,

Donald Trump’s plans to cut foreign aid. Indonesia had been promised US$20 billion in funds under the partnership in what was described as the “single largest climate finance transaction” by a US official when the plan was first announced in 2022, but very little money has been disbursed. “The direct impact of US withdrawal from the JETP is not so