02/07/2025

BIZ & FINANCE WEDNESDAY | JULY 2, 2025 17 Japan business sentiment holding up for now

Indonesia’s May palm oil exports soar as discounts drive demand JAKARTA: Indonesia’s crude and refined palm oil exports soared 53% in May from a year ago, data from the statistics bureau showed, as the tropical oil started trading at a discount to its rivals, boosting demand from key buyers. The surge in exports from Indonesia, the world’s top palm oil producer, is expected to trim inventories and support prices , which have slipped to a discount against soyoil after commanding a premium earlier this year. According to data, Indonesia exported 1.88 million metric tons of crude and refined palm oil in May, up from year-ago 1.23 million tons. In value terms, exports surged nearly 71% year-on-year to US$1.85 billion (RM7.8 billion), the data showed. Between January and May, Indonesia exported 8.3 million metric tons of crude and refined palm oil, up from 8.01 million tons a year ago, the data further showed. However, the bureau’s data excludes palm kernel oil, oleochemicals and biodiesel. The export surge in May was due to strong demand from India and the subcontinent as palm oil prices were at a steep discount compared to soyoil and sunflower oil, said Anilkumar Bagani, research head of Mumbai-based vegetable oil broker Sunvin Group. “Even in June, exports were robust as palm oil prices were very competitive,“ Bagani said. – Reuters S KOREA JUNE EXPORTS REBOUND ON TECH BOOST SEOUL: South Korea’s exports rebounded in June driven by strong tech demand, though shipments to the United States and China remained weak as Seoul warned that economic risks will persist through the remainder of 2025 due to uncertainty over US tariffs. Exports from Asia’s fourth-largest economy, an early bellwether for global trade, rose 4.3% from the same month last year to US$59.8 billion (RM252.3 billion), data showed yesterday. Shipments to the US fell 0.5% last month, extending losses for a third consecutive month, while those to China were also down for a second month, dropping 2.7%. Exports to the European Union rose 14.7%, while those to Southeast Asian countries gained 2.1%. Imports rose 3.3% to US$50.72 billion, bringing the monthly trade balance to a surplus of US$9.08 billion, the biggest since September 2018. – Reuters SEVILLE:The Inter-American Development Bank (IDB) aims to unlock at least US$11 billion (RM46.5 billion) in fresh climate finance through a series of initiatives to help countries cope with the impacts of global warming that will attract private funds, its president told Reuters. From the sidelines of the 4th International Conference on Finan cing for Development, Ilan Goldfajn said the series of steps taken by the IDB would hopefully yield even more money from the private sector – a key aim of the conference. “We’re not just announcing ideas – we’re launching things that the private sector is asking for: credible tools, scalable platforms, and real opportunities to invest with impact and confidence,” he said. – Reuters IDB PLANS BIG JUMP IN CLIMATE FINANCE

BR I E F S

TOKYO: Confidence among large Japanese manufacturers improved in the three months to June, a central bank survey showed, as firms maintained their bullish long term spending plans, unfazed by the immediate potential hit from steep US tariffs. However, manufacturers slashed their profit estimates and expect business conditions to worsen three months ahead, the closely watched “tankan” survey showed yesterday, suggesting firms see pain from US tariffs deepening later this year. Sentiment among big non manufacturers worsened slightly as some companies worried about rising labour costs, the impact of higher

businesses pushed up their prices in June to offset higher labour costs, according to a survey published yesterday. The S&P Global/CIPS manu facturing Purchasing Managers’ Index improved for a third month in a row to 47.7 in June from 46.4 in May although it remained below the 50.0 growth threshold for a ninth month in a row. The reading was unchanged from a preliminary estimate. The severity of the downturn eased in output, hiring and new orders, the PMI showed. “That said, any hoped for stabi lisation remains fragile and subject to potential headwinds that could severely impact demand, supply chain reliability and future growth prospects,” Rob Dobson, director at S&P Global Market Intelligence said. – Reuters on rising costs, said a BOJ official briefing reporters on the survey. By contrast, an index gauging big non-manufacturers’ sentiment edged down to +34 from +35 in March with companies citing a hit to profits from rising labour costs. Both big manufacturers and non-manufacturers expect busi ness conditions to worsen three months ahead, the tankan showed. Japan’s economy, which shrank an annualised 0.2% in the first quarter due to weak consumption, is bracing for further pain as US tariffs hurt exports. Tokyo has so far failed to con vince US President Donald Trump’s administration to scrap a 25% tariff on Japanese cars and a 24% tariff on other Japanese imports paused until July 9. Corporate activity is holding up, at least for now. Big companies expect to increase capital expenditure by 11.5% in the current fiscal year ending in March 2026, up from a 3.1% gain projected in March and above a market forecast for a 10.0% rise. But many analysts expect the damage from US tariffs on exports and output to intensify later this year, and complicate the BOJ’s decision on when to resume interest rate hikes. A close look at the tankan shows the impact is already being felt by some companies. Sentiment among big machinery and automobile makers – sectors directly hit by the tariffs – worsened in the third quarter. Big manufacturers expect sales from exports to rise just 0.6% in the current fiscal year ending in March 2026, sharply lower than a 4.4% gain in the previous year, the tankan showed. Manufacturers expect recurring profits to fall 8.4% in the current fiscal year after a 5.8% gain in 2024. – Reuters

o Big manufacturers’ mood improves but US tariff worries grow, survey shows

supports our view that the Bank of Japan will resume its tightening cycle before the end of the year,” said Marcel Thieliant, head of Asia Pacific at Capital Economics. The headline index measuring big manufacturers’ business confi dence stood at +13 in June, up from +12 in March and beating a median market forecast for a reading of +10. While some firms complained about the hit from US tariffs, others saw profits improve as they passed

prices on domestic con-sumption and softening demand for luxury goods among overseas tourists. The survey suggests the world’s fourth-largest economy remains relatively resilient, even with increasing global trade uncertainty. It will be one of the data points the Bank of Japan (BOJ) scrutinises at its next policy meeting on July 30-31. “The Q2 Tankan survey showed that the economy is holding up well despite trade tensions, which

Containers are seen at an industrial port in the Keihin Industrial Zone in Kawasaki, Japan. Tokyo has so far failed to convince US President Donald Trump’s administration to scrap a 25% tariff on Japanese cars and a 24% tariff on other Japanese imports paused until July 9. – REUTERSPIC BoE governor highlights weakening labour market, hit to UK economy from uncertainty

LONDON: Bank of England (BoE) governor Andrew Bailey yesterday highlighted Britain’s softening labour market and said rising uncertainty in the global economy had “definitely” hurt economic growth and investment intentions. In an interview with CNBC, Bailey said a key question for the BoE was how much the weakening of the labour market and the economy would help to reduce inflation pressure. Bailey mostly emphasised the downward risks to Britain’s economy rather than the threat of inflation – although he said the BoE was watching “very carefully” for signs that recent price increases might turn out more persistent. Short-dated British government bond yields touched an almost two

curve, Bailey said it likely reflected uncertainty in the global economy. There was no question over the viability of the stock of debt, Bailey said. He described the next annual decision over the size of the BoE’s quantitative tightening process as “live”. In June the BoE held interest rates steady in a two-way split vote. It said it is focusing on inflation risks from a weaker jobs market and from higher energy prices due to the conflict in the Middle East. Investors are betting on the BoE cutting rates in two further quarter point moves to 3.75% by the end of the year. Meanwhile, Britain’s manufacturing sector showed some signs of turning a corner in its long slump and

month low after Bailey spoke. “That increase in uncertainty and predictability is definitely coming through in terms of activity and growth,” Bailey said in an interview with CNBC from a central bank summit in Sintra, Portugal. “When I go around the country talking to businesses, which I do a lot, what they tell me is that they are putting off investment decisions.” He repeated his view that interest rates are likely to fall gradually. On the outcome of the BoE’s next meeting in August, Bailey said: “We’ll see.” “I do see some underlying weakening, particularly in the labour market – and the labour market is softening,” Bailey added. Asked about the steepening of Britain’s government bond yield