24/07/2025

BIZ & FINANCE THURSDAY | JULY 24, 2025

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Buyers flee Japan bonds as political, fiscal risks rise

S’pore June core inflation up 0.6% year-on-year SINGAPORE: Singapore’s key consumer price gauge rose 0.6% in June from a year earlier, official data showed yesterday, lower than economists’ forecasts. The core inflation rate, which excludes private road transport and accommodation costs, compared with a forecast of 0.7% in a Reuters poll of economists. Headline inflation was 0.8% in annual terms in June, lower than economists’ forecast of 0.9%. The data was released a week ahead of the Monetary Authority of Singapore’s review of its policy settings on July 30. EToro market analyst Josh Gilbert said the softer-than-expected inflation rate adds weight to expectations that the central bank will loosen monetary policy. “With growth still sluggish and inflation now well contained, it will be harder for MAS to justify holding policy steady, and today’s data strengthens that argument.” At the previous review in April, the MAS loosened monetary policy for the second time this year, and downgraded its economic growth forecast for 2025 to 0% to 2%. It also reduced its forecasts for both core and headline inflation this year to 0.5% to 1.5%. – Reuters Trading in Thai Airways to resume on Aug 4 BANGKOK: Thai flag carrier Thai Airways International will resume trading in August, the stock exchange said yesterday, marking the end of a long restructuring process triggered by the pandemic. In 2020, the national carrier went into bankruptcy-protected restructuring, and drew up plans to restructure debts worth 400 billion baht (RM47 billion). As part of those plans, it reduced its workforce by half and trimmed its fleet. It also appointed Piyasvasti Amranand, the airline’s president from 2009 to 2012 to its restructuring committee, along with a number of veteran bankers. Thai Airways had already been making losses since 2012 as a result of growing competition from budget carriers. As part of the restructuring programme, the government reduced its stake, meaning that the carrier lost its state-owned enterprise status. “The SET approves the removal of THAI securities from the possible delisting list, the lifting of its suspension and non-compliance designations,” the Stock Exchange of Thailand said in a statement. Thai Airways has been making operational profits since 2023 and in June it exited the court-guided restructuring programme. Last year, the carrier ordered 45 Boeing 787-9 wide-body jets with an option for 35 more. This month, it also said it could exercise the option as part of Thailand’s tariff negotiations with the United States. – Reuters

“The market’s first instinct was to mark up political risk premia,” said Shoki Omori, chief desk strategist at Mizuho Securities, referring to reports of Ishiba’s resignation. Investors may struggle to position for the uncertainties around the multiple risks, and “consequently, the super-long sector may continue to exhibit subdued conditions through August, and possibly into September”, he said. Ten-year Japanese government bond futures tumbled as much as ¥1.06 to ¥137.54, their lowest since March 28. Japan’s Finance Ministry has scaled back its issuance plan for super-long bonds in response to the surge in JGB yields and poor demand at auctions. The central bank is due to meet again on policy next week. BOJ deputy hovernor Shinichi Uchida said that the trade deal with the US reduces uncertainty, after earlier warning that economic activity and prices were skewed to the downside. – Reuters

Ishiba plans to resign, a source close to the prime minister said. Local media reported the move could happen by the end of next month. However, the prime minister later said there was no truth to the media reports about his intentions. “Attention will soon turn to the next prime minister’s policy agenda and any signals of recalibration from the BOJ as JGB yields climb,” said Charu Chanana, chief investment strategist at Saxo. After the election defeat, investors expect whoever replaces the fiscally conservative Ishiba will support calls for more government spending, widening an already bloated fiscal deficit at nearly 2-1/2 times the size of Japan’s economy. The election result also puts the Bank of Japan in a double bind as prospects of increased spending could keep inflation elevated while potentially prolonged political paralysis and the impact of the trade war provide compelling reasons to go slow on rate hikes.

of an economic slowdown. The 10-year JGB yield jumped as much as 10 basis points (bps) to 1.6%, marking its biggest move in months and the highest level since October 2008. Super-long term JGB yields hit record highs in May and are back near those levels as concerns mount over Japan’s precarious finances. “We’re seeing a possible buyers’ strike playing through,” said Chris Weston, head of research at broker Pepperstone. “Inflation is running far too hot for where interest rates are. The question is why would you buy at these levels?” he said, adding he expected the selloff could extend to UK gilts too. Sunday’s defeat for Ishiba’s Liberal Democratic Party and coalition partner Komeito follows their loss of a majority in the more powerful lower house last year. Opposition parties have advocated for tax cuts and increased government spending to help households deal with inflation.

TOKYO: Japanese government bonds tumbled yesterday, sending benchmark yields to near 17-year highs, as traders priced in increased political risks and a hazy outlook for the central bank’s policy normalisation path. In a sign of how nervous markets are, the Ministry of Finance’s first sale of super-long government debt since a bruising electoral defeat for Prime Minister Shigeru Ishiba logged the weakest demand in almost 14 years. In a whirlwind day of news, the United States and Japan announced a trade deal, speculation swirled that Ishiba planned to resign, and a Bank of Japan (BOJ) official warned o Finance Ministry cuts super-long debt issuance amid weak demand

The TSMC fabrication plant in Kaohsiung, Taiwan. – REUTERSPIC

Taiwan plans AI projects to boost economy by T$15 trillion TAIPEI: Taiwan plans to launch its “Ten Major AI Infrastructure Projects” initiative, aimed at generating more than T$15 trillion (RM2.2 trillion) in economic value by 2040 as it strives to become a global leader in artificial intelligence. key hub for AI robotics by tapping its hardware and ICT supply chains. and computing infrastructure, efforts to balance AI development across different regions of the island, and the introduction of AI across a wide range of industries. The government also calls for expanding investment in AI

a “smart technology island”. Under the initiative, Taiwan has identified three core technologies as strategic priorities: silicon photonics, quantum technology and AI robotics. Silicon photonics is a technology that Taiwan’s TSMC, the world’s largest contract chipmaker, and many other firms in the industry are actively developing. The government aims to position Taiwan as a global leader in silicon photonics by aligning the sector with future AI development needs. Taiwan also hopes to become a

Industry groups, including one led by Foxconn chairman Young Liu, have backed the move with the formation of the Taiwan AI Robotics Industry Grand Alliance on Tuesday to support the local development of AI robotics and related ecosystems. Taiwan also plans to establish a quantum technology industry chain. The 10 projects also include the development of sovereign AI – ability to build and control domestic artificial intelligence technologies –

innovation, with more than T$100 billion in venture capital funding, as it seeks to become a global hub for AI talent and investment. The initiative targets the creation of 500,000 jobs and the establishment of three international-level research laboratories. – Reuters

Premier Cho Jung-tai said in a Facebook post late on Tuesday that Taiwan aims to leverage its information and communications technology sector and world-leading semiconductor manufacturing capabilities to become a global artificial intelligence influencer and