31/07/2025

BIZ & FINANCE THURSDAY | JULY 31, 2025

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Singapore keeps monetary policy unchanged

Trump has ‘final call’ on trade truce with Beijing: Official STOCKHOLM: China and the United States agreed on Tuesday to hold further talks on extending their tariff truce, but a top US trade official stressed that President Donald Trump would make any “final call”. The world’s top two economies met for a second day of negotiations in Stockholm, with both sides seeking to avert tariffs from returning to sky-high levels that had ground trade between the rivals to an effective standstill. The meeting in a Swedish government building, led on the Chinese side by Vice-Premier He Lifeng and Treasury Secretary Scott Bessent for the Americans, ended without a resolution but with the US side voicing optimism. Neither government has made public any details from the talks, which started on Monday, although US Trade Representative Jamieson Greer said Trump would have the “final call” on any extension in the truce. “Nothing has been agreed until we speak with President Trump,” added Bessent, calling the tone of the talks “very constructive”. The negotiations are taking place in the wake of a trade deal struck over the weekend that set US tariffs on most European Union imports at 15%, but none on American goods going to the EU. The truce between China and the United States has temporarily set fresh US duties on Chinese goods at 30%, while Chinese levies on trade in the other direction stand at 10%. That accord, reached in Geneva in May, brought down triple-digit tariffs each side had levelled at the other after a trade war sparked by Trump spiralled into a tit-for-tat bilateral escalation. The 90-day truce is meant to end on Aug 12. – AFP Visa beats quarterly estimates on resilient consumer spending NEW YORK: Visa beat Wall Street estimates for third-quarter profit and revenue on Tuesday, as the global payments processing company was helped by strong card spending volumes despite softness in the broader economy. However, the payments processing company kept its full-year forecast for net revenue growth unchanged, sending shares of the firm down nearly 2% in extended trading. Visa maintained its forecast of annual net revenue growth in the low single digits for fiscal year 2025. The fiscal 2025 unchanged outlook guidance is “the likely cause of negative pressure on the shares as it implies a deceleration in revenue growth”, analysts at RBC Capital Markets said in a note. But it could be conservatism, given the macro environment, they added. Analysts expect a potential spending slowdown in the back half of 2025 as consumers front-load expenses on products they expect to become costlier once tariffs take effect. “We saw some evidence of pull forward in some categories (in April). Specific categories that people thought might be hit by tariffs, even more significantly,” finance chief Chris Suh told Reuters, referring to the time when tariffs were first announced. The shifting US tariff policies may already be weighing on cross-border payments growth, with the volume of such transactions growing 12% in the third quarter, slower than the 14% rise reported last year. CEO Ryan McInerney, however, said on a post-earnings conference call that the company sees no meaningful impact from tariffs. – Reuters

rushed out goods to beat the imposition of US tariffs. Singapore avoided a technical recession after the economy grew 1.4% quarter-on-quarter in the second quarter, according to preliminary government data. Authorities in Singapore have warned that growth is likely to slow in the second half of 2025 as the export and production frontloading tapers off. “Prospects for the Singapore economy remain subject to significant uncertainty, especially in 2026,” MAS said yesterday. In a separate report, MAS said the effective US tariff rate on Singapore’s exports is currently at 7.8%, up from 6.8% in April. In April, the government reduced its GDP forecast to 0% to 2% from 1% to 3%. Core inflation in the city-state fell to 0.6% year-on-year in June from a peak of 5.5% in early 2023. Maybank economist Chua Hak Bin expects 2025 GDP to come in above the government’s forecast. “We are forecasting GDP growth at 3.2% and expect the trade ministry to upgrade their forecast in August when final second quarter GDP is released,” Chua said. – Reuters consumer demand, which left losses on domestic lenders’ loan books. HSBC’s expected credit losses grew by US$900 million compared to the first half of last year to US$1.9 billion, the bank said, partly due to its exposure to Hong Kong’s troubled commercial real estate sector. A sluggish property market in Hong Kong could continue to weigh on the asset quality of banks operating in Hong Kong, analysts from Citigroup said. Hang Seng Bank, which is 62% owned by HSBC, saw shares slump close to 7% yesterday after a 224% increase in Hong Kong real estate credit charges in the second quarter from a year ago. – Reuters

business, though that lagged a 76% gain over the same period in rival Standard Chartered. HSBC took a further US$2.1 billion hit from its stake in state-run Bank of Communications, following a US$3 billion impairment it took in February 2024 amid mounting bad loans in China. CEO Elhedery downplayed the impairments on the bank’s BoCom stake, saying it would have no impact on its ability to pay dividends. “These are accounting-related impairments ... they do not impact the outlook we have on the Chinese economy, they are paper losses,” he said on the call. The new writedown included a US$1.1 billion loss as a result of the Chinese bank’s fundraising earlier this year, which diluted HSBC’s ownership. China’s property market, once a key growth driver for the world’s second-largest economy, has been in a multi-year tailspin despite repeated government attempts to revive weak The US has in recent weeks cut trade deals with partners, including with Europe and Japan. Instead of using interest rates, Singapore manages monetary policy by letting the local dollar rise or fall against the currencies of its main trading partners within an undisclosed trading band, known as the Singapore dollar nominal effective exchange rate, or S$NEER. It adjusts policy via three levers: the slope, mid-point and width of the policy band. OCBC economist Selena Ling said MAS was keeping its ammunition dry and waiting to see the outcome of tariff negotiations given the two-way risks for inflation. “Tariff impact on Chinese exports to rest of the world may be disinflationary, but geopolitics and supply chain recalibrations may be inflationary, so the net impact still has to be assessed.” Analysts from Bank of America, Goldman Sachs and DBS expect MAS to ease monetary policy for a third time this year at its next meeting in October. The MAS eased monetary policy in January and April this year on growth concerns due to US tariffs after holding settings since a tightening in October 2022. The economy, however, is posting better-than-expected results as exporters

HONG KONG: HSBC Holdings reported a sharper-than-expected drop in profit yesterday, hurt by write-downs from exposures to a Chinese bank and Hong Kong real estate, while the bank pushed ahead with a global restructuring. Its 26% slump in pretax profit in the first half showed the challenge ahead for CEO Georges Elhedery, as Europe’s largest bank racked up losses in China, where it has increasingly pinned its plans for growth in recent years after shrinking in Western markets. Elhedery, who has unleashed a sweeping restructuring at the bank after taking charge last year, said in an earnings conference call that the bank started reviews of its retail banking business in Australia, Indonesia and Sri Lanka, and will start winding down its Bangladesh retail business in the second half of this year. The lender’s corporate and institutional banking businesses were unaffected by these developments, he said. The bank posted a profit of US$15.8 billion for the first six months of this year, missing brokers’ estimates of US$16.5 billion. London-listed shares of HSBC fell 4.5%, matching earlier losses in its Hong Kong shares. The lender’s SINGAPORE: Singapore’s central bank kept its monetary settings unchanged yesterday, dashing some expectations for a loosening of policy, after second quarter economic growth surprised to the upside and global trade tensions eased somewhat. The Monetary Authority of Singapore (MAS) said it will maintain the prevailing rate of appreciation of its exchange rate-based policy band. The width and the level at which the band is centred were unchanged. Half of the 12 analysts polled by Reuters ahead of the review expected the MAS to keep policy settings unchanged while the other half forecast a policy easing. “The risk of a sharp step-down in global growth in the near-term has receded along with the general de-escalation in trade tensions as well as more benign financial conditions since April,” the MAS said in a statement. It added it was in an appropriate position to respond to risks after two previous easings. o MAS keeping ammunition dry, says economist

HSBC profit tumbles as China losses mount

shares have risen 36% in the last year, as it benefited from higher returns on its lending and grew income in its wea l th

A logo of HSBC is seen on its headquarters at the financial Central district in Hong Kong. – REUTERSPIC