01/08/2025

BIZ & FINANCE FRIDAY | AUG 1, 2025

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Malaysian Paper

/thesundaily /

China Galaxy and CICC plan US$1b funds in Southeast Asia

SMFG, Mizuho post slim Q1 profit growth on robust lending demand TOKYO: Mitsui Sumitomo Financial Group reported yesterday a rise of 1.5% in first-quarter net profit, trailed by a rise of 0.4% for Mizuho Financial Group, as lending demand held up despite uncertain global economic conditions. The return of inflation to Japan has unleashed a wave of loan demand among its companies seeking funding for mergers and acquisitions (M&A) and capital expenditure, which remains strong despite US tariff threats and market volatility. SMFG, Japan’s second-largest banking group, recorded net profit of ¥376.9 billion (RM10.8 billion) in the April-June quarter, up from the year-earlier figure of ¥371.4 billion. Mizuho, Japan’s third-largest banking group, had net profit of ¥290.5 billion for the same period, compared to ¥289.3 billion in the corresponding year-ago period. The results follow record annual profits in the year to the end of March as both banks cashed in on the end of ultra-low interest rates that hamstrung lending margins for years. Global economic uncertainty triggered by US President Donald Trump’s sweeping tariffs in April did not hamper SMFG’s lending over the quarter, as net interest income grew to ¥626.3 billion versus ¥524.2 billion the previous year. Mizuho upped its profit forecast by 15% to ¥1.02 trillion for this financial year, while SMFG kept its forecast at ¥1.3 trillion, which would both be record highs. To account for the impact of tariffs, both SMFG and Mizuho had factored into the last quarter’s earnings a bottomline hit of about ¥100 billion and ¥110 billion respectively, for the current financial year. – Reuters BANGKOK: Thailand’s economy slowed in June compared with the previous month following an earlier acceleration, as exports and industrial production declined and tourism revenues also fell. Industrial production declined, with automotive production consistent with the fall in exports and domestic sales, the Bank of Thailand (BOT) said in a statement yesterday. Exports, a key driver of the economy, grew 16.1% in June from a year earlier, while imports rose 13.8%, resulting in a trade account surplus of US$3.3 billion, it said. Thailand posted a current account surplus of US$2.4 billion in June, the central bank said. Private investment in June rose 0.7% while private consumption dropped 0.3% from the previous month, the BOT said. In the second quarter of 2025, Southeast Asia’s second’s largest economy is expected to have grown at a similar pace to the first quarter, it said. In June, the BOT lifted its central-case growth forecast to 2.3% for 2025, nearly equaling last year’s expansion of 2.5%. – Reuters Thai economy slows in June

industry, the official added. Separately, CGS International is teaming up with Fullgoal Asset Management Hong Kong and Bursa Malaysia to ease the listing of foreign-underlying ETFs in Malaysia, particularly those offering China exposure. The first such listings are expected within 12 to 18 months, pending regulatory clearance, Fong said. China is Southeast Asia’s largest trading partner, with annual two-way trade rising 12% to US$982 billion in 2024, Chinese customs data shows. Malaysia has secured RM2.97 billion in confirmed investments from leading Chinese technology companies, Reuters reported on Wednesday, citing the Digital Ministry. The funds will go to develop artificial intelligence capabilities and next-generation digital infrastructure, and create 6,800 high-value digital jobs, the ministry added. – Reuters

renewable energy and consumer, offering investors exposure to emerging opportunities across both China and Southeast Asia, she said. The banks’ push into Southeast Asia also underscores Beijing’s efforts to boost regional ties since US President Donald Trump unveiled hefty import tariffs in his global trade war that targeted China with even heavier levies. China and the US agreed in May to pause some tariffs, but the region of 11 countries with a population of more than half a billion is increasingly becoming a target for Chinese firms seeking growth overseas. “Southeast Asia’s huge market and growth potential presents a big opportunity for Chinese firms,” Fong said. CICC Capital, the private equity investment arm of CICC, is partnering with government agency Malaysia Digital Economy Corp to set up a fund of size targeted at US$100 million, an official of the Digital Ministry told Reuters. It will invest in Malaysia’s gaming

o State-backed banks’ push into region underscores Beijing’s efforts to boost ties

BEIJING: State-backed investment banks China International Capital Corp (CICC) and China Galaxy Securities plan to launch funds worth a total of more than US$1 billion (RM4.27 billion) in Southeast Asia, seeking to grab a slice of a lucrative market amid a US tariff war. The move heralds a shift in investment focus for the banks, typically focused on the domestic market, and comes as Beijing encourages its financial champions to support outbound investment and deepen regional economic ties. Units of CICC and China Galaxy expect to launch the investment funds over the next 1-1/2 years, a top executive and a person with knowledge of the matter told Reuters. “As the tariff wars continue and Chinese corporates accelerate their SEOUL: South Korean tech giant Samsung Electronics’ operating profit dropped by more than 50% year-on-year in the second quarter, its regulatory filing showed yesterday, as US curbs on AI chip exports to China hit sales. The company reported an operating profit of 4.7 trillion won (RM14.5 billion) for the April-June period, marking a 55% decline from a year earlier, according to the filing. The company’s net profit came in at 5.1 trillion won, marking a 48% year-on-year decline, the filing showed. “Despite significant growth in revenue from the first quarter, earnings for the Foundry Business remained weak due to the impact of inventory value adjustments that stemmed from US export restrictions on advanced AI chips to China,” Samsung said in a press release. Going into the second half of the year, its foundry business will “ramp up mass production”, the company said, adding it will strive to “improve factory utilisation and profitability through expanded sales to major customers”. “AI demand is expected to remain robust due to continued investments by major cloud service providers, and therefore server demand for both DRAM and NAND is expected to stay strong,” Samsung said, referring to processing chips and chips used for data storage. Samsung Electronics is the flagship unit of South Korea’s Samsung Group, by far the largest of the family-run conglomerates that dominate Asia’s fourth-largest economy. The disappointing earnings report comes on the heels of two positive developments: the end of

‘China plus N’ strategy, they seek local expertise in Southeast Asia,” said Carol Fong, group chief executive of CGS International, a unit of China Galaxy Securities. Such regional knowledge will aid efforts to expand in areas such as supply chain and distribution, she added. “China plus N” refers to Chinese companies’ diversification strategy to expand supply chains and operations beyond their home country to mitigate geopolitical risk. CGS is looking to launch next year a private equity fund of up to US$1 billion that aims to facilitate investments and capital flows between China and Southeast Asia, Fong added.

The fund will target high-growth sectors such as healthcare, AI, advanced manufacturing, Samsung quarterly operating profit plunges

A man walking past an advertisement for the Samsung Galaxy S25 series smartphones in Seoul. – AFPPIC

deal with Tesla under which it will provide the electric car maker with AI6 chips through the end of 2033. The agreement is expected to provide a major boost to Samsung, which has faced headwinds in its foundry business, lagging rivals SK hynix and Taiwan’s TSMC in the race for cutting-edge artificial intelligence chips. The deal, which represents 7.6% of the firm’s 2024 sales, is a “critical

legal jeopardy for its chairman Lee Jae-yong and a multi-billion-dollar deal with Tesla. Lee was accused of stock price rigging, breach of trust and accounting fraud by prosecutors but his acquittal was upheld by the country’s highest court earlier this month, ending a years-long legal drama at the tech titan. It also follows Samsung’s signing of a US$16.5 billion (RM70 billion)

step” toward widening its place in the fast-changing AI chips market, MS Hwang, research director at Counterpoint, told AFP. The deal will be “bolstering the company’s customer portfolio – a critical step for wider customer reference”, he said. The foundry business involves contract-based manufacturing of chips designed by other companies. – AFP