19/08/2025

BIZ & FINANCE TUESDAY | AUG 19, 2025

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China stocks rally to decade high HONG KONG: China stocks closed at their highest level since 2015 yesterday, extending a months-long rally driven by easing trade tensions and abundant liquidity, while pushing market capitalisation to a record peak. The Shanghai Composite Index rose 0.9% to 3,728.03, its strongest close since August 2015. The CSI 300 Index also climbed by 0.9% to a ten-month peak. o Months-long rise driven by easing trade tensions and fund rotation truce, Beijing’s crackdown on excessive competition, and a rotation of funds from bonds into equities, which brokers say has flooded the market with liquidity. both price appreciation and a surge in listings over the past decade. “There are renewed hopes on domestic retail flows,” she wrote in a note to clients. In a sign of heightened investor activity, onshore turnover reached nearly 2.8 trillion yuan yesterday, the highest since October when Beijing’s sweeping stimulus measures triggered a sharp rally.

Singapore key exports slip as US shipments tumble 42.7% SINGAPORE: Singapore’s non-oil domestic exports slipped 4.6% in July from a year earlier, government data showed yesterday, as shipments to the United States plunged by more than 40%. Southeast Asia’s second-largest economy is heavily reliant on international trade and is vulnerable to any global slowdown induced by the tariffs – even if Singapore only faces a baseline 10% levy from US President Donald Trump. On Aug 6, Trump announced a 100% tariff on chips from firms that do not invest in the United States, and threatened levies of up to 250% on pharmaceutical imports. The 42.7% July contraction in main exports to the US – Singapore’s biggest market – was largely caused by a 93.5% decline in pharmaceutical shipments, the government body Enterprise Singapore said yesterday. Meanwhile, exports of specialised machinery dropped 45.8% and food preparations were down 48.8%. Non-oil domestic shipments to China and Indonesia also declined in July, but grew to the European Union, Taiwan, South Korea, and Hong Kong. The city-state last Tuesday raised its 2025 economic growth forecast, but warned the outlook for the rest of the year remains clouded by global uncertainty, in part due to US tariffs. The Trade Ministry lifted its gross domestic product (GDP) growth forecast to 1.5%-2.5% from an earlier range of 0%-2%. Prime Minister Lawrence Wong on Sunday said that he took “little comfort” from the 10% baseline tariff rate the United States imposed on Singapore. “Because no one knows if, or when, the US might raise the baseline, or set higher tariffs on specific industries like pharmaceuticals and semiconductors,” he said in a National Day speech. “What we do know is that there will be more trade barriers in the world. “That means small and open economies like us will feel the squeeze,”Wong added. – AFP can extend despite headwinds. Leading the rally yesterday onshore, the rare earth sector surged 5.3% to a fresh high since December 2021. The AI sector jumped 3.8% and the information technology sector rose 2.5%. In Hong Kong, the benchmark Hang Seng Index closed down 0.4% to give up earlier gains, weighted by the property sectors. The Tech Index rallied 0.7%, while the EV sector jumped 1.9%. – Reuters

Bank of America’s chief China equity analyst Winnie Wu said positive developments on the geopolitical front and clearer policy direction from Beijing have all helped compress the equity risk premium and trigger a re-rating.

Hao Hong, chief investment officer at Lotus Asset Management, said the stock market may face near-term resistance due to profit-taking pressure, but added that many remain hopeful the bull run

Total market capitalisation of over 5,400 China-listed companies has risen above 100 trillion yuan (RM58.7 trillion) for the first time, reflecting

The Shanghai benchmark has now advanced some 22% since the low struck in early April, buoyed by the extension of the US-China trade HK interbank rates surge after repeated intervention HONG KONG: Hong Kong interbank rates surged yesterday, reflecting a string of recent cash withdrawals by the city’s de facto central bank and sharp rebounds in the local dollar. The Hong Kong Interbank Offered Rate (HIBOR), a key barometer of liquidity, rose across the board, with key tenors jumping to levels last seen in May, when the Hong Kong dollar strengthened and prompted the Hong Kong Monetary Authority (HKMA) to intervene to defend the currency peg within 7.75 and 7.85 per US dollar. The overnight HIBOR leapt to 1.96768%, the loftiest level since May 7, while the three-month tenor – a benchmark for bank funding costs – rose to 2.18333%, also a peak since May. The local dollar has seen sharp swings this year, oscillating between the two ends of the trading band. The intervention in May prompted the HKMA to inject the local currency quickly before the excess liquidity dragged the Hong Kong dollar down to hit the weaker side of the band and force it to tighten cash conditions from June onward. Those operations saw the aggregate balance, a gauge of cash at banks, drop to HK$53.71 billion as of yesterday, down from a high of HK$176.45 billion in June and not far from HK$45.1 billion at end-April. “HIBORs have turned more responsive to additional liquidity drainage,” said Frances Cheung, head of FX & rates strategy at OCBC Bank, referring to HKMA’s most recent operations last week to drain a total of HK$10.441 billion to maintain the peg. “Investors have turned more cautious as reflected by spot USD/HKD not recovering back to near the 7.8500 level as it did shortly after previous rounds of intervention.” The HKMA has stepped in to withdraw liquidity and defend a weakening Hong Kong dollar 12 times since June. The local dollar last traded at 7.8244 yesterday, after hitting a high of 7.8120 on Friday. The strength in the Hong Kong dollar also comes as investors in mainland China are making hefty purchases of Hong Kong-listed stocks via the southbound leg of the Stock Connect scheme, traders and analysts said. – Reuters

Thailand’s Q2 growth beats forecast BANGKOK: Thailand’s economy expanded faster than expected in the second quarter on strong export growth ahead of US tariffs taking full effect, but momentum is likely to slow over the rest of the year, the state planning agency said yesterday. council head Danucha Pichayanan told a news conference. The US tariff on Thai imports has been set at 19%, in line with regional peers. “Growth should be good in the remainder (of the year), but will be lower than the previous two quarters,” Danucha added. Kobsidthi Silpachai, head of capital markets research at Kasikornbank, said he predicts a final growth rate of just 1.5% for 2025. A pedestrian carrying goods across a footbridge in front of a construction site near Pratunam intersection in Bangkok yesterday. – AFPPIC

“Growth is seen to decelerate markedly post the sugar high of exports front loading,” he said, adding that waning tourist numbers and household debt would also weigh heavily on the economy. The NESDC yesterday also lowered its forecast for foreign tourist arrivals this year by 10% to 33 million. On Friday, parliament passed the government’s 3.78 trillion baht (RM492 billion) budget bill for the 2026 fiscal year starting on Oct 1, which is expected to boost economic activity. The central bank last week also cut its key interest rate by a quarter point to a near three-year low of 1.50%, with more easing expected later this year. – Reuters

Southeast Asia’s second-largest economy grew 2.8% in the April-June quarter from a year earlier, the National Economic and Social Development Council (NESDC) said, beating a Reuters poll forecast of 2.5%, but still below the 3.2% annual increase in the first three months. The economy grew 3% annually in the first half, and the council adjusted its full-year forecast to 1.8% to 2.3%, from an earlier estimate of 1.3% to 2.3%. “Exports and manufacturing improved, along with clarity over reciprocal tariffs, so the Thai economy should expand more than our projections in May,”

Last year’s annual growth of 2.5% lagged other countries in the region. The council raised its 2025 export growth forecast to 5.5% from 1.8%, after a 15% year-on-year rise in the first half, driven by shippers racing to beat US tariffs. However, exports are expected to taper in the second half. The United States was Thailand’s biggest export market last year, accounting for 18.3% of total shipments, with a value of $55 billion, but there are still uncertainties relating to tariffs on transshipments via Thailand from third countries.