26/01/2026

BIZ & FINANCE MONDAY | JAN 26, 2026

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Japan PM vows to act against speculative market moves

Europe and India seek ‘mother of all deals’ BRUSSELS: India and Europe hope to strike the“mother of all deals”when EU chiefs meet Prime Minister Narendra Modi in New Delhi this week, as the two economic behemoths seek to forge closer ties. Facing challenges from China and the United States, India and the European Union have been negotiating a massive free trade pact – and talks, first launched about two decades ago, are nearing the finishing line. “We are on the cusp of a historic trade agreement,” European Commission president Ursula von der Leyen said. Von der Leyen and European Council president Antonio Costa will attend Republic Day celebrations today before an EU-India summit tomorrow, where they hope to shake hands on the accord. Securing a pact described by India’s Commerce Minister Piyush Goyal as “the mother of all deals”, would be a major win for Brussels and New Delhi as both seek to open up new markets in the face of US tariffs and Chinese export controls. But officials have been eager to stress there is more to it than commerce. “The EU and India are moving closer together at the time when the rules based international order is under unprecedented pressure through wars, coercion and economic fragmentation,“ the EU’s top diplomat, Kaja Kallas said. “The EU eyes the Indian market and aims to steer a rising power like India away from Russia, while India seeks to diversify its partnerships, doubling down on its strategy of multi-alignment at a time when its relations with the US have taken a downward turn,” said Praveen Donthi, of the International Crisis Group think tank. – AFP S’pore to invest S$1b in public research on AI SINGAPORE: The city-state will invest more than S$1 billion (RM3.1 billion) in public research on artificial intelligence through 2030 to bolster its capabilities and enhance global competitiveness, the government said on Saturday. The fund will enable Singapore to establish “world-class” research centres, build capabilities to support the industrial applications of AI, and develop talent through partnerships with overseas researchers and institutions, it said. The initiative, announced by Minister for Digital Development and Information Josephine Teo at an AI research week gala dinner late on Saturday, is the latest in a series of government investments in AI. The research centres will focus on “long-term, difficult questions” that will benefit the country, Teo said. “We expect them to partner actively with others in our local ecosystem and internationally. We also want their research discoveries to be shared openly, to contribute to the global knowledge commons.” Singapore has been increasingly using technology to meet labour and other needs given its lack of natural resources compared to bigger neighbours. – AFP

TOKYO: Japanese Prime Minister Sanae Takaichi said yesterday her government will take necessary steps against speculative market moves, in the wake of a yen spike that heightened traders’ alert over the chance of currency intervention. Japanese government bonds and the yen have sold off in recent weeks on concern Takaichi’s expansionary fiscal policy and the slow pace of interest rate hikes by the Bank of Japan could lead to additional debt issuance and too-high inflation. After sliding near the psychologically important line of 160 to the dollar, the yen jumped suddenly on Friday after the New York Federal Reserve conducted rate checks, a move some traders saw as heightening the chance of joint US-Japan intervention to halt the ailing currency’s slide. “I won’t comment on specific market moves,” Takaichi told a Fuji Television talk show, when asked about the bond selloff and the yen’s declines. “The government will take necessary steps against speculative or very abnormal market moves,” she said without elaborating. A weak yen has become a source of headaches for Japanese policymakers as it pushes up import costs and broader inflation, hurting households’ purchasing power. Takaichi has compiled a big spending package to cushion the blow from rising living costs and vowed to suspend for two years the 8% sales tax on food, triggering a spike in bond yields that increases the cost of funding Japan’s huge public debt. In the television programme, she said her government will aim to start o Bonds, yen selling off on Takaichi’s expansionary policy

Ueda attends a press conference after a BOJ policy meeting in Tokyo. – REUTERSPIC

appears cautious of the idea. “Using reserves set aside for currency intervention would require selling US Treasuries,” Takayuki Kobayashi, a senior official of Takaichi’s Liberal Democratic Party, told the NHK programme. “That could affect markets and cause a lot of problems.” Alex Saito, a senior official in the LDP’s coalition partner, the Japan Innovation Party, known as Ishin, pointed to problems that could emerge by tapping the BOJ’s ETF holdings to fund a tax cut. “Tapping BOJ assets risks undermining the central bank’s independence, and would be a dangerous step that could further weaken the yen and push up long term interest rates,” Saito told NHK. In September, the BOJ decided on a plan to sell its huge ETF holdings, accumulated during its decade-long stimulus programme, at an annual pace of ¥330 billion (RM8.4 billion). – Reuters

BOJ Governor Kazuo Ueda on Friday signalled the central bank’s readiness to work closely with the government to contain sharp rises in yields, including by conducting emergency bond-buying operations. The market moves are emerging as a key topic of debate in the election. While most parties are calling for a cut to the consumption tax, several opposition parties have proposed investing the BOJ’s holdings of exchange-traded funds and government reserves set aside for currency intervention, and using the proceeds to fund a consumption tax cut. The BOJ could speed up the selling of ETFs so that the proceeds can be used more quickly to fund government spending, Makoto Hamaguchi, a senior official of the opposition Democratic Party for the People, told a Sunday talk show on public broadcaster NHK. Takaichi’s ruling coalition

the two-year tax suspension sometime during the fiscal year beginning in April. Takaichi has been under pressure to deal with the bond market rout, which has accelerated with her decision to call a snap election on February 8 to seek a mandate to gear up her expansionary fiscal policies. US Treasury Secretary Scott Bessent signalled Washington’s displeasure over the repercussions from the rising Japanese yields, saying last week that it was “very hard to disaggregate the market reaction from what’s going on endogenously in Japan”. “I’ve been in touch with my economic counterparts in Japan, and I am sure that they will begin saying the things that will calm the market down,” Bessent said at the World Economic Forum in Davos. Since then, Takaichi has stressed that Japan can secure enough funds for the tax suspension without issuing debt.

EU set to elevate ties with Vietnam amid trade disruptions HANOI: The European Union and Vietnam will elevate ties during a visit to Hanoi by the European Council President Antonio Costa on Thursday, an EU official said, as both sides seek to expand international partnerships amid disruptions from US tariffs. It would place the EU on the same tier as China, the US and Russia among others, further expanding Vietnam’s advanced partnerships, in line with the country’s strategy of balancing big powers. expected to generate more cooperation in multiple fields, including research, technology, energy and critical minerals, according to a draft joint statement, the official said. The EU deficit with Hanoi stood at €42.5 billion (RM201 billion) in 2024. EU officials accuse Hanoi of hampering EU imports with multiple non-tariff barriers, but Brussels has so far taken limited action to address the situation.

Vietnam has significant but often little exploited deposits of rare earths, gallium and tungsten. The Southeast Asian trade-reliant nation is a major link in global supply chains, especially for electronics, clothing and footwear. It has a string of free trade agreements with multiple partners, including with the European Union. The EU has repeatedly criticised Vietnam’s implementation of the free trade agreement, which has boosted Vietnam’s surplus with the 27-nation bloc since it came into force in 2020.

The European Council declined to comment. Vietnam’s government did not respond to a request for comment. These upgrades are largely symbolic, as they merely entail more frequent high-level meetings and usually no binding agreements. Vietnam’s relations with the United States worsened last year after Doald Trump’s administration imposed tariffs, despite the upgrade of bilateral ties inked by former president Joe Biden during a visit to Hanoi in late 2023. The upgrade with the EU is

Also, facing tariffs from the United States, the EU has prioritised improving ties with economic partners and expanding trade agreements, including recently with South American nations of the Mercosur bloc. Costa will visit India before Vietnam, where together with European Commission President Ursula von der Leyen, he intends to hold trade talks with Indian Prime Minister Narendra Modi, according to a schedule published by the EU Council. – Reuters

The visit comes on the heels of To Lam’s re-appointment as Vietnam’s top official, potentially making Costa the first leader of a major power to meet Lam since the ruling Communist Party on Friday appointed him for a new term as general secretary. The elevation of ties to Vietnam’s highest level has been planned for months and was delayed largely because of schedule complications, the official said, speaking on condition of anonymlty.