19/05/2026

BIZ & FINANCE TUESDAY | MAY 19, 2026

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Global bond rout deepens amid inflation fears

EU to force companies to buy components from non-China suppliers: FT BRUSSELS: The European Union is drawing up plans to force companies in the bloc to buy critical components from at least three different suppliers in an attempt to reduce reliance on China, the Financial Times reported yesterday. The new rules would affect businesses in a handful of key sectors like chemicals and industrial machinery, the report added, citing two EU officials familiar with the matter. Under the new legislation companies would be limited to buying about 30% to 40% of components from a single supplier and would have to source the rest from at least three different suppliers not coming from the same country, the FT said. This comes as China continues to use its chokehold on the processing of many minerals as leverage, at times curbing exports, suppressing prices and undercutting other countries’ ability to diversify their sources of the materials used to make semiconductors, electric vehicles and advanced weapons. European Union Trade Commissioner Maros Sefcovic is planning a series of punitive tariffs on Chinese chemicals and machinery in a bid to tackle the bloc’s €1 billion (RM4.6 billion) a day trade deficit and insulate companies from China’s “weaponisation of trade,“ FT said. He recently signed a memorandum of understanding with US Secretary of State Marco Rubio for a partnership on producing and securing critical minerals, as part of a push to loosen China’s grip on materials crucial to advanced manufacturing. – Reuters Ryanair flags Iran war uncertainty as annual profit jumps DUBLIN: Irish no-frills carrier Ryanair reported Monday a sharply higher annual profit but warned that the Middle East war has clouded its outlook for the year ahead. Profit after tax jumped 35% to €2.17 billion (RM10 billion) in the 12 months to the end of March compared to the period a year earlier. “With zero H2 visibility and significant fuel price/potential supply volatility, it is far too early to provide any meaningful FY27 profit guidance at this time,“ chief executive Michael O’Leary said in a statement. Oil prices have soared since the start of the US-Iran war in late February, resulting in much higher jet fuel costs. Ryanair said it had hedged 80% of its fuel costs at US$67 a barrel through to April 2027, which should help insulate its earnings amid“very volatile oil markets”. However, it said its full-year outlook remains “heavily exposed to adverse external developments”, including any escalation in the Middle East war. – AFP

hikes are still not the base case,” said Charu Chanana, Saxo’s chief investment strategist. Adding to the selloff yesterday was news that Japan’s government will likely issue fresh debt as part of funding for a planned extra budget to cushion the economic blow from the war, worsening already strained government finances. Yields on the 30-year Japanese government bond (JGB) jumped more than 10 bps to their highest on record at 4.200% while the 10-year yield touched its highest since October 1996 at 2.800%. DBS senior rates strategist Eugene Leow said news of the extra budget would compound current bond market anxieties. “Sentiment was already weak heading into last week’s close. Additional fiscal spending from Japan definitely worsened matters,” Leow said.

expectations, touched a 14-month top of 4.102%, while the 30-year US Treasury yield rose to a one-year high of 5.159%. The rising yields lifted the US dollar and cast a shadow over stock markets that have surged on the AI enthusiasm of recent weeks. The bond selloff came on the back of a climb in oil prices yesterday, with Brent crude futures at US$111 a barrel, as efforts to end the Iran war appeared to have stalled following a drone strike at a nuclear power plant in the United Arab Emirates. More than two months into the Middle East war, investors are beginning to fret about the economic fallout from the conflict as inflationary pressures mount and what that would mean for the global interest rate outlook. “The ‘higher for longer’ story is coming back, even if actual rate

revenues and issuance of bonds based on those falsified statements. The Hong Kong authorities have also found that PwC Hong Kong seriously breached its professional duties in its auditing of Evergrande. It was hit with a HK$300 million fine and a six-month suspension and it also reached an agreement with the city’s securities watchdog to set aside HK$1 billion (RM509 million) to compensate Evergrande’s independent minority shareholders. Creditors’ claims against Evergrande total some US$45 billion, but only about US$255 million worth of assets have been sold as of last August, according to the firm’s liquidators. – Reuters “This feels like a rolling re-pricing across curves in the region as investors grapple with inflation worries.” Markets are now pricing in a more than 50% chance the Federal Reserve would raise rates by December, according to the CME FedWatch tool, to combat the rise in inflation. The European Central Bank is seen hiking as early as next month and the Bank of England about twice this year . Over in Europe, Germany’s bund futures and French OAT futures fell about 0.4% and 0.45%, respectively. Yesterday’s rout followed a steep selloff from last week, as investors were spooked by a recent raft of hotter-than-expected inflation figures globally, particularly in the United States. “The fact that we are now seeing data backing up inflationary fears that have been in the market since the Middle East conflict started I think is key,” said Nick Twidale, chief markets analyst at ATFX Global. Data last week showed US consumer and producer prices surged in April, with similar readings seen in China, Germany and Japan. Much emphasis had also been placed on a closely watched two-day summit between US President Donald Trump and China President Xi Jinping last week, where investor hopes for a breakthrough in the Middle East war fell flat. “As the Trump-Xi meeting ... did little to raise hopes for a coordinated US-China effort to pressure Iran into reopening the Strait of Hormuz, the combination of a persistent oil supply shock, increasing inflation rates and still-resilient demand became a recipe for higher interest rates,” said analysts at Barclays. Though the bond rout was global, many of the drivers were at least partly local in nature. UK gilt yields surged last week, hitting their highest in decades, as pressure mounts on Prime Minister Keir Starmer to resign over his Labour Party’s hefty losses in local elections, and as challengers emerge. – Reuters

SINGAPORE: Bonds from Tokyo to New York extended losses yesterday as rising energy prices from the ongoing Middle East war fanned inflation fears and stoked investor wagers on rate hikes from global central banks. Benchmark 10-year US Treasury yields, which move inversely to prices, jumped to their highest since February 2025 at 4.631%, having climbed more than 20 basis points last week. The two-year yield, which is most sensitive to inflation and rates o US Treasury yields rise to one-year peaks and JGBs scale record highs

A man walks past an electronic quotation board displaying 10-year Japanese government bonds (left), an index of long term interest rates on the Tokyo bond market, and the foreign exchange rate of the Japanese yen against the US dollar (centre) along a street in Tokyo yesterday. – AFPPIC

Evergrande liquidators seek 57 billion yuan from PwC HONG KONG: Liquidators for Evergrande Group, the failed Chinese property giant, are seeking 57 billion yuan (RM33.4 billion) in damages from PwC, accusing it of being negligent in its auditing work, a Hong Kong court was told yesterday. PwC’s China arm. The rest is being sought from just PwC Hong Kong and PwC’s China arm. Yesterday’s hearing was focused on how much responsibility PwC International should bear. But a lawyer for the liquidators, Adrian Beltrami, argued that PwC International sits at the top of the group and is responsible for maintaining the standards of member firms.

Evergrande defaulted on its offshore debt in late 2021 and was ordered by the Hong Kong High Court to liquidate in 2024. In 2024, PwC’s Chinese arm was penalised by Chinese regulators with a six-month suspension and a record fine of 441 million yuan over the firm’s audit of Evergrande. An investigation by the China Securities Regulatory Commission found that PwC Zhong Tian LLP “turned a blind eye” to and “even condoned” Evergrande’s inflation of

Richard Handyside, a lawyer representing PwC International, argued that the firm should not be a party to the case as the Big Four company consists of several firms and the Hong Kong and China entities were not its subsidiaries. There were no communications between PwC International and Evergrande, and it did not have a “duty of care” with respect to the developer’s financial audits, he argued.

Potential damages would come on top of hefty fines imposed on the global auditing group by mainland Chinese and Hong Kong authorities after Evergrande collapsed with more than US$300 billion of liabilities, becoming one of the biggest casualties of China’s property sector crisis. Of the 57 billion yuan, 38 billion yuan is being sought from PwC International, PwC Hong Kong and