20/08/2026

BIZ & FINANCE

BIZ & FINANCE THURSDAY | AUG 20, 2026

17

Global bond yields hit multi-decade high

Indonesia central bank keeps rates unchanged, focus remains on rupiah JAKARTA: Indonesia’s central bank held interest rates unchanged for a second straight policy meeting yesterday, amid efforts to stabilise the rupiah and keep inflation within its target range. The rate decision was the first taken by BI’s board under the leadership of interim governor Destry Damayanti. Until the surprise resignation of Perry Warjiyo as BI chief last month, Destry was the central bank’s second most senior official. She has been nominated to be the permanent governor and will take the job if she secures parliamentary approval, expected within the next few weeks. Warjiyo’s departure, just days after BI’s July policy meeting, renewed investor concerns about the central bank’s autonomy, after President Prabowo Subianto appointed his nephew Thomas Djiwandono as deputy governor in January and parliament passed sweeping legislation in June that doubled down on the central bank’s role in supporting economic growth. Destry said the decision is consistent with efforts to keep the rupiah stable, manage inflation and support growth. The rupiah and the main stock index were unchanged immediately after the decision. The rupiah has bounced back after a dip in response to Warjiyo’s exit. However, it has remained the worst performing currency among emerging Asian markets, having lost 7% so far this year against the US dollar, with investors also worried about government overspending and a controversial commodity export policy, adding to a global aversion to risk due to the war in the Middle East. – Reuters SK Hynix to buy back, cancel 40 trillion won worth of treasury shares SEOUL: SK Hynix said yesterday it would buy back and cancel 40 trillion won (RM116 billion) worth of treasury shares and allocate more than 50% of free cash flow generated between 2025 and 2027 to boost shareholder returns. The move comes amid growing pressure from investors for SK Hynix and Samsung Electronics to return a bigger share of excess cash through dividends or share buybacks, after the chipmakers offered scant detail on capital returns despite reporting record profits fuelled by booming demand for AI memory chips. Those calls have intensified as SK Hynix and Samsung shares retreated after hitting record highs in June amid concerns about the durability of AI spending, though their stock prices remain far higher than earlier this year. SK Hynix said its “intrinsic value – underpinned by its business competitiveness, robust cash generation capability, and mid-to long-term growth potential – is not fully reflected in its current stock price”. The South Korean chipmaker also said it would pursue an expansion of its total shareholder return target from the previous “within 50% of cumulative FCF” to “over 50% of cumulative FCF” throughshare repurchases, cancellations and dividends. It added that options to expand payouts, including special dividends, were also under consideration, with details of additional shareholder returns due to be announced alongside its third-quarter earnings release, likely in late October. – Reuters

“These shifting conditions have underscored the importance of portfolio diversification, prompting a growing number of global investors to look towards Asia – including China and Hong Kong – as key destinations for long-term capital allocation.” A series of Chinese artificial intelligence companies have launched IPOs in Hong Kong this year, in line with what analysts view as a deliberate push by Beijing to use the capital markets to attract the overseas funds needed to finance national technology goals. Chinese data centre supplier Zhongji InnoLight last month raised about US$6.8 billion on its debut, the city’s biggest public offering in seven years. The city’s IPO market had raised about HK$210 billion as of June, the strongest first-half result in five years, according to accounting firms KPMG and PwC. – AFP When a bond’s yield rises, its price falls. Rising yields hit other assets, with major stock markets such as Nasdaq and Europe’s STOXX 600 in the red on Tuesday. The selloff in government bond markets matters because the repercussions ripple through economies. Sovereign debt sets the benchmark for borrowing costs for companies and other loans, including household mortgages. Competition for capital from AI hyperscalers – the technology giants building huge data centres – rising budget deficits and, in the United States, concern about clear communication from the Federal Reserve under new chairman Kevin Warsh, have exacerbated the selling, analysts said. For some, the higher yields reflect investor worries about how risky the securities have become because of the growing debt pile and uncertainty over policymaking, more than inflation concerns per se. The New York Fed estimates the term premium, or the additional compensation that investors require for lending to the government for 10 years, at around 80 bps, close to its highest level in 12 years. US 10-year Treasury yields, at around 4.71%, are now trading at levels that in the past have attracted the attention of US officials, with 5% now in focus. “This will be very important, not just for bond markets, but also other financial assets as any break higher is likely to undermine confidence,” said Zurich Insurance Group’s chief market strategist Guy Miller. “Given the importance of this level, we are likely to see it defended by the US Treasury.” A Treasury spokesperson did not respond to a request for comment. What’s more, analysts reckon the Treasury’s unusual decision to sell euros and not dollars in recent joint intervention with Japan to bolster a weak yen suggests it does not want bond market strains worsened by foreign central banks selling Treasuries to fund currency-support operations. Foreign holdings of US Treasuries slid in June led by declines in the holdings of Japan – the biggest foreign holder of US bonds – the UK and China. Two recent Treasury auctions also drew attention for high yields. Rising bond yields in Japan, where 30-year borrowing costs are just above 4%, are also starting to draw in Japanese investors, traditionally big buyers of US debt, creating another headwind for the US bond market. For some bond investors, rising yields were making the market attractive, which could support prices from here. – Reuters

o Markets put governments on notice over fiscal, inflation risks

NEW YORK: Long-term borrowing costs from the US to Germany and Japan hit their highest in decades on Tuesday due to ballooning government debt and geopolitics, raising borrowing costs for companies and households and complicating policy. Bond markets are entering an era where the inflation and interest rate outlook is more uncertain and the upside risks are greater, as US President Donald Trump’s policies – from tariffs to war – upend the global order. Debt levels in developed countries are reaching thresholds that look increasingly unsustainable, with the US debt pile nearing US$40 trillion. The Iran war is dragging on, pushing up oil prices and inflation and hitting global growth. In addition, massive borrowing by technology companies to fund a buildout of AI infrastructure is competing with demand for government bonds. Bond yields’ recent surge “suggests investors are losing patience with fiscal profligacy”, said Jonas Goltermann, chief markets economist at Capital Economics. But he said it’s “entirely unsurprising: the fiscal outlook in several major economies is problematic, and politicians have shown little

appetite for addressing the issue”. Thirty-year bond yields in the United States, the world’s deepest and most systemically crucial government bond market, hit their highest since 2007 earlier on Tuesday as oil prices rose back above US$90, fanning inflation worries as US-Iran peace hopes faded. They pulled back in afternoon trading. The elevated yields could squeeze households, companies, financial markets and the federal budget. “We believe the long-end has been subjected to death by a thousand cuts,” wrote TD analyst Gennadiy Goldberg in a research note, citing a string of reasons for the rise in rates. He wrote that “low investor conviction could leave yields under sustained pressure in the near term”. In Japan, inflation angst and expectations that the central bank could hike interest rates as early as September pushed 10-year borrowing costs to a three-decade high. In Europe, Germany’s 10-year Bund yield touched its highest since 2011, French yields were at their highest since 2008 and Britain’s 30-year borrowing costs neared peaks hit in May that marked the highest levels since 1998.

The US Department of the Treasury Building in Washington. – REUTERSPIC

HK stock exchange posts record half-yearly profit HONG KONG: Hong Kong’s stock exchange reported record profits yesterday, thanks to a surge in demand for initial public offerings by tech and artificial intelligence companies. surpassing those set in the final six months of last year, the company added.

CEO Bonnie Chan said the performance was “supported by robust market sentiment, strong fundraising demand from technology and AI-related companies, and active participation from both Chinese Mainland and international investors”. “Trading activity across our cash, derivatives and Stock Connect markets reached record half yearly highs, underscoring the resilience and relevance of our markets,“ she said. HKEX announced earlier this week that Chan’s contract has been renewed for another three-year term, until the end of February 2030. Chairman Carlson Tong added: “HKEX entered 2026 with resilience and continued strategic progress, delivering record first-half performance against a backdrop of macroeconomic uncertainty and evolving geopolitical dynamics.”

The results come as Hong Kong’s IPO market saw a surge in listings from the artificial intelligence, technology and media and telecommunications sectors in the first half of 2026. Hong Kong Exchanges and Clearing (HKEX) welcomed 87 new listings, raising a total of HK$212.4 billion (RM110 billion) – a 94 per cent increase year on year. Attributable profit rose to HK$10.6 billion, up 24 per cent from the same period last year, the firm said, adding that core revenue rose 19 per cent to HK$15.5 billion, reflecting record volumes across the cash, derivatives and commodities markets. The two both set new half-yearly records,