Zafrul: Malaysia set to improve position in IMD's 2025 competitiveness ranking
==========

The government is confident that Malaysia’s position in the International Institute for Management Development's (IMD) World Competitiveness Ranking 2025 will improve from this year, driven by an increase in high-technology product exports. Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz said a reduction in the country’s high-technology exports influenced Malaysia’s lower positioning in the IMD list this year, and this is a short-term situation that is expected to improve in 2025. Malaysia’s lower position in the IMD competitiveness ranking this year resulted from a fall in electronic communications exports due to lower global demand, and increased global competition for electronic communications products. However, global sales of semiconductors are projected to increase in 2024 and 2025, benefiting Malaysia as the world’s sixth largest semiconductor exporter. Stable economic growth, low unemployment, and controlled inflation rate are expected to improve Malaysia’s position in the near future.

#Malaysia #CompetitivenessRanking #Imd #Exports #HightechnologyProducts #Investment #Semiconductors

https://theedgemalaysia.com/node/716400


China’s spate of violence prompts outburst of economic anxiety
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Chinese social media users express discontent about the nation's economic downturn following a spate of violent attacks. A stabbing incident in a Shanghai metro station becomes a top trending topic on social media, with users speculating on the attacker's motive. The public reaction highlights growing fears over China's economic downturn, particularly in the property market. Protests over the economy, especially the housing crash, have become more frequent. Similar reports of violent attacks have been reported across China. Chinese authorities are aware of the link between economic changes and rises in violence. Mental health issues, compounded by economic pressures, are seen as contributing factors to acts of random violence.

#China #EconomicDownturn #Violence #SocialMedia #PropertyMarket #Protests #MentalHealth

https://theedgemalaysia.com/node/716383


CBO projects FY2024 US deficit to jump to US$1.9 tril amid higher outlays
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The US budget deficit is projected to reach US$1.915 trillion for fiscal 2024, surpassing last year's US$1.695 trillion gap. The Congressional Budget Office (CBO) attributes the increase to higher outlays for student loans, Medicaid, bank failure costs, and aid to Ukraine and Israel. These higher outlays account for 80% of a US$408 billion increase in this year's projected deficit. The CBO also raised its cumulative deficit forecast for the fiscal 2025-2034 decade to US$22.083 trillion, up US$2.067 trillion from the February projection. The estimates assume that the individual tax cuts passed by Republicans in 2017 will expire on schedule at the end of 2025. The CBO also updated its US economic projections, increasing its forecast for real gross domestic product growth to 2.0% for calendar 2024.

#UsBudgetDeficit #Cbo #FiscalProjections

https://theedgemalaysia.com/node/715887


Amazon fined US$5.9m over warehouse worker quotas in California
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Amazon has been fined US$5.9 million by the California Labor Commissioner for failing to properly inform workers of productivity quotas at two warehouses in California. The fines were issued in May and were announced by the office of California Labor Commissioner Lilia Garcia-Brower. Amazon violated a 2022 California law that requires employers to provide written descriptions of quotas to workers if they can be disciplined for failing to complete jobs at a specified speed. The violations occurred nearly 60,000 times in a five-month period ending in March at warehouses in Moreno Valley and Redlands. Amazon is appealing the citations and denies having fixed quotas for warehouse workers. The alleged quota system has been a focus of a nationwide campaign to unionize Amazon's warehouses.

#Amazon #California #WarehouseWorkers #ProductivityQuotas #Unionization

https://theedgemalaysia.com/node/715886


Global rate-cut juggernaut struggling to start
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Central banks in advanced economies are hesitant to join the global interest-rate cutting cycle. The Federal Reserve recently reduced projections for US monetary easing, and policymakers in the UK, Australia, and Norway are likely to signal that they are not convinced enough about disinflation to start lowering borrowing costs. June, originally expected to be a month of global rate cuts, is turning out to be a display of hesitancy. The Bank of England is expected to wait until at least August before cutting rates due to the upcoming election and lingering price pressures. Peers in Australia and Norway are also in no rush to cut rates. The Swiss National Bank may avoid a second reduction for now. Other central banks, such as Brazil and Paraguay, are expected to keep borrowing costs on hold, while Chile may slow rate cuts. US retail sales, Chinese data, and inflation numbers from the UK and Japan will be highlights for investors this week.

#CentralBanks #InterestRates #RateCuts #Disinflation #BorrowingCosts #FederalReserve #BankOfEngland #SwissNationalBank #Brazil #Paraguay #Chile #UsRetailSales #ChineseData #Inflation #Uk #Japan

https://theedgemalaysia.com/node/715642


New MM2H participants not eligible for PR status, says tourism minister
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New participants of the Malaysia My Second Home (MM2H) programme in all three categories — Platinum, Gold and Silver — are not eligible to apply for permanent resident (PR) status, according to Tourism, Arts and Culture Minister Datuk Seri Tiong King Sing. The government has agreed to introduce new participation requirements for the MM2H programme to attract high net-worth individuals and digital nomads. The MM2H programme, introduced in 2002, allows foreigners to purchase property and reside in Malaysia. New MM2H applications have been handled by the Immigration Department since October 2021. MM2H applicants are categorised into three tiers — Platinum, Gold and Silver — with specific criteria and conditions. The Platinum category requires a fixed deposit of US$1 million, the Gold category requires US$500,000, and the Silver category requires US$150,000. Motac has started processing and approving MM2H Tourism Business Operation Licences based on newly streamlined conditions. The new requirements for the MM2H Tourism Business Operation Licence include raising the company’s paid-up capital to a minimum of RM200,000, setting the annual licence fee at RM2,500, and having a business premises with a valid address.

#Mm2h #PermanentResident #Tourism #Malaysia

https://theedgemalaysia.com/node/715627


US jobless claims rise to highest in nine months, led by California
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Initial applications for US unemployment benefits increased by 13,000 to 242,000 in the week ended June 8, the highest level in nine months. The rise was led by a large increase in California. The US unemployment rate rose to 4% last month, reflecting people returning to the workforce and not finding a job. Layoffs, however, have remained subdued. New claims before adjustment for seasonal influences rose by 38,530 to 234,707 last week. The four-week moving average increased to 227,000, the highest since September. Continuing claims rose to 1.82 million in the week ended June 1. Federal Reserve Chair Jerome Powell said the labor market remains strong but is gradually cooling with supply and demand coming into better balance.

#UsJoblessClaims #UnemploymentRate #LaborMarket

https://theedgemalaysia.com/node/715436


US job market resembling pre-pandemic environment, Yellen says
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US Treasury Secretary Janet Yellen stated that the US job market is increasingly resembling the pre-pandemic environment. Yellen mentioned that the labor market has become more normal, with a decline in job openings and an increase in labor force participation. She also noted that wage growth is slowing down, but it is not a threat to inflation. Yellen highlighted that the remaining inflation is mainly in housing markets, where drops in elevated rents are slower to take effect. She emphasized that higher costs of housing, education, healthcare, and other necessities are affecting Americans' view of the economy. Yellen mentioned that President Joe Biden will continue to address the high cost of living. Additionally, Yellen proposed that the Group of Seven (G7) back a loan to Ukraine, repaid by frozen Russian assets, to help Ukraine fight Russia's invasion. She stated that the loan proposal could be a meaningful amount, around $50 billion.

#UsJobMarket #PrepandemicEnvironment #Yellen #Inflation #Biden'sEconomicAgenda #G7 #Ukraine #Russia'sInvasion

https://theedgemalaysia.com/node/715428


My Say: Global economic outlook is a glass half full, half empty
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The global economic outlook is a mix of optimism and potential perils. The US economy is cooling at a desirable pace, with the manufacturing sector weakening but the services sector remaining strong. China's outlook is uncertain due to a slowdown in the real estate sector, but policy support and improving economic momentum suggest recovery. East and Southeast Asian economies exposed to the technology sector are benefiting from the uptick in the tech cycle. However, the rising risk of a trade war poses a significant threat to the world economy. China's dominance in global exports and its competitiveness are causing tensions with other countries. The fiscal position of the US and its potential impact on the US dollar is another concern. Southeast Asian governments need to strengthen their resilience to financial shocks and protectionism, boost policy buffers, and leverage trade agreements to mitigate risks.

#GlobalEconomy #UsEconomy #China #TradeWar #TechnologySector #UsDollar #Resilience

https://theedgemalaysia.com/node/714787


Malaysia should get rid of New Economic Policy, says former minister Idris Jala
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Former minister Datuk Seri Idris Jala suggests that Malaysia should replace the New Economic Policy (NEP) with a more inclusive framework that helps the poor regardless of race and religion. The NEP, introduced in 1971, aimed to reduce ethnic inequalities and eradicate poverty by promoting Bumiputera participation in higher education and enterprise management. Idris believes that a new policy should provide equal affirmative action for all individuals in the B40 category, regardless of their race or religion. He also emphasizes the need for radical changes to escape the middle-income trap and attract Malaysians living abroad to return home. Idris was previously a minister in the Prime Minister's Department and the CEO of the Performance Management and Delivery Unit (Pemandu) from 2009 to 2015, leading the Economic Transformation Programme (ETP) to make Malaysia a high-income country by 2020. However, the depreciation of the ringgit prevented Malaysia from reaching high-income status by 2015. In 2022, Malaysia's gross national income (GNI) per capita was US$11,830, still lower than the World Bank's definition for high-income economies of US$13,845.

#Malaysia #NewEconomicPolicy #InclusiveFramework #Poverty #Race #Religion #B40Category #MiddleincomeTrap #AffirmativeAction #EconomicTransformationProgramme #HighincomeCountry #GrossNationalIncome

https://theedgemalaysia.com/node/715057


BlackRock cautious on long-term US Treasuries ahead of elections
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The BlackRock Investment Institute is cautious on long-term U.S. Treasuries ahead of the November presidential elections. The institute expects investors to demand more compensation to hold them due to wide fiscal deficits. It maintains an 'overweight' recommendation for short-term U.S. Treasuries in a high interest rate environment and remains neutral on longer-dated U.S. government bonds. The institute believes that regardless of who wins the election, budget deficits will remain large, leading to high inflation and elevated interest rates. The Treasury will sell nearly $120 billion in bonds this week, and demand for the auction is closely scrutinized due to concerns about U.S. debt sustainability. Some investors are allocating funds to avoid losses if Treasury yields surge due to supply and demand imbalances. Jimmy Chang, chief investment officer at Rockefeller Global Family Office, expects the return of bond vigilantes, but the timing is uncertain.

#Blackrock #UsTreasuries #Elections #FiscalDeficits #InterestRates

https://theedgemalaysia.com/node/715006


Ringgit seen strengthening further to 3.43-3.45 against Singapore dollar by year-end
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The ringgit is projected to stabilize further by year-end, ranging between 3.43 to 3.45 against the Singapore dollar. Factors boosting demand for the ringgit include foreign direct investments flowing into Malaysia, particularly the Johor-Singapore Special Economic Zone (JS-SEZ). The Malaysian ringgit peaked at RM3.5682 versus the Singapore dollar on Feb 20, 2024, and currently fluctuates around RM3.4868, reflecting a 2.3% gain. The economist also highlighted the synergistic efforts between the government, government-linked companies, and government-linked investment companies in fostering an environment conducive to greater conversion of foreign currencies into the Malaysian ringgit. However, the sustainability of the ringgit's surge might depend on external factors, particularly decisions by the US Federal Reserve regarding interest rates.

#Ringgit #SingaporeDollar #ForeignDirectInvestments #JohorsingaporeSpecialEconomicZone #MalaysianEconomy #UsFederalReserve #InterestRates

https://theedgemalaysia.com/node/714966


Global stock index rises slightly while euro falls, yields up
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MSCI's global equities index edged higher while the euro fell after French President Emmanuel Macron called a snap election. U.S. Treasury yields rose as investors digested labor market data and looked toward consumer price data and a Federal Reserve policy announcement. European stocks slipped due to political uncertainty in France. The euro fell to a one-month low against the dollar. The Dow Jones Industrial Average, S&P 500, and Nasdaq composite marked record closing highs. Investors are eagerly awaiting U.S. consumer price index (CPI) inflation data and the Fed's next policy decision. U.S. Treasury yields rose, reflecting higher rate expectations. The dollar strengthened against the euro and the Japanese yen. Oil prices rose to a one-week high, while gold prices rebounded.

#StockMarket #Euro #Yields #InflationData #FederalReserve #PoliticalUncertainty #DowJones #S&p500 #Nasdaq #TreasuryYields #Dollar #OilPrices #GoldPrices

https://theedgemalaysia.com/node/714933


Trump tax cut renewal is winning Wall Street, but could cost US$4.6 tril
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The prospect of renewing expiring portions of Trump's 2017 tax cuts is attracting Wall Street donors, but it could add US$4.6 trillion to the national debt. Independent analyses show that the tax cuts did not pay for themselves in 2017 and will not do so if renewed in 2025. The US government's debt load and interest costs have increased significantly due to the deficit-financed tax cuts, pandemic stimulus, and Biden administration spending. The Congressional Budget Office estimates that extending the tax cuts would cost US$4.6 trillion over the next decade. While some Republicans deny the cost, others propose cutting social programs or increasing tariffs to offset the expense. President Biden's approach is to extend the lower rates for individual taxpayers making less than US$400,000 a year and raise taxes on corporations and the wealthy. Economists largely agree that the claim that tax cuts pay for themselves is misleading. The revenue loss from the tax cuts would only be partially offset by increased investment and growth. The fiscal impact of the tax cuts would be significant, and the level of budget pain needed to offset the revenue loss would be unprecedented. The article presents different viewpoints on the impact and effectiveness of the tax cuts.

#TrumpTaxCuts #WallStreet #NationalDebt #UsGovernmentDebt #TaxPolicy #EconomicImpact

https://theedgemalaysia.com/node/714608


US service providers chalk up strongest growth in nine months
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The US services sector expanded in May by the most in nine months, with the Institute for Supply Management's composite gauge of services jumping 4.4 points to 53.8. The business activity index soared 10.3 points to 61.2, the highest level since November 2022. Thirteen services industries reported growth, led by real estate and health care, while five sectors, including retail trade, noted a decline. The ISM index of prices paid for materials and services cooled to 58.1 from 59.2. The supplier deliveries index climbed to the highest level since November 2022, indicating slower delivery times. The measure of services employment climbed but remained in contraction territory.

https://theedgemalaysia.com/node/714315


Dalio warns of US-China ‘economic warfare’ among top global risks
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Ray Dalio warns that internal conflicts, particularly regarding the acceptance of the US election result, will be a highlight of this year. He highlights the risk of economic sanctions between the US and China, which would be detrimental to the world. Dalio believes that economic warfare often precedes military warfare and raises concerns about the one-China policy and the potential negative consequences for American investors in China. He suggests effective diversification in investments across countries, currencies, and asset classes. Dalio prefers equity assets over debt and recommends including gold in investors' portfolios. He also mentions the attractiveness of Chinese assets and the potential for neutral countries to fare better in a war. Dalio emphasizes the need for diversification and paying attention to quantity.

#RayDalio #UsElection #EconomicSanctions #China #Diversification #EquityAssets #Debt #Gold #OnechinaPolicy

https://theedgemalaysia.com/node/714256


US farmers opt for soy to limit losses as all crop prices slump
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US farmers, including Mark Tuttle and Evan Hultine, are planting more soy and less corn on their farms in northern Illinois to limit losses as prices for both crops hover near three-year lows. Tuttle even broke the traditional soy-corn-soy rotation for field management by planting soybeans in one of his fields for a second straight year. The US Department of Agriculture (USDA) forecasted that farmers would plant 86.5 million acres of soybeans nationwide this spring, the fifth most ever. Some analysts expect soybean acres to increase by another million acres or more as heavy rains close the window on corn planting. However, planting more soy at a time of sputtering demand from importers and domestic processors will only serve to drive prices lower, further swell historically large global supplies, and erode US farm incomes. The expansion of soy plantings is expected to swell the US soy stockpile next season by more than 30% to the highest in five years and the sixth highest level on record as demand from the domestic and export markets is not keeping pace with rising production. Farmers are favoring planting soybeans rather than corn because they require less fertiliser and pesticides and seed costs tend to be lower. However, high interest rates have been a particularly painful expense for farmers. Cash prices offered for the next corn and soybean harvest have improved from earlier this spring, but neither crop pencils a profit at current prices. Rain-saturated fields in some areas could clip corn acres and even further expand seedings of soybeans, which can be planted well into June without significant risk to yields. Weather delays and a favorable price versus corn could boost soy plantings by 500,000 to one million acres above the USDA's latest forecast for 86.5 million.

#UsFarmers #Soy #Corn #CropPrices #Losses

https://theedgemalaysia.com/node/714130


Hedge fund Dymon bucks the trend by expanding Hong Kong office
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Hedge fund firm Dymon Asia Capital is expanding its Hong Kong office in the Landmark commercial complex. The new office in Edinburgh Tower will be 7,000 sq ft and can accommodate more than 70 employees, double the capacity of its current office. The expansion comes at a time when Hong Kong is experiencing record premium office vacancies and declining rental rates. The vacancy rate for grade-A offices in Hong Kong reached an all-time high of 16.7% in March, and rents have declined for 20 consecutive quarters. Despite this, Dymon has chosen to expand in Hong Kong due to a growing pool of talent in the city. Hongkong Land Holdings Ltd, the owner of the Landmark commercial complex, saw its shares rise 3.6% in response to the news. Dymon plans to move into its new office in the early fourth quarter.

#HedgeFund #DymonAsiaCapital #HongKong #OfficeExpansion #VacancyRate #RentalRates

https://theedgemalaysia.com/node/714038


Nasdaq, S&P 500 rise on chips, megacaps boost
==========

The Nasdaq and the S&P 500 inched up on Monday as falling US Treasury yields boosted megacap growth stocks. Megacap stocks including Apple, Meta, and Alphabet gained between 1.1% and 1.7%. AI leader Nvidia rose 3.4% and announced the rollout of its next-generation AI chip platform in 2026. GameStop shares soared 26.8% after a US$116 million bet on the gaming retailer by stocks influencer Keith Gill. NYSE Equities is investigating a reported technical issue that caused volatility pauses for dozens of stocks. A survey from the Institute for Supply Management showed manufacturing activity eased to 48.7 in May. The S&P 500 and the Nasdaq ended May with strong gains. Attention turns to crucial data this week, including surveys on the manufacturing and services sector, factory orders, and the nonfarm payrolls report. At 10.14am ET, the Dow Jones Industrial Average was down 0.12%, the S&P 500 was up 0.22%, and the Nasdaq Composite was up 0.62%. Paramount Global rose 7.1% after a report that Skydance Media was poised to take over the company. JetBlue Airways forecast a smaller drop in second-quarter revenue than previously forecast. Advancing issues outnumbered decliners on both the NYSE and the Nasdaq.

#Nasdaq #S&p500 #UsTreasuryYields #MegacapStocks #Apple #Meta #Alphabet #Nvidia #Gamestop #NyseEquities #InstituteForSupplyManagement #DowJonesIndustrialAverage #ParamountGlobal #SkydanceMedia #JetblueAirways

https://theedgemalaysia.com/node/713972


US firms grow more pessimistic on economic outlook, Fed survey shows
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US economic activity continued to expand from early April through mid-May but firms grew more pessimistic about the future while inflation increased at a modest pace, a US Federal Reserve (Fed) survey showed on Wednesday, as central bankers mull how long they will need to keep interest rates at current levels. The survey, released roughly every six weeks, comes as policymakers remain uncertain on when to start a rate-cutting cycle after holding interest rates in the range of 5.25% to 5.50% for the past 10 months. Most Fed districts reported slight or modest growth in activity, while two noted no change in activity. The Fed's benchmark interest rate is set to remain unchanged at the next policy meeting on June 11-12 and Fed officials, while all but ruling out another rate hike, have indicated they need consistent encouraging inflation data over a number of months before lowering borrowing costs after being stung by bigger-than expected price increases the first three months of the year. US job gains were the fewest in six months in April and the increase in annual wages fell below 4% for the first time in nearly three years, but the labour market remains fairly tight.

https://theedgemalaysia.com/node/713601


Americans expect more student-debt forgiveness in NY Fed survey
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The average perceived likelihood of a year-ahead increase in federal student debt forgiveness rose to 39% in April compared to 28.7% in December, according to a survey conducted by the Federal Reserve Bank of New York. The expectations for federal student debt forgiveness were highest among older Americans, with the share of consumers age 45 and older anticipating more relief rising sharply. Over 10% of Americans with federal student loans have been approved for some measure of debt relief under President Joe Biden. Roughly 43 million Americans owe $1.6 trillion in student debt. Missed federal student loan payments will not be reported to credit bureaus until the fourth quarter of this year. The US Department of Education announced that interest rates on federal student loans for the upcoming academic year will be the highest in more than a decade.

https://theedgemalaysia.com/node/713417


Fed's Kashkari wants significant progress on inflation before rate cuts
==========

Minneapolis Federal Reserve Bank President Neel Kashkari stated that the US central bank should wait for significant progress on inflation before cutting interest rates. Kashkari mentioned that many more months of positive inflation data are needed to give him confidence in dialing back rates. He also mentioned that if inflation fails to come down further, the central bank could potentially even hike rates. In April, Kashkari had penciled in two interest rate cuts for this year, but if inflation continues to stall, none may be required by year-end.

https://theedgemalaysia.com/node/713333


Higher path for rates boosts need to lift revenue, says Yellen
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Treasury Secretary Janet Yellen says the outlook for higher interest rates over the long haul makes it tougher to contain US borrowing needs. Yellen emphasized the importance of boosting revenue in negotiations with Republican lawmakers. The Biden administration's budget proposals aim to ensure a sustainable fiscal trajectory. Yellen highlighted the metric of inflation-adjusted interest payments compared with GDP, aiming to keep it below 2%. Goldman Sachs economists project net real interest payments reaching 2.3% by 2034. Soaring interest rates have made it more expensive for the government to service its debt. Yellen mentioned the upcoming tax negotiation and the need to pay for any extended provisions through new revenue. She suggested implementing the 2022 global corporate minimum tax deal as one way to fund the provisions. Biden's budget includes tax hikes on capital gains and on households worth at least $100 million. Yellen's views on borrowing costs have shifted, as she previously suggested longer-term yields could come down.

#JanetYellen #UsBorrowing #InterestRates #Revenue #BudgetProposals #DebtService #TaxNegotiation #RevenueraisingProposals

https://theedgemalaysia.com/node/713038


European G7 ministers warn over China trade war risks
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European finance ministers from the Group of Seven (G7) wealthy democracies called for a common front against China's "unfair" industrial policies and warned of the risks of a trade war after US tariff hikes against Beijing. Washington last week unveiled increased duties on Chinese imports, triggering concerns of retaliation and fragmentation in global commerce. The US is not calling on its partners to take similar measures, but Treasury Secretary Janet Yellen wants the G7 allies to show they stand with Washington. German Finance Minister Christian Lindner stated that "trade wars are all about losing, you can't win them." Italian Economy Minister Giancarlo Giorgetti said it may only be a matter of time before the European Union (EU) follows the US lead on tariffs. The G7 ministers also discussed a loan to Ukraine backed by future income from frozen Russian assets, but no hard details emerged. The G7 will address a proposed global wealth tax on billionaires, but the US and Germany expressed reservations.

#G7 #China #TradeWar #UsTariffs #Ukraine #GlobalWealthTax

https://theedgemalaysia.com/node/712955


Goldman now sees US debt-cost ratio rising into danger zone
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Goldman Sachs Group Inc. has updated its longer-term US fiscal outlook, projecting a key metric of debt sustainability to reach historically extreme levels. The bank's economists Manuel Abecasis and David Mericle note that higher expected future interest rates have substantially worsened the trajectories of the debt-to-GDP ratio and real interest expense as a share of gross domestic product. Treasury Secretary Janet Yellen has referenced net inflation-adjusted interest payments as a proportion of GDP as her main metric of debt sustainability. Goldman's updated projections have that ratio climbing steadily to 2.3% by 2034, compared to the bank's previous prediction of 1.5%. The bank also forecasts the US debt-to-GDP ratio to reach 130% by 2034, up from the current 98%. The primary fiscal deficit, not accounting for interest costs on the debt, is now 5% greater as a share of US GDP than during times of full employment. Goldman Sachs economists highlight the need for a fiscal surplus to stabilize the debt-to-GDP ratio, but note the lack of political momentum for deficit reduction.

#UsDebt #FiscalOutlook #DebttogdpRatio #InterestRates #TreasurySecretaryJanetYellen

https://theedgemalaysia.com/node/712717


'War economy' angle on debts risks 'creative' solutions: Mike Dolan
==========

The issue of debt sustainability is a concern in financial markets, particularly in the United States. The Congressional Budget Office projects a 17 percentage point jump in the U.S. public debt-to-GDP ratio over the next 10 years to 116% and then rising to 166% by 2054. Federal Reserve Chair Jerome Powell has stated that U.S. fiscal policy is on an 'unsustainable path'. The average interest cost on the U.S. public debt has more than doubled since April 2021 to 3.23%, the highest in 14 years. The persistence of brisk growth and above-target inflation is partly due to the demand stimulus created by unchecked deficits. The long-term debt projections are based on relatively modest expectations for borrowing costs, but the problem lies in the debt accumulated in the interim. The International Monetary Fund doesn't see the overall annual U.S. deficit back below 6% of GDP for the next five years. The justification for fiscal largesse has taken on a 'war economy' rationale, with heavy spending seen as necessary to address existential threats and geopolitical rivalry. French President Emmanuel Macron has also highlighted the risk of Europe's demise and called for an expansion of the European Central Bank's mandate. In conservative quarters, there are calls to erode central bank independence. The imperatives of fiscal retrenchment and electoral cycles may lead to a reliance on monetary policy to keep the economy stable.

#DebtSustainability #FiscalPolicy #PublicDebt #InterestRates #Inflation #MonetaryPolicy

https://theedgemalaysia.com/node/711780


Walmart to lay off hundreds of corporate staff and relocate others, WSJ reports
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Walmart is cutting hundreds of corporate jobs and asking most remote workers to move to offices. Workers at smaller offices in Dallas, Atlanta, and Toronto are being asked to move to other central hubs. Walmart will still allow staff to work remotely part time. Walmart employed approximately 2.1 million associates as of Jan. 31, 2024. The company has been shrinking its workforce and expects about 65% of its stores to be serviced by automation by the end of fiscal year 2026. In February 2023, it shut three U.S. technology hubs and asked workers to relocate. Walmart did not immediately respond to a request for comment.

https://theedgemalaysia.com/node/711450


Stocks near flat, dollar dips as focus shifts to US inflation data
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Global stock indexes were little changed on Monday while the U.S. dollar index eased as investors awaited this week's U.S. inflation data. U.S. consumer prices report and U.S. producer price data are expected this week, along with final reports on European inflation. Chinese retail sales and other data are also expected. Investors have been focused on inflation as they weigh how soon the U.S. central bank is likely to cut rates. Markets are pricing in around an 80% chance of a rate cut by the Fed's September meeting. Economists expect the closely watched core CPI to rise by 0.3% in the month, for an annual gain of 3.6%. The first-quarter U.S. earnings season is winding down, but investors will see reports this week from some big U.S. retailers including Walmart and Home Depot. China's finance ministry will start the sales of 1 trillion yuan of long-term treasury bonds this week. The dollar index eased 0.1% to 105.21. The yield on benchmark U.S. 10-year notes fell 1.6 basis points to 4.489%. Oil prices were higher amid signs of improving demand in the U.S. and China. U.S. crude rose 86 cents to settle at $79.12 a barrel, and Brent gained 57 cents to $83.36. Spot gold fell 1% to $2,336.76 per ounce.

https://theedgemalaysia.com/node/711423


Coach parent Tapestry cuts sales forecast on tepid demand in US, China
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Coach parent Tapestry cuts its annual sales forecast and misses third-quarter revenue estimates due to weak demand for its tote bags and accessories in North America and China. Reduced discretionary spending in North America and a fragile post-pandemic recovery in China have contributed to the decline in demand. Revenue in North America fell 3% in the quarter, while sales in Greater China dipped 2%. Despite the decline, Tapestry beat profit expectations due to margin growth, lower freight costs, and tighter expense control. Tapestry's buyout of Michael Kors owner Capri is being sued by the antitrust regulator. Tapestry expects fiscal 2024 revenue of over US$6.6 billion, down from previous expectations of about US$6.7 billion.

https://theedgemalaysia.com/node/711014


Key debt ratio resumes rise as global debt burden hits record US$315 tril, IIF says
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The global debt-to-output ratio rose to 333% as global debt hit a record high of US$315 trillion in Q1 2024. Debt in emerging markets grew to over US$105 trillion, with China, India, and Mexico being the largest contributors. Government budget deficits are projected to contribute around US$5.3 trillion to global debt accumulation this year. Interest rates have remained high, leading to higher borrowing costs and weakened currencies in many emerging markets. Egypt and Pakistan are expected to have the highest interest expense on government debt. The US and Japan saw the quickest rise in debt among developed economies. The US level of spending is a concern and out of line with long-term fiscal sustainability, according to the International Monetary Fund.

#GlobalDebt #DebttooutputRatio #EmergingMarkets #GovernmentBudgetDeficits #InterestRates #BorrowingCosts

https://theedgemalaysia.com/node/710680


Aramco to pay US$31 bil dividend as Saudi posts budget deficit
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Aramco will pay US$31 billion in dividends to the Saudi government and other investors despite lower profit. The payout, including a special component, is for the first quarter and will help fund the kingdom's spending plans as it looks to diversify the economy away from oil. Saudi Arabia needs oil at around US$108 a barrel to balance the budget, but benchmark crude prices are currently trading below US$84 a barrel. Aramco's massive dividend payouts come as the country's economy has contracted for three consecutive quarters and the budget has been in deficit for six consecutive quarters. Saudi Arabia has revived a plan for a follow-on offering of Aramco's shares, but global investors will keep an eye on the Saudi economy and oil output levels. The Organization of Petroleum Exporting Countries and its allies are expected to extend supply curbs into the second half of the year.

#Aramco #Dividend #SaudiArabia #BudgetDeficit #OilPrices #Economy

https://theedgemalaysia.com/node/710590


Soft US jobs raise selloff risk for stocks, BofA strategist says
==========

A weaker jobs report would be a stagflation signal, raising the odds of a selloff in stock markets, according to Bank of America Corp strategist Michael Hartnett. Recent US economic data has been stagflationary as it suggested slowing growth at a time of sticky inflation and labor costs. If the Labor Department’s report on Friday were to show the US added fewer than 125,000 jobs in April, and the average hourly earnings rose more than 0.4% from the previous month, that would be a “stagflation risk-off print,” he said. On the other hand, if payrolls were to rise by more than 225,000 and average hourly earnings by less than 0.2%, it would be interpreted as “Goldilocks back on and risk back on,” Hartnett wrote in a note. Forecasters expect the report, due at 8:30am in Washington DC, to show employers boosted payrolls by 240,000 in April. Average hourly earnings likely advanced 0.3% compared with the previous month. A rally in US stocks faltered last month as the Federal Reserve signaled it would hold interest rates higher for longer amid elevated inflation. A sharp slowdown in economic growth in the first quarter has also raised worries that the US was heading toward stagflation. Other market strategists, including at BofA, have downplayed those concerns. The bank’s head of US equity and quantitative strategy, Savita Subramanian, said on Thursday that a sturdy economy would sustain the bull-market run in US stocks. Hartnett, on the other hand, said stocks were in a “late secular bull market,” which ends either with a bubble or recession. Subramanian and Hartnett have often taken a contrarian stance on the outlook for equity markets. In March, they disagreed about artificial intelligence pushing technology stocks into bubble territory.

#UsJobs #StockMarket #Stagflation #BankOfAmerica #MichaelHartnett

https://theedgemalaysia.com/node/710265


China’s US Treasury holdings becoming ‘hostages,’ academic warns
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China needs to further reduce its Treasuries holdings to lessen potential leverage of Washington. China's vast American assets are hindering the safeguarding of national sovereignty. The US freezing of Russian assets following Moscow's invasion of Ukraine in 2022 is cited as an example of American actions that pose challenges for foreign investors. China's holdings of Treasuries have been trending down for several years, hitting the lowest level since 2009 last October. China is the second-largest foreign owner of Treasury securities. Di Dongsheng, vice-dean of Renmin University’s School of International Studies, argues that China no longer needs massive foreign reserves due to structural economic reforms at home. Di also views large dollar reserves as unnecessary in the event of upward pressure from the US currency against China's yuan.

#China #UsTreasuryHoldings #Leverage #NationalSovereignty #ForeignReserves #ExchangeRate

https://theedgemalaysia.com/node/709841


US ramps up help as countries plan response to China’s bullying
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Countries are seeking help from the US State Department to mitigate economic pressure from China. After Beijing tried to punish Lithuania for opening a liaison office with Taiwan, the US intervened and created a team to assist countries facing economic coercion. About a dozen nations have sought guidance on diversifying export markets away from China. The State Department team, known as 'the firm,' analyzes trade vulnerabilities, offers support, and conducts table-top exercises to game out responses to Beijing. The US government also leverages its economic power in foreign affairs, but faces challenges due to internal political divisions and a lack of an offensive trade agenda. China has not responded to allegations of economic coercion. In the case of Lithuania, China blocked trade, pressured multinationals, and canceled trade credits after Vilnius allowed a Taiwanese trade office to use the word 'Taiwan' in its name. The US provided trade credits, improved market access, and offered diplomatic support to Lithuania. Other nations are warned that economic dependence can become a weapon in the future.

#UsStateDepartment #China #EconomicCoercion #Trade #Lithuania

https://theedgemalaysia.com/node/709659


China firms go 'underground' on Russia payments as banks pull back
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Chinese companies are facing difficulties in shipping products to Russia due to China's big banks throttling payments for such transactions out of concern over US sanctions. Some Chinese exporters are turning to small banks on the border and underground financing channels, such as money brokers and even banned cryptocurrency, to settle payments. Chinese banks have intensified scrutiny of Russia-related transactions or halted business altogether to avoid being targeted by US sanctions. Major Chinese banks have suspended settlements from Russia since March, leading to drops in Russia-related business for some state-owned lenders. Chinese companies are experiencing delays in opening accounts at rural banks along the Russian border, causing bottlenecks in payment collection. Some Chinese exporters have given up on the Russian market due to the difficulties in collecting payments. The situation is posing a growing problem for small Chinese exporters.

#China #Russia #UsSanctions #ChineseBanks #Trade #SmallExporters

https://theedgemalaysia.com/node/709657


Elon Musk visits China as Tesla seeks self-driving technology rollout
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Tesla CEO Elon Musk arrived in Beijing on an unannounced visit to discuss the rollout of Full Self-Driving (FSD) software and permission to transfer data overseas. Musk met with Premier Li Qiang, who praised Tesla's development in China as a successful example of U.S.-China economic and trade cooperation. Tesla has not yet made FSD available in China, its second-largest market, but Musk stated that it may be available to customers in China 'very soon.' Musk is seeking approval to transfer data collected in China abroad to train algorithms for autonomous driving technologies. The surprise visit is seen as a major moment for Tesla, as rival Chinese automakers are rolling out similar software. Musk also met with Ren Hongbin, a government official who heads the China Council for the Promotion of International Trade. Tesla's Model Y and 3 cars were found to be compliant with China's data security requirements. Musk's visit comes after he canceled a planned visit to India due to Tesla obligations. Tesla shares have declined by almost a third since the start of the year.

#ElonMusk #Tesla #China #SelfdrivingTechnology #FullSelfdriving #Fsd #PremierLiQiang #DataTransfer #AutonomousDriving #ModelY #Model3

https://theedgemalaysia.com/node/709650


Apple intensifies talks with OpenAI for iPhone generative AI features
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Apple has renewed discussions with OpenAI about using the start-up’s technology to power new features on the iPhone. The two companies are discussing terms of a possible agreement and how the OpenAI features would be integrated into Apple’s iOS 18. Apple is also in discussions with Google about licensing its Gemini chatbot. The next iPhone operating system will include new features based on Apple’s in-house large language model and the company is seeking partners to power a chatbot-like feature similar to OpenAI’s ChatGPT. The discussions with OpenAI and Google come ahead of Apple’s Worldwide Developers Conference where it plans to introduce new AI software and services. Apple CEO Tim Cook has previously expressed interest in OpenAI’s ChatGPT and promised that new AI features would come to Apple’s platforms on a “very thoughtful basis”.

#Apple #Openai #Iphone #GenerativeAi #Ios18 #GeminiChatbot #Chatgpt #AiSoftware #WorldwideDevelopersConference #TimCook

https://theedgemalaysia.com/node/709585


Global manufacturing activity recovery to continue gradually into 2024, says S&P Global
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Global manufacturing activity recovery had seen a gradual improvement in late 2023 and is expected to continue into 2024. The US economy is stronger than expected, while Western Europe underperformed. Growth in Asia-Pacific was uneven, with India and Indonesia leading the region. Global PMI data showed gradual improvement, with new orders and future output rising. Asia-Pacific is expected to drive world growth in 2024, benefiting from recovery in China and resilient domestic demand. Malaysia's economic momentum will continue in 2024, with real GDP growth projected to accelerate to 4.6%. Manufacturing new orders have steadily increased since December 2023. The textile and apparel manufacturing segment is expected to slip. There is an upside risk to supply chain activities in 2024 if US importers anticipate tariff increases for imports from China. China remains a huge market for semiconductor suppliers, while the US accounted for 25% of revenues of the 10 largest chips companies.

https://theedgemalaysia.com/node/709537


Biden trails Trump in six of seven key states, poll shows
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US President Joe Biden is trailing Donald Trump in six out of seven key battleground states, according to a recent Bloomberg News/Morning Consult poll. Biden is ahead in Michigan by two percentage points but trails Trump slightly in Pennsylvania and Wisconsin, and has a larger deficit in Georgia, Arizona, Nevada, and North Carolina. The poll reflects a return to the previous state of the presidential race before Biden's strong State of the Union address in March. Respondents in the poll expressed pessimism about the economy, with a majority expecting worsening economic conditions in the coming months. Biden's deficit in the swing states is wider than that of Democratic congressional candidates, indicating a sour view of Biden among voters.

#UsPresidentialRace #JoeBiden #DonaldTrump #Poll #SwingStates #Economy

https://theedgemalaysia.com/node/709254


Fisker may seek bankruptcy protection in 30 days if unable to meet debt obligations
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Fisker may have to file for bankruptcy protection within 30 days if it does not get adequate relief from its creditors and enough liquidity to meet its current debt obligations. The cash-strapped electric vehicle (EV) start-up failed to make an interest payment of about US$8.4 million on some notes due in 2026 during a 30-day grace period. Talks with a large automaker for a potential investment collapsed last month, leading to the need for in- or out-of-court restructurings and capital market transactions. Fisker's cash balance reduced to US$325.5 million in 2023 from US$736.5 million in 2022. The company plans to further reduce its workforce and streamline its operations. It had previously cut the prices of its 2023 Ocean sport utility vehicle models in March to boost sales and raise capital. Fisker has been facing intense competition and customers holding back purchases due to higher borrowing costs and economic uncertainty.

#Fisker #Bankruptcy #DebtObligations #ElectricVehicle #EvStartup

https://theedgemalaysia.com/node/709136


China condemns US’ overcapacity claim just before Blinken visit
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China condemns US' claim of industrial overcapacity as economic coercion and bullying. Chinese diplomat accuses the US of seeking a more favorable competitive position and market advantage. The remarks come ahead of Secretary of State Antony Blinken's visit to China. Tensions between the two countries have been strained, with issues such as accusations of spying, tariffs on Chinese exports, a probe into China's shipbuilding sector, and efforts to force TikTok to divest from its Chinese parent. China expresses irritation and opposition to US interference in its internal affairs. Blinken's visit follows Treasury Secretary Janet Yellen's visit and the first phone call between China's new defense minister and his US counterpart. The US may impose sanctions on Chinese banks to curb Beijing's commercial support of Russia. China denies involvement in the Ukraine crisis and rejects being the scapegoat.

#China #Us #IndustrialOvercapacity #EconomicCoercion #AntonyBlinken

https://theedgemalaysia.com/node/709065


Euro at highest since 2008 on yen, markets nervous about Tokyo stepping in
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The yen hit fresh multi-year lows against the dollar and the euro on Tuesday, with the euro reaching its highest level since 2008 at ¥165.62. Investors are on heightened intervention watch ahead of the Bank of Japan's (BOJ) meeting this week. The dollar also rose to its highest level since 1990 against the yen, nearing the trigger level for intervention by Japanese authorities. Japanese Finance Minister Shunichi Suzuki has warned of the chance of intervention. However, doubts remain about whether Tokyo will act so close to the BOJ's policy meeting. The euro also gained against the dollar and the pound, while the pound dropped to a five-month low against the dollar. Investors are more confident in Bank of England rate cuts due to comments from policy makers about inflation slowing. The US Federal Reserve is seen as one of the last major central banks to cut rates. Investors are currently pricing in a 46% chance of the Fed's first rate cut starting in September. The strength of the US economy will be assessed this week with first-quarter GDP data and the PCE index, the Fed's preferred measure of inflation.

#Yen #Euro #Dollar #BankOfJapan #Intervention #BankOfEngland #FederalReserve #Inflation #Gdp #PceIndex

https://theedgemalaysia.com/node/709005


SERC: Escalated oil price boon and bane for Malaysia
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High crude oil prices caused by tension in the Middle East will boost Malaysia's oil and gas exports, but escalate fuel prices and dampen economic growth. The first order effect of higher oil prices will expand Malaysia's trade surplus. However, the second order effect of oil supply shocks will cause rising energy prices, inflation, and dampen consumer spending and investment demand. This will impact Malaysia's exports and result in higher equity risk and downward pressure on stock prices. RHB Investment Bank expects oil prices to reach as high as US$140 per barrel if the Israel-Iran conflict intensifies. The targeted fuel subsidy rationalization will not lead to complete floating of retail petrol prices, but rather a gradual adjustment. The impact of targeted fuel subsidies on headline inflation will be manageable, but there may be indirect impacts on other goods and services. Bank Negara Malaysia is not expected to raise interest rates to address the increase in inflation.

#OilPrice #Malaysia #EconomicGrowth #TradeSurplus #Inflation #ConsumerSpending #InvestmentDemand #StockMarket #FuelSubsidy #InterestRates

https://theedgemalaysia.com/node/708970


US business equipment borrowings fell 7% in March, ELFA says
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U.S. companies borrowed 7% less to finance equipment investments in March compared to a year ago, with new loans, leases, and lines of credit totaling $9.3 billion, up 18% sequentially. ELFA President and CEO Leigh Lytle expects equipment and software investment to pick up in the latter part of the year when the Fed begins its rate cuts. ELFA's credit approvals for U.S. companies in January came in at 77%, up from 76% the previous month. The Equipment Leasing & Finance Foundation reported a confidence index of 52.9 for April, indicating a positive business outlook.

https://theedgemalaysia.com/node/708938


US bond bulls lean into latest selloff despite inflation scare
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A sharp selloff in U.S. bonds prompts some investors to consider allocating more funds to lock in higher yields ahead of interest rate cuts by the Federal Reserve. Treasury yields have soared in recent weeks after solid economic data and rebounding price pressures pushed out expectations of rate cuts. Despite lower bond prices, investors see an opportunity to increase duration and benefit from potential interest rate moves. Some investors are rotating from cash to high-yielding fixed income products such as mortgages, credit, and emerging markets. Year-to-date returns on Treasuries have been negative, but investors remain optimistic about the duration trade. However, not all investors share the same view, with some expecting lower yields and a drop in allocations to bonds. Traders of futures tied to the Fed's policy rates expect less than two interest rate cuts in 2024. Confidence in easing price pressures is lower compared to the previous rally in bonds. It is considered too early to extend duration.

#UsBonds #Inflation #InterestRates #FederalReserve

https://theedgemalaysia.com/node/708937


Shadow banking stress in South Korea sends warning to global investors
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South Korea is experiencing stress in its shadow banking sector, raising concerns among global investors. Delinquency rates at Korean lenders have nearly doubled to 6.55% and 111 trillion won (US$80 billion) of project-finance debt is considered troubled. Korean shadow-bank financing to the real estate sector reached a record 926 trillion won last year. The restructuring announcement by builder Taeyoung Engineering & Construction Co. highlights the threat of flareups. The extent of the concern in Korea is reflected in the rapid policy response, including potential on-site inspections of saving banks. The government plans to speed up restructuring in the property sector. However, overall credit risks have not caused broader economic damage. The worst is yet to come for Korea's property malaise, with Citigroup economists predicting a slowdown in economic growth in the second half. Korean non-bank lenders have made significant investments in overseas commercial real estate, which have suffered in the post-Covid slump. Smaller and non-bank financial institutions are considered more vulnerable to the restructuring efforts. Global investors are closely watching the situation in South Korea's shadow banking sector as a potential warning for other economies.

#SouthKorea #ShadowBanking #RealEstate #FinancialStability #DebtRestructuring

https://theedgemalaysia.com/node/708923


'Overdue' pullback in US stocks to test dip-buyers' resolve
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The S&P 500 is down more than 5% from its March 28 closing high, its biggest retreat since October. The index has experienced an average of three pullbacks of 5% or more every year since 1929. Many market participants believe the factors that drove the S&P 500 to a 10% gain in the first quarter, including resilient economic growth and excitement over artificial intelligence, remain in place and will support stocks over the long term. Some investors are already buying on weakness, while others are waiting for more clarity on inflation, geopolitical tensions, and corporate earnings. The S&P 500 has seen an average maximum drawdown of 11% each time it has gained 10% or more in the first quarter. Clients of BofA sold $800 million in US equities in the latest week, the third straight week they were net sellers. Some volatility-sensitive funds that bought equities as markets marched higher have already started selling and could dump more stocks if markets grow more turbulent. Investors are also watching the level of the Cboe Volatility Index. The coming week’s earnings from Tesla, Meta Platforms, Alphabet, and Microsoft could offer support to stocks or further exacerbate the selloff. The earnings picture has been mixed so far. Investors will also focus on Friday's release of the monthly Personal Consumption Expenditures Price index, a crucial piece of inflation data before the Fed's April 30-May 1 meeting. Investors are pricing in around 40 basis points of interest rate cuts this year, compared to 150 priced in at the start of 2024.

https://theedgemalaysia.com/node/708848


No social media accounts for children under 13, says Fahmi
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The Malaysian Communications and Multimedia Commission (MCMC) has reminded parents to ensure that their children under 13 do not own any social media accounts. Communications Minister Fahmi Fadzil said the commission found that it is not appropriate for children under 13 to use any social media. Most social media platforms do not permit teens of such age to sign up for an account. Fahmi warned parents that children under 13 are not permitted to own TikTok, Facebook, Instagram, or any other social media accounts. The MCMC will shut down any accounts found to be owned by children under 13. Fahmi stated that social media platforms currently do not have a way to verify the age of users during account registration. The Ministry of Communications has held meetings with social media platforms, including Meta (owner of Facebook, Instagram, and WhatsApp) and Telegram, to discuss plans to address the ownership of social media accounts by children under 13. An announcement regarding online safety for children is expected in early May.

https://theedgemalaysia.com/node/708812


Trade tensions threaten rise of China’s stock champions
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China's most-promising industries, including electric vehicles, wind and solar projects, medical devices, and chips, are facing growing trade restrictions from Western governments. These sectors are of strategic importance to President Xi Jinping's bid for leadership in the global race toward green transition and high-tech development. The rising tensions come at a time when stocks were starting to emerge from a multi-year slump as investors bought into China's efforts to build new growth engines and achieve self-sufficiency along key supply chains. The materialization of these threats can hinder China's global expansion and may lead to a full-blown trade war. The biggest Chinese firms that get at least a fifth of their revenue from exports command more than a 14% weight in the CSI 300. Recent months have seen tensions worsen, with the European Union joining US-styled protectionist moves. The focus is now on which sector will be targeted next, with electric vehicles being a key target so far. The unpredictable nature of geopolitical tensions increases the risk of investing in Chinese stocks, which many were already avoiding due to regulatory uncertainties and a slowing economy.

#China #TradeTensions #StockMarket #StrategicIndustries #ElectricVehicles #GreenTransition #HightechDevelopment

https://theedgemalaysia.com/node/708734


Ringgit likely to trade around 4.78 versus greenback next week
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The ringgit is likely to trade around 4.78 against the US dollar next week. The situation in the Middle East will continue to be under scrutiny by investors, and any escalation in tension would result in a higher demand for the US dollar. The Federal Reserve's favorite inflation gauge, the personal consumption expenditures (PCE) price index, will also be watched. Stable growth prospects and authorities' continued support might help keep the ringgit stable. On April 15, Bank Negara Malaysia said it stood ready to deploy tools to ensure the Malaysian financial markets remain orderly. The ringgit depreciated to 4.7810/7855 versus the greenback compared with 4.7680/7730 a week earlier. Malaysia's economy was forecast to have grown by 3.9% in 1Q2024. The ringgit traded higher against Asean currencies except for the Singapore dollar.

https://theedgemalaysia.com/node/708707


The Week Ahead: Eyes on March inflation, US 1Q GDP and tech earnings
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The Department of Statistics Malaysia (DOSM) will release the Consumer Price Index (CPI) data for March on Thursday. Inflation in February was 1.8% year on year (y-o-y), higher than expected. Core inflation remained steady at 1.8% y-o-y. Bank Negara Malaysia will release its latest data on Monday. The 1MDB-Tanore criminal trial involving former prime minister Datuk Seri Najib Razak continues. Bank Indonesia will announce its policy rate decision on Wednesday. South Korea will release its 1Q gross domestic product (GDP) on Thursday. China will release industrial profits for March on April 27. The Bank of Japan will announce its monetary policy decision on April 26. Australian and New Zealand stock markets will be closed on April 25 for Anzac Day.

#Inflation #Gdp #TechEarnings #EconomicIndicators #ConsumerPriceIndex #BankNegaraMalaysia #1mdbtanoreTrial #BankIndonesia #SouthKoreaGdp #ChinaIndustrialProfits #BankOfJapanMonetaryPolicy #AnzacDay

https://theedgemalaysia.com/node/708696


US bank reserve balances see largest drop since 2022 tax season
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The amount of reserves in the US banking system dropped by the most in two years as Americans paid income tax bills out of their bank accounts. Bank reserves totalled US$3.33 trillion in the week through April 17 from US$3.62 trillion the prior week, a decline of US$286 billion. This is the largest drop since the April 2022 tax deadline. The level of reserves is closely monitored by market participants and policymakers to gauge liquidity and potential impacts on financial markets. As reserves approach a level estimated to be between US$3 trillion and US$3.25 trillion, the Federal Reserve may need to consider altering its balance-sheet unwind. The current level of reserves is considered abundant, but policymakers aim for a slightly lower level. The Fed may need to slow the pace of runoff soon. If reserves shrink too much, it risks volatility in overnight funding markets. However, too many reserves consume bank capital and inhibit lending. Scarcity of reserves has caused problems in the past, such as in September 2019 when demand for liquidity surged and overnight funding markets experienced volatility.

#UsBankReserves #FederalReserve #BalancesheetUnwind #Liquidity #FinancialMarkets

https://theedgemalaysia.com/node/708565


US Bancorp shares fall as lending-income guidance trimmed
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US Bancorp reduced its outlook for net interest income (NII) to $16.1 billion to $16.4 billion this year, down from the previous guidance of $16.6 billion or more. The trend of customers shifting funds to interest-bearing accounts from those that don't pay interest hasn't slowed as quickly as expected. Shares of US Bancorp fell 3.6% to $39.53 after the announcement. The bank expects NII to be stable in the second quarter and start growing in the second half of the year. The reduction in guidance was disappointing to analysts and may weigh on the stock in the near term. US Bancorp is one of the largest lenders in the country with over $600 billion in assets.

#UsBancorp #NetInterestIncome #LendingincomeGuidance #Banking

https://theedgemalaysia.com/node/708463


Citi says Wall Street wrong to slash Fed rate-cut bets
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Economists at Citigroup Inc are sticking by their forecast for five-quarter point cuts this year, despite other banks dialing back their forecasts for interest-rate cuts. Citigroup believes the Fed remains concerned about economic growth stalling and is eager to seize on any signs of disinflation or economic weakness. The bank's forecast contrasts with the broader sentiment in financial markets, where bond yields surged after last week's consumer price index report. Citigroup's economists believe upcoming readings of the core personal consumption expenditures index will show some cooling of price pressure, giving the Fed cover to begin adjusting policy rates lower starting in June or July. They also expect the Fed to give more weight to signs of economic weakness than to data showing continued strength.

https://theedgemalaysia.com/node/708442


Indonesia's plunging rupiah twists the policy plot
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The Indonesian rupiah has plunged to a four-year low against the dollar, complicating monetary policy for Bank Indonesia. The currency's decline may force the central bank to raise rates as early as next week. Bank Indonesia has been using various intervention tools to stabilize the rupiah, but a rate hike may be necessary to support the currency. The rupiah's high yields have historically attracted investors, but its appeal has waned due to currency volatility and narrow spreads. Foreigners now hold just 14% of Indonesian government securities, compared to 25% in December 2020. Bank Indonesia has spent $6 billion in the first quarter to support the rupiah. However, the central bank may be running out of options as expectations for Fed rate cuts recede. Some investors are betting on eventual Fed rate cuts later this year to provide relief for the rupiah. Bank of America's economist has pushed out expectations for Bank Indonesia's first rate cut to December from June. The central bank may surprise the market with a rate hike to address inflation risks from imported inflation and energy.

https://theedgemalaysia.com/node/708375


US 30-year mortgage rate rises to four-month high of 7.13%
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The contract rate on a 30-year fixed mortgage rose 12 basis points to 7.13% in the week ended April 12, according to Mortgage Bankers Association data. The effective rate, which includes fees and compound interest, increased to 7.32%. Purchase activity stabilised last week with a 5% increase in the group's index of mortgage applications for home purchases. Mortgage rates are at risk of rising further based on the 10-year Treasury yield. Federal Reserve chair Jerome Powell said that the latest US inflation readings indicate that it will take longer for the central bank to lower its benchmark interest rate, which will likely keep mortgage rates elevated and temper housing demand. MBA's overall index of applications rose 3.3% last week, with the refinancing gauge edging higher.

https://theedgemalaysia.com/node/708367


IMF says US, China debts pose risks to global public finances
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The International Monetary Fund (IMF) warns that the US and China will drive the increase in global public debt over the next five years. Both countries are projected to nearly double their public debt by 2053. The IMF states that how these two economies manage their fiscal policies will have profound effects on the global economy and pose risks to other economies. The high and uncertain interest rates in the US make it difficult for many countries by strengthening the value of the US dollar and increasing debt burdens. The IMF also warns of risks from a larger-than-expected slowdown in China, which could impact international trade, external financing, and investments. The report projects a decline in overall primary deficits but notes substantial risks to public finances in many countries. The IMF highlights that this year, voters in 88 economies representing over half of the world's population and GDP will go to the polls, making it a challenging year for fiscal policy.

https://theedgemalaysia.com/node/708326


Bank of America profit hurt by losses on credit cards, office loans
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Bank of America's first-quarter profits shrank as the bank set aside more money to cover souring loans from consumers. The bank's net charge-offs rose to $1.5 billion from $807 million a year earlier, mainly from credit card losses. The bank's net interest income slid 3% to $14 billion. Bank of America CEO Brian Moynihan said the bank had cut the workforce by more than 4,700 employees. Investment banking fees jumped 35% to $1.6 billion. Revenue from the consumer unit sank 5% to $10 billion. Profit from the Merrill wealth management division rose about 10% to $1 billion.

#BankOfAmerica #CreditCards #OfficeLoans #Profits #NetChargeoffs #NetInterestIncome #InvestmentBankingFees #ConsumerUnit #MerrillWealthManagementDivision

https://theedgemalaysia.com/node/708253


IMF steps up its warning to US over spending and ballooning debt
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The International Monetary Fund (IMF) has criticized US policymakers for their unsustainable fiscal policy, stating that the country's recent strong economic performance is driven by a fiscal stance that is out of line with long-term fiscal sustainability. The IMF warns that Washington's overspending risks reigniting inflation and undermining global fiscal and financial stability. US deficit spending has been fueled by Covid-related stimulus, investments in infrastructure and clean energy, and rising interest costs. Debt held by the public is projected to reach $45.7 trillion, or 114% of GDP by 2033. Treasury Secretary Janet Yellen has downplayed concerns, stating that debt sustainability should be measured by the cost to service debt as a percentage of GDP, adjusted for inflation. However, Yellen acknowledges that this forecast is vulnerable if interest rates remain elevated.

https://theedgemalaysia.com/node/708208


Big banks led by Citi continue layoffs amid pressure to cut costs
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US banking giants, including Citigroup, Bank of America, Wells Fargo, and PNC Financial, have continued to lay off employees in the first quarter of 2024. Citigroup saw the biggest drop, with a decline of 2,000 employees after completing a reorganization aimed at improving profits and reducing management layers. The layoffs were part of a broader goal to reduce Citi's staffing by 20,000 over the next two years. Bank of America's headcount has fallen by more than 4,700 since the first quarter of 2023. However, JPMorgan Chase went against the trend and added nearly 2,000 employees in the first quarter. The layoffs are driven by pressure to control costs due to the uncertain economic outlook and the need to navigate the changing rate environment. Higher funding costs, contracting net interest margins, and uneven trading results are likely to keep banks cautious. Investment banks, on the other hand, have brought in higher revenue, fueled by a revival in capital markets. Goldman Sachs and Morgan Stanley saw reductions in headcount, but executives are optimistic that a surge in equity offerings will lift sentiment and spur mergers and acquisitions.

#Banking #Layoffs #Costcutting #EconomicOutlook

https://theedgemalaysia.com/node/708202


US Treasury cash balance jumps most in two years as tax payments rise
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The US Treasury's cash balance surged by $172 billion to $897 billion on Monday, the highest since May 2022. Taxpayers are expected to owe more this year due to higher incomes and a booming stock market. Treasury collected roughly $63.5 billion in corporate taxes, $86.6 billion in non-withheld individual electronic payments, and $4.66 billion in non-withheld individual "other" payments. To date, Treasury has collected roughly $290 billion in tax-related income this month.

https://theedgemalaysia.com/node/708191


Dow up on UnitedHealth boost; higher bond yields, Mideast tensions cap gains
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The Dow Jones Industrial Average rose on Tuesday, driven by positive results from health insurer UnitedHealth. UnitedHealth Group's stock advanced 5.9% after beating expectations for first-quarter adjusted profit. Other health insurers such as Humana, CVS Health, and Centene also saw gains. Morgan Stanley rose 2.4% after beating first-quarter profit estimates. The market is searching for a bottom from its recent sell-off. Conflict in the Middle East and higher Treasury yields kept investors on edge. Israel's war cabinet was set to meet to decide on a response to Iran's first-ever direct attack. The yield on the 10-year government bond hit fresh five-month highs. US retail sales increased more than expected in March, indicating a solid first quarter for the US economy. Several policymakers, including Federal Reserve Chair Jerome Powell, are slated to speak later in the day. Rate-sensitive real estate and utilities led sectoral declines. The Dow Jones Industrial Average was up 0.23% at 37,822.67, the S&P 500 was down 0.26% at 5,048.56, and the Nasdaq Composite was down 0.30% at 15,837.84. Tesla fell 3.7% after an internal memo revealed layoffs. Johnson & Johnson slipped 2.0% as its first-quarter revenue missed estimates. Declining issues outnumbered advancers on both the NYSE and Nasdaq. The S&P index recorded no new 52-week highs and six new lows, while the Nasdaq recorded nine new highs and 189 new lows.

#DowJonesIndustrialAverage #Unitedhealth #HealthInsurers #MorganStanley #MiddleEast #TreasuryYields #Israel #Iran #UsRetailSales #FederalReserve #Tesla #Johnson&Johnson

https://theedgemalaysia.com/node/708174


El-Erian says world ‘frozen’ by strong dollar, high US rates
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Policymakers around the world are struggling to confront a surging greenback and lofty US interest rates, according to Mohamed El-Erian. El-Erian, the president of Queens’ College, Cambridge and a Bloomberg Opinion columnist, said that authorities are unsure how to react to a generalised dollar strengthening and a generalised increase in US interest rates. In the past, when these two factors have gone too far, they have broken something elsewhere. El-Erian cited the yen’s plunge below the 154 per dollar mark as an example of inaction from Japanese policymakers. He believes that sectors with imbalanced balance sheets and countries with unsustainable debt are the most exposed to the impact of tighter financial conditions. El-Erian also stated that while the likelihood of the Fed hiking interest rates is low, it is not zero. If inflation worsens, a rate hike could lead to a regional banking crisis and damage in the marketplace.

https://theedgemalaysia.com/node/708164


Biden once rejected Trump’s migrant policies but now echoes them
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Joe Biden came into office in 2021 vowing to undo Donald Trump’s harsh policies on the US’s southern border and work with governments across Central America to reduce the motivations for their citizens to head north. However, record flows of migrants have overwhelmed the system, leading Biden to consider further restricting migrants' ability to claim asylum, echoing some of the Trump-era policies. The Biden administration blames Congress for failing to approve its aid plan for the region and failing to deliver on reforms needed to handle the large numbers of people seeking to move to the US. The administration's diplomatic push across the region has had mixed results, with Mexico deporting fewer migrants and South American countries surpassing the Northern Triangle as the largest source of migrants. The administration is aware of the political risks of surging migration but believes its more humane approach on the border has changed migrants' perceptions. The Biden administration's efforts to ease poverty, violence, and misrule in Central America have had limited success, with many migrants still believing the border offers their best chance of reaching the US.

https://theedgemalaysia.com/node/708119


Morgan Stanley sees US Fed cut delay pushing back easing in Asia
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Most central banks across Asia are likely to begin cutting interest rates later in the year — if at all, according to economists at Morgan Stanley. Central bank policymakers in China, South Korea, Indonesia, the Philippines, and Taiwan are set to postpone rate cuts, while India and Malaysia hold rates for the rest of the year. The delay in the Federal Reserve's policy easing has influenced the outlook for Asian central banks. The odds of rate cuts globally are waning as data points to ongoing inflation pressures in the US. Asian central banks are unlikely to lower rates ahead of the Fed to protect their currencies. Overall aggregate real rates will likely stay about 30 basis points above pre-Covid levels through at least the first quarter of 2025. Risks to the forecast include surging oil prices and further inflationary pressure.

https://theedgemalaysia.com/node/708082


Indonesian rupiah hits four-year low, prompts cenbank intervention
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The Indonesian rupiah weakened to its weakest level in four years, reaching 16,200 per US dollar, prompting the central bank to intervene. The decline was influenced by the US dollar gaining strength due to strong US economic data and rising inflation. Bank Indonesia is taking steps to maintain rupiah stability through triple interventions, including maintaining supply-demand balance in the foreign exchange market and boosting the attractiveness of rupiah-denominated assets. The benchmark stock index also weakened, dropping 3.02% before recovering some losses. The yield of the benchmark 10-year bonds rose to 6.83%, the highest since November 2023.

https://theedgemalaysia.com/node/708051


'Low price' is the word at China's largest trade show
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Foreign buyers will attend China's 135th Canton Fair, where the keyword will be 'low price'. China's shift towards its manufacturing complex and away from its property sector is causing concern in the US and EU. The fair will showcase China's efforts to move up the value chain. The majority of factories in the 'new three' industries of electric vehicles, batteries, and solar energy are less sophisticated, and depressed domestic demand leaves them reliant on foreign buyers. The fair is expected to attract around 93,000 foreign buyers and 28,600 exhibitors. Deals worth US$22.3 billion were signed at the last Canton Fair. The lower numbers may reflect a drop in value rather than volume due to producer price deflation in China. The fair is seen as a contradiction between developed countries' government preferences and micro-level business priorities.

#China #TradeShow #CantonFair #LowPrice #Manufacturing #Exports

https://theedgemalaysia.com/node/707899


Clobbered Fed rate cut bets wipe out even last year’s bond gains
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Investors who expected an extension of last year's global bond gains have been disappointed as expectations of higher US interest rates have wiped out the 4.2% return on global sovereign debt from 2023. The decline in bond prices has been driven by investors now expecting under two Fed interest rate cuts this year, a significant backtrack from earlier bets of more than 150 basis points of easing starting in March. The selloff has room to run as the US inflation print this week sent yields surging across the curve. However, some believe there is scope for bonds to recoup their losses when the Fed begins easing, and investors may be looking to buy on dips. Sticky US inflation remains a concern for bond investors, and some predict further declines in bond prices.

https://theedgemalaysia.com/node/707734


US plans chip, nickel deals in Philippines as defence ties grow
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The US plans to support infrastructure, semiconductor, and nickel processing projects in the Philippines as part of their growing investment partnerships. This comes as the Philippines strengthens economic ties with the US and Japan amid strained relations with China. The US, Philippines, and Japan will accelerate investments on the Luzon Economic Corridor, focusing on rail and port modernization, clean energy, semiconductor supply chains, agribusiness, and civilian port upgrades. The US will also support a grant to Eramen Minerals Inc for the development of an ore-to-nickel and cobalt processing plant. United Parcel Service Inc will expand its operations in Clark, and the US military will have access to Philippine bases under the Enhanced Defense Cooperation Agreement. The US Agency for International Development will launch a humanitarian relief initiative at one of the sites for the Philippines' civilian disaster response. Cooperation between the US and Philippines in the South China Sea has reached historic levels.

#Us #Philippines #Investment #DefenseTies #Infrastructure #Semiconductor #NickelProcessing #LuzonEconomicCorridor #China #SouthChinaSea

https://theedgemalaysia.com/node/707699


Fed officials in no rush to cut rates as inflation worries rise
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Federal Reserve (Fed) officials, including New York Fed president John Williams and Boston Fed president Susan Collins, are saying there is no rush to cut interest rates due to concerns about rising US inflation. Williams stated that there is no clear need to adjust monetary policy in the near term, while Collins mentioned that recent data suggests it may take more time to gain confidence in inflation's downward trajectory. The officials believe that rate cuts will be needed eventually, but the anticipated start of an easing cycle has been pushed further down the road. In Europe, central bankers left the policy rate unchanged but signaled they remain on track to cut rates as soon as June. However, sources suggest that the European Central Bank (ECB) could pause after June to await more clarity from the Fed on its rate decisions. International Monetary Fund chief Kristalina Georgieva expressed concern that higher US interest rates are not great news for the rest of the world. US consumer price index (CPI) data came in stronger than expected in March, leading to a resetting of expectations for when the Fed will be able to cut rates this year.

#FederalReserve #InterestRates #Inflation #UsEconomy #EuropeanCentralBank #MonetaryPolicy

https://theedgemalaysia.com/node/707690


US core CPI tops forecasts again, likely delaying Fed rate cuts
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The US core consumer price index (CPI) increased 0.4% from February, holding steady at 3.8% from a year ago, likely delaying any Federal Reserve (Fed) interest-rate cuts until later in the year. The overall CPI climbed 0.4% from the prior month and 3.5% from a year ago, boosted by higher energy prices. The report suggests that progress on taming inflation may be stalling, despite the Fed keeping interest rates at a two-decade high. Treasury yields and the dollar jumped, while S&P 500 index futures tumbled. Swaps traders lowered their expectations of Fed rate cuts this year. The core CPI over the past three months increased an annualized 4.5%, the most since May. Gasoline and shelter accounted for over half of the overall monthly advance. Shelter prices rose 0.4% for a second month. Excluding housing and energy, services prices accelerated to 4.8% from a year ago, the most since April 2023. The Fed's preferred inflation metric, the personal consumption expenditures (PCE) price index, is trending closer to the 2% target. Fed officials have ruled out a rate cut at their next policy meeting on May 1.

https://theedgemalaysia.com/node/707624


Asean balance sheets appear to hold up 'very well' amid US liquidity tightening pressure, says Eastspring portfolio manager
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The balance sheet of Asean economies, including Malaysia, has held up well in withstanding pressures from the US liquidity tightening process over the past two years. When the expected interest rate cut by the US Federal Reserve takes place, the Asean economies are set to shine given their resilient balance sheet and attractive valuations. Historically, Asean economies tend to perform poorly whenever the US Fed raises interest rates, but this time they have held up well. The Chinese market appears to have bottomed with signs of recovery showing up, particularly in the manufacturing sector and nascent signs of consumption recovery.

#Asean #UsLiquidityTightening #InterestRates #BalanceSheets #ChinaMarket #Recovery

https://theedgemalaysia.com/node/707559


ECB-Fed split in rate policy fuels talk of euro sliding to parity with dollar
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Policymakers at the European Central Bank (ECB) are expected to deliver more interest-rate cuts this year than their US peers, leading to talk of the euro touching parity with the dollar. Bank of America Corp (BofA) and Germany’s LBBW are warning of euro weakness if the differing pace of rate cuts at the ECB and the US Federal Reserve play out. The euro could touch parity with the dollar this year, according to Geoffrey Yu, a senior strategist at Bank of New York Mellon. ECB officials led by president Christine Lagarde are expected to prepare markets for an initial rate cut on June 6. The euro is down almost 2% this year at US$1.09. Strategists at BofA are weighing scenarios where the euro returns to parity against the greenback if the Fed stands pat on rates this year and the ECB delivers three quarter-point cuts. Every extra cut the ECB delivers relative to the Fed can trigger a 1% move in the euro-dollar exchange rate. Options markets imply only about a 15% chance of the euro reaching parity with the dollar over the next 12 months.

#Ecb #FederalReserve #InterestRates #Euro #Dollar

https://theedgemalaysia.com/node/707551


The US and its allies face a US$10 tril reckoning in the race to rearm
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A new era of global rearmament is underway, with the US and its allies facing a potential $10 trillion in additional commitments over the next decade. European Union nations are considering increasing their defense spending to as high as 4% of their GDP, in order to meet the North Atlantic Treaty Organization's (NATO) targets. The aggressive actions of Russia and the expansion of the Chinese military are driving the need for increased defense capabilities. The US, already allocating 3.3% of its GDP on defense, would see its borrowings increase to 131% from 99% over the next decade if it pushed its military budget to 4%. The implications of increased defense spending include potential fiscal challenges, such as deeper levels of borrowing, significant budget cuts, or tax increases. The surge in military budgets is a global phenomenon, with China's defense spending projected to grow by 7.2% in 2024. The question of how to reconcile increased defense commitments with finite tax revenues and growing welfare and health needs is becoming a pressing political issue. NATO members are unlikely to agree to a firm commitment to spend 4% of GDP on defense in the near future. The issuance of jointly-backed euro bonds is a potential financing option, but higher interest rates could increase debt servicing charges. The opposition to joint bond issuance from fiscal hawks in wealthier nations like Germany adds to the complexity of the discussions. NATO's plan includes overhauling its defenses, increasing troop readiness, and investing in new technologies to maintain an advantage over Russia. The alternative to increased defense spending is also a consideration, as failing to spend the money could have negative consequences for countries, economies, and investors.

https://theedgemalaysia.com/node/707525


Gold extends record rally amid speculative buying, geopolitical tensions
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Gold prices extended their record rally, reaching a high of US$2,353.79 per ounce, supported by speculative buying and geopolitical tensions in the Middle East. The rally is driven by strong central bank buying, safe-haven inflows, and demand from momentum-following funds. Despite strong US job growth in March, lower interest rates reduce the opportunity cost of holding gold. Analysts expect the market to test US$2,400, but anticipate bearish volatility to shake out some bulls. Gold demand in India remained tepid due to high domestic prices, while premiums held firm in China. Spot silver rose 1.4% to US$27.85 per ounce, platinum edged 0.1% higher at US$928.11, and palladium gained 0.4% at US$1,006.88.

#Gold #RecordRally #SpeculativeBuying #GeopoliticalTensions #UsJobGrowth #InterestRates #India #China #Silver #Platinum #Palladium

https://theedgemalaysia.com/node/707333


Solutions: Emerging technologies shaping the future of social enterprise
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The global impact of social enterprises is significant and transformative. There are about 10 million social enterprises globally, contributing US$2 trillion annually to the world economy and supporting about 200 million jobs. Women lead half of these enterprises. The Malaysian government supports social enterprises but the sector is still developing. Technology adoption presents opportunities for social enterprises to create innovative solutions and scale up operations. Emerging technologies like AI, ML, blockchain, and IoT are reshaping the sector. SOLS Energy is a Malaysian social enterprise that harnesses solar technology and digital platforms. Funding gap of US$1.1 trillion is a barrier to technological advancement. The government and GLICs and GLCs support social enterprises through funding schemes and initiatives. Policymakers can encourage technology transfer and open innovation to enhance efficiency and impact. Enhancing support for impact investing and patient capital is essential. Integrating emerging technologies with Malaysia's social enterprise sector can lead to transformative impact and growth.

#SocialEnterprise #Technology #EmergingTechnologies #Ai #Ml #Blockchain #Iot #Funding #GovernmentSupport #SolsEnergy #Innovation #ImpactInvesting #PatientCapital

https://theedgemalaysia.com/node/707173


US Fed on track to cut rates in June, Morgan Stanley’s Zentner says
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The US Federal Reserve is expected to cut interest rates in June, according to Ellen Zentner, chief US economist at Morgan Stanley. Zentner believes that the market's expectation of about three cuts this year is in line with the Fed's view. However, she expects four cuts in total, with the fourth quarter seeing an acceleration of rate cuts due to inflation coming down faster than the Fed. Nouriel Roubini, chairman of Roubini Macro Associates, highlighted that markets are now less optimistic on rate cuts than the Fed, as they consider the possibility of higher inflation due to factors such as higher-than-expected growth or geopolitical risks impacting inflation.

https://theedgemalaysia.com/node/707149


Saudi Crown Prince MBS’s US$100 bil foreign investment quest falters
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Saudi Arabia's attempt to attract foreign investment for its Vision 2030 economic transformation plan is facing challenges. The country aims to achieve $100 billion of foreign direct investment (FDI) annually by 2030, but preliminary data for 2023 shows FDI below target at $19 billion. Foreign investors remain cautious due to unclear and untested laws governing contracts and investment in Saudi Arabia. The government is considering self-funding a larger portion of its economic remake and has started cutting back on megaprojects. The Public Investment Fund (PIF) has provided financial support to companies like Lucid Group Inc, which is increasingly relying on Saudi money to stay in business. The PIF, which is the top shareholder of Lucid, has already invested $5.4 billion in the company. The government's reliance on oil riches to entice firms and fund its diversification plans is evident, as it recently gave the PIF an additional $164 billion stake in Saudi Aramco. However, the PIF is feeling the pinch, with just $15 billion in cash reserves as of September. The kingdom may advocate longer production curbs by OPEC+ to sustain oil prices, but prices remain below what is needed to balance the budget and fund the grand ambitions of Crown Prince Mohammed Salman.

#SaudiArabia #ForeignInvestment #Vision2030 #PublicInvestmentFund #LucidGroupInc #Oil #Economy

https://theedgemalaysia.com/node/707147


Dalio defends his decades-long investment in China
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Ray Dalio, founder of Bridgewater Associates, defended his decades-long investment in China and expressed his commitment to not abandon the country despite the identified problems and risks. In a LinkedIn post, Dalio stated that his relationship with the Chinese people and culture has led him to love them, and he believes being involved with them and their markets is essential. He emphasized that he doesn't engage in fair-weather investing and remains committed even during challenging times. Dalio previously discussed the difficulties China faces and urged Beijing to address its debt and monetary policy. He believes China's problems are manageable if its leaders act smartly and courageously. Dalio also mentioned the possibility of quantitative easing and debt restructuring in China. While he acknowledges the risk of conflict between the US and China, he continues to do business with China and sees it as one of his core investment positions. Dalio considers China as one of his good uncorrelated return streams and adjusts his investment based on assessments of various factors.

https://theedgemalaysia.com/node/706935


Asian stocks slump, FX range-bound as Taiwan earthquake hits sentiment
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Emerging Asian stocks fell after Taiwan experienced a 7.2-magnitude earthquake, causing concerns about disruptions to the chip-making industry. Taiwan's benchmark index ended lower, and shares of Taiwan Semiconductor Manufacturing Co slumped 1.3% after some facilities were evacuated. Stocks in Seoul, Manila, Singapore, and Jakarta also fell. Singapore Telecommunications fell nearly 4% after confirming no impending deal to divest its Australian telecom unit. The dollar remained strong, with the dollar index steady at 104.78. The yen traded at 151.67 per dollar, and the Philippine peso slipped 0.3%. Thailand's cabinet approved a plan to raise its budget deficit next year. Oil prices edged higher due to geopolitical tensions and a larger-than-expected fall in US crude inventories. Chile's central bank cut its key interest rate by 75 basis points to 6.50%.

#AsianStocks #TaiwanEarthquake #Fx #ChipmakingIndustry #Dollar #Yen #PhilippinePeso #Thailand #OilPrices #Chile

https://theedgemalaysia.com/node/706834


Malaysia’s market potential drives continued US investments — Ambassador
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The United States Ambassador to Malaysia, Edgard D Kagan, expressed confidence in the continued investments of American firms in Malaysia, citing the country's market potential and integration into global trade networks as key factors. He highlighted the enduring economic partnership between the US and Malaysia, emphasizing the significant investments and job opportunities generated by American companies in the region. Kagan also emphasized Malaysia's participation in the Indo-Pacific Economic Framework (IPEF) and its role in shaping international trade norms and standards. The IPEF includes 14 countries in the Indo-Pacific region and was set up under US President Joe Biden's administration to address long-term economic issues. Malaysia has seen additional flows of investment from American companies since the announcement of the IPEF. The US is the top investor in Malaysia, with over RM150 billion worth of foreign direct investments (FDIs) since 2021.

https://theedgemalaysia.com/node/706535


The Week Ahead: Upper house to debate supplementary budget proposal
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Parliament's upper house will debate the supplementary budget proposal for 2023, requesting RM23.48 billion from the consolidated fund. The largest allocation will go to Treasury General Services, followed by Contribution to Statutory Fund and the Ministry of Education. The upper house will also discuss 10 amendments to the Police Act 1967, including the establishment of the role of honorary commissioner-in-chief of the Royal Malaysian Police. The Election Commission will set the dates for the Kuala Kubu Baharu state by-election. Economic data to be released includes the S&P Global Manufacturing PMI for March and preliminary first-quarter 2024 GDP data for Singapore. China will release its official March manufacturing PMI data. The Reserve Bank of India will make a monetary policy decision, and the Reserve Bank of Australia will release its March policy meeting minutes. Inflation-related data will be released by Indonesia, South Korea, Thailand, and the Philippines. US financial results season will begin, and key economic data will be released. Key European data includes the preliminary March CPI from the eurozone and the European Central Bank's Account of March Rate Decision. Impeachment proceedings will continue in the Penang undersea tunnel project corruption trial, and the 1MDB-Tanore criminal trial will continue. A final hearing will be held for former Umno Supreme Council member Datuk Lokman Noor Adam.

https://theedgemalaysia.com/node/706391


BNM: Malaysia’s end-February official reserve assets at US$114.28 bil
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Malaysia’s official reserve assets amounted to US$114.28 billion as at end-February 2024, while other foreign currency assets stood at US$202.69 million, according to Bank Negara Malaysia (BNM). The detailed breakdown of international reserves provides forward-looking information on the size, composition, and usability of reserves and other foreign currency assets. The pre-determined short-term outflows of foreign currency loans, securities, and deposits for the next 12 months amount to US$16.33 billion. The net short forward positions amounted to US$22.59 billion as at end-February 2024. Foreign currency inflows are projected to amount to US$2.46 billion in the next 12 months. The only contingent short-term net drain on foreign currency assets is government guarantees of foreign currency debt due within one year, amounting to US$400.9 million.

https://theedgemalaysia.com/node/706331


JPMorgan says stocks are so crowded they may crack at any time
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JPMorgan Chase's chief global equity strategist, Dubravko Lakos-Bujas, warns investors that the five-month rally in US equities may come to an end unexpectedly. Lakos-Bujas encourages diversifying holdings and considering risk management. Excessive crowding in the market's best-performing stocks raises the risk of an imminent correction. Lakos-Bujas points out that flash crashes have occurred in the past due to one fund de-levering positions, causing a chain reaction. The S&P 500 Index is on track for a 10% return in the first quarter, but Lakos-Bujas sees this as a reason for concern, as many positive factors have already been priced in. He believes there are limited sources of upside surprise and more risks in the background. Looking at recent history, the rush into popular momentum stocks is typically followed by a correction. JPMorgan holds the lowest year-end target on the S&P 500 of 4,200, implying a drop of nearly 20% from the current level.

#JpmorganChase #DubravkoLakosbujas #UsEquities #S&p500Index #FlashCrashes #CrowdedStocks #RiskManagement

https://theedgemalaysia.com/node/706237


Areca Capital fund wins Best Equity Malaysia for seventh year in a row
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Areca Capital Sdn Bhd has won the Best Equity Malaysia award for the seventh consecutive year at the LSEG Lipper Fund Awards 2024. The fund house's Areca equityTRUST fund received the award in the five- and 10-year categories. CEO Danny Wong attributes the fund's success to its agile investment philosophy and emphasis on appropriate asset allocation. The fund performed well in 2023 by increasing cash holdings during peak-pessimistic levels and making sectoral calls in utilities, property, and healthcare stocks. The Areca equityTRUST fund, launched in 2007, generated a cumulative return of 5.21% over the past year, with returns of 80.41% and 170.57% over the past five and 10 years, respectively. The fund's sector allocation is primarily in construction and properties, technology, and industrial sectors. Areca Capital plans to continue its investment formula, which has proven successful over nearly two decades.

#ArecaCapital #LsegLipperFundAwards #EquityInvestment #Malaysia

https://theedgemalaysia.com/node/705429