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Khairussaleh Ramli, CEO of Maybank, discusses the benefits of the bank’s presence in 10 ASEAN countries, and says the region’s population is “growing in affluence.”
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Tag: Asia Economy
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Blinken to meet China’s Xi Jinping on Monday
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US Secretary of State Antony Blinken walks after arriving in Beijing, China, June 18, 2023.
Leah Millis | Afp | Getty Images
U.S. Secretary of State Antony Blinken is to meet with Chinese President Xi Jinping on Monday, as the top U.S. diplomat wraps up his rare two-day visit to Beijing amid simmering U.S.-China tensions.
Blinken will meet with Xi at 4:30 p.m. local time, according to a State Department official.
The trip by Blinken makes him the highest-level American official to visit China since Joe Biden became U.S. president and the first U.S. secretary of State to make the trip in nearly five years. A meeting with Xi had not been confirmed before Blinken arrived in Beijing, and will likely be seen as a positive sign that talks are going well.
Blinken met top Chinese diplomat Wang Yi on Monday, after “candid, substantive, and constructive talks” with Chinese Foreign Minister Qin Gang on Sunday.
Wang stressed that the Blinken visit came at a critical juncture in Sino-U.S. relations, in a statement released by the Chinese foreign ministry translated via Google. He said both parties must choose between cooperation and conflict, adding that the difficulties in the countries’ ties are rooted in the U.S.’ “erroneous perception of China, which leads to wrong policies towards China.”
Wang further urged Washington to give up its so-called “China threat theory,” to lift sanctions against Beijing and to no longer suppress China’s technological development.
The State Department did not immediately respond to a request for comment.
This is a breaking news story, please check back later for more.
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HKEX’s new dual counter scheme ‘solidifies’ Hong Kong’s role as yuan trading hub, CEO says
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HONG KONG, CHINA – JUNE 05: A pedestrian walks by an electronic screen displaying the numbers for the Hang Seng Index on June 5, 2023 in Hong Kong, China. (Photo by Chen Yongnuo/China News Service/VCG via Getty Images)
China News Service | China News Service | Getty Images
Investors will now be able to trade selected Hong Kong stocks in both the Hong Kong dollar and Chinese yuan in the so-called dual counter scheme that launched Monday.
The newly launched “HKD-RMB Dual Counter Model” will see an initial 24 companies start offering yuan counters to allow investors in Hong Kong to trade in the yuan, in addition to the Hong Kong currency. Companies on the list include tech heavyweights like Tencent, Alibaba and Baidu.
The dual counter model covers securities listed in both Hong Kong dollar and renminbi counters only. The Hong Kong Exchange said all shares of the same securities in the two different trading counters will be “fully interchangeable between counters.”
In an exclusive interview on CNBC’s “Squawk Box Asia,” Hong Kong Exchanges and Clearing CEO Nicolas Aguzin said the move was aimed at giving investors more options for investments, as well as more diversification possibilities.
“This program is aimed at number one, making sure that we give more options to investors. Number two, that we continue helping on the internationalization of the renminbi.” Thirdly, he said it “solidifies” Hong Kong’s role as a yuan trading hub.
The HKEX CEO noted that the initial batch of 24 companies make up about 40% of the average daily trading volume in the Hong Kong.
“We would expect that to continue expanding,” he added. “And over time, I think a great majority of the stocks in our markets will be participating in this program.”
With trading volumes in Hong Kong at a four year low, Aguzin said he expects an increase in turnover from the new dual connect model, noting there are “a lot” of yuan deposits in Hong Kong. As such, “you’re tapping a liquidity pool that is in renminbi that will now be able to invest directly,” he pointed out.
The key objective is to simplify the southbound flow of investments from the mainland, Aguzin said.
Investments from the mainland are currently carried out via the Southbound Stock Connect, which allows mainland investors to purchase Hong Kong stocks in Hong Kong dollars.
Stock Connect is a mutual market access program that allows investors in mainland China to trade and settle shares in Hong Kong via exchanges and clearing house in their home market, and vice versa.
Aguzin highlighted that it’s “very inconvenient for the mainland investors, [and] the fact that they will 1687155004 be able to transact in an instant basis in renminbi, that’s a huge difference.”
He foresees more investment flow from the mainland, especially from retail investors.
“One of the challenges of Hong Kong is it’s only 7 million people. So it’s very limited in terms of retail. But the mainland, 1.4 billion people, that’s a lot. And a lot of that can come through Stock Connect and help liquidity in our market.”
The dual counter model will initially target the offerings at investors holding offshore yuan, and eventually, enable mainland investors to trade yuan stocks listed in Hong Kong using onshore yuan, Reuters reported.
While there is no firm date for when investments via Stock Connect will be able to access the dual counter model, Aguzin said this will take a little bit of time, and the HKEX is working closely with regulators and other stakeholders to make sure everything will be in place before making an announcement.
Not the first try
This is not the first time that such a scheme is being introduced in Hong Kong.
In 2012, the Hong Kong exchange launched a similar scheme called the “dual tranche, dual counter” model, which allowed the issuer to offer and list two tranches of shares in both the Hong Kong dollar and Chinese yuan.
As with today’s dual counter model, shares of both RMB tranche and the HKD tranche were of the same class, and shareholders under these two tranches are expected to be treated equally.
According to Bloomberg, that scheme failed to take off when only one company took it up.
The difference this time is that there is a “dual counter market maker program” — aimed at providing liquidity to the yuan counter and minimizing price discrepancies between the Hong Kong dollar and yuan counters.
Aguzin said there are currently nine of these market makers that have signed up, and he thinks this “should encourage a lot of activity and [make] sure that the markets are really stabilized in both markets.”
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Goldman joins Wall Street banks in cutting China’s growth outlook as post-Covid bounce fades
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Aerial photo shows the traffic flow on a viaduct in Nanjing, East China’s Jiangsu Province, June 16, 2023. (Photo by Costfoto/NurPhoto via Getty Images)
Nurphoto | Nurphoto | Getty Images
Goldman Sachs became the latest Wall Street bank to downgrade its growth forecast for China, as the world’s second-largest economy stutters and loses momentum after its coronavirus reopening.
The investment bank cut its full-year gross domestic product forecast for 2023 from 6% to 5.4%, noting further turbulence ahead for the economy. The recovery from its stringent Covid-19 lockdown measures continue to disappoint through soft economic data, as well as mounting pressure on its property sector.
While the firm sees further stimulus to come, it notes that the measures will not be enough to overcome the greater problems that it faces: weakened sentiment.
“With continued challenges from the property market, pervasive pessimism among consumers and private entrepreneurs, and only moderate policy easing to partially offset the strong growth headwinds, we mark down our 2023 real GDP forecast,” economists led by Chief China Economist Hui Shan said in research note Sunday.
The latest revision from Goldman Sachs follows the likes of UBS, Bank of America and JPMorgan who have all downgraded their China full-year GDP estimates.
Goldman Sachs’ economists added that there are a slew of macroeconomic issues facing the nation.
“With the reopening boost quickly fading, medium-term challenges such as demographics, the multi-year property downturn, local government implicit debt problems, and geopolitical tensions may start to become more important in China’s growth outlook,” they said.
It also sees further weakness in the Chinese yuan against the U.S. dollar due to rate differentials with the People’s Bank of China expected to ease its monetary policy further while the Federal Reserve is hinting at more rate hikes to come.
UBS also sees continued weakness in China’s economy ahead, particularly focusing on the second quarter of the year.
“Q2 [second quarter] sequential growth may slow to only 1-2% quarter-on-quarter saar [seasonally adjusted annual rate], weaker than our earlier expectation of 4.5%,” UBS Investment Bank’s Chief China economist Wang Tao said in a Friday note.
Wang noted that uncertainty in China’s property sector remains a central risk to its forecast and could bring its growth outlook even lower.
“Risks to our forecast is slightly biased towards the downside, mainly from uncertainties in property market and path of property policy support ahead, as well as weaker external demand,” she said.
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Consumption soft even amid deep discounts during major China shopping festival, analysts say
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JD.com has become the latest Chinese tech giant to announced plans for a ChatGPT-style product, joining the hype around the chatbot technology.
Qilai Shen | Bloomberg | Getty Images
Chinese consumers snapped up billions worth of items in China’s first major online shopping festival after emerging from the pandemic as merchants slashed prices, but analysts say that consumer confidence still remains weak.
Chinese merchants offered customers steep discounts during the 618 shopping festival, which ran on China’s major shopping platforms from the end of May until June 18, in the hopes of shoring up sales amid a weaker-than-expected recovery in consumption.
Major shopping festivals, like e-commerce retailer JD.com’s 618 and Alibaba’s Singles’ Day, are typically barometers of consumption in China, and Chinese e-commerce platforms often participate by offering discounts and incentives to consumers.
Analysts say that consumption remains soft this year as China emerges from the pandemic, even as platforms including JD.com, Tmall, Taobao and Pinduoduo offered billions in subsidies.
“Chinese consumer confidence remains weak due to a mix of geopolitics, continued weakness from Covid-19 and domestic Chinese politics,” said Shaun Rein, founder and managing director of the China Market Research Group in Shanghai.
Rein said that consumers were less likely to spend more during 618 as merchants had already been discounting heavily for years because of the pandemic, and deals were not that much better compared to previous months.
In March, JD.com launched a “10 billion yuan subsidies” program to compete with rival Pinduoduo, which is known for its low-priced goods. The CEO of Alibaba’s e-commerce business unit, Trudy Dai, also previously pledged to make “huge, historic” investments to attract users to its platforms.
“For months, Chinese consumers have been price-conscious, looking for deals and trading down across most product categories,” Rein said.
This year, for the first time, JD.com did not reveal its total sales numbers for the 618 event, despite saying in a blog post that the 2023 shopping extravaganza had “exceeded expectations, setting a new record.”
Last year, neither Alibaba nor JD.com unveiled final numbers for Singles’ Day in November, amid muted festivities during Covid-19 and an expected slowdown in growth.
JD.com said in a blog post that during the 618 shopping festival, consumers snapped up 10 times the number of products that were eligible under its “10 billion yuan subsidies” program, compared to March.
Despite overall soft consumption, categories like cosmetics and luxury goods saw a bigger uptick in sales compared to the previous quarter, according to Jacob Cooke, CEO of e-commerce consultancy WPIC.
For this year’s 618 event, more luxury brands took part as they sought to boost sales in China after the sector in 2022 declined for the first time in five years amid China’s strict “zero-Covid” policies and lockdowns that hammered retail spending.
Brands like Moncler and Lemaire took part in 618 on Tmall for the first time.
Many luxury brands also took the opportunity to launch new products online, with some offering rare discounts and other incentives such as interest-free payments in installments over 12 months.
Brands like Burberry, Chloe and Miu Miu’s sales in the first 30 minutes of the 618 festival at the end of May had exceeded its total sales during the shopping festival a year ago, according to Tmall data.
“Luxury coming back online is a big trend, because that’s the category that’s been hit really hard over Covid-19,” said Cooke. “Some brands may see up to a 10-fold increase in sales over last year.”
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China’s economic recovery is stalling. Here’s what to expect next
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A raft of weak Chinese economic data in May has raised hopes of decisive policy intervention.
Market watchers are anticipating the next steps from China’s State Council and a Politburo meeting in July, during which the Communist Party’s top brass will review the country’s economic performance in the first half of the year.
China’s National Statistics Bureau warned Thursday of “mounting pressure … in domestic structural adjustment” in the world’s second-largest economy. A slew of economic data from industrial production and fixed asset investment to retail sales and trade fell short of expectations, with China teetering on the brink of deflation as its post-pandemic economic recovery stalls.
“I think they are probably considering an overall kind of stimulus package at the moment to boost not only investment, but also consumption using measures such as interest rate cuts,” Bank of America’s chief China economist Helen Qiao told CNBC Thursday.
“At the same time, they probably are considering [a] consumer voucher program and thinking about increasing the fiscal deficit in making fiscal policy more expansionary,” she added. “But that said, a lot of these need to be prepared and then rolled out. It’s not something readily available.”
Rate cuts merely a start
Economists considered both moves this week to be largely symbolic, but they underscore the urgency of the situation.
“Weak investments data suggest that authorities are unlikely to stop at the monetary easing we saw this week,” Oxford Economics’ lead economist Louise Loo wrote in a note after Thursday’s China data release.
She cited examples such as the 7.2% drop in cumulative property investment in China in the first five months this year — a faster rate than the 6.2% decline recorded in the January-April period.
A job fair in China’s southwestern city of Chongqing on April 11, 2023. Unemployment among young people aged between 16 and 24 hit another record in May at 20.8% — four times the urban jobless rate for people of all ages at 5.2%.
Str | Afp | Getty Images
“This suggests that while investments had been state-led so far, it has not been effective in crowding in private investments or lifting overall business sentiment,” she added.
“We therefore continue to expect announcements of further ‘piecemeal’ property sector easing measures to follow in the coming weeks,” Loo wrote.
“And these could entail a further easing in home purchase restrictions, a more aggressive policy push for public housing, and supporting the funding conditions of property developers.”
Consumption and employment
Unemployment among young people aged between 16 and 24 hit a fresh record high in May at 20.8% — four times the urban jobless rate for people of all ages at 5.2%.
Goldman Sachs economists said last month that getting young people back to work would give China’s economic recovery a sizable boost, given that they account for almost 20% of consumption in China.
Retail sales, a key gauge of consumer confidence, climbed 12.7% in May, missing consensus expectations for 13.6% growth and slowing from April’s 18.4%.
“Consumption is still a late cycle variable for China, one that comes down to business cycle changes,” Bank of America’s Qiao said. “In other words, consumers have to wait until they get better job security and income expectation, and then they [will be] comfortable to spend more.”
While youth unemployment is a structural issue, economists say there’s scope for more policy stimulus to resolve cyclical issues in the shorter term.
“At the moment, if you are look at CPI inflation and also profit/loss making in the corporate sector as well as the labor market, I don’t necessarily think there is any other explanation but cyclically speaking, we have a very large output gap,” said Qiao.
Output gap refers to the difference between an economy’s actual output and its potential output at full capacity.
“Policy stimulus are well warranted and have to be rolled out to get out of the blues, to boost the economy back to its long term potential level,” she added.
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China opens a new era of ‘proactive easing’ as the economic recovery turns sour
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SHANGHAI, CHINA – NOVEMBER 04, 2022: Buildings at Lujiazui Financial District are illuminated to celebrate the opening ceremony of the 5th China International Import Expo (CIIE) on November 4, 2022 in Shanghai, China.
Vcg | Visual China Group | Getty Images
A central bank move in Beijing this week is being seen by economists as a starting gun on a new era of monetary policy as China’s Covid-19 reopening fails to gather pace.
On Tuesday, the People’s Bank of China cut its seven-day reverse repurchase rate from 2% to 1.9% — the such first cut in nine months — as the economy loses momentum and hard data starts to disappoint. Top China economists at Wall Street banks viewed the move as the start of much more easing to come.
“This is the first cut since August 2022, and confirms further that policymakers have switched to proactive easing from wait-and-see,” Citi economists, led by Xiangrong Yu, said in a Tuesday research note shortly after the PBOC’s announcement.
“Our thesis of timely easing is playing out, and more measures of small steps that don’t have a high threshold could follow in coming weeks,” they said, adding that the upcoming July Politburo meeting in Beijing would be closely watched for more significant measures to follow.
China’s sovereign bonds rose in price following the latest move by the central bank while the Chinese yuan dipped to its weakest levels since November.
Pointing to soft economic figures from China, including credit data, Citi economists said “stimulus seems to be underway with the weak readings.”
China’s new bank loans for the month of May rose by 11.4% to 1.36 trillion yuan ($190 billion), missing estimates from a Reuters poll and strengthening the case for further stimulus, as the economy continues to see tumbling industrial profits on soft demand and falling exports.
Barclays economists, writing in a Tuesday note titled “Entering a rate cut cycle,” predict China will deliver a cut for every quarter until early 2024. The bank predicts a 10 basis-point cut in the medium-term lending facility rate on Thursday, as well as a cut to its loan prime rate next week (two monetary levers the PBOC uses).
“In the next nine months, based on our economic analysis and reasoning, we now expect the central bank to continue its monetary easing cycle with additional 30bp [basis point] policy rate cuts in total, 50bp RRR cuts and 60-80bp mortgage rate cuts for both new and existing home loans,” Barclays economists led by Jian Chang said in a note.
Goldman Sachs economists including Hui Shan said the firm expects the central bank to cut its medium-term lending facility rate on Thursday and its loan prime rate by 10 basis points next week. China’s central bank controls the benchmark one-year lending and deposit rates, which affect the borrowing costs for banks, businesses and individuals across the country.
Noting that the PBOC has never never cut policy rates and the reserve requirement ratio in the same month before, Goldman Sachs economists expect a full RRR cut to be delivered in the third quarter of this year. The reserve requirement ratio refers to the amount of money that banks must hold in their coffers as a proportion of their total deposits.
Goldman Sachs also expects the PBOC to deliver another 25 basis point RRR cut in the third quarter of this year, their economists said, adding that the firm expects another cut in the final quarter as well.
“Sluggish activity growth, potentially weak credit extensions, and low confidence are the reasons behind this cut, in our view,” they said.
Is it enough?
Mizuho Bank’s Head of Economics and Strategy for Asia Vishnu Varathan argued that the latest actions from China’s central bank “does not cut it.”
“Markets were justifiably unimpressed as credit data details suggest a worrying private sector confidence deficit that is likely to diminish run-of-the-mill stimulus efforts,” he said.
He predicted a more significant plan would be necessary — at the risk of overshooting and harming stability in the economy.
“Save for a more comprehensive stimulus plan that may necessarily imperil financial stability, it looks like PBOC rate cuts may just not cut it,” Varathan said.
Societe Generale economists also said, “much more easing is needed, particularly fiscal backed by central gov funding.”
“However, the drip mode of easing – preferred by Chinese policymakers – may not be well suited to containing the mounting deleveraging pressure within the economy,” SocGen economists said.
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India’s growth is set to power ahead. Analyst names sectors with the ‘best value’
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Birds flying over the corridor of the Jama Masjid at sunrise in New Delhi on October 27, 2016.
Money Sharma | Afp | Getty Images
India’s growth is looking like a “bright spot” as the country’s outsourcing sector remains robust on top of an increasing trend of tech companies moving their manufacturing lines to the country, according to the CEO of Destination Wealth Management.
“India looks like a bright spot in particular because you’re seeing tech companies starting to move forward in terms of manufacturing in India,” said Michael Yoshikami of the wealth management firm, who said he’s expecting an economic growth of 5% to 6% in the next five years.
The International Monetary Fund recently released its forecast for India’s economy to expand by 5.9% in 2023.
A large part of this is driven by India’s outsourcing sector being on pace to keep its momentum, said the CEO.
Many companies are opting to outsource software development projects to India for quality at reasonable costs, according to Krina Mehta, a co-founder of U.S.-based offshore software development company Fortune Infosys.
The country’s “outsource phenomenon” is going to continue, Yoshikami said, attributing it to its assembly of technology schools and companies exercising cost control as a priority.
He said India’s labor costs are also well below many other countries, especially when compared to China’s rising wages.
“China used to be cheap outsource. It’s just not cheap outsource anymore,” Yoshikami said.
“I think you’re going to continue to see an outsource away from China and other countries, maybe Philippines and Vietnam … to India.”
To leverage on India’s burgeoning growth, Yoshikami picked the banking sector as one of the shining stars for international investors.
“I think that probably the best value right now is in [India’s] banks … if you look around the world, banks in general, have been struggling in the United States,” he said.
The U.S. banking crisis that erupted in March, triggered by the collapse of Silicon Valley Bank, continues to weigh on sentiment.
However, Yoshikami noted that the technology sector has made some recovery inroads, and won’t necessarily give banks the upper hand.
“I think they both hold promise … I certainly think they’re sort of a barbell approach.”
The barbell approach is an investment strategy that seeks to balance high-risk and no-risk assets by investing in both extremes, while avoiding middle-risk options.
“I wouldn’t layer all of your money in banks or all of your money in technology … I think that’s too much of a risky bet.”
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Toyota shares surge 5% after announcing plans for next-gen battery EVs
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A display of Toyota electrified vehicles at the 2022 New York Auto Show, April 13, 2022.
Scott Mlyn | CNBC
Shares of Japanese automaker Toyota spiked 5% Tuesday after the company announced it will introduce a full lineup of battery electric vehicles with “next generation” batteries from 2026.
These will be developed and manufactured by a new EV unit called BEV Factory, which was established in May.
In a presentation Tuesday, Takero Kato, president of BEV Factory, said that Toyota is targeting a driving range of 1,000 kilometers (620 miles) for its EVs. BEV Factory aims to produce about 1.7 million vehicles by 2030, Kato said.
In comparison, the Tesla Model 3 has a range of about 430 kilometers, while the long-range model has a range of about 570 kilometers.
Toyota has a goal of achieving sales of 1.5 million all-electric vehicles per year by 2026, and selling 3.5 million all-electric vehicles annually by 2030.
Separately, the company is also developing a method for mass producing all-solid-state batteries for battery electric vehicles, and aims to commercialize this in 2027 to 2028. Toyota said it will be looking at a 20% improvement in cruising range for its all-solid-state batteries, compared to the current batteries.
This is along with a higher-specification model that is under research and development. This model aims for a 50% improvement in cruising range compared to the current product.
More pronounced shift to EVs?
Most notably, Toyota said that it has discovered a technological breakthrough that overcomes the challenge of battery durability in its all-solid-state batteries, and as such, the company is “reviewing its introduction to conventional HEVs and accelerating [its] development as a battery for BEVs.”
HEVs refer to hybrid electric vehicles, which are vehicles that are powered by a conventional internal combustion engine in combination with one or more electric motors.
This could signal a continued shift in the automaker’s EV strategy under new CEO Koji Sato, who took over the helm in April. In February, Sato said that the company will “accelerate the development of BEVs with a different approach than before,” Nikkei reported.
Under previous CEO Akio Toyoda, Toyota had come under fire for its go-slow approach to all-electric cars, instead sticking with the belief that all-electric vehicles are one solution, not the solution, for the company’s goal to become carbon neutral. This strategy persisted even up to the end of 2022, when it unveiled new hybrid Prius models.
Toyota executives had argued they did not believe that all-electric vehicles will be adopted as readily as competitors think, citing reasons like roadblocks and saying that the market was not “mature enough.”
On its website, Toyota says that the materials needed to produce one long-range, all-electric vehicle battery could be used to produce six plug-in hybrid vehicle batteries, or 90 hybrid electric vehicle batteries.
The more aggressive push to all-electric vehicles could be seen in Kato’s presentation, with the BEV Factory president saying that “our aim is to change the future with BEVs … the next-generation battery EVs will adopt new batteries, through which we are determined to become a world leader in battery EV energy consumption.”
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China has been spying from Cuba for some time, U.S. official says
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Aerial view of the old city of Havana, Cuba on August 04, 2017
Frédéric Soltan | Corbis News | Getty Images
China has been spying from Cuba for some time and upgraded its intelligence collection facilities there in 2019, a Biden administration official said on Saturday, following a report about a new spying effort underway on the island.
The Wall Street Journal on Thursday reported that China had reached a secret deal with Cuba to establish an electronic eavesdropping facility on the island roughly 100 miles (160 km) from Florida, but the U.S. and Cuban governments cast strong doubt on the report.
The Biden administration official, speaking on condition of anonymity, said the media’s characterization “does not comport with our understanding,” but did not specify how the report was wrong nor address in detail whether there were efforts by China to build a new eavesdropping facility in Cuba.
The official said the issue predated Joe Biden‘s presidency, as had Beijing’s efforts to strengthen its intelligence collection infrastructure worldwide.
“This is an ongoing issue, and not a new development,” the official said. “The PRC (People’s Republic of China) conducted an upgrade of its intelligence collection facilities in Cuba in 2019. This is well-documented in the intelligence record.”
Asked for comment, an official at China’s embassy in Washington pointed to Friday’s statement by a Chinese foreign ministry spokesperson who accused the U.S. of “spreading rumors and slander” with talk of a Cuba spy station, and of being “the most powerful hacker empire in the world.”
The Cuban government did not immediately respond to a request for comment.
On Thursday, Cuban Vice Foreign Minister Carlos Fernandez de Cossio dismissed the Journal’s report as “totally mendacious” and called it a U.S. fabrication meant to justify Washington’s decades-old economic embargo against the island.
He said Cuba rejects all foreign military presence in Latin America and the Caribbean.
Attention surrounding alleged Chinese spying from Cuba comes as Washington and Beijing are taking tentative steps to soothe tensions that spiked after a suspected Chinese high-altitude spy balloon crossed the United States before the U.S. military shot it down off the East Coast in February.
That includes a trip to China that U.S. officials say Secretary of State Antony Blinken is planning for June 18. Washington’s top diplomat had earlier scrapped the visit over the spy balloon incident.
The Biden administration official said that despite the former administration of Donald Trump being aware of the Chinese basing effort in Cuba and making some attempts to address the challenge, “we were not making enough progress and needed a more direct approach.”
The official said U.S. diplomats had engaged governments that were considering hosting Chinese bases and had exchanged information with them.
“Our experts assess that our diplomatic efforts have slowed the PRC down,” the official said. “We think the PRC isn’t quite where they had hoped to be.”
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Russia has received hundreds of Iranian drones to attack Ukraine, says White House
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A man tries to extinguish a fire at a residential house that was hit during Russian shelling next to a flooded area on June 9, 2023 in Kherson, Ukraine.
Roman Pilipey | Getty Images News | Getty Images
The White House said on Friday that Russia appeared to be deepening its defense cooperation with Iran and had received hundreds of one-way attack drones that it is using to strike Ukraine.
Citing newly declassified information, the White House said the drones, or Uncrewed Aerial Vehicles (UAVs), were built in Iran, shipped across the Caspian Sea and then used by Russian forces against Ukraine.
“Russia has been using Iranian UAVs in recent weeks to strike Kyiv and terrorize the Ukrainian population, and the Russia-Iran military partnership appears to be deepening,” White House spokesman John Kirby said in a statement.
“We are also concerned that Russia is working with Iran to produce Iranian UAVs from inside Russia.”
Kirby said the U.S. had information that Russia was receiving materials from Iran required to build a drone manufacturing plant that could be fully operational early next year.
“We are releasing satellite imagery of the planned location of this UAV manufacturing plant in Russia’s Alabuga Special Economic Zone,” he said.
The U.S. has previously sanctioned Iranian executives at a defense manufacturer over drone supplies to Russia. Iran has acknowledged sending drones to Russia but said in they past they were sent before Russia’s February invasion. Moscow has denied its forces used Iranian drones in Ukraine. A White House official said Iran had transferred several hundred drones to Russia since August.
Russia has been offering Iran unprecedented defense cooperation, including on missiles, electronics, and air defense.
John Kirby
White House spokesman
Support between Iran and Russia was flowing both ways, Kirby said, with Iran seeking billions of dollars worth of military equipment from Russia including helicopters and radars.
“Russia has been offering Iran unprecedented defense cooperation, including on missiles, electronics, and air defense,” he said.
“This is a full-scale defense partnership that is harmful to Ukraine, to Iran’s neighbors, and to the international community. We are continuing to use all the tools at our disposal to expose and disrupt these activities including by sharing this with the public – and we are prepared to do more.”
Kirby said the transfers of drones constituted a violation of United Nations rules and the United States would seek to hold the two countries accountable.
Britain, France, Germany, the U.S. and Ukraine say the supply of Iranian-made drones to Russia violates a 2015 U.N. Security Council resolution enshrining the Iran nuclear deal.
Under the 2015 U.N. resolution, a conventional arms embargo on Iran was in place until October 2020.
Ukraine and Western powers argue that the resolution includes restrictions on missiles and related technologies until October 2023 and can encompass the export and purchase of advanced military systems such as drones.
The Iranian and Russian missions to the United Nations did not immediately respond to a request for comment on the U.S. accusations.
“We will continue to impose sanctions on the actors involved in the transfer of Iranian military equipment to Russia for use in Ukraine,” Kirby said.
He said a new U.S. advisory issued on Friday aimed “to help businesses and other governments better understand the risks posed by Iran’s UAV program and the illicit practices Iran uses to procure components for it.”
The advisory highlighted key items sought by Iran for its development of drones, including electronics such as processors and controllers.
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Deposit rate cuts from China banks may be a ‘precursor’ to lending rates being cut, says Jefferies
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Shujin Chen of Jefferies says deposit rate cuts from Chinese banks are the government’s way of showing that it is trying to rebuild confidence in the market.
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You underestimate China at your own peril, analyst says
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Mattie Bekink of the Economist Intelligence Corporate Network says the country’s property sector could stabilize in the second half of the year, which could “smooth out” its uneven recovery from the Covid pandemic.
02:49
Thu, Jun 8 202311:35 PM EDT
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China’s producer prices plunge the most in seven years as deflation hangs over economy
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People walk past buildings in Shanghai, Shanghai, China, on Friday, April 21, 2023.
Bloomberg | Bloomberg | Getty Images
Inflation in China stayed at low levels in May, as the economy struggles to recover even after its strict Covid lockdown measures lifted late last year.
Producer price index in May fell 4.6%, compared to a decline of 3.6% in April. A Reuters poll showed economists expected to see a decline of 4.3% in producer prices.
The reading marked the steepest year-on-year drop in seven years, when producer prices saw a year-on-year drop of 7.2% in May 2016.
China’s consumer price index in May rose 0.2% compared to a year ago, government data showed. Economists surveyed by Reuters expected a 0.3% rise. CPI in April was at a two-year low of 0.1%.
Month-on-month, prices fell 0.2% — economists predicted a 0.1% decline.
China’s low consumer inflation and deflation in its producer prices come in contrast to relatively high inflation in major economies around the world.
Global central banks, including the U.S. Federal Reserve, have been fighting to bring down rising prices for more than a year. Just this week, Canada and Australia defied expectations and raised interest rates.
After the release , the onshore Chinese yuan weakened 0.06% after to 7.1154 against the U.S. dollar. The CSI 300 Index, which tracks the largest listed companies in Shanghai and Shenzhen, shed 0.2% and last traded slightly above the flatline.
The latest data is among a batch of economic indicators that point to a cooling economy in China.
Pinpoint Asset Management’s Zhiwei Zhang said, “The risk of deflation is still weighing on the economy. Recent economic indicators send consistent signals that the economy is cooling.”
Zhang expects the Chinese government’s next fiscal policy review to take place after its second quarter gross domestic product is released next month.
This is a breaking news story. Please check back for updates
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Singapore economic czar Tharman Shanmugaratnam to run for president
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Singapore’s veteran economic policymaker Tharman Shanmugaratnam has signaled his intention to contest upcoming presidential elections in Singapore that must be held by September this year.
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Singapore’s veteran economic policymaker Tharman Shanmugaratnam is planning to run in the upcoming presidential elections in Singapore that must be held by mid-September.
Shanmugaratnam, once thought of as a potential candidate for International Monetary Fund chief, will resign from the ruling People’s Action Party to stand for election, he said in a letter to Singapore Prime Minister Lee Hsien Loong Thursday.
That means stepping down from his current roles as senior minister and coordinating minister for social policies on July 7.
The Singapore presidency is largely a symbolic and ceremonial head of state position with limited executive power over the Singapore government, including control of the national reserves.
The prime minister is the head of government in Singapore. Since 1993, the Singapore president has been directly elected by a popular vote.
This marks the end of Shanmugaratnam’s service in various roles in the Singapore cabinet and several global organizations after more than two decades. A professional economist, he was a career public servant before he was first elected as a Member of Parliament in November 2001.
The veteran policymaker is 66 years old this year and the current chairman of the Monetary Authority of Singapore, the country’s de facto central bank and financial regulatory authority. He is also on the board of the Group of Thirty, a global council of economic and financial leaders from the public and private sectors and academia.
Shanmugaratnam co-chairs the Global Commission on the Economics of Water and is a member of the United Nations’ High-Level Advisory Board on Effective Multilateralism.
Among his past global appointments, Shanmugaratnam was the first Asian chair of the International Monetary and Financial Committee, the IMF’s key policy forum. He was also Singapore’s deputy prime minister from 2011 to 2019, and previously served as finance minister and education minister.
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New York overtakes Hong Kong as the most expensive city in the world for expats, new survey shows
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Hong Kong has ended its four-year reign as the most expensive city globally for expatriates — surpassed by New York which took first place, according to a new survey.
ECA International’s latest “Cost of Living” research ranked 207 cities based on a basket of day-to-day goods and services commonly purchased by assignees.
That includes food, utilities, public transport and basic needs such as household goods. The research aims to help organizations calculate cost-of-living allowances for assignees, the data company said.
Hong Kong fell in our rankings as the increase in prices of day-to-day goods and services was tempered by falls in accommodation costs in the city.
Lee Quane
ECA International
Still, Hong Kong retained its position as the most expensive location in Asia.
“Costs for goods and services in Hong Kong rose at multi-year highs, showing that the city was not spared from the wave of inflation we have seen throughout the world in the past year,” said Lee Quane, regional director for Asia at ECA International.
“In spite of this, Hong Kong fell in our rankings as the increase in prices of day-to-day goods and services was tempered by falls in accommodation costs in the city.”
Hong Kong has hiked its mortgage interest rates to keep pace with the U.S. Federal Reserve — and home prices plunged to a five-year low in October as borrowing costs soar. The report is based on information collected in March, from 207 cities in 120 countries, said ECA. Reports suggest residents of Hong Kong left the city in droves last year — due to Covid-19 restrictions and what they see as an erosion of democratic norms.
Singapore moves up
The second most expensive location in Asia is Singapore, which rose eight places from last year’s ranking.
Singapore is also the fifth most expensive location globally, the survey showed, marking the first time it has risen into the top five.
This ascent was primarily driven by “rapidly rising accommodation costs,” according to the ECA.
A recent report from the Urban Land Institute (ULI) Asia Pacific Centre for Housing found that private rental homes in Singapore had the highest monthly rent in Asia Pacific at $2,600 — “far exceeding” other cities.
Earlier relaxation of Covid-19 restrictions in Singapore drove up demand for rental accommodation, which was “not matched” by an increase of supply, said Quane.
However, Singapore is one of only a few locations in Asia that moved up the rankings this year.
Nearly all the Asian locations surveyed fell in the rankings, the report said, citing “lower rates of inflation relative to other regions” that were surveyed.
“[This] indicated that expatriates will find living in Asian cities relatively cheaper than the rest of the world in the past year,” the report said.
Most expensive locations for expatriates in Asia
- Hong Kong
- Singapore
- Seoul
- Tokyo
- Shanghai
- Guangzhou
- Shenzhen
- Beijing
- Taipei
- Yokohama
For example, Chinese cities like Shanghai and Guangzhou have fallen out of the global top 10 and now rank as the 13th and 14th most expensive cities in the world.
“China’s relatively late emergence from Covid-19 related restrictions had an impact on its economy,” explained Quane.
“The yuan is weaker against the U.S. dollar than it was last year, resulting in lower costs in its cities.”
Similarly, currency depreciation “counteracted” inflation rates in Japanese cities — Tokyo, which was top five globally in the past five years, dropped five places to 10th, ECA said.
“Tokyo’s fall in our rankings makes it a relatively cheaper location in comparison to recent years,” explained Quane.
“However, for companies moving staff from Japan … [it] means that companies may have to pay more in order to ensure that their employees’ purchasing power is protected whilst they are overseas.”
New York on top
In the U.S., rankings for all cities surged this year due to the strength of the U.S. dollar and “significant rises” in rental costs, said the report.
According to the survey, New York moved up one spot to first place, while San Francisco moved up four places from 11th to 7th.
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Elon Musk discussed a possible Mongolia expansion with the country’s prime minister
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Tesla CEO Elon Musk.
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Mongolia’s prime minister Luvsannamsrai Oyun-Erdene and Tesla CEO Elon Musk on Monday discussed possible expansion and investments into the Asian country over a virtual meeting.
“They discussed the possibility of welcoming Tesla to Mongolia for its electric vehicles battery factory, leveraging the country’s wide availability of copper and rare earth elements, which are essential components of electric cars’ batteries,” according to a statement issued on behalf of the Mongolian government.
The East Asian country is rich in minerals and boasts large deposits of copper, gold and coal.
“The Mongolian Government is committed to cooperating with international organisations to help boost the development of new technologies and raise investment in the country,” the statement said.
A statement from the cabinet secretariat of Mongolia’s government added that the country’s prime minister emphasized his support for the use of electric cars and urged Mongolian citizens to use such vehicles.
Musk and Oyun-Erdene also spoke about bringing Starlink — a satellite communications terminals and services provider operated by the Musk-founded SpaceX — to Mongolia. Starlink was registered as a company in Mongolia in 2022 and is expected to launch regionally this year.
Musk’s meeting with the Mongolian leader comes after the tech giant last week met with Chinese vice premier Ding Xuexiang and other top officials in China, as Beijing looks to portray a friendly business environment for foreign companies amid tensions with the U.S.
The Tesla CEO complimented China’s technological advances and visited the Tesla gigafactory in Shanghai.
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‘Public nuisance’: New York sues Hyundai and Kia, alleging their cars are easy to steal
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Hyundai Motor Co. vehicles are displayed at the company’s Motorstudio showroom in Goyang, South Korea, on Thursday, Oct. 22, 2020.
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South Korean automakers Hyundai and Kia are being sued for causing a “public nuisance,” according to a complaint filed in Manhattan federal court.
New York City is accusing the two firms of failing to install devices that prevent cars from being stolen, after a social media challenge prompted young teens to steal vehicles off the street by hot wiring them using a USB cable.
A viral TikTok challenge started in 2021 and spurred a rise in thefts of Hyundai and Kia cars. Chicago saw a jump of 800% year-on-year in the theft of these cars for the month of August 2022, officials told CNBC at the time. Los Angeles officials also saw an 85% jump compared with the year before.
“In electing profits over safety and deviating from industry norms by not including engine immobilizers as a standard safety feature, Defendants created and maintained a public nuisance,” the city said in the filing made in the U.S. District Court in the Southern District of New York.
New York accused the two companies of enabling “this spiraling epidemic” of car thefts.
“This case is a clear example of what happens to public safety when car manufacturers choose not to include standard anti-theft technology in their cars,” the filing said. “Making sure cars are not easy to steal protects both property and the public by keeping dangerous drivers in stolen vehicles off the roads,” it said.
When contacted by CNBC, Hyundai highlighted a response sent to news outlets where it said it made immobilizers standard on all vehicles from November 2021 and had taken measures to reduce the threat of thefts.
Highlighting the companies’ “failure” to install an anti-theft device, the complaint accused them of having “opened the floodgates to vehicle theft, crime sprees, reckless driving, and public harm.”
Shares of South Korea’s largest automakers fell on Wednesday. Hyundai Motors slid by more than 2% while Kia Corp dropped by more than 5%.
Hyundai and Kia last month agreed to a $200 million consumer class-action lawsuit settlement, according to Reuters, which covered approximately 9 million car owners and included up to $145 million for out-of-pocket losses for customers.
‘Virtual explosion’ of thefts
New York City in its filing said that the thefts are still continuing, and that it is seeking “compensation for the economic losses,” without specifying an exact figure.
“In 2023, in comparison to past years, there has been a virtual explosion of thefts of Kias and Hyundais,” it said. Around 977 Hyundai and Kia vehicles were reported stolen in the first four months of the year, according to the filing.
“This represents a roughly 660% increase in thefts of Kia and Hyundai vehicles as compared to those same months in 2022, when there were only 148 such thefts,” it said.
New York City joins a number of cities that took similar measures against the two automakers, including Baltimore, St. Louis, Milwaukee, San Diego and Seattle.
In a release, Baltimore Mayor Brandon M. Scott said in May: “These cost-cutting measures employed by Hyundai and Kia at the expense of public safety are unacceptable.”
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China’s stimulus could focus on its ‘dire’ property sector. Here’s what economists expect
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Unfinished buildings, abandoned part way through construction, in Wuxi, China, on Tuesday, May 16, 2023. China’s economic recovery is losing momentum after an initial burst in consumer and business activity early in the year, prompting calls for more policy stimulus to bolster growth. Photographer: Qilai Shen/Bloomberg via Getty Images
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Weak economic data out of China despite an expected rebound has prompted talk that Beijing will have to boost fiscal stimulus — and some economists say the property sector could be in focus.
Prices in China’s housing market has been on the rise, but sales have slowed, research firm China Beige Book said in a May report.
related investing news
Citi economists said a property-focused stimulus package may be imminent, and pointed to a local media report that showed deteriorating sentiment in resale home listings and a decline in transaction volumes. //
“The stimulus package could be centered on the property sector, with expansionary monetary and fiscal policies to keep up growth momentum,” Citi economists led by Xiangrong Yu wrote in a Tuesday note.
“We think the overall policy tone for this sector could transfer from stabilizing to cautious stimulating. More efforts would be needed to stop a downward spiral,” they wrote.
Critical two months ahead
Citi economists say the stimulus could come as soon as June and more significant measures may be introduced in China’s Politburo meeting in July.
“The coming two months will be a critical window to act,” they said.
The economists laid out some options for a property-focused stimulus package from China: more mortgage rate cuts; funding support for property developers; and lowering down payment ratios for second-home purchases.
These steps would follow a potential cut in medium-term lending facility rates or reserve requirement ratio, the report said. The measures would boost housing demand in families, especially those with two or more children outside of core regions of China.
“The policymakers will probably have to reconcile any new stimulative measure with the overreaching guideline that ‘housing is for living, not for speculation,’ even though the mantra could be omitted in upcoming policy meetings,” Citi economists wrote.
Don’t expect a ‘bazooka’
Nomura’s Chief China economist Ting Lu said “the situation of China’s property sector appears dire.”
The Japanese investment bank doesn’t expect a “bazooka” stimulus package but predicts it will be introduced in a cautious manner.
“We believe measures will be introduced in a piecemeal step-by-step manner, and be implemented mainly in tier-2 cities,” Nomura economists wrote.
They pointed to the latest wording from top policymakers and their emphasis on “security” – how this is an indicator for the scale of a stimulus package to come.
“With decision making now highly centralized, and with an emphasis on ‘security,’ efforts to
pass a support package for the property sector may progress only gradually and could even be easily blocked for various non-economic reasons,” they wrote.Nomura expects the so-called “rescue package” to be rolled out slowly.
“Amid worsening growth prospects, we expect Beijing to eventually announce a rescue package, although most likely these supportive measures will be gradual,” they wrote.
“The best we can expect are policies that finally stem the downward spiral and stabilize new home sales at slightly above current levels.”
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The RBA is trying to ‘slow the economy down even further’ with another hike, HSBC says
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Paul Bloxham of HSBC says the risk that inflation stays "too high for too long" is more than the Reserve Bank of Australia can bear.
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