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- A + A (June 30): All emerging Asian currencies were set for half-yearly losses on Thursday, with the South Korean won set to lose the most, as policy tightening by the US central bank and concerns over global economic outlook spurred selling in Asian assets. The won dropped 8.4% so far this year, while the Philippine peso and Indian rupee were on track to post half-yearly losses of 7.3% and 5.8%, respectively. Emerging markets in the six-month period were battered by capital outflows due to the US Federal Reserve kicking off its tightening cycle, Russia's invasion of Ukraine, and inflation from higher commodity prices. Among local drivers, China's insistence on a zero-Covid policy also spurred selling as the country's repeated imposition of restrictions means a slower economic recovery for the region's largest economy. "The broader market ... they need some more convincing because I think at the back of their mind, they've still got this hesitancy due to the … [Read more...] about Asian currencies set for half-year losses on rate hikes, inflation woes

- A + A (June 30): Valuations are starting to turn attractive for South Korea bonds amid signs the market has overpriced how much the most hawkish central bank in emerging Asia may raise rates. Won forward rates are pricing in about 125 basis points of hikes over the next six months, far above economists’ forecasts for how much the Bank of Korea will move. This points to an improving environment for won bonds, the biggest loser among emerging-Asia’s sovereign debt this quarter as inflation quickened to a 14-year high and bets on rate increases jumped. Increased flows into Korean debt may help ease pressures on the won, which last week reached a 13-year low. The country is vulnerable to soaring imports exacerbated by a weak currency. It also means that Korean bonds may start to diverge from other emerging markets in Asia, where the risk of interest-rate swaps and yields moving higher is clouding the outlook. “We see value in Korean government bonds, as the market … [Read more...] about Bond traders bet market has swung too far on Korea rate hikes

The average rates of household loans extended by banks stood at 4.14 percent per annum last month, up 0.09 percentage points from a month earlier, according to the data from the Bank of Korea (BOK). The May figure marked the highest level since January 2014, when it came to 4.15 percent. Mortgage rates stayed unchanged at 3.9 percent in May, but unsecured loan rates jumped by 0.16 percentage points on-month to 5.78 percent in May, the highest since January 2014, the data showed. The rise is in line with the BOK's recent moves to raise its policy rate to keep a lid on rising inflation pressure. The BOK has hiked the rate five times since August last year, including a quarter percentage-point rise last month. Yonhap … [Read more...] about Lending rates for households in Korea rise to highest in 8 years

The wet market in Old Town, Petaling Jaya, Selangor. According to Annuar, despite inflation rates being on the rise across the world, Malaysia is still among the countries with the lowest rates, which is at 2.8%. (Photo by Low Yen Yeing/The Edge) - A + A PUTRAJAYA (June 30): The government, through the Special Task Force on Jihad against Inflation, will strive to keep the inflation rate in Malaysia low and manageable to ensure the well-being of Malaysian families, Communications and Multimedia Minister Tan Sri Annuar Musa announced. Annuar, who is the chairman of the task force, said they would give attention to all prices of goods and services that could contribute to the increase in the inflation rate, apart from chicken, eggs and cooking oil. “We are also giving our assurance that we will continue taking a proactive approach to control and keep the country’s inflation at a low and manageable rate.” He said this at a press conference after chairing the task … [Read more...] about Annuar: Govt to ensure Malaysia’s inflation rate remains low, manageable

PETALING JAYA: Foreign flows into the local bond market returned to positive territory in May amid foreign investors’ flight-to-safety demand and Bank Negara’s hawkish pivot. Nevertheless, the magnitude was only a meager RM531mil, which did not completely offset the relative net foreign outflows of RM2.2bil in April. Total cumulative foreign holdings in the local bond market grew to RM911.1mil for the first five months of 2022, following the net foreign inflows. Notwithstanding this, they were significantly lower than the cumulative net foreign inflows of RM25bil from January to May 2021, according to MARC Ratings Bhd. Total Malaysian Government Securities/Government Investment Issues (MGS and GII) outstanding expanded by 11.1% year-on-year (y-o-y) to RM947.3bil in May 2022 as there was no redemption of government bonds recorded. This is notwithstanding the reduced issuances in both the MGS (May: RM4.5bil; April: RM10bil) and GII (May: RM8bil; April: RM9.5bil) segments during … [Read more...] about Foreign flows into local bond market returns to positive territory

- A + A (June 30): Taiwan’s stock benchmark index slumped on Thursday (June 30), taking its decline from a January high to over 19% and just points away from a so-called bear market. The Taiex gauge closed 2.7% lower in Taipei, the worst performer in Asia. It was dragged by chipmakers after Bank of America took a cautious view on the industry’s growth prospects. Taiwan Semiconductor Manufacturing Co (TSMC), which accounts for more than a quarter of the index’s weighting, dropped 3.1%. Facing headwinds of rate hikes by global central banks, tech-heavy stock markets in Taiwan and South Korea have been the worst performers in Asia this quarter, both down over 15%. Foreign investors have net sold about US$16 billion (about RM70.52 billion) of Taiwan stocks during the three-month period, the most among emerging Asia countries outside China. Taiwan’s deputy finance minister said the National Financial Stabilization Fund will continue to closely monitor the stock market … [Read more...] about Bear market looms for Taiwan stocks after chipmaker-led slump

This article first appeared in The Edge Malaysia Weekly, on June 20, 2022 - June 26, 2022. - A + A ALL eyes are on RHB Banking Group’s newly minted group managing director (MD) and group CEO Mohd Rashid Mohamad as he steers the fourth-largest banking group by assets forward in a tough operating landscape. “It’s very challenging, especially now in a fast-changing market environment, and as we face potential risks such as geopolitical and inflationary,” acknowledges Rashid in his first exclusive interview as group MD/CEO. Competition has intensified, given new entrants into the market, which are not just new banks but also technology companies that compete for the same pie. Rashid adds that this has partly affected the profitability of the industry, along with many other factors. He notes that banks globally no longer see “high ROEs” as before. For RHB Bank Bhd, its return on equity (ROE) in the past 10 financial years hit a high of 13.4% in FY2012 before … [Read more...] about Cover Story: RHB’s Game Plan in ‘fast-changing’ new normal

- A + A LONDON (June 30): Investors knew that, after two years of COVID-19 chaos, 2022 would be a bumpy ride, but nobody expected this - the most turbulent first half global markets have ever seen. To grasp just how torrid things have been, consider two things. MSCI's 47-country world stocks index has suffered its biggest 1H drop since its creation in 1990. At same time, 10-year U.S. Treasury bonds - the benchmark of global borrowing markets and traditional go-to asset in troubled times - have had their worst first half since 1788. Why? Russia's invasion of Ukraine supercharged what was already fast-rising inflation, forcing the big central banks to jack up interest rates and politicians to warn of new world orders. The result? A $13 trillion wipeout in world stocks, a 15.5% plunge Japan's yen, Italy's worst rout since the euro zone crisis, and what is shaping up to be the strongest commodities rally since World War I. Add to that Russia being gouged out the … [Read more...] about Markets in 1H: The almost perfect storm

- A + A KUALA LUMPUR (June 30): Malaysia’s banking system remains well capitalised to support economic recovery, said Bank Negara Malaysia (BNM). The central bank said capital ratios rose marginally in May 2022, driven by valuation gains on available-for-sale financial instruments as bond yields eased temporarily during the period. “As at end-May 2022, the banking system recorded RM121.5 billion in excess capital buffers,” said BNM in its monthly highlights for the May 2022 report released on Thursday (June 30). The central bank said overall gross and net impaired loans ratios remained broadly stable at 1.6% and 1% respectively, reflecting the marginal increase in impairments from the business and household segments, following the tapering of repayment assistance measures since the first quarter of 2022. "Total provisions remained at a prudent level, accounting for 1.8% of total banking system loans and 109.1% of impaired loans. "As of end-May 2022, total … [Read more...] about BNM: Malaysia’s banking system remains well capitalised to support economic recovery

KUALA LUMPUR: Malaysia’s banking system remains well capitalised to support economic recovery, said Bank Negara Malaysia (BNM). The central bank said capital ratios rose marginally in May 2022, driven by valuation gains on available-for-sale financial instruments as bond yields eased temporarily during the period. "As at end-May 2022, the banking system recorded RM121.5 billion excess capital buffers,” said BNM in its monthly highlights for May 2022 report released today. The central bank said overall gross and net impaired loans ratios remained broadly stable at 1.6 per cent and 1.0 per cent respectively, reflecting the marginal increase in impairments from the business and household segments, following the tapering of repayment assistance measures since the first quarter of 2022. "Total provisions remained at prudent level accounting for 1.8 per cent of total banking system loans and 109.1 per cent of impaired loans. "While as of end-May 2022, total provisions and … [Read more...] about Malaysia’s banking system remains well capitalised to support economic recovery