Hong Kong dollar peg at risk in Trump’s coming fight with China – Asia Times

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Under Donald Trump’s coming second administration, Hong Kong may likely play a significant role in the wider industry, security, and political conflict between the United States and China. If therefore, the Hong Kong currency’s clamp to the US franc had come under US fire.

Trump is expected to make a new policy statement regarding Hong Kong-related problems, from the city’s role in assisting Russia in obtaining dual-use Chinese goods and avoiding American restrictions to the detention of pro-democracy activists and politicians to the economic capital’s role in reported money laundering that is against US interests, according to some observers.

Before Trump emphatically won the US presidential election on November 5, the former senator vowed to free Jimmy Lai, a pro-democracy activist and media mogul, from jail. Lai, who stands accused of fomenting Hong Kong’s 2019-2020 turmoil, is obviously one of Beijing’s negotiations cards on the bargaining table between Chinese and US officials. &nbsp, &nbsp, &nbsp,

Six additional abroad Hong Kong activists were detained on Christmas Eve after their arrest warrants were issued by Hong Kong’s federal security police on the charge of inciting subversion, colluding with international forces, and getting worse. The police also imposed HK$ 1 million ( US$ 128, 425 ) bounties on each of them. &nbsp,

Tony Chung and Chloe Cheung, two young activists, social critics, Victor Ho, a former city councillor, Carmen Lau, and former comedian and performer Joseph Tay are among the six. Ho and Tay are in Canada, and Tay is in the UK.

The six, according to Hong Kong’s Security Secretary Chris Tang, have allegedly violated international law by speaking out, posting on social media, and influencing foreign governments to impose sanctions on Hong Kong authorities and courts.

As of December 25, 19 people have been arrested on suspicion of violating federal safety in Hong Kong.

The Hong Kong government’s “relentless achievement of pro-democracy protesters outside its borders is a overt excess that ignores global standards,” according to Chris Patten, the previous government of Hong Kong and a supporter of United Kingdom-based Hong Kong Watch.

He demanded that the governments of the UK, the US, and Canada “agissent quickly and collectively to protect these campaigners from international persecution, ensuring their protection, and standing strong against Beijing’s attempts to undermine the very political values we hold lovely.”

hub of financial violence

The new arrest warrants does encourage hawkish American politicians to call for more harsh methods, such as the removal of some Hong Kong-based lenders from the SWIFT financial exchange program, which, if implemented, could lead to a de-pegging of the Hong Kong dollars and US buck. &nbsp,

In a letter to US Treasury Secretary Janet Yellen in late November, John Moolenaar, president of the US House Select Committee on the Chinese Communist Party (CCP), expressed the agency’s “deep problem” with regard to Hong Kong’s reported “increasing function as a financial hub for cash laundering, sanctions evasion, and other illegal financial activities.

According to him,” Hong Kong has shifted from a trusted global financial center to a crucial player in the deepening authoritarian axis of the People’s Republic of China ( PRC ), Iran, Russia, and North Korea,” following the National Security Law of 2020, which subjected the country to the CCP’s rule. &nbsp,

” We must now question whether longstanding US policy towards Hong Kong, particularly towards its financial and banking sector, is appropriate”.

Moolenaar claimed that the US Treasury has taken preliminary action against businesses based in Hong Kong, where the city has since become a global leader in practices like importing and re-exporting prohibited Western technology to Russia, creating front companies to purchase prohibited Iranian oil, facilitating the trade of Russian-sourced gold, and managing “ghost ships” that engage in illegal trade with North Korea.

He stated that the committee is interested in learning how the US Treasury will combat Hong Kong’s financial system’s financing of money laundering and sanctions evasion.

Jesse Baker, assistant to the US deputy treasury secretary, met with Hong Kong financial institutions, including HSBC, StanChart and Bank of China ( Hong Kong ) in Hong Kong on December 11, warning them not to engage businesses with Russia or help Russia evade western sanctions, Nikkei reported.

In fact, Trump met with his top officials to decide the United States ‘ response after Beijing passed the Hong Kong National Security Law on June 30, 2020. &nbsp,

At the time, Trump had considered forcing an end to Hong Kong’s peg policy, but opted against the move due to commerce and treasury officials ‘ opposition. Instead, he signed an executive order to end Hong Kong’s special status.

The Biden administration has not discussed de-pegging the Hong Kong dollar from the US greenback over the past four years.

In November 2022, markets fretted that Hong Kong’s peg policy would end as the city’s currency had repeatedly touched 7.85 per US dollar, the lower end of the allowed peg range of 7.75-7.85, amid rising US interest rates. &nbsp,

Bill Ackman, a billionaire investor at the time, predicted that the Hong Kong dollar would decline and that its peg to the US dollar would collapse. Boaz Weinstein, a veteran trader, claimed to have a 200-to-1 payoff potential when he bet against the Hong Kong dollar. &nbsp,

De-pegging debate

Some Hong Kong experts said they don’t believe the Taiwan Straits will soon experience a de-pegging unless a sudden war breaks out. However, they did not rule out the possibility of de-pegging in the future.

According to Vincent Lam, a financial columnist and fund manager based in Hong Kong, it’s unlikely that Trump will act to stop the country from using US dollars because this conflicteth with US interests. She noted that Trump has vowed to impose a 100 % tariff on BRIC nations that engage in de-dollarization schemes. &nbsp,

He added, however, that if the Hong Kong government doesn’t improve its balance sheet, it runs the risk of depleting its$ HK$ 550 billion fiscal reserves and will have to abandon its peg policy in the coming years. He claimed that in order to maintain financial stability, Hong Kong can peg its dollar instead to a basket of global currencies.

Allan Zeman, the founder of Lan Kwai Fong Group, stated in a recent interview that the Hong Kong government should have a plan B for its currency peg policy.

He claimed that a peg to the US dollar would hurt Hong Kong’s competitiveness and economy if US inflation and interest rates remained high during the Trump 2.0 era. He claimed that in this situation, a de-pegging might be beneficial for Hong Kong.

In an article, Charles Gave, the founder of the Hong Kong-based Gavekal research group, predicted that Hong Kong might become the potential home for a new international financial system in the coming years. &nbsp,

He claimed that many Asian exporters have kept their income in Hong Kong over the past few years, leading to an increase in the city’s US dollar reserves. He claimed that if these deposits were converted into Hong Kong dollars and lent to Asian nation borrowers, a new pyramid of US dollar-denominated credit would emerge that US authorities would not be able to control. &nbsp,

Hong Kong may represent a new flashpoint in Trump’s fight with China, according to a Bloomberg commentary on December 21. Trump may look into Hong Kong’s peg policy again because he doesn’t like being told he has no say in something.

Yong Jian contributes to Asia Times. He is a Chinese journalist who specializes in Chinese technology, economy and politics.

Read: Call for HK to prepare for possible US sanctions

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Songsak backs locals in land dispute

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SRT promises are being disputed by people.

PUBLISHED: 21 Dec 2024 at 06: 05

A view of Khao Kradong in Muang district of Buri Ram from the highest point in Khao Kradong Forest Park. (Bangkok Post file photo)
From the highest level in Khao Kradong Forest Park, one can see Khao Kradong in the Muang city of Buri Ram. ( Bangkok Post file photo )

Songsak Thongsri, the Deputy Minister of Interior, said the State Railway of Thailand ( SRT ) appears to be at fault in a land dispute in Khao Kradong, Buri Ram.

Over 400 impacted residents met with Mr. Songsak and officials who discussed the property rights dispute with them in the contested land area in Muang district on Friday.

To demonstrate their legal residency on the property they claim was first occupied by their predecessors, residents of Samet and Isan sub-districts in the Muang city showed him property ownership documents, including name activities and Nor Sol 3 documents.

Some locals denied allegations of encroaching on the railroad property and claimed to have settled in the area before the railroad was built.

The governmental group examined the residential areas and the disputed railroad boundary. The contested area contains about 5, 083 ray in seven settlements in two subdistricts. The debate impacts 4, 712 communities with a population of around 7, 641 citizens and 12 government organizations, such as the Buri Ram Provincial Hall, the Provincial Administration Organisation, police facilities, schools and the Volunteer Defense Corps.

Mr. Songsak spoke out against miscommunications regarding the land’s ownership to the SRT and expressed sympathy for the affected residents. He noted that residents have been stung and harmed by the conflicting claims and unclear legal boundaries as a result of the situation.

He questioned whether the disputed land belonged to the SRT after speaking with the residents.

After listening to the residents, Mr. Songsak said he thought SRT had violated their rights.

He emphasized the significance of provincial governors and the Department of Lands holding discussions with the residents who had presented title deeds to back up their claims. Mr. Songsak gave the DoL the instructions to thoroughly examine the evidence and strictly follow the law in order to defend citizens ‘ rights.

He claimed that the lack of a clear sense of ownership has already caused problems for residents who use land titles to make purchases or obtain loans from banks.

Sombat La-on, a Buri Ram Provincial Land officer, said the DoL has adhered to court rulings, which include 35 cases where the SRT sued residents and vice versa.

The investigative committee came to the conclusion that the SRT’s evidence lacks sufficient clarity to warrant the removal of residents ‘ land titles. The committee suggested halting actions taken against the titles, a resolution that would benefit locals who have fought to keep their land rights.

The SRT has appealed the Do L’s decision.

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Will the federal deficit be Trump’s nemesis? – Asia Times

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This research appeared earlier this week in the Asia Times ‘ International Risk-Reward Monitor, a regular examination of market forces.

Given our current position of information about the new government’s intentions, we foresee a steadily deteriorating socioeconomic environment in 2025 with continual high interest rates, higher than expected inflation, and weaker than expected earnings.

The Biden Administration bequeathed Donald Trump the largest-ever federal deficit ( at 6.1 % &nbsp, of GDP ) in an economic expansion. &nbsp, The president-elect wants to renew&nbsp, his 2018 corporate tax cut at an estimated cost of$ 400 billion per year, &nbsp, and&nbsp, eliminate taxes on Social Security income at a cost of about$ 150 billion per year. &nbsp, That would raise the federal deficit, now at$ 1.7 trillion, by about a quarter, minus possible revenues from additional tariffs ( which now bring in about$ 80 billion a year in revenue ), and whatever cost savings&nbsp, his team can obtain from spending reductions.

What didn’t go on forever didn’t, according to Okun’s Rules, and the United States doesn’t continue to run up the federal deficit continuously. But it has a price to pay to continue doing so for the near future. America doesn’t encounter a” Liz Truss time” ,&nbsp, as Swiss Re economist&nbsp, Jerome Jean Haegeli&nbsp, told the Wall Street Journal&nbsp, November 21, referring to&nbsp, the blowup of the UK tie business in October 2022 after the short-tenured prime minister proposed deep tax cuts. &nbsp, For the time being, the US can fund the Treasury’s saving need with&nbsp, local resources. However, that comes at a high price, and it’s possible that financial pressure may become stronger in 2025.

Unlike the aftereffects of the 2008 World Financial Crisis, when foreign central banks financed the boom in Treasury loans, US regional economic institutions&nbsp, absorbed the bulk of post-Covid Treasury financing, with some help from international personal investors and US homes. The presence of financial institutions in Treasury funding is more clearly visible graphically in terms of levels.

Lenders can continue to get Treasuries, but only if interest rates remain high. According to McKinsey, return on equity for large parts of the finance sector would be lower than the institutions ‘ individual cost of capital without the rise in interest rates of the previous two years. The supply on medium-term Treasuries is approximately equivalent to the bank’s loans from the central bank, which means that the deficit cannot be funded by the legendary printing press. Deposits, while, cost much less than borrowed money, and the Biden Administration’s massive governmental increase of 2019-2020 unleashed a flood of payments into the banking system. Payments rose much faster than institutions ‘ loans and leases, and were channeled into Treasuries.

That began a period in motion. Federal subsidies caused the gap to balloon, but a sizable percentage of those subsidies were reinvested back into the Treasury securities that provided the deficit. The grants unleashed prices, and the Federal Reserve&nbsp, raised interest rates, making Treasuries appealing for businesses. &nbsp, Higher interest rates&nbsp, doubled the cost of servicing the federal debt, to$ 1 trillion last year from$ 500 million in 2020.

In short, the rising of Treasuries on banks balance sheets, the higher price setting, the higher deficit expected to doubled interest payments, and higher inflation are all facets of the same problem.

What could go bad?

For one thing, a year ago, the surge in payments that made it possible for banks to purchase Treasuries with inexpensive customer money stopped. Lenders will have to make a higher yield than they already receive for immediately money from the Federal Reserve in order to continue funding the deficit. The secured over funding rate is currently higher than the supply of five-year Treasuries.

Businesses can use inexpensive reserves to finance buying of Treasury securities, but no expensive borrowings from the central bank. As we see in the chart above, &nbsp, the year-on-year shift in business businesses assets of US Treasury and Agency stocks tracks the year-on-year shift in payments.

Lenders will only be able to continue funding the Treasury gap once the spread between the central bank’s cost of funds and the produce on Treasury securities has dried up. One chance, of course, is that the main institution could provide cheaper revenue to the banks. That would in effect allow the printing press to fund the Treasury deficit, which is a badly inflationary move. Fed head Jerome Powell didn’t do this.

Another possibility is that medium-term Treasury yields need to climb. Rising long-term curiosity rates, though, may reduce if not eradicate economic growth.

Furthermore, US households may stop consuming and purchase a lot more government securities. &nbsp, American families save only 4.4 % of their disposable income, or about$ 1 trillion a year. If homeowners doubled that to$ 2 trillion a month, they could fund the gap by themselves. However, a rapid decline in use may lead to a recession, lower taxes revenues, and a bigger deficit.

Accidents are often feasible – for example, a big problem in the multi-trillion industry for short-term funding of government securities. As the Federal Reserve shrank its portfolio holdings of Treasuries, the illiquidity of the Treasury market ( as measured by the bid-asked spreads of off-the-run Treasuries ) worsened.

However, it’s unlikely that a liquidity seize-up would cause any long-term harm. Central banks have a way to react to these kinds of situations; they simply purchase whatever is available until the market drops.

The consequence of the expansion of US debt, high inflation, high Treasury rates and high debt service costs is likely to be gradual – a headwind, not a cyclone. &nbsp, This will hit US consumers the hardest.

US consumers borrowed money from credit markets to maintain their level of consumption after the Biden subsidies expired in response to high ( and significantly higher than expected ) inflation. Credit card debt increased significantly, while the interest rate on revolving credit increased from 14 % to 22 %. Revolving credit’s total interest payments increased from$ 100 billion to$ 250 billion last year.

The tax cuts that Trump’s team has &nbsp, discussed don’t have supply-side effects. Extending the old corporate tax cut doesn’t change incentives to invest, and removing taxation of Social Security benefits won’t bring more 70-year-old into the workforce. &nbsp, Tariffs cannot help but increase prices, both for consumers and for production inputs. Higher tariffs on imported capital goods will likely lead to a lower investment because the US currently imports more capital goods domestically than it produces.

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Banks conducting ‘thorough review’ of practices on use of NRIC numbers: ABS

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SINGAPORE: Banks are conducting a” thorough review” of their practices on the use of National Registration Identity Card ( NRIC ) numbers, the Association of Banks in Singapore ( ABS ) said on Thursday ( Dec 19 ). &nbsp,

Customer banking customers were also cautioned by ABS that NRIC figures cannot be used to authorize payments and transfer funds. &nbsp,

In a media release, it stated that “banks apply multi-factor verification at registration for online financial services and that there is an extra layer of command to authorize higher risk activities.”

Higher-risk activities include high-value fund transport, adding a fresh beneficiary or raising account transfer limits.

NRIC figures, according to ABS, perform crucial functions in different ways to identify customers. For example, they can help customers who want over-the-counter services distinguish between people with similar names and make their identification more quickly. &nbsp,

Some banks have chosen to immediately apply NRIC numbers to immediately identify customers in need of quick assistance, according to ABS, adding that banks are then reviewing their practices in immediate situations, such as when responding to continuing scams. &nbsp,

” We seek customers ‘ knowing that some existing procedures may get changed as a result”, said the relationship. &nbsp,

ABS advises bank customers to change their passwords where customers use their NRIC range or other personally identifiable information as their registration credentials.

Label, NRIC number, and date of birth are some examples of personal recognisable information.
 

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Trump 2.0: Asia in a highly risky place in America’s inflation era – Asia Times

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As Asia brackets for the fantastic” Trump business” experience of 2025, the instructions from 2024 are fast piling up.

The biggest session is how badly the inflation-is-transitory deal worked out for buyers. And for citizens and earth officials who don’t appreciate a Donald Trump 2.0 president.

The&nbsp, US prices surge has some parents — from post-Covid supply chain disruptions to exceptionally low interest rates to an blast of over-the-top state signal. But Trump’s election is the mother-of-all part results from fiscal and monetary laws run rampant.

And Asia has the greatest front-row seats for what’s to come as Trump retakes the ropes with really big — and&nbsp, questionable — programs.

The Trump-to-be-war is the subject of the most attention. But far more attention should be on the fireworks sure to come as Trump ‘s&nbsp, policy promises&nbsp, meet with a fiscal train wreck unfolding in slow motion.

On January 20, Trump did gain a federal loan exceeding US$ 36 trillion. And depending on which columnist you follow, Trump may be about to axe the debt in significant ways with huge tax cuts, or given the enormous knife Trump has given Elon Musk, to aggressively reduce it.

Which result might result in significant risks for world markets.

Door No. One could see payment rating companies stumbling over US debt as US debt rises to US$ 40 trillion. Washington was quickly lose its final Premium standing, from Moody’s Investors Service. Asia is directly at the center of the conflict that a downgrade may cause in the world’s relationship, stock, and money markets.

Door No. 2 may see Trump’s Tesla tycoon patron trying to trim&nbsp, national spending&nbsp, by firing government workers here and there. However, Musk’s state performance product won’t make a gash until Team Trump is ready to attack the military and privileges like Social Security, Medicare, and Medicaid.

Deregulation and excessive grants for sectors like Musk’s private businesses would have much more success. A lack of funding in productivity-boosting industries and technologies made the US so vulnerable to inflation.

” With Trump and some good appointees focused on reducing diplomatic deficits”, says Andrew Tilton, &nbsp, an analyst at Goldman Sachs,” there is a danger that — in a sort of’ whack-a-mole’ way — burgeoning bilateral deficits was eventually fast US tariffs on another Asian economies”.

Tilton adds that” Korea, Taiwan and, particularly, &nbsp, Vietnam&nbsp, have seen big trade benefits versus the US”, things Trump 2.0 isn’t possible to let slip. As such, Asia’s leading trading nations does try to narrow surplus to “deflect” Team Trump’s focus away from them.

According to Barclays Bank analyst Brian Tan,” business plan is where Mr. Trump is likely to be most significant for emerging Asia in his second word as US leader,” inflicting “greater pain” on more empty economies.

Suffice it to say, America’s debt excesses also will challenge — and most likely plague — the Trump 2.0 era in ways the president-elect doesn’t seem to realize.

If ever there were a buckle-your-seatbelt moment for Asia, 2025 is it. The combination of runaway debt and inflation will limit the Federal Reserve’s ability to continue&nbsp, cutting rates. And even if Fed Chairman Jerome Powell tries, fiscal realities will result in higher-than-hoped long-term rates.

The state of the banking system is one of the pressing concerns of the Fed. Banks have been huge buyers of Treasury securities. If medium and long-term government debt yields fall faster than expected, will institutions experience stability issues?

This could trigger supply issues, too. If interest rates move too low or move too quickly, is it reasonable to ask if banks can continue to buy Treasuries?

According to Yanmei Xie, an economist at Gavekal Dragonomics, one of Asia’s issues is that it’s unclear who Trump will be in the White House in roughly a month.

The issue with interpreting trade policy in a second Trump administration is that Trump has publicly supported both positions and that Trump has publicly stated his views on them. The common feature is tariffs or the threat of tariffs: 60 % or more on China and 10-20 % on the&nbsp, rest of the world. But to what end?”

One possibility, she says, is that Trump will go with his once and possibly future trade czar, Robert Lighthizer, in pushing for a rapid, across-the-board disengagement from China.

Trump,” Xie says,” promised a four-year plan to phase out all imports of essential goods from China, including everything from electronics to steel to pharmaceuticals, and pledged to include strong safeguards to prevent China from bypassing restrictions by passing goods through conduit nations. In this scenario, there would be a ramping-up of coercive pressure on allies to join in the&nbsp, anti-China&nbsp, agenda.”

Trump might also use the threat of tariffs as leverage to strike a deal with China, despite the content of any such deal being very uncertain. This is the approach favored by Scott Bessent” – Trump’s pick for Treasury secretary –” who claims that Trump is in fact ‘ a free trader ‘ who will deploy tariffs to escalate to&nbsp, de-escalate,” Xie notes.

Another major Trump wild card is a US dollar devaluation, which many Trump advisers see as the fastest way to regain broad-based manufacturing competitiveness.

” China is unlikely to cooperate with this agenda,” Xie says”, but the theory of the across-the-board tariff on all trading partners seems to be that it will also be used as leverage in currency negotiations.”

Trump has in fact mentioned a Plaza Accord 2.0, which lowers the dollar against the yen.

In 1985, US President Ronald Reagan’s Treasury secretary, James Baker, managed to convince the most powerful industrialized nations to push the yen sharply higher and the dollar lower. It was the high-point of Reagan’s mercantilist policy mix, which inspired Trump. The Plaza Hotel, a landmark hotel in New York that Trump once owned, was the location of the transaction.

When Trump was in office, advisors like Peter Navarro and then-Treasury Secretary Steven Mnuchin made hints about Trump’s desire for a “new Plaza Agreement” that would send the Chinese yuan into a soaring range. Now, as&nbsp, Trump 2.0&nbsp, gears up, Trump seems ready to give the strategy another try.

Xi Jinping, the Chinese leader, would undoubtedly reject. Chinese officials are aware of how the 1985 currency deal caused Japan’s asset bubble in the late 1980s, which resulted in decades of economic stagnation. A stronger yuan would slam China’s crucial export engine, but many economists worry that a weaker dollar might cause inflation to go into the stratosphere.

One way Trump might try to engineer a weaker dollar is by commandeering&nbsp, Fed policy&nbsp, decisions. Trump and his advisers have made it clear that in January, the Fed’s independence will be in jeopardy. The” Project 2025 “scheme that Republican operatives cooked up for Trump 2.0 includes curbing the Fed’s autonomy.

Jerome Powell, Trump’s handpicked Fed chairman, had a challenging time during Trump 1.0. From 2017 to 2021, Trump cajoled Powell’s team with a verve never before seen from a White House. Trump attacked the Fed in speeches, press conferences and on social media. Trump even mulled firing Powell. That year, the Fed suddenly began cutting rates, adding liquidity to an economy that didn’t need it.

In October, Trump mocked Powell’s policymaking team”. I think it’s the greatest job in government,” Trump told Bloomberg”. Everybody talks about you like a god when you say, “let’s say flip a coin,” and you show up to the office once a month.

Trump also contends that presidents have the authority to compel the central bank to do their bidding. Trump said in August that the Federal Reserve is a very interesting thing and that it has sort of gotten it wrong frequently. He added that” I feel the president should have at least say in there, yeah. I feel that strongly. I think that, in my case, I made a lot of money. I was very successful. And I believe I have a better sense of instinct than those who, in many cases, would be chairman or the Federal Reserve.

Such maneuvers are of particular concern in Asia, where central banks have the largest stocks of US Treasury securities. Japan alone holds US$ 1.1 trillion of US debt, &nbsp, China&nbsp, US$ 770-plus billion. The largest investors in Asia have approximately US$ 3 trillion worth. Many pieces of Asian state wealth could be in danger as a result of Trump’s 2.0 presidency.

Trump’s antics here could send the dollar sharply lower. Many investors argue, of course, that continued dollar strength isn’t necessarily great news for the global financial system heading toward 2025 either. In recent years, the dollar’s “wrecking ball” tendencies have shook global markets. It sucked up outsized waves of global capital, disadvantaging emerging economies in particular. &nbsp,

When Tom Dunleavy, a partner at MV Capital, states that the risks posed by this wrecking ball dynamic are “particularly acute in emerging markets because” they rely heavily on commodities and have debt in dollars, he speaks for many. ” Oil, most trade and debt are still priced in dollars. And, he says”, The denominator of everything is going up.”

Regardless of the dubious logic behind it, the more crowded a continued-dollar-strength trade becomes, the worse the global fallout when depressed punters flee for the exits. If Trump’s Treasury team works to devalue the dollar, the U-turn could be particularly chaotic. The more chaotic a maneuver becomes the more inflationary it turns out to be.

Economists including former US Treasury Secretary Larry Summers are warning that Trump would be wise to abandon his campaign promises, in order to avoid sending&nbsp, inflation&nbsp, sharply higher. &nbsp,

Summers was right about US inflation being of the longer-lasting variety. Now, he worries that Trump’s plans to impose giant tariffs, cut taxes, deport undocumented workers and mess with the Fed’s mandate will boost inflation.

According to Summers,” If he sticks to what he said during his campaign, there will be an inflation shock that will be far greater than what the nation experienced in 2021.”

Summers worries that the upcoming Trump stimulus may bring prices down to the nine-decade high of 9.1 %, which was recorded in June 2022. In 2025, US inflation almost certainly will rule the world economy, even if this proves to be too pessimistic.

According to Kelvin Wong, senior market analyst at broker OANDA,” the incoming Trump administration’s ‘ America First ‘ policy may see a further escalation of deglobalization that could lead to headwinds to global economic growth and spurt another round of inflationary pressure resurgence.”

Wong points out that Trump’s mercantilist policies may cause the 10-year US Treasury yield to increase faster than the 2-year rate because of higher inflationary pressures.

Far from being transitory, US inflation may be about to get a very powerful second wind, one sure to blow Asia’s way early and often in 2025.

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Asia’s bond outlook upbeat for issuers in 2025: JP Morgan | FinanceAsia

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A combination of lower interest rates, lower failures, and more securities is good for businesses and governments looking to enter Asia’s bond market in 2025.

There are hopes for Asia’s tie business next year to beat 2024 which is expected to hit$ 160-165 billion in 2024 for Asia, ex-Japan. There is a lot of willingness from banks to provide in the area as issuers prepare to enter the market, which is helping to keep extends small.

Speaking at an early December press presentation in Hong Kong, Jessica Chen, head of China DCM, creation Asia ex-Japan, JP Morgan:” General spreads are small and look extremely attractive to issuers. In 2024, China is expected to overtake Korea in terms of release ( from 2023 ) as the country’s largest business”.

Chen added:” We are expecting$ 170 billion of supply in 2025 in Asia, ex Japan with stockpile to pick up over 2024. We anticipate that this pattern will continue as some businesses mortgage next year.

Another positive factor is that regional relationship failures are declining, and that the US Fed will cut interest rates even further in the coming year. &nbsp, &nbsp,

Soo Chong Lim, managing director, head of Asia credit research, JP Morgan, said:” Bond default rates declined to around 4.4 % in 2024 compared with 17 % in 2023, and we expect them to decline further to 3 % in 2025″.

Despite falling interest rates in the US, anticipation are mixed regarding home bonds and the potential for some headwinds. &nbsp,

Lim added:” We expect three]US Fed ] rate cuts in 2025 and China’s GDP to grow 3.9 % next year. There will still be market volatility, particularly for the Chinese real estate sector, which is recovering slowly after a number of years of volatility. For instance, in Hong Kong, the company occupancy rate will continue to decline as a result of the supply that enters the market.

In 2024, India – probably Asia’s best performing market– had a very powerful yr for bond issuances, a trend that is set to remain in the new year.

Puja Shah, head of Southeast Asia ( SEA ), DCM and sustainable finance Asia ex-Japan, JP Morgan, said:” The high yield bond market in India was a particular bright spot in 2024 with some large names coming onto the market. It is at$ 4.7 billion YTD, and we expect that momentum to continue into 2025 with around$ 5 billion in supply”.

The issuing of green bonds is expected to increase as well. Singapore-based Shah added:” We expect stable demand, at between 25-30 % of issuances, for sustainable ( green and social ) bonds next year in the region, compared with 25 % in 2024″.

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Close to S.8 billion set aside under banks’ ‘money lock’ feature to protect customers from potential scams

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SINGAPORE: People in Singapore have set aside close to S$ 15.8 billion ( US$ 11.7 billion ) in savings out of the reach of potential scammers through a security feature offered by banks here.

The number, as of end-October, is up 76 per cent from the S$ 9 billion total kept separately for shelter under the “money switch” have as of the end of July. &nbsp,

More than 181, 000 customers have used the “money lock” option as of Oct 31, about a year after it was introduced, the Monetary Authority of Singapore ( MAS ) said. &nbsp,

Even if a scam gains online exposure to the profile, the element, which is available at seven of the biggest financial bankers, prevents locked funds from being withdrawn.

Now, DBS, OCBC, UOB, Citibank, HSBC, Maybank and Standard Chartered Bank provide this safety function, MAS said. &nbsp,

The majority of the financial creditor foundation in Singapore is now ready to use Money Lock for greater assurance with this, according to a spokesperson.

” Different retail businesses have rolled out or are gradually looking to move out Money Lock in the upcoming time.”

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Global economy bracing for Trumpworld – Asia Times

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The world market was already under pressure as a result of Donald Trump’s victory in the November election, which also included a sluggish Europe, an ugly conflict in Ukraine, and a sluggish Chinese market. However, there was a chance that lower interest rates may encourage economic activity and the global economy in 2025 as central banks began to control higher inflation.

Trump’s triumph, however, has a number of reasons to doubt those expectations. The world’s largest economy’s economic policies are under a lot of new confusion, as is how Trump’s extreme rhetoric toward China will actually work. &nbsp,

Trump emphasized three monetary steps on the plan trail that appear more certain than others to be put into practice.

The first is density deportations of illegal immigrants, a round-up that will dent the US’s labour supply with negative consequences for progress and prices. The second is a business income reduction, which will increase the already large US fiscal deficit and national debt but will also encourage more capital to be raised.

Trump plans to increase trade taxes across the board, but to the evident greatest extent against China, in a second and more significant way for the global economy. Given all of these actions’ inflationary effects, it seems obvious that the US Federal Reserve will need to be watchful for any potential spikes or overly sticky prices.

Due to Europe’s surprisingly depressed economic situation, this risk is rarely present in that country. That in turn indicates a weaker euros in the upcoming year as the European Central Bank will be more willing to cut interest rates. &nbsp,

In other words, it seems exceedingly improbable that the fantastic dream of a quick standardization of US monetary policy and, with it, a weaker US dollar, would lead to better global financial conditions. Many developing and emerging markets with access to additional funding are particularly concerned about this Trump-driven transition in world economy expectations.

Given the unhappy financial climate in France and Germany and the good effects it would have on the eurozone’s profitability abroad, a weaker euros may be good news for Europe. That’s especially true as Trump’s taxes will also probably pin the European Union, though to what level is very questionable.

Trump’s primary tariff statements since winning the election, which targeted the US and Mexico ( to be hit with 25 % of US tariffs despite having a trade agreement with the US), may serve as a consolation for the EU that allies and friends won’t become immune to Trump’s tax assault.

Another important issue is whether Trump may impose more severe sanctions on nations that import Chinese goods for US distribution as made in their own countries, including but not limited to Vietnam, Malaysia, and Thailand.

This, among other factors, will decide whether the rest of Asia will be a relative “decoupling” success from Trump’s taxes, as has been the case with the Biden administration’s limits on China trade.

Trump’s plan to reduce US business income and the effects that will have on the relocation of US multinational profits are another important factor. More money will likely flow to the US from Asia as a result of this resettlement.

The Inflation Reduction Act, which granted grants to a limited US-based companies, has already done so. In other words, Trump’s tax plan could leave the US as the most appealing location for squandering international funds, with adverse effects for Asia and Europe. &nbsp, &nbsp, &nbsp, &nbsp, &nbsp, &nbsp, &nbsp, &nbsp, &nbsp, &nbsp, &nbsp, &nbsp, &nbsp, &nbsp, &nbsp, &nbsp, &nbsp,

Beyond ramped-up US protectionism and business tax cuts, both gross negative for the rest of the world, Trump had accidentally make another major problem for the world economy, especially the dollar’s collapse as the globe’s reserve currency.

Trump has repeatedly stated he craves a weak money to reduce the enormous US trade deficit, despite the fact that these three hooks of his monetary policy mentioned above may eventually enjoy the money, which is how the market responded following his victory. &nbsp,

Within Trump’s world of financial experts, there are voices proposing capital controls, which would be unthinkable of for the world’s supply money. Trump has simply added more complexity by making it seem as though Trump has just threatened BRICS people with 200 % taxes if they decide to de-dollarize their business and finances.

But the rhinoceros in the room is Trump’s program for China. On one hand, Trump has been fiercely aggressive toward Beijing, threatening 60 % tariffs on all Chinese-made products.

In a December 2019 alliance that gave China the right to purchase$ 600 billion worth of US goods and grant them preferential access to US buyers in some highly desired areas of its economy, Trump showed a commitment to strike a deal with China.

The EU may care a lot about how Trump handles China. For Western companies looking to do business with China, a new US-China trade agreement that is comparable to the one from 2019 is likely to be a net negative. Importantly, the 2019 offer saw Western businesses lose market share to American types in China.

All in all, Trump’s 2025 appearance does bring with it a quantum jump in worldwide economic uncertainty.

Trump’s guaranteed taxes and tax breaks could lead to a new rise in global inflation, worsening economic conditions for developing and emerging markets, and more inflows of cash from Asia and Europe into the US, but the effects of these measures on the money and US-China relations may be felt everywhere.

Alicia Garcia Herrero is an adjunct professor at Hong Kong University of Science and Technology and a senior researcher at the Bruegel think tank.

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