Money Talks Podcast – Invest 101: Do dividend stocks always give returns?

By:
On:
In: South-East Asia

Here’s an extract from the radio: &nbsp,

Andrea Heng:
But when I invest in a payout stock, I may expect some returns. So when is quick for income owners, and how are they paid out?
 
Abel Lim:
Okay it varies, suddenly from company to company, business to business as well. So dividends may come in the form of monthly, half- every, or even annually. Therefore, it really depends on the board of directors and their standard operations within the given business. But, in general, we see businesses basically pay out on an annual basis, and this money is usually done in several ways. It can be in the form of money, so it’s a strong credit into your profile. Likewise, you can be paid via more stock. And if you’re paid more stock, you can possibly sell those stocks for income or for the long term investment, spend it. So the best way, if you have a long term sky, spend the funds. You really summon the seventh wonder of the world when you reinvest the money.

Andrea Heng:
The seventh wonder of the world? Show me more. &nbsp,

Abel Lim:
The seventh wonder of the world is the power of compounding. But when you reinvest your income, you reinvest the shares in the company, creating two streams of income: the dividend payment and natural earnings. But because of the truth that you are reinvesting it, you’re earning attention upon that curiosity, or dividend upon income.

Andrea Heng:
Therefore, having it stack on top of each other to maximize your profits is really a wise idea… But can a business decide to reduce dividends or, in some cases, even no pay out at all?

Abel Lim:
Well, a company can do that. It’s within their control. However, it’s typically a pretty bad sign that a business is n’t doing particularly well when it chooses to reduce or cut its dividends. There are some difficulties that they are acquiring sufficient resources to overcome, and they are typically not ( an ) ideal situation for a company to be in. When a company reduces or stops its dividends, the news that enters the sector or the markets is typically rather bad. That’s also one of the causes of the controlled nature of many of these earnings in the beginning to prevent sending the wrong message. &nbsp,

Continue Reading

China to defuse its trillion LGFV debt time bomb? – Asia Times

By:
On:
In: Asia

China’s leadership getting scheduled for later this month could be the catalyst for policymakers ‘ development of a defused US$ 13 trillion time bomb that threatens Asia’s largest economy.

Although China’s home crisis is in the news, debt issues plaguing local governments across the country also call for immediate action.

The recent boom in local government financing vehicles ( LGFVs ) raises questions. For bill, the vast majority of it the off- balance- strip form, now nearly rivals China’s annual&nbsp, gross domestic product ( GDP ).

It’s obvious why international investors are concerned about China’s monetary foundations given the definition drama surrounding the large property developers and the glut of LGFVs, especially in a time of extreme global uncertainty.

With US&nbsp, bond yields staying increased, Japan skirting crisis and Europe walking in position, the second quarter of 2024 is n’t simply fertile ground for China to produce an export boom.

The good news, however, is Xi Jinping’s Communist Party seems ready to tackle the ticking LGFV time bomb. According to local press reports, a long-awaited economic strategy session scheduled for July 15 to August 18 will aim to find a resolution to the enormous debt load.

At the upcoming Third Plenum, Xi’s inner circle is anticipated to permit local governments to retain more of the fiscal funds that currently go to Beijing at the upcoming election. The necessary tax reforms in China’s system could be a significant step in the direction of eradicating one of the most pressing threats to financial stability.

It could also be a vital step toward investing more in high- value manufacturing sectors while stimulating&nbsp, now languid domestic consumption. The issue is that mainlanders save more than they spend because of the lack of social safety nets.

Increased revenues would reduce local governments ‘ dependence on property and land sales to stay afloat and give them more opportunity to invest in innovation and productivity-boosting industries. Additionally, they would lessen debt issuances ‘ appeal.

It’s difficult to overstate how significant a pivot could be. Fixing China’s financial cracks is only one part of the process. The other is building economic muscle that puts China on a path toward growing&nbsp, better, not just&nbsp, faster.

Since the 2008 Lehman Brothers crisis, Beijing has relied heavily on China’s 34 province- level administrative areas to fuel economic growth. Regional leaders in Beijing frequently caught attention even before that by reporting higher GDP figures than the national average.

This accounts for the nation’s infrastructure arms race. Now, the bill for all those ginormous skyscrapers, &nbsp, six- lane&nbsp, highways, international airports and hotels, white- elephant stadiums, sprawling shopping districts and amusement parks is coming due.

Local governments raced to outbuild and outgrow each other to get Beijing’s attention. Photo: Asia Times Files / iStock

“LGFVs played an essential role in funding&nbsp, China’s colossal infrastructure buildout, which has also helped drive up land prices in what was previously a virtuous growth cycle”, notes Henry Storey, an economist at the Lowy Institute think tank. Land revenue provided an ostensibly inexhaustible source of largesse for subsidies in the heady days before China’s real estate collapse.

This growth model was not without its drawbacks, Storey notes”. After decades of bingeing, he says, “LGFV debt comprises&nbsp, well over half of China’s GDP – a totally unsustainable dynamic when median return on assets has hovered around 1 %. Local governments currently invest about 19 % of their total fiscal resources in interest payments.

Over the next few weeks, Xi has a chance for a major reboot. Since taking the reins in 2012 and 2013, Xi pledged to recalibrate an economic model that he said had become “unbalanced, uncoordinated and unsustainable”.

But “despite momentous economic change since, many of the government’s stated ambitions remain the same”, says economist Diana Choyleva at Enodo Economics.

For this “vision of high- quality development” to ultimately be achieved, it will depend on “whether Xi can fully implement” reforms, Choyleva says,

Without the structural changes required to create genuine consumer demand, Choyleva goes on to say that a successful implementation of these supply-side reforms wo n’t be sufficient to put the economy on a sustainable growth path. However, the majority of those are glaringly absent from the discussion.

The weeks to come may provide this missing link and mark one of the biggest adjustments to China’s financial system since the Xi era, if not the last couple of decades. &nbsp, It would also be a major down payment on Xi’s pledges to revamp China’s$ 61 trillion financial sector.

According to Sherry Zhao, an analyst at Fitch Ratings,” We believe local and regional governments will still face challenges in supporting LGFVs due to falling land concession revenue.” Because they have more state-owned assets and financial resources for long-term debt resolution, economically stronger regions are more likely to have higher resilience.

A more active capital market would lessen boom-bust cycles, which would be less volatile. Additionally, reforms would give municipalities more room to put policies into practice so that they can spread the fruits of economic growth.

Analysts concur that significant disruption is required. ” China’s economy is not cratering, but it is definitely running at well below potential, and the government seems reluctant to do what it takes to get it up to full speed again”, says Arthur Kroeber, an analyst at Gavekal Dragonomics.

As ever, it will all come down to implementation. Over the past 13 plus years, Xi has occasionally shown to be more adept at recommending bold reforms than putting them into practice. That may be about to change, though, in foundational ways.

Last week, the party’s 24- member Politburo noted that a “resolution on comprehensively deepening reform and advancing Chinese modernization” will be circulated among the Beijing elite. By 2035, the nation should be transformed into a “high-level socialist market economy.”

According to Haibin Zhu, an economist at Morgan Chase &amp, Co., one reason for reform hope is that, unlike in the past when significant policy pivots were announced, the coming Third Plenum does not coincide with significant changes in top leaders.” This is not the case this time,” Zhu says.

Continuity, economists say, could improve the odds that reforms are implemented.

Xi Jinping, the leader of China, has a chance to fulfill his high-quality growth promise. Image: Asia Times Files / Getty

According to Robin Xing, an economist at Morgan Stanley,” The Plenum will likely support the economic framework that has taken shape in recent years: prioritizing chokepoints in supply chain self-sufficiency and tech innovation.”

Shuang Ding, an analyst at Standard Chartered, expects this month to be a key moment for Xi’s legacy as a reformer. We anticipate that the Plenum will reiterate the party’s support for the expansion of the private sector, a stronger state sector, and the crucial role that the market plays in resource allocation.

More importantly, Ding adds,” we think they’ll take steps to remove cross- region barriers, encourage innovation and green transition, and improve income distribution. Additionally, we anticipate that they will place greater value on security, addressing security risks in the financial and housing sectors, and strengthening supply chain resilience. Potential fiscal and tax reforms, which are crucial for long-term sustainability, will likely receive a lot of attention from the market.

Even though it might not significantly increase GDP in the short run, this latter push may be a game-changer for local governments. In fact, efforts to repair the local government’s finances would cause more economic turbulence in the near future.

According to Xing,” the focus on deleveraging the housing sector and LGFVs continues to put downward pressure on growth and deflation.”

LGFVs have found it much harder to issue bonds in recent months as regulators have made more effort to lessen risks in one of China’s most debated industries.

That “points to the continued regulatory tightening since the fourth quarter last year and we have n’t yet seen any signs of relaxation”, says Laura Li, an analyst at Standard &amp, Poor’s.

” This suggests that it’s increasingly difficult for low- quality, low- rated LGFVs, including those from affluent provinces such as Jiangsu and Zhejiang, to issue bonds in future”, Li added.

However, allowing local governments to keep more tax revenue could have a significant impact on incentives. As economist Jonathon Sine, author of the Cogitations newsletter, explains, Beijing in decades past wanted revenues routed through its own coffers for purposes of control, most importantly over subordinate levels of government and redistribution.

Once you realize that the central government is essentially responsible for the majority of the money, Sine explains. ” Indeed, once transfers are accounted for the oft- cited central- local fiscal gap disappears. Unfunded mandates did occur following the budget reform in 1994, but in a more nuanced way.

Locally generated income is frequently transported from the provinces to Beijing and back again. Photo: Asia Times Files / AFP

However, he claims that the “problem was – and still is – in the nature of the intergovernmental transfer system.” ” Beijing bureaucrats apportion funds to the provinces, who are in charge of apportioning funds to prefectural cities, who are in charge of apportioning funds among county-level units, and who are in charge of apportioning funds among townships,” the phrase goes.

Sometimes, Sine notes,” the provinces send funds directly to the counties, by- passing the cities. Each level also requires its own funds. And each level may take months before passing on the funds it has received. By the time funds get from top to bottom, a year or more can pass”.

China could reduce the effectiveness of the world’s second-largest economy, destabilize distorted incentive structures, and help Xi deliver on his high-quality growth promises by putting an end to this M C Escher-like financial system.

Follow William Pesek on X at @WilliamPesek

Continue Reading

Singapore a ‘very attractive place’ to develop new climate technology: Bill Gates

By:
On:
In: South-East Asia

Relationship WITH TEMASEK, ENTERPRISE SINGAPORE

By signing a memorandum of understanding ( MOU) to identify and support budding climate technology in Southeast Asia in April, the company made an announcement to collaborate with government agency Enterprise Singapore and state investment firm Temasek.

A joint money responsibility over the next three years is included in the MOU, which was announced at Ecosperity Week 2024.

The Breakthrough Energy Colleagues program will establish a hub in Singapore, its first provincial hub outside of the United States, to accomplish this.

Through the program, Singapore does co-fund and support deep-tech climate start-ups that deal with solar power and carbon footprint. This aims to assist the place in achieving its net-zero goal by 2050.

The program’s first grain money will be US$ 500,000. They may also get a worldwide network of business companions, mentors, experts, and investors.

” Breakthrough Energy looks at a full spectrum of game-changing solutions to address global warming,” said Lee Chuan Teck, president of Enterprise Singapore.

But you’ll be looking at a variety of technologies, including new non-carbon materials like gas and gas carriers, as well as novel ways to extract carbon from the atmosphere.

Calling the engagement a” earn- get proposition”, Mr Lee added that Enterprise Singapore hopes to take on more partners and address different global challenges like food protection, waste treatment, and healthcare.

Vice-president Ashley Grosh of Breakthrough Energy Fellows praised the “unprecedented professional skills” at Nanyang Technological University and the National University of Singapore.

We are hoping to instill the entrepreneurial spirit in all those experts in the area because we are aware of how much development and research is happening there, she said.

Singapore’s area also allows Breakthrough Energy to employ industry and business partners, added Ms Grosh.

Continue Reading

The West needn’t worry about Putin’s visit to Hanoi – Asia Times

By:
On:
In: Asia

Vladimir Putin was greeted as an old friend in the Asian capital Hanoi shortly after making his journey to North Korea last month. His 22-hour state visit was greeted with the best possible level of respect and led to a number of contracts on electricity, science, and technology. There was also speak of the once-close supporters working together on defense and security.

In many ways, this display of affection comes as no surprise. After all, it was the socialists in North Vietnam who, with the help of the Soviets, won the war in 1975 and then joined Saigon ( then Ho Chi Minh City ) and the west in uniting.

Many of Vietnam’s current political, business, and academic elite members have previously studied or worked for the Soviet Union in the past ten years, and they are acutely aware of how close the country is to the Communist Party of Vietnam ( CPV ).

However, the myriad of movements to a growing participation and the greeting of old friends sparked questions and concerns. If the West be concerned about Putin’s warm welcome in Hanoi after decades of cooperation and soaring integration with the US and european marketplaces?

We think no. While the present rulers of the CPV, as well as other rulers, were shaped by the apex of the Soviet- Asian attachment, Vietnam’s younger generations are no.

The government’s 100 million inhabitants displays a very unique – and more American – orientation. The rulers of Vietnam’s flourishing digital market, for example, generally studied in the West and talk English, rather than Russian.

The US has a lot more control on Vietnam than the time-tested Russian companion does. This is especially true for the generations born after or after 1986, when the state implemented a number of free-market measures known as “i Mimi.” For most of these individuals, Russia is mysterious, outside of past training and a few regions where it invests or sends visitors.

Their coming-of-age has been a result of growing northern acclaim. Russian language programs in Vietnamese schools and universities have drastically decreased, and Russian language courses are much less popular than French and Chinese. The widespread import of Western information, such as the global standard certificate for tertiary education curriculum and the Scholastic Aptitude Test, has contributed to Vietnam’s rise of global education.

Go west, young gentleman

Young Vietnamese, including the sons and daughters of Russian-educated social, business, and scientific officials, are also becoming more widespread. Our own study, which was published in 2021, compared the background of Vietnam’s online leaders, who were mostly born after the Soviet Union decline, with those of the country’s leading businesses in more traditional fields like caffeine, furniture, and steel.

A significant change was observed when looking at the international experience of both founders. Returnees from the West are increasingly at the forefront of Vietnam’s rising startups, as opposed to the former Soviet Union.

In comparison to their older counterparts, the owners of Vietnam’s high-performing technology companies are 15 times more likely to have US experience. And they are 35 times more likely than the heads of Vietnam’s large, standard companies to be graduates of American institutions.

The businesses who are generating new success in Vietnam and shaping the speed of its cultural norms, economic growth, and modern connections have backgrounds that are greatly different from those of the older technology.

This generational shift towards a Western context, both in business and past, suggests to us that Putin’s state visit may really add up to a largely ceremonial training. As part of their long-standing “bamboo diplomacy,” in which Vietnam pragmatically engages with all powers, we see Vietnam’s leadership rolling out the red carpet for Putin.

For two interrelated reasons, it is unlikely to reflect deeper ambitions or future plans for the nation’s transition from bamboo diplomacy.

First, over the past 30 years, the West has established a strong and tangible footing in Vietnam’s every aspect of cultural, economic, and technological life, from Ho Chi Minh City in the south to Hanoi in the north. Indeed, Hanoi even seems to welcome the West when it comes to security, a juxtaposition with Vietnam’s inventory of Russian- made arms.

Second, Vietnam’s political leadership will steadily come to have more Western- educated returnees in senior positions. The Vietnamese elites ‘ strong ties to Russia will grow as the commitment to making agreements with their former allies grows.

Not to mention the country’s already somewhat Westernized economy, which is supported by the growing Western-educated business community and is fueled by free trade agreements and foreign investment.

The fact that the CPV welcomed a US assistant secretary of state, Daniel Kritenbrink just three days after Putin left is perhaps the most obvious indication of Vietnam’s commitment to its bamboo diplomacy. The American friend’s visit to the US confirmed the country’s position of being a” comprehensive strategic partner” in Vietnam, placing it on par with both China and Russia.

Ba- Linh Tran is a senior lecturer at the University of Economics Ho Chi Minh City, while Robyn Klingler-Vidra is associate dean for global engagement and associate professor of entrepreneurship and sustainability at King’s College London.

This article was republished from The Conversation under a Creative Commons license. Read the original article.

Continue Reading

Looking for cheaper mushrooms? You may soon get them from Singapore’s newest farm that taps AI

By:
On:
In: South-East Asia

SINGAPORE: Cheaper, better- quality develop at double the supply – this is what Singapore’s newest fruit farm is looking to obtain with the help of automation and artificial intelligence.

The vertical land plans to meet a third of the local demand for bright button mushrooms from customers, and it wants to set them aside at about S$ 7.50 per pounds, or even lower. This is roughly half the price at the moment.

The land, which will be run by Finc Bio- Tech Mushrooms, is scheduled to become constructed on a land piece about the size of three soccer fields at Sungei Tengah Close.

Next time, it intends to start growing its first crop of vegetables.

” The mushroom industry has been developed ( on ) a scale … that, for example, in China and Japan, at least 70 per cent of mushrooms are now grown in the factory. So we want to use our valuable knowledge to market other markets,” said Bao Shengjie, a representative for Finc Bio-Tech Fruit.

The Shanghai- based company, which claims to be the nation’s largest Shimeji fruit company, has been growing mushrooms for years. It even exports its produce to Singapore.

Finc runs four facilities in China that are powered by large files, AI and robotics, producing roughly 260 kilograms of vegetables – or the mass of 65 elephants – daily.

It will now introduce the first-ever use of similar technologies in Singapore.

Continue Reading

BTS agency staff facing insider trading charges

By:
On:
In: Asia

North Korean prosecutors have charged three employees of companies of HYBE, the company that produced the music industry’s K-pop stars Bk, with insider trading.

Before Song people announced they were taking a crack on June 14, 2022, they are accused of selling shares in the company.

The announcement sent HYBE shares plunging 25 % when markets opened, resulting in a loss in market value of nearly 2 trillion won ($ 1.4 billion ).

The three employees allegedly acted without being aware of what was going to happen, avoiding losses ranging from$ 24, 000 to more than$ 108, 000.

Some researchers at the time speculated as to the causes of the break, with some claiming that band members would have to complete South Korea’s mandated 18-month military service.

Since South Korea and North Korea are technically still at conflict, almost all able-bodied men must register for 18 months by the age of 28.

In the years and months that followed, all group members do end up being drafted.

The eldest part of the popular son band, Jin, was let go earlier this month after serving in the military.

The various six- J- Trust, V, RM, Jimin, Jung Kook and Suga- are also serving and the band is expected to return only in June 2025.

Fans of the wildly popular boy band anticipate that Jin’s transfer marks the start of BTS’s comeback.

Continue Reading

Southeast Asia has its reasons for pivoting to BRICS – Asia Times

By:
On:
In: Asia

The sudden reversal of Southeast Asia toward the BRICS countries is a major game-changer that some in Washington anticipated.

In recent days, Malaysia extensive its interests to visit Brazil, Russia, India, China and South Africa. Thailand and Vietnam are even interested in joining the Association of Southeast Asian Nations, which is a group of nations.

In Indonesia, there’s growing recognition that Argentina, Egypt, Ethiopia, Iran, United Arab Emirates, Saudi Arabia and another” International South” countries have a place in vying to join this burgeoning international business.

Anwar Ibrahim, the prime minister, made the declaration in an interview with Chinese media prior to Li Qiang’s attend to Malaysia, announcing his intention to re-join the union, which has grown by a whopping 2 % in the last year. That dynamic is luring the Global South countries, primarily because it provides access to funding and a political movement that is unconstrained by Washington’s influence. &nbsp,

Joe Biden, the US senator, might find the South Asian stumbling block particularly troubling. Since the Biden time, a provincial shield has been built to counteract China’s growing influence and attempts to replace the US dollars in trade and finance.

Relationships between the US and some ASEAN people are clearly deteriorating. This, at a time when&nbsp, Saudi Arabia&nbsp, is looking to step out the “petrodollar”. As China, Russia, and Iran square off against old partnerships, Riyadh is intensifying de-dollarization work.

” A gradual reform of the international financial environment may be afoot, giving way to a planet in which more local economies can be used for international purchases“, says analyst&nbsp, Hung Tran at the Atlantic Council’s Geoeconomics Center. The money would continue to be important but without its enormous influence, which would be complemented by currencies like the Taiwanese renminbi, the euros, and the Chinese yen in a way that’s proportionate to the global footprint of their economies.

Tran points out that “in this environment, how Saudi Arabia approaches the consists continues to be a significant predictor of the economic coming.”

Malaysia’s excursion tells the story. Anwar Ibrahim, the prime minister, made a world impact by supporting Western finance. That was in the late 1990s, when Anwar’s liberal tendencies clashed with Mahathir Mohamad’s stances.

Mahathir shut Anwar down. The door was opened to Deputy Premier Anwar, who was afterwards imprisoned. Anwar’s efforts to improve competition and establish equal using fields were even reversed. Capital controls were imposed by Mahathir and Malaysia Inc. were circling the vehicles.

Then it’s Anwar who’s turning away from the Adam Smith- encouraged guidelines he once championed — and toward the&nbsp, BRICS.

” We have made our plan apparent and we have made our choice”, Anwar tells Chinese internet outlet&nbsp, Guancha. The proper process will begin immediately, according to the statement. As far as the Global South is concerned, we are totally supportive”.

Anwar gave a shoutout to Argentine President Luiz Inacio Lula da Silva, who is determined to end the economy’s dominance.

” Last month, Malaysia had the highest expenditure ever, but the money was also attacked”, Anwar explains. ” Well, it has eased in the past few months. But it does n’t make sense, it goes against basic economic principles”.

Anwar documents that the question is: Why? He claims that” a coin that is completely outside the two nations ‘ business structure and useless in terms of economic activities in the country has become prominent merely because it is used as an international money.”

Among the many reasons for Anwar’s ideological reversal is China’s emergence on the global scene, providing a regional growth engine. Another: the” Western narrative” surrounding events like Hamas’s October 7 attack on Israel.

After their meeting in Beijing on March 31, 2023, Malaysian leader Anwar Ibrahim addressed Chinese President Xi Jinping in positive terms. Image: Facebook / Anwar Ibrahim

” People keep talking about October 7, which annoys me”, Anwar says. Do you want to obliterate 70 years of history by repeating one event? This is the Western narrative. You see, this is the problem with the West. They want to control the conversation, but because they are no longer a colonial power and independent nations should be free to express themselves, we can no longer accept it.

In late May, Thailand announced it’s applying for&nbsp, BRICS&nbsp, inclusion in part to boost its presence on the world stage. If approved, Bangkok would likely become the first ASEAN economy added.

According to Nikorndej Balankura, a spokesman for the foreign ministry,” Thailand believes that BRICS has an important role to play in strengthening the multilateral system and economic cooperation between countries in the Global South, which aligns with our national interests.” ” As for economic and political benefits, joining BRICS would reinforce Thailand’s role on the global stage, and strengthen its international cooperation with emerging economies, especially in trade, investment and food and energy security”.

Thailand’s bid, according to Soumya Bhowmick, an associate fellow at the Observer Research Foundation think tank, supports Beijing’s wider strategic objectives of boosting its economic influence in Southeast Asia.

” For China”, Bhowmick notes,” Thailand’s membership represents an extension of its regional influence, complementing its Belt and Road Initiative. This is in line with China’s strategic goals of fostering stronger economic ties and the creation of new infrastructure in Southeast Asia.

The first BRIC grouping was created in 2001 by Goldman Sachs economist Jim O’Neill. The members formally joined forces in 2009; A year later, they added the” S” when South Africa joined. In 2023, the BRICS doubled in size by luring more&nbsp, Global South&nbsp, nations.

Today, BRICS nations account for half the world’s population and two- fifths of trade, including top energy producers and importers. &nbsp, BRICS nations also account for 38 % of global petroleum imports, led by China and India. &nbsp,

The grouping could give the Global South a greater voice in international affairs and challenge the domination of existing institutions, according to Daniel Azevedo, an analyst at Boston Consulting Group.

BRICS , Azevedo adds,” creates a forum that, at minimum, gives&nbsp, emerging markets&nbsp, the opportunity to align on global topics and new opportunities to promote mutual&nbsp, economic development &nbsp, and growth. And it’s evolving steadily”.

Azevedo notes that as the BRICS build political and&nbsp, financial institutions&nbsp, and a payment mechanism for executing transactions,” there are important potential implications for the future of&nbsp, energy&nbsp, trade, international finance, global supply chains, monetary policy and technological research”.

Global companies will need to take these new geopolitical and economic realities into their investment strategies, according to Azevedo. They ought to also improve their ability to take advantage of opportunities and reduce risk.

The BRICS have n’t always demonstrated their viability as a bloc. Five core nations are present, with nothing else in common besides some economists ‘ imagination. The BRICS frequently seem to be focused solely on improving access to China’s rapidly expanding economy and doing little else.

Paul McNamara, investment director at GAM&nbsp, Investments, speaks for many when he observes that the&nbsp, BRICS&nbsp, is still an acronym in search of cohesive economic argument. Would most current global elites care about the BRICS without China at the core, asks McNamara?

As such, says Ian Bremmer, president of Eurasia Group, the “impotence of&nbsp, BRICS”&nbsp, makes joining the group” a low- stakes gambit with some potential upside. It may help Thailand, which is its biggest trading partner and most worrying military threat, win over China. But, if not, what has Bangkok really lost”?

Vietnam traveled to Russia earlier this month to take part in the BRICS summit. According to Deputy Minister of Foreign Affairs Nguyen Minh Hang, Hanoi is eager to collaborate with like-minded developing nations.

At a time when political dysfunction is at its worst, and all this is happening amid deteriorating American finances. As the national debt approaches US$ 35 trillion – on the way to&nbsp, US$ 50 trillion&nbsp, – Biden’s Democrats and Donald Trump’s Republicans are barely on speaking terms.

This is not appropriate for either investing in government funding in the short run or making necessary upgrades to promote innovation and productivity over the long run. Additionally, it implies the threat of a second Capitol Hill insurrection similar to the one that occurred on January 6, 2021.

That event played a direct role in the August 2023 move by Fitch Ratings to revoke Washington’s AAA credit grade. Extreme polarization, explains Fitch analyst Richard Francis, “was something that we highlighted because it just is a reflection of the deterioration in governance, it’s one of many”.

The key is now how Moody’s Investors Service, which still assigns Washington AAA, responds to the chaos caused by Trump’s campaign promises to win back control. And as Biden attempts to overthrow Trump, Biden uses new trade sanctions.

This puts US Treasury securities in a high degree of risk. Japan and China alone have US government debt totaling$ 2 trillion. Any sudden run on the dollar could trigger a fire sale, sending US yields skyrocketing.

The Federal Reserve’s reluctance to lower interest rates as was widely anticipated increases the chance of a policy error in this regard. One of the most well-known Fed errors in history was missing the subprime crisis ‘ level of distress in credit markets in 2007.

As Fed Chairman Jerome Powell’s team prolongs the “higher for longer” era for yields, developing economies are increasingly in harm’s way. That’s especially so as the dollar’s surge hoovers up global capital.

These worries fall under the umbrella of the broader BRICS’s plan to pool more than US$ 100 billion in foreign currency to absorb financial shocks. Members can use the funds in emergencies, preventing them from visiting the International Monetary Fund. Since 2015, the bank that the BRICS created has approved tens of billions of dollars of loans for infrastructure, transportation and water.

The&nbsp, BRICS currency &nbsp, project has been gaining traction since mid- 2022, when the 14th BRICS Summit was held in Beijing. Vladimir Putin, the president of Russia, stated there that the BRICS were developing a “new global reserve currency” and were willing to expand its use.

Brazil’s Lula&nbsp, also has thrown his support behind a BRICS monetary unit. Why ca n’t a bank like the BRICS bank use a currency to finance trade between Brazil and China, as well as Brazil and all other BRICS nations? he asks. Who made the decision to use the dollar as the reserve currency following the end of gold parity?

President of Brazil, Lula da Silva. Photo: Editora Brasil 247

Fernando Haddad, Lula’s finance minister, has been making a point about the more prevalent use of local currencies in bilateral trade instruments like credit receipts. The focus, he says, must be phasing out the use of a third currency.

The benefit is that trade transactions are resolved in the currency of a non-membership-based nation, he claims.

Economist Vikram Rai of TD Bank points out that” there is great potential for regionally dominant currencies and a multipolar international regime to emerge,” with the roles being “filled now by the dollar shared with the euro, a more open yuan, future central bank digital currencies, and possibly other options we have yet to see” within the next ten or two.

Analysts at Moody’s warn that the Americans going overboard on tariffs, concerns about default and weakening institutions are threatening the dollar ‘s&nbsp, reserve currency status.

” The greatest near- term danger to the dollar’s position stems from the risk of confidence- sapping policy mistakes by the US authorities themselves, like a US default on its debt for example”, Moody’s argues. The dollar’s global role is threatened by weak institutions and a political pivot toward protectionism.

It’s difficult to believe that America could lose much more than just the economic plot as Southeast Asia increasingly leans toward the BRICS.

Continue Reading

China’s economy in focus ahead of key July political meeting

By:
On:
In: Asia

Business TENSIONS

Beijing responded on Thursday when American officials suggested that Canada might become the latest European nation to impose extra tariffs on Chinese electric cars and batteries.

According to a record posted on the commerce ministry website,” Canada should regard facts, abide by WTO rules, and make a good, non-discriminatory, and repetitive market environment for the typical development of the China-Canadian electric vehicle industry.”

Beijing has criticized the EU’s plans to establish new levies of up to 38 % on Chinese electric vehicles by July 4 for what it calls “pure mercantilist”.

Beijing has denied the claim that large state subsidies in China have caused unfair contest in local areas.

The United States hiked tariffs on US$ 18 billion worth of imports from China next month, targeting strategic sectors such as electric vehicles, batteries, steel and essential minerals, a move Beijing warned do” greatly change” relations between the two nations.

At a World Economic Forum meeting this year, Chinese Premier Li Qiang asked nations to “oppose coupling.”

However, according to analysts, China may eventually need to cut back on its reliance on foreign markets to ensure a full recovery.

Andrew Batson and Wei He of Gavekal Dragonomics wrote this week,” For China to maintain its improvement, it needs to increase its modern and innovation capabilities and overcome the limitations imposed by American nations.”

This calls for the authorities to no longer just focus on short-term growth; instead, it must direct the allocation of resources to accomplish the government’s policy objectives of technological upgrading and technological innovation.

Continue Reading