Forget the Fed and BOJ; PBOC holds the monetary cards – Asia Times

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TOKYO – With all the focus on the US Federal Reserve and Bank of Japan, it’s easy to forget where the most important monetary calls are being made this year: Beijing.

Sure, Fed Chairman Jerome Powell said Wednesday (July 31) that big actions are coming. A September interest rate cut is “on the table,” provided the inflation data supports one. That, and BOJ Governor Kazuo Ueda’s modest 0.15% rate hike hours earlier, is the talk on global markets.

But both narratives, though, are more of the signaling variety than anything that’s going to make or break the world’s No. 1 or No. 3 economy. How People’s Bank of China’s Governor Pan Gongsheng plays his monetary hand in Beijing will likely have far more impact given the intensifying headwinds bearing down on Asia’s biggest economy.

For all their challenges, neither the US nor Japan faces simultaneous mini-crises with property developers, weak household spending and deflationary pressures. Neither confronts youth unemployment at record highs. Neither faces domestic headwinds from municipalities grappling with US$10 trillion-plus of local government financing vehicle (LGFV) debt.

All this explains why the PBOC surprised global markets with an interest rate cut on July 25, when it cut the one-year policy loan rate by 20 basis points to 2.3%, the biggest move since April 2020. That came just days after the PBOC lowered a key short-term rate.

In July, mainland manufacturing activity unexpectedly fell for the first time in nine months. The Caixin manufacturing purchasing managers index slid to 49.8 last month from 51.8 in June. The dip suggests China’s export machine is losing momentum, dimming the economy’s prospects.

“The most prominent issues are still insufficient effective domestic demand and weak market optimism,” says Wang Zhe, economist at Caixin Insight Group.

Yet for all the turmoil in China’s economy, there are signs that the PBOC might be done lowering rates for a while.

The PBOC “moves reflect ongoing deflationary pressure and should modestly support growth,” says Duncan Innes-Ker, analyst at Fitch Ratings. “Nevertheless, we believe the prospects for further rate cuts are limited by the government’s wariness of adding to pressure on the renminbi exchange rate.”

Perhaps more important is that currency traders suddenly seem more interested in bracing for a rising yuan than a falling one.

Hedging trends show that the premium for put options used to bet on a weaker dollar-yuan relative to wagers on a stronger rate are at levels not seen in 13 years.

Nor do measures of expected volatility appear to be spiking as the Fed and BOJ finally make, or move toward, long-awaited rate moves.

Some of the yuan’s stability owes to a now-rallying yen. Its surge in the wake of the BOJ hiking rates the most since 2008 has the yuan trading at two-month highs. Chinese state banks are reinforcing the move and putting the dynamic to good use by selling dollars.

This dovetails with President Xi Jinping’s top-line priority for the yuan. In recent years, Xi’s inner circle worried that a weaker yuan might make it harder for giant property developers to make payments on offshore debt, heightening default risks.

More recently, Xi’s Communist Party has tried to avoid becoming a bigger election issue in the US, where Donald Trump is making another play for the presidency and looking to make trade wars great again.

Perhaps the biggest priority, though, is Xi’s yuan internationalization policy. Since 2016, Team Xi has made steady and significant progress toward supplanting the dollar as the linchpin of the global financial system.

That year, Beijing secured a spot in the International Monetary Fund’s “special drawing-rights” program. It put the yuan into the globe’s most exclusive currency club along with the dollar, euro, yen and the pound.

As Xi’s “yuanization” gambit gains traction, it stands out as one of his top reform successes. In March, the yuan hit a record high of 47% of global payments by value.

In 2023, the yuan topped the yen as the currency with the fourth-largest share in international payments, according to financial messaging service SWIFT. It overtook the dollar as China’s most used cross-border monetary unit, a first.

The strategy would get a major boost if the BOJ can continue hiking rates and the Fed ratchets rates lower.

Both of these dynamics are an open question. The BOJ, for example, confronts a sluggish economy, tepid wage growth and political paralysis in Tokyo.

“The rate hike sits uncomfortably with the poor run of economic data and lack of demand-driven inflation,” says Moody’s Analytics in a note.

Gross domestic product, Moody’s adds, “has been falling for the better part of a year. And consumer price inflation has slowed sooner than expected, despite jumpy headline and core CPI readings.”

What’s more, “the ‘shunto’ spring wage negotiations produced a three-decade record result, but actual pay gains recorded across the economy have been disappointing,” Moody’s notes. Also, “industrial production stalled in the second quarter and wage gains lack oomph, both of which move the recovery further into the distance.”

Moody’s concludes that the Ueda BOJ “is hiking into a weak economy. Indeed, there is a good chance that Wednesday’s decision will be remembered as one of the BOJ’s more controversial ones.”

The Fed faces myriad uncertainties of its own. Powell’s team confronts the specter of a Trump 2.0 White House, which seems primed for battle with the Fed over monetary independence.

During his first term from 2017 to 2021, Trump browbeat the Fed into cutting rates at a time when the US didn’t need fresh monetary stimulus. Trump even threatened to fire Powell.

If Trump wins another term on November 5, he might implement the “Project 2025” blueprint that includes eradicating the Fed system. Trump also is believed to favor devaluing the dollar.

Tokyo worries that weak Asian currencies – including the yen – might become a political talking point ahead of November. This fear is among the reasons Japan’s Ministry of Finance is working to prop up the yen. Tokyo spent more than $3 billion in the last month to put a floor under the yen.

The currency surged on Wednesday after Ueda’s minor rate hike, partly because he hinted at more tightening steps to come.

“Ueda’s hawkish comments and the content of the policy statement point to risk of the next hike to be brought forward earlier, depending on upcoming data. We see flattening of Japanese government bond curve as markets price in sharper rate hike cycle within short period,” says Takeshi Yamaguchi, economist at Morgan Stanley MUFG.

But it’s the PBOC’s Pan who faces the most challenging road to 2025. One reason is uncertainty about the timing of Xi’s plans to ramp up government stimulus.

“The Politburo is signaling a renewed emphasis on shoring up the domestic economy through consumer-focused policies, as China navigates economic headwinds,” says Carlos Casanova, economist at Union Bancaire Privée.

“However, investors were hoping to see actionable measures emerge from the July meeting. Instead, the announcements seemed to lack concrete details, leaving the impression of sizzle but no steak,” Casanova says.

Until there’s greater clarity, he says, “the 10-year government bond yield in China is likely to remain suppressed in the coming weeks, as the government rolls out additional policy support measures.”

All the global financial system can do is hope that Pan gets right the timing, magnitude and sequencing of rate cuts.

Nothing would cheer global investors more than the biggest trading nation beating this year’s 5% growth target in a big way and defeating deflationary pressures in short order.

That’s why this year’s most impactful monetary policy calls won’t be in Washington or Tokyo, but rather in Pan’s office.

Follow William Pesek on X at @WilliamPesek

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China Tesla rival BYD strikes EV deal with ride-hailing firm Uber

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Uber have announced a deal which aims to bring 100,000 electric vehicles (EV) made by China’s BYD to the ride-hailing giant’s global fleet of cars.

The two companies say they will offer drivers incentives to switch to electric cars, including discounts on maintenance, charging, financing and leasing.

The multi-year agreement will be rolled out first in Europe and Latin America, before being made available in the Middle East, Canada, Australia and New Zealand.

The announcement comes as EV sales around the world have slowed and Chinese car makers face higher import charges in places like the US and the European Union.

“The companies aim to bring down the total cost of EV ownership for Uber drivers, accelerating the uptake of EVs on the Uber platform globally, and introducing millions of riders to greener rides,” the two firms said in a statement.

They also said they will work to integrate BYD’s self-driving technologies into Uber’s platform.

Earlier this year, Uber said it was working with Tesla to promote EV adoption among its drivers in the US and planned to develop a purpose-built EV with South Korean car giant Kia.

The US, the European Union and other major markets have recently hiked tariffs on China-made EVs in moves aimed at protecting their car industries.

The move has prompted BYD and other Chinese EV makers to expand their production facilities outside China.

In July, BYD agreed a $1bn (£780m) deal to set up a manufacturing plant in Turkey.

The new plant will be able to produce up to 150,000 vehicles a year, according to Turkish state news agency Anadolu.

The facility is expected to create around 5,000 jobs and start production by the end of 2026.

Also last month, BYD opened an EV plant in Thailand – its first factory in South East Asia.

BYD said the plant will have an annual capacity of 150,000 vehicles and is projected to generate 10,000 jobs.

At the end of last year, BYD announced it would build a manufacturing plant in EU member state Hungary.

It will be the firm’s first passenger car factory in Europe and is expected to create thousands of jobs.

The company has also said it is planning to build a manufacturing plant in Mexico.

BYD, which is backed by veteran US investor Warren Buffett, is the world’s second-largest EV company after Elon Musk’s Tesla.

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Less transparency, less faith in China stocks – Asia Times

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This week is offering quite the split screen to investors hoping China would step up efforts to raise its capital markets game.

On one screen, the China Securities Regulatory Commission (CSRC) pledged to improve market operations, strengthen comprehensive research capabilities, deepen response mechanisms to manage market risks and hone regulations for trading.

On the other, signals that Beijing is increasing opacity surrounding the flow of capital. Specifically, how much capital international funds deploy into and out of Asia’s most volatile major stock market.

After August 18, analysts won’t be able to track net capital movements at the end of a trading day. The fact this follows a move in May to end intraday data flows with Hong Kong markets suggests this is no aberration.

And it generates more questions than answers about the state of Xi Jinping’s vision for making China a more attractive investment destination for the biggest of the globe’s big money.

Of course, there’s a third screen on which investors are keeping an eye. This one features a fresh round of stimulus.

On Tuesday, the Politburo, a Communist Party’s top decision-making body, signaled renewed efforts to reach this year’s 5% growth target focused on consumers.

Chinese leaders said the priority is increasing household income “through multiple channels” and increasing the “ability and willingness” of low- and middle-income groups to spend.

Yet the Politburo had less to say about financial upgrades at a moment when regulators are obscuring basic intelligence on capital flows.

True, exchanges still plan to provide data on turnover and trading volume in equities and exchange-traded funds through links with markets in Hong Kong.

But as regulatory signals go, making it harder to discern top-line levels of enthusiasm and pessimism about mainland shares isn’t likely to bolster confidence in Asia’s biggest economy.

Restoring trust on the part of global investors was a major goal of this month’s Third Plenum extravaganza. Though normally a five-yearly event, President Xi didn’t convene one in 2018.

Since the recently concluded Third Plenum was the first since 2013, expectations for bold reforms were – and still are – sky-high. Xi’s Communist Party pledged to “unswervingly encourage” the private sector in a bid to accelerate “high-quality development,” “Chinese-style modernization” and “innovative vitality.”

There’s still scope for China’s 24-member Politburo to bolster investors’ trust by detailing plans to make bigger alterations to the nation’s export- and investment-led growth model.

Suffice to say, though, announcing plans for reduced transparency the same month overseas money managers sold at least US$4.1 billion of Chinese shares might not go down well. Chinese and Hong Kong stock markets lost an epic $6.3 trillion from their peak in 2021 to January this year.

Xi’s team also faces confidence deficits on the economic front. The nation’s 4.7% economic growth rate in the second quarter amid weak consumer demand and housing prices disappointed many.

As economist Louise Loo at Oxford Economics observes, “discretionary retail spending fell at the sharpest sequential pace since the April 2022 Shanghai lockdowns.”

Hence the Politburo’s renewed focus on demand-boosting stimulus. To economist Zhang Zhiwei at Pinpoint Asset Management, it’s a sign Xi’s inner circle “recognizes that domestic demand is weak and plans to prepare some policy measures in the pipeline to address the problem.”

This backdrop explains why the People’s Bank of China surprised global markets with an interest rate cut on July 25. It trimmed the one-year policy loan rate by 20 basis points to 2.3%, the biggest move since April 2020. That came just days after the PBOC lowered a key short-term rate.

Robin Xing, economist at Goldman Sachs, is struck by the “reactive nature of easing” by PBOC Governor Pan Gongsheng. Kathleen Brooks, research director at XTB, called it a “sign that the Chinese authorities are concerned about the state of the Chinese economy, which is more worrying for stock markets and for investors.”

All the more reason to use the recent Third Plenum as an opportunity to accelerate moves to increase the quality of growth, not just the quantity.

The weeks since the meeting have left unclear the status of Xi’s pledges to get bad assets off property developers’ balance sheets to avoid defaults. The same goes for creating social safety nets to prod households to save less and spend more, the fate of internet platforms uncertain about the regulatory outlook and moves to build more vibrant capital markets.

Though Xi has been promising to prioritize capital market development since 2013, the effort seemed to get a big lift last November. That was when Xi met with a who’s-who of top chieftains in San Francisco on the sidelines of the Asia-Pacific Economic Cooperation summit – including Apple CEO Tim Cook, Tesla chief Elon Musk and Blackstone’s Steve Schwarzman.

Other top executives on hand to rub elbows with the man leading an economy with which the US does roughly $600 billion of trade annually: Marc Benioff of Salesforce; Stan Deal of Boeing; Raj Subramaniam of FedEx; Ryan McInerney of Visa; Ray Dalio of Bridgewater Associates; Albert Bourla of Pfizer; Merit Janow of Mastercard; and Larry Fink of BlackRock.

There, Xi raised expectations for his inner circle, led by Premier Li Qiang, to strengthen capital markets in foundational ways. Since then, though, progress on the ground in China hasn’t matched the lofty rhetoric.

The speed with which capital has continued to flee China suggests that Xi’s efforts to communicate that Beijing is at the top of its myriad challenges are not getting through to investors. That includes efforts to stabilize a cratering property market and overall weak demand.

There’s confusion in international circles, too, about Xi’s commitment to giving the private sector and market forces “decisive” roles in Beijing decision-making. That 2012-2013 pledge was first called into question in 2015 when Xi’s government intervened aggressively to stabilize Shanghai stocks.

Questions only increased after Xi began cracking down hard on mainland tech platforms in late 2020, starting with Jack Ma’s Alibaba Group. The inquisition rapidly widened to Baidu, Didi Global, JD.com, Tencent and other top internet companies. It even had Wall Street banks debating whether China might have become “uninvestable.”

Now seems the time to get under the economy’s hood as rarely before. One law of economic gravity that Xi’s team has tried to beat these last 10 years is the idea that a developing nation must build credible and trusted markets before trillions of dollars of outside capital arrive.

In China’s case, this means increasing transparency, making local government officials more accountable, prodding companies to raise their governance games, crafting reliable surveillance mechanisms like credit rating companies and strengthening the financial architecture before the world shows up.

Too often during Xi’s first two terms as leader, China has tried to flip the script, believing it can build a world-class financial system after waves of foreign capital arrive. Whether fair or not, the Xi era’s efforts to communicate that a financial Big Bang is afoot continue to get lost in translation in boardrooms from New York to London to Tokyo.

The sense that Xi’s China tends to over-promise and under-deliver financial upgrade-wise set in back in summer of 2015, back when Shanghai shares plunged by one-third in three weeks. Beijing’s response was to treat the symptoms of the market rout, not the underlying causes.

Since then, Xi stepped up the pace of winning Chinese stocks places in top global indices – from MSCI for stocks to FTSE-Russell for bonds. Yet increases in access to yuan-denominated assets often outpace reforms needed to prepare China Inc for the global prime time.

Whether China can win back investors’ trust is an open question. As Chinese stocks are reminding us – the Shanghai Shenzhen CSI 300 Index is down more than 13% this year – there are certain laws of gravity that still apply to economies transitioning from state-driven and export-led growth to services, innovation and domestic consumption.

Trouble is, China’s bond market – totaling more than $23 trillion overall – is underpinned by a developing economy with limited liquidity and hedging tools, a giant and opaque state sector, and a rudimentary credit-rating system that can obscure risk and misallocate capital.

For all China’s promises, this makes it more of a buyer-beware market than many investors expected.

This gets at other split screens. On one, China’s inclusion in major benchmarks is luring bond giants like BlackRock. On screen No. 2: the crisis of confidence surrounding developers like China Evergrande Group offer a stark reminder of the mainland’s opacity and excesses. 

The prevalence of local government financing vehicles – roughly $13 trillion of such off-balance sheet LGFVs – can be a major turnoff for foreign bond funds.

Not only are they difficult to analyze but their fingerprints also touch the operations of everything from commercial banks’ wealth management units to mutual funds to hedge funds to insurers to the gamut of securities companies.

Hence the need for deeper bond markets. And, of course, for regulators in Beijing to avoid steps that spook global markets anew. Among recent missteps by Xi’s party: last year’s crackdown on foreign consultancy firms on which global investors and multinational firms rely for information and analysis.

The move, supposedly part of a nationwide anti-espionage campaign, reduced the appetite for investment from some overseas firms. When US Treasury Secretary Janet Yellen’s team visits Beijing these days, the consultancy policy is among the examples of “non-market” practices and “coercive actions” against American firms that US officials highlight.

Deeper debt markets would help sort out the cart-before-the-horse problem that afflicts China’s economy. During the Xi era and before it, China too often believed that pulling in more foreign capital was a reform all its own. It’s been slower to strengthen China’s financial system ahead of those waves of overseas capital.

And pulling down new curtains of opacity won’t help to reverse recent capital outflows and flagging investor confidence.

Follow William Pesek on X at @WilliamPesek

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BEST Inc. launches DWS System in Malaysia with nearly US.1 million investment

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  • Deployment follows successful expansions in Vietnam, Thailand & S’pore
  • Aims to enhance efficiency, service quality amid M’sia’s e-commerce boom

BEST Inc. launches DWS System in Malaysia with nearly US$2.1 million investment

BEST Inc., a leading integrated smart supply chain and logistics solutions provider in China and Southeast Asia, has announced the deployment of its eleven advanced Dimensioning, Weighing, and Scanning (DWS) systems in its largest sorting centre in Southeast Asia, located in Shah Alam, Malaysia. The total investment in these systems amounts to nearly US$2.1 million (RM10 million), the firm said in a statement.

It added that this strategic initiative is a significant part of its efforts to enhance operational efficiency and service quality in response to Malaysia’s burgeoning e-commerce market.

Gavin Lu, CEO of BEST Inc. Malaysia, highlighted the importance of this technological advancement, noting that the introduction of the DWS machine in Malaysia is a significant milestone for BEST Inc. Malaysia. “As we continue to invest in cutting-edge technologies, this advanced system will streamline our operations, reduce costs, and provide superior service to our customers. Malaysia is a crucial market for us, and we are committed to supporting its growth with our innovative solutions. The DWS technology exemplifies our dedication to optimising logistics through automation and precision,” Lu said.

The eleven dynamic DWS machines are an extension of the top-side code reading version, which not only has all the functions of the top DWS, but also further improves sorting efficiency. The code reading cameras on five sides of the frame can simultaneously scan five sides of the parcel. In this case, the barcode information, dynamic volume and weight data in all directions of the package can be obtained comprehensively, which reduces the requirements for package placement and improves the identification efficiency in unit time, including improving the automation degree and sorting efficiency of enterprise logistics links.

According to the company, the newly built automated line allows each DWS to handle 20,000 parcels per hour, contributing to a daily capacity of 500,000 parcels for the KUL Hub.

“The implementation of the DWS machine marks a new era for logistics in Malaysia. By integrating this technology into our operations, we are not only enhancing efficiency but also setting a new standard for the industry,” Lu added. “This advancement will enable us to better serve our customers with faster and more accurate parcel processing, ultimately driving customer satisfaction and operational excellence. This is particularly important as Malaysia’s e-commerce market continues to expand rapidly, necessitating more sophisticated and scalable logistics solutions.”

The deployment of the DWS machine in Malaysia aligns with BEST Inc.’s broader strategy to strengthen its presence in Southeast Asia. This follows successful expansions into other regional markets, including Vietnam, Thailand, and Singapore.

“These strategic moves are driven by the company’s commitment to innovation and customer satisfaction, aiming to deliver reliable and efficient logistics services across the region. The DWS system is a testament to BEST Inc.’s commitment to providing high-quality logistics solutions that meet the demands of modern e-commerce and supply chain operations,” Lu concluded.

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US hints new stealth drone tech built to beat China – Asia Times

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The US has signaled a potential strategic pivot from legacy intelligence, surveillance and reconnaissance (ISR) systems to more advanced platforms leveraging new technologies like space-based assets and stealth drones.

This month, The War Zone reported that US Air Force Secretary Frank Kendall hinted at a new ISR platform during a roundtable discussion before the Farnborough International Airshow in the United Kingdom.

The discussion, sparked by aviation journalist Chris Pocock’s inquiry about US ISR after the retirement of the U-2 Dragon Lady and RQ-4 Global Hawk, saw Kendall describe future ISR as “a combination of things,” including space-based capabilities and new systems like the E-7 command and control node.

The War Zone report says that while details are scarce, Northrop Grumman’s RQ-180 stealth drone, built for contested air space and known as the “White Bat”, is likely key to the new high-tech strategy.

It notes that the US Air Force plans to retire its U-2s, operated since the 1950s, and RQ-4 drones, first introduced in 2001, by 2026 and the end of 2027 respectively, despite Congressional resistance to shutting them down.

The moves reflect a US strategic shift toward more survivable and modern ISR systems in the face of increasing threats from adversaries’ air defenses, particularly from China and Russia.

The War Zone says the new ISR approach likely emphasizes distributed concepts and advanced computing to collect and prioritize critical data for near-real-time exploitation.

It notes that if the RQ-180 continues to receive government funding, it could serve multiple roles including electronic attack and data-sharing, and represents a move away from legacy platforms deemed too vulnerable for modern warfare.

Recent US drone losses in Yemen may have exposed the limitations of legacy drones like the MQ-9, whose design and basic technologies date back to the 1990s. Those losses have likely prompted the US to reconsider its strategies for developing and using drones.

In June 2024, Asia Times noted the US had lost several MQ-9 Reaper drone losses to Yemen’s Houthi rebels, whose basic air defense systems managed to shoot down the costly drones.

Although the MQ-9 is considered expendable, its US$30 million per unit price tag raises broader concerns about the US strategy for using drones in modern warfare. The MQ-9 is also considered too expensive and slow to regenerate to operate within surface-to-air missile (SAM) range.

The MQ-9 was designed in an era when the US assumed air supremacy as a given. It was built to carry a limited payload while maximizing loiter time. However, the MQ-9 was not designed with maneuverability in mind, making it vulnerable in large-scale combat operations.

Antonio Calcara and other writers point out in a December 2022 article in the peer-reviewed Security Studies journal that current-generation drones such as the MQ-9 have a larger radar cross-section (RCS) than often assumed, diminishing the perceived advantage of being small.

Calcara and others say that modern air defense systems can counter these features through radar adjustments and elevation tactics. They add that low-altitude flight, while reducing detection range, poses risks and can be countered by airborne radars.

They note that the potential for next-generation drones to gain an offensive advantage is contingent on future developments in drone and air defense technologies.

However, they caution that technological advancements in air defense (e.g., improved radar, big data, machine learning) will continue to pose challenges to drones.

Based on those points, Calcara and others refute the assumption that drones will always get through and highlight the evolving nature of military technology, urging a balanced consideration of offensive and defensive innovations.

Stealthier and more survivable drones such as the RQ-180 could enable the US to enhance the ISR capabilities of weak allies such as the Philippines, supporting the latter’s diplomatic and military efforts while shielding the US from having to intervene directly under their mutual defense treaty.

While the viability of the Philippines’ “assertive transparency” strategy versus China is now questionable following a series of significant maritime standoffs that have shown China is undeterred by the reputational costs of aggressive actions, US ISR support could be crucial in improving the Philippines’ diplomatic efforts vis-à-vis China in their South China Sea disputes.

As the US and the Philippines finalize their General Security of Military Information Agreement (GSOMIA) intelligence-sharing pact, the capabilities provided by advanced ISR assets such as the RQ-180 may prove critical in the agreement’s usefulness and success.

The US could also use advanced drones such as the RQ-180 to bolster the Philippines’ weak ISR capabilities, toughening the latter’s lacking military position in the South China Sea and making it a more viable defensive position for the US in the First Island Chain. 

In June 2024, Asia Times noted that as the Philippines lacks long-range ISR capabilities, it could be restricted to using its newly acquired and much-touted BrahMos missiles within the short range covered by its limited ISR assets, which extend only a few dozen kilometers from shore. The Philippines lacks over-the-horizon (OTH) radar, a capability usually restricted to major military powers.

Instead of specialized airborne early warning and control (AEW&C) aircraft, the Philippines has a motley fleet of Beechcraft King Air C-90, BN-2A Islander and Cessna 208 planes barely suited for the task.

Additionally, the Philippines has a limited number of Hermes and ScanEagle drones that are slow and vulnerable to advanced Chinese air defense systems.

Given those deficiencies, the US may use sophisticated drones to improve the Philippines’ ISR capabilities, as shown by its deployment of the MQ-9A Reaper drone to support a sinking exercise (SINKEX) in May.

During this joint exercise, the Philippines’ BRP Jose Rizal frigate sank a decommissioned Chinese-made oil tanker with ISR support from a US MQ-9A drone.

However, the MQ-9 might struggle with China’s sophisticated air defenses, as it previously failed to withstand even basic air defenses when deployed against Houthi rebels in Yemen.

The US introduction of advanced drones such as the RQ-180 could spark a larger drone arms race in the Indo-Pacific region, pitting US high-tech drones against China’s mass production capabilities.

This month, the South China Morning Post (SCMP) reported that the US and China, inspired by advanced drone technologies seen in the Ukraine and Gaza conflicts, are both keenly investing in unmanned aerial vehicles and AI to bolster their strategic capabilities in the Indo-Pacific region.

China has notably accelerated its drone development over the past two years, creating faster, smarter and adaptable drones for its navy, army and air force, drawing the attention of military observers worldwide.

SCMP asserts China’s People’s Liberation Army (PLA) is now tactically on par with US forces, thanks to its integration of UAVs and other drone technologies with crewed assets.

It highlights China’s development of possibly the world’s first dedicated drone carrier ship and the Type 076 amphibious assault ship, which could support drones, other aircraft and assault forces.

The SCMP report says that China’s drone strategy, emphasizing mass production and low unit costs, could significantly impact future combat operations and sea-based carrier activities.

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UOB makes ‘management refresh’ amid digital push | FinanceAsia

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United Overseas Bank (UOB) is making several senior leadership changes. From September 1, Susan Hwee, head of group technology and operations (GTO) will assume the role of head of group retail, taking over from Eddie Khoo.

Khoo (pictured left) is retiring from his role, but will still take on the position of senior adviser to United Overseas Bank (UOB) Vietnam.

To replace Hwee (pictured middle), UOB has promoted Singapore-based Lawrence Goh (pictured right) is promoted head of GTO and will commence the role on the same day as September 1, according to a UOB press release.  

UOB is a leading bank in Asia, headquartered in Singapore with subsidiaries in China, Indonesia, Malaysia, Thailand and Vietnam. The global bank has 500 offices in 19 countries throughout Asia Pacific, Europe and North America.

Hwee has more than 35 years of experience in the technology and banking industry. Having joined UOB in 2001, Hwee leads the bank’s global strategy for technology, operations and information security in her present role as head of GTO.

According to the release, Hwee is “instrumental in the development and innovation” of UOB’s digital platform, UOB TMRW, which uses artificial intelligence (AI) to push digital acquisition and customer engagement.

Hwee’s promotion will see her spearhead plans to strengthen the bank’s digital operations and product solutions while increasing customer engagement and connection to Asean opportunities, the release said. Hwee will also help integrate AI and push digital acquisition across UOB’s customer base.

Goh will succeed Hwee as head of GTO after more than three decades of IT experience spread across positions in corporate and consultancy roles. Goh began his professional life at a global advisory firm, having held positions of leadership in strategy and transformation, infrastructure consulting and security. 

Goh currently manages the day-to-day operation and strategic planning of UOB’s infrastructure and platform services across the bank’s international network as chief operating officer for GTO and head of group infrastructure platform services.

Responsible for progressing UOB’s technology strategy, Goh has been “instrumental in shaping the bank’s technological investment and transformation”, according to the release, having established UOB’s first Test Centre of Excellence in 2018 to enhance the bank’s testing quality, automation and consistency.

The aim of Goh’s new role is to push innovation and technology integration to enhance operational efficiency and customer experience, the release said

Khoo is to become senior advisor to UOB Vietnam after retiring as head of group retail. Khoo joined UOB in 2005 and has been “pivotal in growing UOB’s group retail business to the strong regional franchise the bank has today”, the release said.

UOB Vietnam has been integrating Citigroup’s consumer banking businesses following its full integration of Citi’s consumer banking businesses into UOB Indonesia, Malaysia and Thailand, after UOB’s acquisition of several of Citigroup’s businessesin 2022. 

Khoo intends to apply his experience to support UOB’s management team to drive the bank’s retail strategy in Vietnam, with UOB Vietnam “imperative” to strengthening the bank’s regional franchise.

“This management refresh is part of our ongoing efforts to strengthen UOB’s capabilities to serve our enlarged customer base across the region,” commented Ee Cheong Wee, deputy chairman and chief executive officer of UOB, in the release.

Wee added: “With rapid digitalisation in our key markets, Susan’s experience is crucial to drive digital engagement strategies and uplift customer experience. Lawrence, as a seasoned IT leader, will continue to drive innovation and lead our technology transformation in our new phase of growth. Eddie has made invaluable contributions to our retail banking business. In his new role, he will continue to support our team to realise the potential of our retail franchise in Vietnam.”  

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Natixis-affiliated Ostrum AM creates new transition department; aims to expand FI offering in Asia | FinanceAsia

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Paris-based Ostrum asset management (AM), an affiliate of Natixis Investment Managers, has appointed Nathalie Beauvir to head up its newly created sustainable transitions department.

A spokesperson confirmed to FinanceAsia that Beauvir had been in her new role in Paris since the start of the job transition in May.

The newly established department, according to a July 10 press release, consists of five environmental, social and governance (ESG) experts and two corporate social responsibility (CSR) experts.

They will be responsible for strengthening Ostrum AM’s strategic positioning on ESG; optimising the interdependence of investment policies including exclusion, engagement and voting; and developing offerings with new thematic ranges.

The department reports directly to the firm’s chief executive officer (CEO) office.

CEO Olivier Houix commented in the press release that the team expects Beauvir to establish Ostrum AM as a “committed partner for transitions” for stakeholders, in terms of investment strategies and development financing.

Beauvir was promoted from her previous role as head of sustainable bond analysis and research at Ostrum AM,where she was involved in the launch of the firm’s climate and social impact bond fund.

Asia expansion

The Ostrum AM team currently has five portfolio managers and analysts in the Asia Pacific (Apac) region, led by Rushil Khanna, head of equity investments, within Natixis Investment Managers’ Singapore local operations.

Currently, the team has a specific focus on equity investments, while Ostrum AM also aims to provide fixed income expertise locally in Southeast Asia, with the upcoming arrival of a fixed income portfolio manager, the spokesperson told FA.

Globally, Ostrum AM manages around €40 billion ($43 billion) in green, social and sustainability (GSS) bonds, out of its €402 billion in assets managed for institutional clients as of end-March.


¬ Haymarket Media Limited. All rights reserved.

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Chalerm vows to act solo if Pheu Thai won”t let him go

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A disgruntled former legislator also threatens to leak” secrets” about Pheu Thai father Thaksin Shinawatra.

Chalerm Ubumrung campaigns for the Pheu Thai Party in Ban Dung district in Udon Thani on April 27, 2023. (Photo: Chalerm Ubumrung Facebook account)
On April 27, 2023, Chalerm Ubumrung activities for the Pheu Thai Party in the Ban Dung city of Udon Thani. ( Photo: Chalerm Ubumrung Facebook account )

After it consistently refused to remove him, veteran politician Chalerm Ubumrung has pledged to act freely to keep the Pheu Thai Party in search.

The Pheu Thai list-MP made the commitment after a falling-out with the group that heads the government partnership. Mr Chalerm says he’s even had enough of the Shinawatra community, especially father Thaksin.

Thaksin’s child Paetongtarn, the Pheu Thai chief, on Wednesday deleted Mr Chalerm from the Line team used by party Members for sending emails that made them feel “uncomfortable”.

The conflict started when Mr. Chalerm and his brother, past MP Wan Ubumrung, attended a meeting hosted by a rival candidate for Pheu Thai in a Pathum Thani regional election on June 30.

Despite Mr. Wan’s claims that he was just visiting with an old family friend, some Pheu Thai people accused him of “fraternising” with the army. Since then, he has resigned from Gen. Prawit Wongsuwon’s Palang Pracharath Party ( PPRP ) leadership.

Mr. Chalerm wants to do the same and has requested that Pheu Thai remove him so that he can stay in his MP chair when he relocates. Yet, Ms Paetongtarn says the group has no purpose of purging Mr Chalerm.

She defended her decision to oust the group Line team from the 77-year-old former officers commander.

The Line party chatroom is intended to primarily be used to communicate with MPs regarding work-related visits, she said.

” We thought it best to cut Mr Chalerm from the chatroom’s list of members”, she said, adding that group did not wish to see the spit dramatised.

The Pheu Thai chief said,” We are ready to explain that we really want the problem to be put to rest once and for all.”

Ms. Paetongtarn announced that she would not longer respond to questions from reporters regarding the matter.

Along with his plea for him to leave Pheu Thai, Mr. Chalerm has threatened to reveal details about the parents of Ms. Paetongtarn’s daughter, who is alleged to be the de facto leader of Pheu Thai.

Mr. Chalerm claims that he is the only person who is aware of these tricks.

Mr. Chalerm said he would have no choice but to assume a new position as an independent MP who will be essential of his own party, particularly in House disputes, if Pheu Thai continues to ignore his need to be purged.

On Wednesday, Mr Chalerm claimed he had “taken treatment of” some legal situations for Thaksin while the latter was living in a self-imposed captivity elsewhere.

In connection with the sales of primary land by a condition company to his then-wife for a low price, Thaksin fled the country in 2008, shortly before the Supreme Court found guilty of abusing his power while serving as prime minister.

” We owe each other nothing compared to me and Thaksin. However, a face-to-face discussion had been enjoyable, Mr. Chalerm said at a media conference on Wednesday at his luxurious residence in Bangkok’s Bang Bon area.

Former police captain Mr. Chalerm, who is a very powerful past policeman, has spent more than 40 years in politics and held senior positions in numerous governments, including as Yingluck Shinawatra’s deputy prime minister.

Bang Bon has long been the social subdivision of the Ubumrung family, but Move Forward stranger Rukchanok Srinork won over him by more than 20 000 seats when Mr. Wan ran for office in May of that year.

Phumtham Wechayachai, the deputy prime minister, said he wished the internet would quit making up the matter and that he wanted to stop the controversy.

Chalerm Ubumrung, not shy about showing off his success, is seen stepping out of a red Bentley in 2012. ( Photo: Apichart Jinakul )

Chalerm Ubumrung, not shy about showing off his success, is seen stepping out of a red Bentley in 2012. ( Photo: Apichart Jinakul )

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South China Sea: Is the Philippines becoming a gateway for the West’s Indo-Pacific interests?

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In reference to the international tribunal that ruled in Manila’s favor in its maritime dispute with China, invalidating Beijing’s nine-dash-claim over the South China Sea, Cabalza said, adding that” New Zealand shares the same purpose of supporting the Philippines ‘ Hague decision.”

” Wellington, along with 13 other nations, had been an observer in the past Balikatan activities with Manila. Given that proper course, there is no stopping stop for New Zealand as a corporate partner of the Philippines”, Cabalza said.

The Philippines ‘ inclusion in Pegase 24 is the most recent of Paris ‘ efforts to strengthen security ties with Manila since discussions started over military cooperation in December. It is a yearly French Air and Space Force mission to the Indo-Pacific to demonstrate air power projection.

” Paris ‘ interest in Manila’s military modernization increased when it offered assistance on its submarine program and supported its maritime rules-based advocacy as an Indo-Pacific power,” Cabalza said.

This time, a contingent of European plane will land at Clark Airbase, a previous US military center 93km north of Manila.

France’s adviser to the Philippines, Marie Fontanel, said on Jul 12 that the vision was meant to illustrate the government’s commitment to upholding the freedom of navigation” as essential to keeping an open and inclusive Indo-Pacific place”.

According to Cabalza, Italy’s choice to include the Philippines in its Indo-Pacific plan was a “new contrast to the cords of European major powers recognizing the Philippines ‘ growing political system destined to safeguard democratic ideals at sea.”

Countries in the West may be concerned about possible problems in the water lines of communication and outposts in the region, according to Lucio Blanco Pitlo III, a study fellow at the Asia-Pacific Pathways to Progress Foundation, given that Asia continues to be a significant business path for Europe and 40 % of its international trade flows flow through the South China Sea.

Europe “has a lot of stakes in ensuring the state’s security and prosperity, and is willing to see unrestricted access to essential lakes and peaceful resolution of disputes,” he said.

” Italy, the sponsor of this year’s G7 mountain, is the only member of the club of rich countries to come up with its own approach towards the place”, he added.

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Australia’s ANZ faces fire for alleged market manipulation – Asia Times

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The Australian Securities and Investments Commission ( ASIC ) is looking into ANZ in light of serious allegations that the bank manipulated the market when it facilitated a$ 14 billion ( US$ 9.2 billion ) sale of government bonds in April of last year.

ASIC has today officially stated that it believes ANZ acted unlawfully. ASIC chair Joe Longo told the Australian Financial Review on Tuesday,” We are talking about you.

The CEO of ANZ has the right to define how he would describe it, but it is clear that it is an research, which means we must by definition believe there is a violation of the law.

Earlier this month, ANZ launched its own domestic investigation into alleged misconduct in its industry sector. ANZ says it is treating the claims” with the highest severity” and has engaged additional constitutional lawyers to help with its studies.

ANZ has also been accused of increasing the value of its bond buying by billions of dollars in order to get “lucrative” government mandates that come from large-scale trading.

Tie markets? State demands? You’d be forgiven for feeling a little lost.

On its encounter, the alleged crime might seem very mystical and professional. However, the Australian Financial Review has suggested that the dispute might turn into” the biggest incident” in ANZ’s 182-year story.

To be clear, these are claims amid an ongoing research by Australia’s business regulation. However, it’s crucial to comprehend exactly what the lender has been accused of doing here and how what transpires in the relationship sector has the power to affect everyone.

It’s all about federal borrowing

You need a thorough understanding of a transaction that sounds a little dry-sounding and quite routine in order to understand the allegations made against ANZ.

The state of Australia frequently takes out loans. It does this by selling so-called “bonds” to shareholders.

An investor purchases a bond, which was once a piece of paper but is now electronic, and in exchange receives (usually fixed ) interest payments known as” coupons,” one each month or year.

At the issuance of the tie, get it after three years, ten years, 20 years or more, the trader gets her or his money again.

You do n’t need to know everything about how bonds function. Bonds are only available on the open market, meaning that their value is shift, and that investors can buy them to other investors.

The investors ‘ returns are a result of both ( a ) receiving those coupons and ( b ) the difference between the amount they spend on the bond and the final principal amount when the bonds are due.

The price of the friendship will drop if standard interest rates rise above the bond’s coupon rate. Because the bond simply would n’t pay enough in comparison to what they want from an investment with that much risk.

Likewise, if standard interest rates fall, the relationship price is likely to walk.

An Australian Office of Financial Management ( AOFM), a branch of the Commonwealth Treasury, issues new government bonds. In order to conduct significant relationship sales, AOFM normally appoints a bank or banks to oversee the process and communicate with investors.

The state contracted ANZ to maintain a sizable A$ 14 billion bond sales in April 2023. ANZ was given access to sensitive information, including information about when the giving do take place.

ANZ was required to purchase bonds from investors who wanted to trade them for new bonds as part of the position. The value of those securities may depend on the gain that investors want from government bonds. Remember that a bond’s value drops if it receives an unrequited gain in excess of what is needed. So, if the expected return increases, the cost ANZ has to spend decreases.

You might have heard the notion: purchase low and sell high. Also, ANZ reportedly sought to do just that.

It is claimed that ANZ allegedly tried to raise bond yields by investing in what is known as the “futures industry,” a market that essentially allows traders to place bets on upcoming interest rate movements.

These wagers even affect the reference rate that determines the cost of new ties. Because the government uses the futures level to determine the profit the business needs for its debt and determine the bond issuer’s coupon rate.

If that prospects price climbs, then so too does the discount price on the government’s new relationship issues. This increases the government’s overall interest costs.

Image: ASIC Chairman Joe Longo. &nbsp, Photo: Lukas Koch / AAP via The Talk

ANZ is accused of manipulating future yields to get it to buy bonds from investors for a lower rate.

ANZ supposedly then reversed its future trades, allowing the price of the securities it held to rise and the general interest rate to fall, earning a profit.

If the claims are accurate, ANZ did have engaged in both insider trading and market manipulation. This would be outlawed.

According to the Australian Financial Review, trading information details to unexpected price moves on and around April 19 of last year.

Up until the relationship was issued on April 19, the data shows that bond prices had risen (yields had risen ), then produces had dropped, leading to a rise in bond rates.

But it’s important to notice this diagram says nothing about cause. Charges may have decreased for reasons related to ANZ.

Exaggerated achievement

ANZ has also been accused of overstating its investing success to the state, to secure rewarding friendship control options.

Based on their trading of government bonds and their skills, the state chooses managers. It is claimed that ANZ falsely reported how much buying it did.

According to the Australian Financial Review, ANZ told the government it had “facilitated”$ 137.6 billion in bond trades to the year ended June 2023, when it had really only facilitated$ 83.2 billion – a discrepancy of$ 54.4 billion.

Although it may seem far removed from daily life, what happens on the bond market has the ability to have an impact on everyone.

If found to be true, ANZ’s reported deception was reportedly had cost citizens as much as A$ 80 million. That number reflects how much more interest the government may be required to pay if it issued bonds with higher interest rates than they needed to.

Mark Humphery-Jenner is associate professor of funding, UNSW Sydney

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

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