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Business Times
3 days ago
- Business
- Business Times
Malaysia scores record flows as bond investors favour Asia
[SINGAPORE] Bond investors fleeing the United States are finding a haven in stable and lucrative Asian debt markets, with Malaysia leading the pack as the destination for foreign money. Foreign ownership of government bonds from Indonesia to India is soaring, becoming a tailwind for markets that have traditionally been dominated by domestic players. 'We're in a very good environment for Asian investments,' said David Chao, global market strategist for Asia Pacific at Invesco. 'The ingredients are in place for Asia, for emerging markets to outperform.' The biggest appeal is the combination of monetary easing and currency appreciation they are offering for the first time in four years, precipitated by US President Donald Trump's policies and a weakening dollar. Malaysian bonds recorded their biggest monthly foreign inflows since 2014 last month, around US$3.15 billion. India and Indonesia also got significant inflows. Across Asia, low inflation and policy rates at their peak contrast with the United States, Europe or Japan, where fiscal profligacy has undermined the value of long-term debt. A NEWSLETTER FOR YOU Friday, 8.30 am Asean Business Business insights centering on South-east Asia's fast-growing economies. Sign Up Sign Up Subdued growth and expected rate cuts further enhance the appeal of locking in peak rates, with the potential for capital appreciation on bonds as yields decline. A weaker dollar also gives investors scope to profit from currency appreciation. 'Emerging market assets fundamentally will do well when US rates are dropping, and the US dollar is weakening,' said Shah Jahan Abu Thahir, head of global markets for South-east Asia at Bank of America. 'The last few years, it was the now, anecdotally, there's definitely some interest potentially coming back.' Data from regional regulatory authorities and bond market associations showed foreign investors bought US$34 billion worth of Asian debt securities so far this year – the largest amount in the first five months of a year since at least 2016. That's just the beginning of flows into these under-owned markets, analysts said, and likely to continue so long as economies and monetary settings in this part of the world remain insulated and more stable than developed markets. 'We're seeing this fixed income interest across the board in the bigger and small EM countries - Thailand, Philippines, Indonesia and India,' Sue Lee, head of markets for Asia South at Citi Group, said. India has been one of the more active markets for clients, due to the string of rate cuts, she said. Investors are positioning themselves ahead of expected rate cuts, locking in yields with the anticipation of bond prices rising as rates decline. Malaysia, where the market remains divided on rate-cut prospects, has an edge over Thailand, where investors reckon the cycle is almost over. Thailand had outflows of about US$53.6 million in May, as investors shunned a market with one of the lowest returns in the region and hit hardest by Trump's trade tariffs. The central bank has hinted it has limited room to cut rates further, while the government has said it wants a weaker currency. One-year bond yields are below the 1.75 per cent policy rate. Indonesian government bonds (IndoGBs) offer attractive yields, with a two-percentage point premium over US Treasuries on 10-year IndoGBs. However, concerns over government spending and political uncertainty have tempered investor enthusiasm. Investors say Malaysian bonds offer more value, with its central bank yet to start cutting rates despite weaker growth, and a relatively robust ringgit. Abu Tahir said bonds in Indonesia are regarded as expensive while Thailand has rate cuts priced in and is already at fair value. 'It's about what's the expectation and what's the market pricing,' he said, predicting Malaysia will cut rates in July, though the market is more divided. 'So that's like where the value is because if everybody is expecting a cut, it's already been priced in,' he said. The lack of liquidity in Asian bond markets has long been a constraint for investors, with rapid foreign capital flows capable of triggering price volatility. Last month, a rush of capital into Hong Kong caused a spike in its usually stable currency. But analysts say there is less cause for concern, given a benign inflation environment and low foreign ownership. 'For the past five years, it's been tumbleweed in terms of portfolio inflows into the region, so actually it wouldn't be bad to see more inflows back into the region,' said Claudio Piron, a strategist at Bank of America. 'In a way, if it's done in a calibrated, natural way, it may not be bad. A good problem to have.' REUTERS
Business Times
4 days ago
- Business
- Business Times
Malaysia launches Digital Asset Innovation Hub to speed up growth of fintech and blockchain
[KUALA LUMPUR] Malaysia unveiled its Digital Asset Innovation Hub on Tuesday (Jun 17), with an eye on accelerating growth in the digital economy, particularly in the digital finance sector. Prime Minister Anwar Ibrahim, in his speech at the event, described it as the beginning of a new chapter, 'one that calls for deeper collaboration between regulators and industry players'. The innovation hub, unveiled at the Sasana Symposium 2025, aims to provide a controlled environment – a regulatory sandbox – for local and international fintech and digital-asset firms to test their products and services. The symposium on Jun 17 and 18 homes in on pressing economic issues and policy reforms and is hosted by Bank Negara Malaysia in Kuala Lumpur. The participants include policymakers, industry leaders, academics and the business community who are taking part in discussions and workshops. The sandbox-like setup of the hub is aimed at ensuring regulatory compliance and relevance to Malaysia's evolving digital economy. Anwar said the hub would be a key catalyst for innovation, enable use cases such as programmable payments, ringgit-backed stablecoins and supply chain financing. A NEWSLETTER FOR YOU Friday, 8.30 am Asean Business Business insights centering on South-east Asia's fast-growing economies. Sign Up Sign Up 'Our ambition is clear – to align infrastructure, policy and talent, across both the public and private sectors, in pursuit of a digitally capable, future-ready Malaysia,' he said. Further details on the programme were not disclosed. The move underscores Malaysia's broader ambitions to position itself as a regional fintech hub. In April, Anwar met with Binance founder Changpeng Zhao to discuss the country's potential in the cryptocurrency space. Zhao pleaded guilty to US money laundering violations in 2023, and was reprimanded by Malaysia in 2021. By the following year, however, Binance had secured a regulated presence in Malaysia through its minority stake in MX Global, operating under local oversight. Anwar said that Malaysia is charting a bold course in digital transformation, guided by national strategies such as the Digital Economy Blueprint, the Financial Sector Blueprint and the Capital Market Masterplan. Ensuring stability amid rapid evolution Malaysia is charting a bold course in digital transformation, guided by national strategies such as the Digital Economy Blueprint, the Financial Sector Blueprint and the Capital Market Masterplan. PHOTO: BT FILE Bank Negara governor Abdul Rasheed Ghaffour, in his opening remarks, said as a steward of financial stability, the central bank acknowledges the rapid evolution of the digital asset landscape, so it is pursuing digitalisation to ensure Malaysia's financial system remains fit-for-purpose and capable of serving the national economy. He added: 'From the modernisation of Rentas, our payment systems infrastructure, to the expansion of cross-border payment linkages, and now, the exploration of asset tokenisation and other digital solutions, we aim to build a strong foundation for an adaptive and resilient economy.' Thailand's digital-asset sandbox programmes In a panel discussion on the future of digital assets held on the opening day of the symposium, Naphongthawat Phothikit, senior director of payment systems and financial technology policy department at Bank of Thailand, shared insights on Thailand's digital asset regulatory sandbox programmes and how these have helped fintech companies enhance their marketability while ensuring security. Thailand launched its Digital Asset Sandbox last August, he said. There are two types of sandbox programmes: The first enables service providers to offer conventional financial services using new technologies; the other sandbox will be for unregulated activities, particularly in payments involving stablecoins. Banks testing the use of cryptocurrencies (such as stablecoins) for cross-border fund transfers, for example, would use the first type of sandbox for their trial runs. While their customers still transact in fiat currency, the use of cryptocurrencies would mitigate the risk of price fluctuations and ensures that customers receive the full transferred amount, said Phothikit. (Transactions between Thai and US banks use USDC, a stablecoin with its value pegged to the US dollar.) Another use case entails private-sector banks developing blockchain networks to streamline bond issuance. Through blockchain, they can effortlessly calculate principal and interest, using e-money for payments to bondholders. 'These examples demonstrate the application of new technology within traditional business models,' he added. Referring to the sandbox for unregulated activities, particularly in payments involving stablecoins, he said: 'We have regulations that require stablecoins to be pegged to the Thai baht, but they are not listed on secondary markets.' The sandbox provides a controlled environment to test the functionality and safety of these payment solutions before they are introduced to the wider market, he added.
Business Times
5 days ago
- Business
- Business Times
Petronas looks abroad to help cut production costs
[KUALA LUMPUR] Malaysia's state-owned oil and gas company Petronas is looking to expand output from more affordable assets abroad in an effort to cut production costs and rein in declining profits. Petronas is seeking to produce oil at a break-even level of US$50 per barrel, from US$60 to US$70 in the past five years, said Mohd Jukris Abdul Wahab, the chief executive officer of Petronas' upstream business, which includes exploring, developing and extracting oil and gas. The firm will focus more on countries where it already has a presence, including Canada, Suriname, Brazil, Turkmenistan and several South-east Asian nations. Still, Petronas does not rule out going into a new country if it provided 'headroom for us to grow', he added. 'We want to reshape the entire portfolio,' Jukris said in an interview on Jun 13 on the 79th floor of the steel-clad Petronas Twin Towers in Kuala Lumpur. 'We are preparing ourselves, moving into a more volatile environment in the future.' Petronas is shifting its strategy as a drop in crude prices from a recent peak in 2022 slashed profits and forced the company to lower dividends. The state-owned company said earlier this month that it will cut about 10 per cent of its workforce to reduce costs. While crude prices recovered some of the lost ground on Friday (Jun 13) after Israel's air strikes on Iran fuelled concerns of a wider conflict in the Middle East, the supply-demand outlook for oil points to more pressure in the longer term. A NEWSLETTER FOR YOU Friday, 8.30 am Asean Business Business insights centering on South-east Asia's fast-growing economies. Sign Up Sign Up 'Any capital deployment for our international asset has got to provide a healthy return,' Jukris noted. 'We are dealing with a lot more risk in some of the geographies that we are present.' Petronas' woes pose a challenge for Malaysia's government, which relies on the company for billions of US dollars in income. The national oil company has pledged RM32 billion (S$9.7 billion) in dividends this year, down from RM50 billion in 2022. The firm said in September that over the 50 years since its inception in 1974, it had injected RM1.4 trillion into the nation's economy through dividends, taxes and cash payments. The company plans to increase the net present value of its international upstream contributions to about 60 per cent within the next five to 10 years, from about 40 to 50 per cent now, said Jukris, who started his career at the firm in 1990. Petronas produces the equivalent of about two million barrels of oil per day in Malaysia and around 700,000 barrels abroad, Jukris said. To maintain this level of production in the face of declining output from older assets the company needs to bring in new fields, he added. Even as Petronas looks for new assets abroad, Jukris is optimistic that Malaysia's reserves will last for 'years to come', because investors keep making new discoveries. He said that there is still untapped potential in the country, including off the coast of Peninsular Malaysia where international oil companies have shown interest to explore. 'For the last 10, 15 years, we have been saying that our reserves will last only 15 years,' Jukris said. 'So today, we will also last another 15, 20 years.' BLOOMBERG
Business Times
12-06-2025
- Health
- Business Times
Thai panel upholds suspension of doctors who helped ex-PM Thaksin dodge jail
[BANGKOK] Thailand's medical council on Thursday (Jun 12) upheld its suspension of two doctors who enabled influential politician Thaksin Shinawatra to spend his prison sentence in hospital, a day ahead of the start of a Supreme Court case that could see him jailed. Thaksin, the driving force behind the current government, returned from 15 years of self-exile in 2023 to serve a prison term for abuse of power and conflicts of interest, but was sent to hospital after only a few hours in jail complaining of chest problems. The polarising billionaire, whose daughter Paetongtarn Shinawatra is prime minister, stayed in a VIP wing of the hospital for six months until his release on parole without a single night in jail, prompting public outrage and deep scepticism about the extent of his ailments. 'More than two-thirds of the council voted to uphold the punishments,' Medical Council of Thailand vice president, Prasit Watanapa, told reporters. 'Members made the decision based on medical principles, evidence and reason.' The suspensions could impact a case at the Supreme Court that begins on Friday in which the legality of Thaksin's hospital stay has been challenged, with the possibility the tycoon could be made to serve that time again, in prison. A NEWSLETTER FOR YOU Friday, 8.30 am Asean Business Business insights centering on South-east Asia's fast-growing economies. Sign Up Sign Up Thaksin, 75, remains a towering figure in Thai politics and though he holds no formal government role, he is highly influential. His lawyer declined to comment on Thursday on the council's decision. The revival of the controversy over Thaksin's hospital stay comes at a challenging time for Paetongtarn's government, which is seeing its popularity dwindle amid a prolonged struggle to spur economic growth and domestic pressure to take a tougher stance on an ongoing border dispute with Cambodia. Thaksin's sentence was originally eight years, but it was commuted to a year by the king and he became eligible for parole after six months. The medical council's vote overrides a veto of its earlier decision by Health Minister Somsak Thapsutin, a Thaksin ally. The council had yet to confirm the duration of the suspension of the two doctors, who it found had issued documents that contained false medical information. They had denied wrongdoing and stood by their medical assessments. Another doctor with the corrections department received a warning for failing to meet medical standards in a referral notice for Thaksin. Sixty per cent of respondents in a poll last week believed Thaksin's case would affect the stability of a government whose popularity was shaken after it paused a cash handout programme to tens of millions of Thais. 'He has a lot of influence on this government and it would hurt public confidence if the outcome of the case is negative,' said Yuttaporn Issarachai, a political science expert at Sukhothai Thammathirat Open University. The Pheu Thai administration is also grappling to keep the border dispute with Cambodia from spiralling out of control, as both sides have mobilised troops before talks between their militaries curbed rising tension set off by a recent skirmish. Saturday's talks with Cambodia may not lead to a resolution, however, said Titipol Phakdeewanich, a specialist in political science at Ubon Ratchathani University. 'The prime minister has not been very firm in her statements, which raised questions by some about whether this government is actually protecting the interests of the country,' Titipol said. The border row has become a lightning rod for administration critics, with royalists holding small protests and urging the military to oust the government, as it has at least 10 times since 1932. 'The country now faces security issues and nationalism is on the rise at a time when government leadership is at its weakest,' said Jatuporn Prompan, a Thaksin ally turned critic. 'Some people have started calling for a coup.' But Defence Minister Phumtham Wechayachai last week talked down such a possibility. 'The army has to do its duty,' he told reporters. 'There is no conflict with the government.' REUTERS
Business Times
12-06-2025
- Business
- Business Times
China likely to ditch low-grade coal from Indonesia due to glut
CHINA is likely to cut imports of the lowest grades of coal as a glut of the fuel makes the trade uneconomic and the government tightens up on carbon emissions. It's a move that would weigh most heavily on suppliers in Indonesia. China's benchmark price of thermal coal has slumped to a four-year low, a product of record domestic production and a binge on imports in recent years. Power demand hasn't kept up as the economy has slowed, while renewables are shouldering more of the burden of electricity generation. Coal imports fell year-on-year for a third straight month in May, and the decline is likely to accelerate over the rest of 2025, Li Xuegang, an analyst at the China Coal Transportation and Distribution Association, said on Wednesday. The government's 'tighter emission controls will slash demand for low-heating and poor-quality grades,' Li told industry representatives at the annual Coaltrans event in Beijing. Over the past three years, China has stepped up imports of lignite, or brown coal, from its biggest overseas provider Indonesia, blending the lower calorie and heavily polluting fuel with higher grades for use in power stations. That trade has come unstuck as prices have dropped and utilities are able to source better-quality supplies more cheaply. A NEWSLETTER FOR YOU Friday, 8.30 am Asean Business Business insights centering on South-east Asia's fast-growing economies. Sign Up Sign Up The shift away from the worst kind of coal would also represent progress at the margins for the country's ambitions to reduce emissions to meet its climate goals. China Huadian, one of the country's biggest power generators, expects total imports to slide to about 400 million tons this year, from the record 543 million tons purchased in 2024, according to Zhang Aipei, deputy director of production. Purer, high-calorie grades should be enough to fill any seasonal or regional gaps in supply, he told the Coaltrans conference. Coal demand more generally is holding up, however, putting the government's pledge to start reducing consumption from next year in doubt. Having endured a spate of economy-crippling blackouts earlier this decade, China has greenlit a massive expansion of coal-fired power capacity to lock-in security of supply. Moreover, electricity consumption is likely to get a boost from the rollout of data centres, and the expansion of green and high-tech manufacturing, while coal is also finding other outlets for demand from the chemicals sector, according to other speakers at the conference. Domestic production, which topped 4.7 billion tons last year, is China's main source of supply. Huadian's Zhang said he doesn't expect that to peak until 2027. BLOOMBERG
