China's Cosco eyes veto rights in deal for Li Ka-shing's ports
State-owned China Cosco Shipping is asking to have veto rights or equivalent powers in the entity taking over the 43 ports, including two strategically important ones along the Panama Canal, the sources said, asking not to be identified discussing private matters. Cosco has argued such rights are necessary to block any decisions that are potentially harmful to China's interests, the sources added.
Li's CK Hutchison Holdings and the original buyer group, which includes BlackRock's Global Infrastructure Partners unit and Italian billionaire Gianluigi Aponte's Terminal Investment, have agreed that Cosco should have full informational access to the operation, the sources said. But talks are still ongoing as to the powers that Cosco will have in the consortium and no final decisions have been made, they said.
A 145-day period for exclusive talks between CK Hutchison and the consortium is likely to lapse on Jul 27, and details of Cosco's role in the consortium could be settled by the end of September, some of them said.
Cosco did not respond to calls and a faxed request for comments. CK Hutchison and the Aponte family's MSC Mediterranean Shipping, which controls Terminal Investment, did not respond to separate requests for comment. BlackRock declined to comment.
Cosco's demands mark the latest twist for a deal that's become a proxy for US-China rivalry, after US President Donald Trump painted the transaction as the return of Panama Canal to US influence. Chinese regulators have, for their part, vowed to investigate the transaction, and Li and his family have come under intense scrutiny and criticism.
The Hong Kong tycoon's younger son Richard Li's talks to expand his insurance business into mainland China have stalled after the ports deal upset Beijing, Bloomberg reported earlier this month. That followed another Bloomberg report in March that China told its state-owned firms to hold off on any new collaboration with businesses linked to the Li family.
The original structure of the buyer consortium was designed to give the Aponte family-controlled Terminal Investment ownership of all the ports except the two in Panama, whose control will go to the BlackRock unit. BLOOMBERG
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Business Times
28 minutes ago
- Business Times
EU reaches broad tariff deal with US to avert painful trade blow
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Von der Leyen said no decisions have been made on European wine and spirits, but the matter would be sorted out soon. Key to getting the 15 per cent rate to apply to pharmaceuticals and semiconductors was the bloc's promise to make US investments, according to sources familiar with the matter. Ahead of the meeting, the EU was expecting a 15 per cent charge on its imports to also apply to most pharmaceuticals. The products had been one of the negotiation's main sticking points. Without a deal, Bloomberg Economics estimated that the total US average effective tariff rate would rise to nearly 18 per cent on Aug 1 from 13.5 per cent under current policies. The new deal brings that number down to 16 per cent. For months, Trump has threatened most of the world with high tariffs with the goal of shrinking the US trade deficits. But the prospect of those duties, and Trump's unpredictable nature, put world capitals on edge. In May, he threatened to impose a 50 per cent duty on nearly all EU goods, adding pressure that accelerated negotiations, before lowering that to 30 per cent. The transatlantic pact removes a major risk for markets and the global economy, a trade war involving US$1.7 trillion worth of cross-border commerce, even though it means European shipments to the US are getting hit with a higher tax at the border. The goals, Trump said, were more production in the US and wider access for American exporters to the European market. Von der Leyen acknowledged part of the drive behind the talks was a reordering of trade, but cast it as beneficial for both sides. 'The starting point was an imbalance,' von der Leyen said. 'We wanted to rebalance the trade we made, and we wanted to do it in a way that trade goes on between the two of us across the Atlantic, because the two biggest economies should have a good trade flow.' The announcement capped off months of often tense shuttle diplomacy between Brussels and Washington. The two sides appeared close to a deal earlier this month when Trump made his 30 per cent threat. The EU had prepared to put levies on about 100 billion euros (S$151 billion), about a third of American exports to the bloc, if a deal was not reached and Trump followed through on his warning. US and European negotiators had been zeroing in on an agreement this past week, and the decision for von der Leyen to meet Trump at his signature golf property brought the standoff to a dramatic conclusion. Officials had discussed terms for a quota system for steel and aluminium imports, which would face a lower import tax below a certain threshold and would be charged the regular 50 per cent rate above it. The EU had also been seeking quotas and a cap on future industry-specific tariffs. 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Straits Times
28 minutes ago
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North Korea says South Korea's overtures ‘great miscalculation'
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Business Times
an hour ago
- Business Times
How reliable is the 60/40 portfolio in downturns? Adding private debt not a panacea
[SINGAPORE] A big argument in favour of an investment in private markets is that the traditional 60/40 balanced portfolio (60 per cent stocks, 40 per cent bonds) is no longer as reliable or robust as it traditionally was. The steep portfolio loss in 2022 when stocks and bonds fell at the same time – and each asset class by double digits – has likely scarred most investors. It is no coincidence that since that year, strategists and bankers have redoubled efforts to persuade investors to invest in assets that are less correlated with public markets. Institutions and private wealth advisers alike are pinning their hopes on private markets to drive not just overall portfolio returns but also dampen risk. BlackRock chairman Larry Fink in his 2025 letter wrote that the future standard portfolio may have the allocation of 50/30/20 – that is, 50 per cent stocks, 30 per cent bonds and 20 per cent in private assets such as infrastructure, real estate and private credit. 'Generations of investors have done well following (the 60/40) approach, owning a mix of the entire market rather than individual securities. But as the global financial system continues to evolve, the classic 60/40 portfolio may no longer fully represent true diversification,' he wrote. The big question dogging the 60/40 method is not so much that of the risk and return of equities, but rather of bonds. Have bonds lost their ability to diversify? It is significant that the three types of private assets Fink cites are those that come closest to bonds. Infrastructure, real estate and private credit all generate a yield. Private assets also show lower correlation with public markets. Retail investors are able to access listed infrastructure and real estate investment trusts. Private debt is currently confined to accredited investors. And, in today's environment, there may be reasons for caution in private debt, which I will touch on shortly. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Strategists are not calling for the scrapping of the 60/40 portfolio, but to enhance its diversification benefits. Still, some fund managers maintain that the 60/40 approach continues to prove its value even without private markets, and the 2022 experience was an outlier. Morningstar noted that 2022 was the single year over a 150-year period that bonds failed to provide diversification benefit in a downturn. Could it happen again? 60/40 portfolio's track record Erin Browne, Pimco managing director and portfolio manager, said that the 60/40 portfolio has proven its resiliency – not just over the past decade but over more than 30 years. Browne, based in Pimco's Newport Beach office, looks after the firm's multi-asset strategies. Pimco manages more than US$2 trillion in assets. 'Our portfolio is up by around 10 per cent year to date, and the (reference) 60/40 is up by 8 per cent. It really has proven to be a good core ballast of delivering portfolio returns over different market environments and histories. This year is no different,' she said. Pimco's data shows that since 1990, a global 60/40 portfolio has returned just 0.7 per cent less than global stocks on an annualised basis, but with 37 per cent less volatility. 'The US stock-bond correlation has gotten more negative over recent months, with the one-year correlation dropping from 0 to minus 15 per cent. This is particularly valuable in an uncertain macro environment; both stocks and bonds can benefit from a soft landing amid central bank rate cuts,' she added. 'If growth deteriorates faster than expected, high-quality bonds provide a ballast. Finally, the long-term track record and easy-to-understand benefits of a 60/40 allocation allows investors to stay invested rather than attempt to time the market, which typically causes underperformance.' Browne said inflows into Pimco's multi-asset offerings are not just from retirement savers, but also more broadly from investors looking to build a 'strong, stable bellwether' as their core portfolio. 'Flows are really coming from investors looking to create the core of their asset allocation strategy, where they're able to participate in continued upside in equities, and also have some diversification.' She believes volatility is likely to be elevated given the geopolitical and macroeconomic shifts, from a 'unique unipolar world' to a multi-polar world, and from global cooperation to fragmentation. 'There will be friction in that change… Growth is also slowing on a global basis, and that creates pockets for disruption within global markets and equities, which creates more volatility.' Morningstar research found that the poor performance of the 60/40 portfolio in 2022 was due to a painful bear market in bonds that actually began around 2020. In its analysis of how the 60/40 portfolio performed over 150 years, it found that the crash of the 2020s was the only one where the decline of the 60/40 portfolio was more painful than that of an all-stock portfolio. That is, while the deepest drawdown of the 60/40 portfolio was shallower than the all-equity portfolio, it has taken the 60/40 portfolio longer to recover. In the 2020s, the downturn in equities – brought on by the Ukraine war, higher inflation and supply shortages – coincided with a bear market in bonds. 'While the stock market recovered to its previous high in September 2024, the bond market has not yet fully emerged from underwater. This decline was so severe that it prevented the 60/40 portfolio from returning to its previous high until June 2025 – marking the only time in the past 150 years that the 60/40 portfolio experienced more pain than the stock market,' it said. 'Nonetheless, even in this once-in-150-years bond bear market, the depth of the decline experienced by a 60/40 portfolio was less than that of either the stock market or the bond market alone.' Pimco's Browne argued that the starting point of bond yields is key for an investor. 'I don't think fixed income as a risk diversifier is dead. There's real potential for fixed income to continue to deliver not only on income return but also diversification,' she noted. 'In 2020 inflation ran very high, and the starting points of yields were exceptionally low in a negative or zero-rate environment. But where we are today is quite different. The starting point of yields today provides a really nice cushion to protect portfolios in risk-off events, with 10-year yields exceeding 4 per cent. Yields tend to be very highly correlated with the expected return of the asset over the next five years.' Caution on private credit What about private credit as a bond proxy? Despite an attractive yield, it is not a panacea for returns or lower risk. There is also reason for caution when almost every private banker or sales person trots out private debt offerings. According to an article in the Financial Times, the GIC itself is cautious as the asset class is untested in a major credit default cycle. GIC chief investment officer Bryan Yeo reportedly said the investment company is 'raising the bar in terms of further deployment in the private credit space', adding: 'We're now at a part of the cycle where we feel that spreads are a lot tighter, and valuations are also higher.' Pimco is wary as well. It noted in its mid-year report that credit spreads remained tight relative to historic averages despite signs of 'elevated secular recession potential', which reflects some complacency in public and private credit markets. Private credit, it said, is vulnerable to broad risk asset repricing due to its 'large allocations' into technology and artificial intelligence disruptors. 'Amid limited fiscal space, a genuine credit default cycle – unlike the recent 'buy the dip' era – may unfold for the first time in years, catching many investors unprepared… We express caution in areas of private corporate credit where capital formation has outpaced investable opportunities, leading to potential disappointment.'
