T Rowe favours Thailand, Malaysia bonds on scope for rate cuts
Malaysia's central bank has potential to deliver several more interest rate cuts after its first policy easing in five years earlier this month, while persistent deflation in Thailand should extend support for its debt despite already-low yields, said Leonard Kwan, a Hong Kong-based portfolio manager at the US asset manager.
Kwan, who manages the firm's Emerging Markets Bond Strategy fund, added he prefers medium-term Thai bonds and longer-dated notes in Malaysia.
The fund had assets worth US$581 million as at Jun 30.
Tailwinds from the US dollar's weakness against the Asian currencies will be 'less powerful than what we saw year to date', Kwan said. He expects a 'consolidative period for the US dollar over the next three to six months' as bearish wagers on the greenback appear excessive.
Kwan's comments signal a rethink among investors as the US dollar has rebounded in the past two weeks, clawing back some of this year's steep losses as fresh inflation data cast doubts on the outlook of US rate cuts.
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
Meanwhile, signs of strong consumption and a resilient labour market also helped ease concerns about a tariff-induced recession and a sustained decline of American exceptionalism.
Despite the latest gain, the Bloomberg Dollar Spot Index is down 8 per cent this year. Joining a broader Asian currency rally against the greenback, both the Thai baht and Malaysian ringgit have risen over 5 per cent since 2025 began.
The currency gains have been a key catalyst of the performance of the two nations' local-currency bonds. Thai debt has generated year-to-date total returns of 13.8 per cent this year, with 10.2 per cent for their Malaysian counterpart, Bloomberg data show.
Elsewhere in the region, Kwan said he also likes Indonesian bonds of medium-term maturities, as the firm sees another two-to-three 25-basis-point rate cuts in South-east Asia's biggest economy.
The Indonesian rupiah, in contrast, is Asia's worst-performing currency this year, down 1.3 per cent versus the US dollar. BLOOMBERG
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Times
5 hours ago
- Business Times
Wall Street banks lose ground in Europe as tariffs spook clients
AS US President Donald Trump has ratcheted up his rhetoric against trading partners in Europe, corporates across the continent are taking notice. Some companies have begun to diversify their banking relationships away from the giants of Wall Street, according to data compiled by Bloomberg. That has been a boon for Europe's leading banks, which have been actively vying to win the extra business. 'Some players are saying that it's better to go to European or French investment banks for advice on financing or mergers and acquisitions,' said Arnaud Petit, managing director of Edmond de Rothschild's corporate finance business. Deutsche Bank chief executive officer Christian Sewing said he sees similar in potential clients' requests for proposals. 'It is happening every day with client wins and RFPs and new business that we put on.' So far this year, roughly half of the euro bond deals from non-US companies did not involve any of the five biggest US banks, according to data compiled by Bloomberg. That is up five percentage points from a year earlier. For sterling bonds, the gap has widened even further. Wall Street banks were shut out of just 47 per cent of deals throughout all of last year. So far this year, though, they have been excluded from 64 per cent of them. 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 The emergence of the ability of a few European banks 'to be able to offer competitive services and advice to clients' has created a desire among clients to switch, according to UBS chief executive Sergio Ermotti. 'We believe we are well-placed to continue to benefit from that diversification.' 'Specific skills' Even before Trump's trade war kicked off in earnest, the biggest of the US banks warned that it was starting to see an impact. By April, JPMorgan Chase had already lost 'a couple' of bond deals tied to the tariff uncertainty, with companies opting for local banks instead, chief executive officer Jamie Dimon said in an interview with Fox Business at the time. He warned that the tumult was 'causing cumulative damage, including huge anger at the United States'. The latest example of a win for non-US banks came this week, when Zurich-based insurer Chubb issued an offshore yuan bond. It opted for Standard Chartered to help take on the deal. The bank was told: 'We want to bank with the regional champions, rather than just with global banks in general,' Standard Chartered chief financial officer Diego de Giorgi said. 'Because we think that you guys bring specific skills in a world that is fragmenting.' Chubb is not an exception. The effect is most pronounced in Asia, where economies are expected to be hard hit by the changing trade regimes and the re-routing of supply chains, said Ruchirangad Agarwal, head of corporate banking for Asia and the Middle East at research firm Coalition Greenwich. 'The willingness of companies in Asia to change their transaction bank is currently at a high: a third of them plan to issue a new (request for proposal) within the next 12 months,' Agarwal said. Already, US lenders' market share in financing trade for Chinese companies has dropped in recent years, from 12 per cent in 2017 to about 7 per cent share now, he added. Martin Smith, head of markets analysis at East & Partners, said: 'We expect to see heightened uncertainty and customer churn at US banks as large corporates take an active risk management stance on FX, interest rates, counterparty risk, geopolitical tensions and supply chain disruptions.' BNP Paribas, meanwhile, has gained more share than any other player in Asia, he added. 'There are clearly strategic opportunities in the tectonic shifts that the world has been seeing in recent months,' Societe Generale chief executive officer Slawomir Krupa said of companies looking to shift toward European banking partners. 'The logic behind this form of risk diversification has become more apparent for companies.' BLOOMBERG
Business Times
5 hours ago
- Business Times
No plans to ‘fully liberalise' cross-border ride-hailing services: LTA
[SINGAPORE] The Land Transport Authority on Sunday (Aug 3) said it has 'no plan to fully liberalise' point-to-point transportation between Singapore and Malaysia via ride-hailing services. This was in response to recent media reports from Malaysia, which suggested that Singapore is looking to introduce cross-border on-demand ride services. The agency clarified that officials from both countries had met on Aug 1 to discuss cross-border service arrangements. 'During the discussions, the issue of allowing cross-border (ride-hailing) to ferry passengers was raised, but no decision was made,' said LTA. While the agency is open to ideas to improve the cross-border community experience, it said there is no intention to fully liberalise cross-border transportation through ride-hailing services. Currently, there is a reciprocal Cross Border Taxi Scheme (CBTS) that allows a licensed fleet of up to 200 taxis from each side to ferry passengers across the Causeway. These taxis are permitted to pick up and drop off passengers at a single designated point on either side: Larkin Sentral in Johor Bahru for Singapore taxis, and Ban San Street Terminal in Singapore for Malaysian taxis. 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 existing quota of the CBTS has not been fully utilised, said LTA. 'In view of commuter demand for more convenient cross-border travel, we will encourage full take-up of the quota.' The agency said it is also considering increasing the number of boarding and alighting points in both countries, in addition to the use of ride-hailing apps to book cross-border trips on licensed taxis. 'Our key priorities are to better meet commuter demand while safeguarding the interests of our taxi and private hire drivers,' LTA said. Any change in the CBTS will require agreements from both governments. LTA added that during earlier discussions, Malaysian authorities had requested for Singapore's cross-border buses to start operations from Johor Bahru at 4 am. It is exploring, together with cross-border bus operators, if operating times of these services can be adjusted to address bus crowding in the early mornings. This includes engaging private bus operators on potentially operating earlier services at higher fares. 'A key consideration is that the first buses should match the starting time of our local bus and MRT services when they arrive in Singapore,' said LTA.
Business Times
9 hours ago
- Business Times
Ninth generation Pictet family member of leading the group beyond 220 years.
[GENEVA] Striving not for size but 'to be the finest, as a wealth and asset manager known for superior returns and exceptional client experience' is what drives 46-year-old Francois Pictet, managing partner of Pictet Group. He is a ninth-generation member of a family who became associated with Pictet Group in 1841. The Geneva-headquartered organisation, which turns 220 this year, traces its roots even further back, to its founding in July 1805. Francois Pictet followed the footsteps of his father, grandfather and great-grandfather into the top echelons of the group's management. Today, Pictet Group is Switzerland's second-largest financial institution, behind UBS, and the largest privately held financial institution in Europe. Francois Pictet sits alongside his cousin, senior partner Marc Pictet, and five other managing partners at the apex of the company's management. The seven top partners – six men and one woman, all of whom are based in Geneva – are a close-knit group, who meet thrice a week, for several hours per session, to discuss strategies and investments. 'You cannot invite as managing partners people who want to decide everything and don't want to listen to others. This type of profile will not make it,' said Francois Pictet. 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 He pointed out that while Pictet Group is unique in having a long association with his wider family, having the name alone does not mean guaranteed entry into the group's top leadership. In addition to the seven managing partners, Pictet Group also has 43 equity partners. New partners buy shares at book value; when partners exit, they sell their shares at book value, which has hopefully grown during their tenure. Partners adhere to the retirement age of 65. To date, Pictet Group has grown organically and not done any mergers and acquisitions. Also, the group has stayed out of business lines such as commercial banking, retail banking and investment banking. 'Why would you make an acquisition unless you want to show growth to your shareholders? In finance, growth by hiring the right people is more effective,' said Francois Pictet, adding that making acquisitions can harm the corporate culture. He likes the group's business model, which he sees as being differentiated from other financial institutions and bringing stability to the business and clients. 'Stability nowadays is in very rare supply, and I think this is a key advantage that we have,' he said. He argued that by being conservative in how Pictet Group uses its balance sheet, space is freed up to be innovative in serving clients. 'Our usage of the balance sheet is extremely conservative, we don't play with it at all,' he said. Personal journey Francois Pictet, who became a managing partner in 2022, currently leads the group's technology and operations division, as well as the private wealth management's Asian and Middle East commercial efforts. Trained in law, he said that it was 'initially not really my intention' to join the family business. He spent over a decade working for organisations including UBS, the former Credit Suisse and US private equity firm AEA Investors before joining Pictet Group in 2015. Asked if carrying the Pictet name within Pictet Group is a privilege or a burden, he admitted that 'with the family name comes the pressure as well'. He described working at Pictet Group as being at 'a place where you have your name on the door and the responsibility of not undoing the work done by eight generations before you'. Still, when the opportunity to join the group came while he was in his thirties, he said it would have been a waste not to seize it. With Pictet Group today being considerably larger than in his father's time, Francois Pictet thinks family members who want to join now or in future should spend some years outside the group to chalk some achievements before coming on board. 'It's very important for our managing partners to have seen the world out there and also proven themselves outside the firm,' he said. In the private wealth management business, Pictet Group serves clients with a net worth of five million Swiss francs (S$8 million) or more. Francois Pictet sees no reason to lower this threshold for the sake of acquiring a larger customer base. He emphasised that in the private wealth management business, much time is spent on understanding clients and their worry with money. Investment solutions then come on the back of understanding client needs. He noted this is unlike 'the brokerage model, where you start the discussion by talking about products'. 'Our time horizon is not a quarter, not even 10 years. It is really generations with our clients,' he stressed. Francois Pictet noted that amid geopolitical fragmentation, wealthy families have become more mobile, requiring all sorts of combinations of booking and servicing centres. With its stability, he observed that Singapore has been on the rise as a booking centre for the whole of Asia for several years. Other megatrends that he sees in the private wealth management business include generational wealth transfer, the rise of Asia, the growing importance of private equity and the need to invest more in technology as well as risk and compliance. Generational wealth transfer Honora Ducatillon, head of family advisory at Pictet Wealth Management, said that with dynastic families, Pictet Group is seeing growing demand for help in crafting a family charter, as a framework for long-term success. Dynastic families are defined as those having a net worth of US$100 million or more. Typically, a family charter may cover areas such as family mission, family values, code of conduct, conflict resolution, succession in ownership and management, governance bodies, access to capital, family members, employment, ownership policy and education of family members. Ducatillon said wealthy families are evolving with trends such as longevity and the rise of the 100-year-old chief executive. Also contributing to this evolution are accelerating shifts in sociocultural values; the increase in blended families; the rise of women wealth owners, the move from top-down to collaborative governance models; and technology's role in transforming how families institutionalise wisdom across generations. Citing a McKinsey report, she noted that some US$5.8 trillion in assets will be transferred across generations in Asia-Pacific between 2023 and 2030 by wealthy families, and that many family offices report that preparing the next generation to take on wealth responsibly is a major challenge.
