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Business Times
19 hours ago
- Business
- Business Times
As end of tariff pause looms, Malaysia could ‘gain greater prominence' in trade: Maybank
[SINGAPORE] Malaysia may be poised to shine in the next phase of global trade, said analysts from Maybank Investment Banking Group. This is in light of a likely fresh wave of US-led tariffs under 'Trade War 2.0'. The overall pause on reciprocal tariffs set by US President Donald Trump will be lifted on Jul 9, with the leader broadly suggesting that he will not extend its deadline. Malaysia could become more competitive as a trading partner, said regional co-head of Maybank's macro research team, Chua Hak-Bin, on Tuesday (Jul 1). 'Outcome of the negotiations between US and key trading partners – including Malaysia – on US reciprocal tariffs as the end of the 90 days suspension approaches will be key to watch,' he added. The country's weighted average tariff rate stands at 12.6 per cent with the pause – lower than that of other regional counterparts, such as Indonesia's 16.9 per cent, the report indicated. On Wednesday, Trump announced that a new trade deal with Vietnam was reached. Exports from the South-east Asian country to the US would be tariffed at 20 per cent, while US exports to the latter would face no tariffs. Goods that were deemed to be transhipped via Vietnam to the US would also face a 40 per cent tariff. 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 Maybank analysts on Thursday said that the deal appears to be rather 'one-sided', compared to the other deals with the UK and China. They also noted it has not been officially confirmed by Vietnam. 'Vietnam may see some rewards for its efforts to get its tariffs reduced substantially, but the possibility of a full reduction to zero tariff or even a 10 per cent tariff could be slim,' the analysts said. 'This is why Vietnamese dong may continue to remain on the backfoot,' they added. Malaysia versus Vietnam Due to companies increasing their imports and boosting stockpiles before the next round of tariffs come into effect – also known as 'frontloading' – exports to South-east Asian countries are increasing exponentially as firms capitalise on the 90-day pause period, said Maybank. For example, Asean electronics exports grew 31.4 per cent year on year in April, accelerating from 17.8 per cent in Q1 2025. Chua said: 'In the first trade war earlier this year, the biggest beneficiaries of shifts in supply chains were Vietnam and Malaysia.' He observed that the frontloading boost is particularly strong in Vietnam, in addition to countries such as Malaysia, Thailand and Indonesia. In June, the country's benchmark VN Index touched a three-year high, buoyed by expectations that the final tariff rate after ongoing negotiations with the US will be significantly lower than the current headline rate of 46 per cent. Vietnam's visitor arrivals also continued to spike in Q1, around 130 per cent above 2019 levels, and above 140 per cent in Q2 this year, significantly faster than its peers in the South-east Asian region. 'But for the next round, in light of its potential wider gap in reciprocal tariff rates compared to Vietnam, Malaysia may catch up and gain greater prominence,' he said. The macro research analyst said that Malaysia will also likely remain at the lower band after the US unveils the finalised reciprocal tariffs, along with Singapore, whose current tariff rate is set at 5.1 per cent. In the event reciprocal tariffs remain, with key exemptions in the areas of pharmaceuticals, semiconductors and relevant equipment, and various metals and minerals, Malaysia's weighted average tariff rate is expected to rise to 17 per cent. Other countries in such a scenario could face up to 53.3 per cent in these tariffs such as Cambodia, while Indonesia may take on a tariff rate of 34 per cent, according to Maybank's estimates. Significant rebound potential amid weak market performance However, Malaysia's market performance has not been strong. As at Jun 19, it recorded a year to date decline of 8.6 per cent in US dollar terms – the second widest loss in Asia after Thailand. The FTSE Bursa Malaysia KLCI has also only been able to recover to pre-Apr 2 levels and is still in negative territory year to date. This is primarily due to macro overhang posed by pending semiconductor and electronics sector-wide tariffs which could severely disadvantage these key export industries, said Anand Pathmakanthan, head of regional equity research at Maybank. For context, Malaysia exports over US$10 billion of semiconductors to the US or around 3.3 per cent of its total exports. But Pathmakanthan is 'overweight' on the laggard Malaysian market, and is confident that it has 'the biggest rebound potential', with clarity around sector-specific tariffs in the areas of semiconductors and electronics. 'Investors can now refocus on robust domestic macro momentum per broad investment upcycle, resilient consumer spending (amid a forecasted rate cut in the third quarter of 2025 to provide further support), and maturing policy initiatives such as fiscal reforms and the up-and-coming Johor-Singapore Special Economic Zone,' he said. Lim Sue Lin, head of research of Malaysia at Maybank, said that the Malaysian government continues to be in negotiation with the US on these reciprocal tariffs while this report was written. 'A further risk that could arise from here is the extended Middle Eastern tensions,' she said. 'Softer macro and any market weakness in the second half of 2025 would offer investors an opportunity to accumulate stocks, especially the banks, which we believe stand out as long-term winners,' she added.
Zawya
08-04-2025
- Business
- Zawya
Soybeans wait in the wings while US, China exchange blows: Braun
(The opinions expressed here are those of the author, a market analyst for Reuters.) NAPERVILLE, Illinois - U.S.-China Trade War 2.0 is heating up and soybeans, China's top U.S. import, are in the crosshairs once again. But the soybean battle may be lackluster right now because of how little trade is done at this time of year and how few U.S. cargoes are left to ship to China this season. It is well known that China in recent years has reduced reliance on U.S. beans while leaning more heavily into the Brazilian market. Last week's U.S. tariff onslaught – and China's retaliatory response – come nearly seven years to the day that Beijing first announced intended measures against U.S. soybeans, early in the first U.S.-China trade war. Back in 2018, this appeared a senseless, self-damaging move for China, as all analysis indicated no possible path for China to avoid importing U.S. soybeans. However, Beijing for a time was able to shun the American oilseed to a much larger degree than expected based on a one-off, catastrophic spread of disease throughout its hog herd, slashing feed demand. Today, data suggests that China should still need some degree of U.S. soybeans, albeit lower volumes than previously. But don't expect those purchases to show up anytime soon. BY THE NUMBERS As of March 27, China had purchased 22.12 million metric tons of U.S. soybeans for shipment in 2024-25, which ends August 31. That is a 12-year low for the date aside from the first two trade-war years. Still, China accounts for 48% of total soybean sales so far, highlighting its importance in U.S. trade. Only about 600,000 tons of China's 2024-25 U.S. bean commitments were unshipped as of March 27, representing above-average export progress. U.S. Department of Agriculture data on Monday showed another 341,000 tons of U.S. beans inspected for export to China in the week ended April 3. This means only a handful of cargoes are left to ship, reducing the risk that China cancels orders. But 2 million tons of unshipped beans booked to unknown destinations remained on the books as of March 27. While that is an average volume when compared with overall sales, it leaves room for potential Chinese cancellations. There is no risk of China terminating 2025-26 contracts since there are none in existence. Last year, China began buying 2024-25 U.S. soybeans in mid-July, its latest start since 2005, and a similarly delayed onset this year would not be surprising. BRAZIL'S ROLE 'Black swan' events are unpredictable, in theory. No one knew that African swine fever could allow China to shut out U.S. beans in 2018. But under business-as-usual, China likely cannot eliminate the U.S. oilseed yet. Recently, both China and Brazil have respectively imported and exported roughly 100 million tons of soybeans per year. So theoretically, Brazil could almost fully cover China's annual needs. But Brazil has other customers, and its soybean supplies are usually thin in the months leading up to harvest, which is when U.S. beans are plentiful and cheaper. China also prefers U.S. beans for its state reserves, as lower moisture levels allow for better storage. China has increased dependence on Brazil, but the reverse is not exactly true. China was the destination for 73% of Brazilian soybean shipments in 2024. That compares with 75% in 2013 and a 75% average ever since. This suggests it is highly unlikely that Brazil would suddenly shift all its bean business exclusively to China. However, if Brazil's crop continues to expand faster than Chinese demand, China would be able to continue slowly phasing out U.S. soybeans. While China is likely to remain the top destination for U.S. soybeans for the time being, market participants have learned after the first trade war that when it comes to China, nothing is ever guaranteed. Karen Braun is a market analyst for Reuters. Views expressed above are her own. (Writing by Karen Braun Editing by Matthew Lewis)
Yahoo
04-03-2025
- Business
- Yahoo
Instant View: China to impose extra tariffs of 10%-15% on various US products
(Reuters) - China on Tuesday swiftly retaliated against fresh U.S. tariffs, announcing 10%-15% hikes to import levies covering a range of American agricultural and food products, and placing twenty-five U.S. firms under export and investment restrictions. COMMENTS: DENNIS VOZNESENSKI, ANALYST, COMMONWEALTH BANK, SYDNEY "Chinese tariffs on U.S. wheat and corn imports should be supportive for demand for Australian wheat and barley exports. However, China's recent slowdown in imports of feed grains from all origins should temper the excitement." WAN CHENGZHI, ANALYST, CAPITAL JINGDU FUTURES, DALIAN CITY "Considering that China's peak import period for U.S. soybeans has already passed, the impact of these countermeasures on the total volume of U.S. soybean imports is limited. Any price increases in the future are likely to be more of an emotional market response." OLE HOUE, DIRECTOR OF ADVISORY SERVICES, IKON COMMODITIES, SYDNEY "It is broadly negative for U.S. agricultural markets. It is going to have a bearish influence on prices. There are enough corn and soybean supplies in the world for China to make the switch, it is more of an issue for the U.S., 30% of U.S. soybeans still go to China." EVEN PAY, AGRICULTURE ANALYST, TRIVIUM CHINA "It's notable that Beijing's response is restrained. Trump has now imposed a total of 20% tariffs on all Chinese products. China's tariffs impact a limited number of U.S. products, and remain below the 20% level. This is by design. China's government is signalling that they do not want to escalate, they want to deescalate. "It's fair to say we're in the early days of Trade War 2.0. There's still time and space to avoid a protracted, entrenched trade war if Trump and Xi can strike a deal." ROSA WANG, ANALYST, SHANGHAI-BASED AGRO-CONSULTANCY JCI "From the supply and demand perspective, the short-term impact on the domestic market won't be significant. The reasons are: 1. It is currently the South American soybean season, while the U.S. soybean is in the off-season; 2. The amount of U.S. soybeans purchased by China has decreased, and the proportion of U.S. soybeans in China's soybean imports has dropped to 17%. "However, the large number of products involved this time will add further difficulties to China's aquatic product exports to the U.S., especially tilapia exports. With the additional 10% tariff, the tariff on tilapia exports to the U.S. will reach 45%, making it basically impossible to export to the U.S."
Yahoo
06-02-2025
- Business
- Yahoo
Most markets track Wall St gains, USPS rethink provides boost
Asian and European markets rose Thursday, tracking gains on Wall Street and following the US Postal Service's U-turn on a ban on parcels from China and Hong Kong, though trade war fears continue to dampen sentiment. Global equities have been hit by volatility this week after US President Donald Trump announced hefty tariffs on China, Canada and Mexico. But while he reached deals with the United States' neighbours to delay implementation of the measures, there was no such agreement with Beijing. That was followed Tuesday by news the USPS had scrapped a duty-free exemption for low-value packages from China and Hong Kong -- dealing a heavy blow to Chinese ecommerce giants. But it rowed back on Wednesday, saying it would "continue accepting all international inbound mail and packages". The news provided traders with some positive mood music to start the day. Markets in most of Asia were on the rise, with Hong Kong, Shanghai, Seoul and Sydney up more than one percent. Tokyo, Singapore and Taipei also rose, while London, Paris and Frankfurt opened on the front foot. Manila, Mumbai, Bangkok and Jakarta slipped. However, investors remained on edge about the economic outlook as Trump appeared set to resume the hardball approach to trade and diplomacy seen in his first term. "Trade War 2.0 is different from the US-China Trade War 1.0 enacted in January 2018 in terms of coverage as this time round it involves major trading partners of the US, on top of the ongoing US-China Tech War," said OANDA senior market analyst Kelvin Wong. "Hence, countries that have a significant trade surplus with the US will be at risk of being targeted by Trump's trade tariffs policy; the European Union, Japan, South Korea, and ASEAN export-dependent countries such as Vietnam, and Malaysia. "If trade negotiations are not able to reach the 'middle ground' between the US and the targeted countries, tit-for-tat retaliation measures may escalate." Ongoing uncertainty about the outlook helped safe-haven gold to a new high above $2,882. Disappointing earnings from Google-parent Alphabet weighed on the tech sector, which was already feeling the pinch after Chinese startup DeepSeek released a chatbot it said rivalled those of US tech giants but at a fraction of the cost. Alphabet tanked more than seven percent in New York, while Amazon was off more than two percent. In currency markets, the yen built on its recent gains against the dollar fuelled by expectations the Bank of Japan will continue hiking interest rates as inflation remains elevated. After raising borrowing costs last month, officials hinted at more tightening down the line, and on Thursday top policy board member Naoki Tamura said rates should go up to one percent by the end of the year, from their current 0.5 percent. Among businesses, Nissan rose more than seven percent in Tokyo after reports said it was looking for a new partner amid talk that its flagged tie-up with Honda would not go ahead. Honda fell four percent. A source told AFP on Thursday that Nissan's board was in favour of abandoning the merger talks. On Wednesday, Nissan dropped 4.8 percent and Honda soared more than eight percent. - Key figures around 0810 GMT - Tokyo - Nikkei 225: UP 0.6 percent to 39,066.53 (close) Hong Kong - Hang Seng Index: UP 1.4 percent to 20,891.62 (close) Shanghai - Composite: UP 1.3 percent to 3,270.66 (close) London - FTSE 100: UP 0.7 percent at 8,683.98 Euro/dollar: DOWN at $1.0379 from $1.0397 on Wednesday Pound/dollar: DOWN at $1.2473 from $1.2502 Dollar/yen: DOWN at 152.50 yen from 152.63 yen Euro/pound: UP at 83.21 pence from 83.16 pence West Texas Intermediate: UP 0.2 percent at $71.20 per barrel Brent North Sea Crude: UP 0.1 percent at $74.70 per barrel New York - Dow: UP 0.7 percent at 44,873.28 (close) dan/sn
