NEWS
Since 2010, China’s exports of goods and services have exceeded those of the US and the gap continues to widen. In 2024, the US trade deficit with China in goods was US$295 billion (the U.S. imported $439 billion in goods from China, and it exported $144 billion there).
A weak Yuan makes China’s exports cheaper for its US customers, while making US imports dearer at home. Trump asserts that this is done on purpose and amount to currency manipulation by China.
Unlike the USD or Greenback which fluctuates in value, the value of the Yuan against USD is carefully monitored and controlled by the Peoples Bank of China (PBOC), its central bank.
Eg if the Yuan strengthens against Greenback, the PBOC would sell its own currency to buy USD. China has forex reserves of around US$3 trillion currently which gives it plenty of ammunition to manage its currency value.
On the other hand, China doesn’t let the outside world do the same to its currency. China has capital controls that make it hard to move money in and out of China, i.e. the private market cannot swamp what the PBOC is trying to do.
Chinese citizens cannot buy more than US50,000 each year. Furthermore they are not allowed to use this money to purchase foreign assets. Therefore it’s not easy for Chinese money to leave China.
At the same time, it’s not easy for foreigners to the flood in and buy assets in China.
The entire system may not be airtight but it achieves what China wants it to do, meaning that China pretty much has full control over its currency.
But does China actually manipulate its currency?
In 1993-94 the Yuan weakened substantially against the USD and held steady around RMB8:USD1 level for a decade thereafter. It’s likely that the Yuan was deliberately kept weak to fuel the export boom.
From 2018 when the first Trump administration imposed tariffs on China, the Yuan weakened from around RMB6.3 to RMB7 to USD1.00
At todays rate of RMB 7.3, theYuan has actually strengthened against USD from 20 years ago when it was closer to RMB9.
There is more money wanting to exit China today than there is wanting to enter. If capital controls were removed, the Yuan would probably fall against USD. This does not gel with the assertions that China artificially depresses its own currency.
If Manipulation is defined as “intervening/managing”, then China is always doing it.
A Fixed Exchange Rate is by definition Currency Manipulation. The question is whether the Fixed Exchange Rate undervalues or overvalues the currency.
However apart from the US, no other country has a framework of labelling countries as a Currency Manipulator. No other country really cares like how the US does.
Source: YouTube CBC News
Since the Reciprocal Tariffs announcement by Trump on 2/4/25, this was how the S&P 500 ended:
2/4/25 – 5670
3/4/25 – 5396
4/4/25 – 5074
7/4/25 – 5062
8/4/25 – 4983
a loss of 12.1% in the 4 days following the announcement and a drop of 19% from its peak of 6147 in Feb 2025.
Based on data collected by Creative Planning Chief Market Strategist Charlie Bilello, the S&P 500 has endured 15 Four-day Declines of 11.5% to 28.5% between 1950 and 2025. This period saw dramatic falls during the Black Monday crash of 1987, the Global Market Collapse of 2008, and the 2020 COVID pandemic crash. In these scenarios, the analyst worked out that the total returns (including dividends) of the S&P 500 at the one, three and five-year periods following each of these four-day declines were always higher than the total decline at the time.
Source: Yahoo Finance
Billionaire investor Ken Fisher (who is the son of Phil Fisher*) weighed in on the possibility of a recession this year with his dismal outlook if tariffs aren’t rolled back following the 90-day pause in reciprocal tariffs.
“If it does not resolve that President Trump and crew have negotiated some deals and then put all of this nonsense behind us, or 90% of all this nonsense behind us, you’ll see a very bad economic effect that will cause a recession, and it will be recession before the end of the year.”
While it’s too early to declare a recession, Fisher was quoted as saying:
“We never get a recession unless the US stock market and global stock market have peaked from an all-time high and gone down for three or fourth months,” said Fisher. “It won’t start any sooner than that.”
Source: The Street
* Phil Fisher, the author of “Common Stocks and Uncommon Profits” is credited as the father of value investing and widely revered by investment legends such as Warren Buffett.
CPO’s price premium to Soy Bean Oil has started to reverse This ends the rare occurrence that has pervaded in the five months since November 2024. This follows on from increased supply due to output recovery from palm oil producers in Malaysia. Lower CPO prices recently have spurred demand from India which is the world’s largest importer currently. The long term dynamics for CPO prices remain positive due to weak supply growth expectations for most food oils except soybean.
Source: TheEdge
Anything can happen in an escalating trade war between US and China. According to Goldman Sachs. US institutions currently hold some $250 billion or 26% of total Chinese ADRs while their Hong Kong stock holdings amount to $522 billion. Together with their holding of China A Shares, total exposure of some $800 billion. In the extreme scenario of financial separation between the two countries, US investors could potentially be forced to divest of their investment holdings in China equities.
Source: Times of India
Against the backdrop of the current US Treasury sell off, it is interesting to note that Canada and Japan were among the biggest net buyers during the preceding month. Foreign holdings of Treasury securities hit a high of US$8.82 trillion in February. Here’s a tally of the large foreign holders:
Japan $1.13 trillion
China $784.3 billion
UK $750.3 billion
Belgium US$394.7 (include Chinese custodial accounts)
The foreign holdings for April will only be revealed in June, giving more clarity over any weaponization issue and strategy via US Treasuries.
There are trade war theories that China is weaponizing their US Treasury holdings although some analysts disagree as the sell down may necessitate capital being moved back into China causing yuan appreciation. Others say that China can also convert the proceeds into Euros or German bunds. May explain Germany’s bunds bucking a wider sell-off in long-dated Treasuries last week. Other theories point to Japan’s life insurers selling due to concerns about US policy flip-flops, while others say it is the Hedge Funds and Bond Vigilantes.
Source: CNBC
When the 50-Day Moving Average crosses below the 200-Day Moving Average, some chartists see this signal as a turning point known as a “death cross.” The S&P 500 suffered its first death cross since 2022 this week whereby investors can potentially suffer substantial short-term losses.
Source: TheStreet
Notwithstanding the current trade war climate, CIMB Research does not believe that the price-to-book valuations of banking stocks will fall to the COVID-19 lows of 0.3 to 0.5x Book Value. During the pandemic lockdown, 70% to 80% of loans were placed under moratorium in the initial phase, before dropping to 30% on an opt-in basis towards the end of 2020. However in the current scenario, loan relief assistance can be more targeted towards exporters and affected companies in the supply chain, making the current uncertainty less widespread as compared to the pandemic days.
Source: TheStar
Out of curiosity, we asked Google Gemini and below is the answer.
While there isn’t a specific law mandating that banks in Malaysia must hold a certain percentage of their assets in government bonds at all times, they are indirectly required to do so through the Statutory Reserve Requirement (SRR) framework managed by Bank Negara Malaysia (BNM), the central bank of Malaysia. Here’s a breakdown:
Statutory Reserve Requirement (SRR): The SRR is a tool used by BNM for liquidity management in the banking system. It requires banking institutions to maintain a specified proportion of their eligible liabilities in a Statutory Reserve Account (SRA) with BNM.
Flexibility with Government Securities: BNM provides flexibility to banking institutions in meeting their SRR obligations. Since March 2020, BNM has allowed Principal Dealers to recognize Malaysian Government Securities (MGS) and Malaysian Government Investment Issues (MGII) of up to a certain limit as part of their SRR compliance. This measure was introduced to ensure sufficient liquidity in the banking system.
Purpose of Government Bond Holdings: While the primary purpose of holding MGS and MGII under the SRR framework is to meet the statutory reserve requirements, it also means that banks do hold a certain amount of government bonds as part of their liquid assets.
Liquidity Requirements: Beyond the SRR, banks in Malaysia are also subject to other liquidity requirements and prudential regulations set by BNM to ensure they have sufficient liquid assets to meet their obligations. Government bonds, being highly liquid and considered low-risk, often form a part of these liquid asset holdings.
In summary: There isn’t a direct law stating banks must hold a specific percentage of government bonds. However, the SRR framework in Malaysia allows banks to use government securities to meet their reserve requirements, effectively making them a component of banks’ mandatory holdings with the central bank. Additionally, for overall liquidity management, banks often choose to hold government bonds due to their liquid and low-risk nature, aligning with regulatory expectations.
It’s important to note that the specific regulations and the extent to which government bonds can be used for SRR compliance can be adjusted by Bank Negara Malaysia based on economic conditions and monetary policy objectives. As of February 2025, the Statutory Reserve Requirement (SRR) for commercial banks in Malaysia was 2.0%.
China’s GDP in 2023 was $18 trillion. It exported goods to the US worth US$440 billion (less than 2.5% of its GDP). Furthermore China only imported around US$150 billion worth of goods from the US. So why should it be concerned? Here’s the answer according to Google Gemini:
1. The Absolute Value and Contribution to Growth:
While the percentage might seem small, the absolute value of exports to the U.S. is still enormous (hundreds of billions of dollars). This contributes significantly to China’s export revenue, which has historically been a major driver of its economic growth and employment. Even a small percentage of such a large GDP translates to a substantial impact when lost or reduced.
2. Interconnectedness of Supply Chains:
A significant portion of China’s exports to the U.S. are intermediate goods and components that are part of complex global supply chains. Tariffs on these goods can disrupt these chains, impacting not only Chinese manufacturers but also U.S. businesses and consumers. Disruptions can lead to decreased efficiency, increased costs, and the need for companies to find alternative suppliers, potentially leading to a longer-term shift away from China.
3. The U.S. Market’s Importance:
The U.S. is a major consumer market with significant purchasing power. Access to this market has been crucial for the growth and development of many Chinese industries.
Losing or facing restricted access to the U.S. market can limit the growth potential of these industries and force them to find alternative markets, which may not be as large or as profitable.
4. Signaling Effect and Future Uncertainty:
U.S. tariffs and trade policies can create uncertainty for Chinese businesses regarding future trade relations. This uncertainty can deter investment, impact long-term planning, and encourage diversification of supply chains away from China by other countries and companies.
Even if current tariffs only affect a small portion of GDP, the potential for further escalation and broader restrictions is a significant concern.
5. Impact on Specific Sectors and Employment:
While the overall GDP impact might be small, certain sectors in China are heavily reliant on exports to the U.S. Tariffs can have a significant impact on these specific industries, leading to job losses and economic disruption in those regions. Examples include electronics, machinery, textiles, and toys.
6. Trade Balance and Currency Issues:
The large trade surplus China has with the U.S. has been a point of contention. U.S. tariffs are often aimed at reducing this trade deficit. While the overall GDP impact might be limited, changes in the trade balance can have implications for currency exchange rates and China’s foreign exchange reserves.
7. Geopolitical Implications:
Trade issues are often intertwined with broader geopolitical tensions. China is concerned that U.S. trade policies are part of a larger strategy to contain its economic and technological rise.
In summary, while the direct percentage of China’s GDP from exports to the U.S. might appear small, the absolute value, the interconnectedness of supply chains, the importance of the U.S. market for specific sectors, the potential for future escalation, and the broader geopolitical implications all contribute to China’s significant concern regarding U.S. trade policies and tariffs. The impact goes beyond just a simple percentage of GDP.
Source: Google Gemini
More Reading: List of Top Products exported by US to China
2020 COVID-19 Market Crash
S&P 500 dropped almost 14% over two days on 11 and 12 March, bottoming out on 23 March, with declining another 10% making a total decline from peak of around 34%. This was a steep yet quick fall with a fast recovery due to Fed intervention.
2008 Subprime Mortgage Crisis
S&P500 declined by 8.8% on 29 Sep and later declined by about 20% the week of Oct. 6. The market found a bottom five months later in early March 2009 losing another 44% after the initial plunge on 29 Sep. The S&P500 lost more than half its value during the five month bear market and took more than five years for the market to return to new highs. The Fed slashed interest rates to near zero percent and initiated QE.
1987 Black Monday
The DJIA lost 22.6% on 19 Oct as a result of to overvaluation and speculation. It reached a second bottom in early December and took nearly two years to reach new highs. The crash was a valuation reset after a long bull market.
1929 Wall Street Crash
The Dow Jone plunged 23% over a two-day period in late October resulting from runaway speculation and high valuations. Several tough followed as the DJIA would decline another 82% before reaching a bottom in July 1932. The Dow’s peak to trough decline was 89% and it took 25 years for the market to fully recover.
Source: Motley Fool
The US Treasury received US$9.0 billion of customs revenue for March, a US$2.0 billion increase from 2024. The federal deficit hit US$1.31 trillion in six months, up 15% from a year earlier.
Source: AHIB
In Malaysia, around 1.4 million hectares (25% of total planted area) are nearing the end of their productive life. In Sabah alone, one in three trees is over 20 years old. Without aggressive replanting, yields will fall, costs will surge and the industry will stagnate. Replanting costs around RM30,000 per hectare with a maturity horizon of 3 years. In 2023 and 2024, only 132,000 HA and 114,000 HA were replanted respectively. Companies with ageing trees will be hit hardest when palm oil prices dip.
Source: The Star
If you’re not willing to keep your chin up during the occasional rout, he continued, “you’re not fit to be a common shareholder, and you deserve the mediocre result you’re going to get compared to the people who can be more philosophical about these market fluctuations.” Charlie Munger
For investors, when you have the opportunity to buy assets at a huge discount, it’s important to seize the moment to the best of your ability, and not leave your money sitting on the sidelines while you wait for things to get better, Munger said.
Source: CNBC
Company debt sales have ground to a halt in the US following Trump’s escalating trade war and fears of a global recession. Several leveraged loan sale and debt refinancing have been put on hold and no new US investment-grade bonds have been issued since Wednesday 2/4/25. Transactions on riskier debt are being pulled or postponed, while perceived risk for high-grade and high-yield US corporate bonds are flashing warning signs.
Source: The Star
Carmakers on average have just under three months’ worth of inventory on hand in the United States, according to data from automotive services provider Cox Automotive, giving them some breathing room to keep supply intact until they establish a longer-term strategy for dealing with the tariffs.
Source: Reuters
The DJIA index fell 22.6% on Monday 19 October 1987, plunging 508 points to 1738. In the wake of Trump’s tariff war announced on 2/4/25, a similar percentage fall on Monday 7/4/25 would have taken 8,000 points off the DJIA. As it turned out, Monday was relatively calm following Thursday’s 5% drop and Friday’s 6% drop.
Source: 247 Wallst
US imports a lot more goods from China (US$439.7 billion) than it exports (US$144.6 billion).
Soybeans, oilseeds and certain grains were a key US export to China, amounting to US$13.4 billion last year. And China bought 52% of US soybean) exports in 2024.
Source: Malay Mail
Nike stock price rallied 4% after Trump’s post that he had a call with Vietnam’s To Lam. About 25% of Nike’s footwear is made in Vietnam. Nike is also one of the biggest holdings of Ackman’s portfolio. On 28/6/24, it reported sales that missed analyst estimates. The stock fell 20%, its biggest one-day drop since 1980. Nike’s stock price had tumbled 30% in 2024.
Source: The Street
Trade war will result in China moving towards alternative agriculture suppliers including Brazil. China is imposing additional duties of 34% on all US goods (on top of the 10%-15% tariffs) placed on US$21 billion worth of agricultural products, effectively closing doors on all US agricultural imports. The main impact will be on products like soybeans and sorghum, not so much on wheat and corn as China has not been buying much of wheat and corn from the US in 2025. EU is likely to put tariffs on US soybeans, leading to product substitution to others such as palm oil.
Source: The Edge
1. Trump’s (特离谱) All-Out Tariff Strategy
Trump’s “global tariff” plan is not primarily aimed at fixing trade deficits or reshoring manufacturing. It is a geopolitical and financial maneuver to force all countries to bear the cost of U.S. debt—a move to “leverage U.S. market access to coerce foreign cooperation.”
2. The Real Crisis: U.S. Sovereign Debt
As of early 2025: Debt: $36 trillion+
Annual tax revenue: $5 trillion
Annual spending: $6.75 trillion
Debt interest: $1.12 trillion
This creates a dangerous debt spiral: deficit → borrow more → pay more interest → deeper deficit.
3. August 2025 Deadline: The Ticking Bomb
Debt ceiling set at $36.1 trillion.
U.S. Treasury using emergency measures to avoid breaching the cap.
Come August–September 2025, funds will be exhausted unless the cap is raised.
4. Need for $6 Trillion in 2025
To stay afloat in 2025, the U.S. needs to raise:
$3 trillion (for maturing bonds)
$1.12 trillion (for interest)
$2 trillion (budget deficit)
=> Need total of $6 trillion in new debt
The market may not be able to absorb such volume, threatening the collapse of the U.S. Treasury market and dollar credibility.
5. Trump’s Initial Moves
Budget cuts: $2 trillion
Cut foreign aid (e.g., Ukraine), sell immigration “green cards”
Created “Department of Government Efficiency” led by Elon Musk (which failed)
These actions hint at an impending fiscal cliff, and tariffs are just phase one of a larger plan.
6. Conclusion
Tariffs won’t raise $6T before August 2025.
Trump is forcing countries to indirectly pay by buying U.S. debt.
Expect further escalation if countries resist.
The goal: Avoid default, preserve dollar hegemony, and control inflation without expanding the Fed’s balance sheet.
Source: Unknown
More Reading: The Secret Tax
A steep correction could be in store for gold price according to Morningstar’s Jon Mills. There are long-term trends that could push bullion back to $1,820. Current high price and margins are encouraging greater production and exploration. Global central banks purchased a net 1,045 tons of gold through 2024, the third straight year of purchases over 1,000 tons. Inflows into Gold ETFs reached $9.4 billion in February, the highest inflow in nearly three years (World Gold Council data). But there are signs that the world’s appetite for gold is starting to wane. In a survey by WGC last year, 71% of central banks said they expected their own gold holdings to remain the same or decrease in the coming 12 months. Also investor appetite will likely dip, given that economic concerns are typically only short-term factors influencing gold prices: Eg Gold price briefly spiked in 2020 in response to pandemic fueled concerns. But price fell quickly thereafter and didn’t reach the prior peak until late 2023.
Source: Yahoo Finance
Foreign investors extended their selling streak on Bursa Malaysia for the 22nd consecutive week, with a net outflow of RM1.25 billion. Foreign ownership in Malaysia Treasury Bills in Feb 2025 stood at 52.7%, while Bank Negara Malaysia’s international reserves stood at US$118 billion.
Source: The Edge
According to BoA, S&P500 could see 12% drop to 5000 in a downturn with increased unemployment, then increase to 5500 to end 2025. At the time of publication (EOD 27/3/25), S&P500 closed at 5712 and tumbled to 5074 at EOD 4/4/25 in response to Trumps’ Liberation Day tariff announcement on 2/4/25.
Source: Business Insider
Vietnam will cut its tariffs on several U.S. products including LNG and cars, and moved to approve Starlink services, as the country tries boost US imports and avoid being hit with U.S. tariffs because of its trade surplus which exceeded $123 billion last year. Under the new plans, the tariff on American LNG will be cut from 5% to 2%, automobiles from a range of 45% to 64% to 32% , and on from 10% to 5%.
Source: Reuters
Malaysia’s IPO sentiment has cooled significantly since 20/2/25, despite strong subscription rates.
Source: New Street Time
It opened 17% lower at 73sen and closed at 83sen, making it the third listing to close below IPO price in 2025.
Source: TheEdge
According to JP Morgan Chase, the $5.5 trillion S&P 500 correction was most likely driven by two types of equity hedge funds adjusting their positions rather than investor concern about a potential recession: Quant hedge funds & TMT sector hedge funds. Quant hedge funds typically use data and code to make investment decisions, while TMT sector hedge funds primarily invest in firms related to technology, media and telecommunications. Bank of America said S&P500 has more downside potential before reaching a price floor while Morgan Stanley said S&P500 is now hovering at an area where it could ignite tactical rallies, saying that 5,500 should provide support for a tradable rally led by cyclicals, lower quality, and expensive growth stocks that have been hit the hardest and where the short base is the greatest. As it turned out, the recent falls from 3/4/25 to 8/4/25 were much more severe than anyone expected.
Source: Daily Hodl
US imposed a 25 percent tariff on virtually all goods produced by their two top trading partners — Canada and Mexico. At the same time it also imposed a 20% tariff on all China goods. As a result, the average tariff level is now higher than at any time since the 1940s. China and Canada immediately retaliated.China hit back with a 15 percent tariff on American agricultural products and the Canada putting a 25 percent tariff on $30 billion of US goods. Mexico vowed retaliatory tariffs.
Source: Vox
Share Price: RM5.73 | Target Price: RM5.70 | Rating: Neutral
AMMB Holdings reported a FY25 Q3 net profit of RM486.5m dragged by lower non-interest income and higher operating expenses. 9 Month net profit increased by 6.9% YoY to RM1.49bn, driven by NIM expansion and lower impairment charges. Results were above estimates and were mainly due to lower credit cost. Public Investment Bank maintained its Neutral call while raising its FY25-27 forecast earnings by an average of 7% on a lower credit cost assumption. It increased its dividend-based TP to RM5.70.
AMBANK Results Update for Q4 Ending 31/3/24
Research House: Public Investment Bank (PIB)
Analyst: Wong Ling Ling
FY2025 Forecast: Net Profit: RM1,939m | EPS: RM0.585 | DPS: RM0.293
Share Price: RM5.73 | Target Price: RM6.30 | Rating: Buy
AMBANK’S core net profit of RM487m in q3 FY25 (-3% QoQ, brings 9MFY25 total to RM1.5bn (+53% YoY). This was slightly above HLIB’s estimates, due to lower-than-expected loan loss provision.
AMBANK Results Update for Q4 Ending 31/3/24
Research House: Hong Leong Bank Investment Bank (HLIB)
Analyst: Chan Jit Hoong, CFA, CPA
FY2025 Forecast: Net Profit: RM1,979m | EPS: RM0.597 | DPS: RM0.270