Market Focus Daily: Monday, June 23, 2025
Singapore and Asian markets trade lower after US strikes on Iran; Oil hits five-month high; Singapore core inflation slows as food and recreation prices fall; UBS downgrades Thai stocks to neutral as political woes weigh.
Synopsis: Market Focus Daily is a closing bell roundup by The Business Times that looks at the day's market movements and news from Singapore and the region.
Written and hosted by: Emily Liu (emilyliu@sph.com.sg)
Produced and edited by: Chai Pei Chieh & Claressa Monteiro
Produced by: BT Podcasts, The Business Times, SPH Media
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Business Times
5 hours ago
- Business Times
Americans cash out on gold coins as Asian investors bulk up
Americans who once snapped up gold bars and coins are offloading the assets while their Asian counterparts show no letup in bullion buying, a sign that investors on opposite sides of the world have different outlooks on the global economy. The divergence suggests US residents who stash bars and coins at home or in safe deposit boxes – akin to stock market day traders – are more at ease about US President Donald Trump's tariffs, rising government debt and geopolitical tensions. And, they're ready to cash in after the metal's stunning rally over the past two years. Known as retail investors, these Americans are bucking broader market trends in which more wealthy investors continue to aggressively buy the haven asset as do sovereign funds and central banks. Meanwhile, Asian gold buyers are eschewing jewellery for bars and coins. In the US, 'a lot of the retail investors tend to be Republican-leaning. And whatever we say about the policy of tariffs, they like the idea of how Trump's doing', said Philip Newman, managing director at research consultancy Metals Focus. 'So from their point of view, there's less reason to buy gold.' The US market is so awash with bars and coins that some precious metals dealers have slashed their premiums to the lowest in six years to spur sales. And when investors sell, they're now looking at paying dealers a fee to offload gold. Bullion dealer Money Metals Exchange currently charges buyers of one-ounce American Eagle gold coins US$20 over spot prices, compared with US$175 four years ago. And sellers now need to pay about US$20 for the online exchange to take the metal, whereas in 2021 they would have received an extra US$121 for selling. 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 glut has led to a collapse in sales of newly minted bullion products, with the US Mint's American Eagle gold coins – a proxy for retail demand – tumbling more than 70 per cent in May from the prior year. The demand for gold bars and coins has been falling for the past three years in North America and Western Europe while rising everywhere else in the world, with last year marking the biggest divergence on record in data going back to 2014, according to Metals Focus. That gap continued into the first quarter of 2025, driven predominately by the selloff in the US market, according to the consultancy. Meanwhile, demand for bars and coins rose 3 per cent in the Asia-Pacific region in the first quarter, with the Chinese market registering a 12 per cent year-on-year increase, according to the latest data from the World Gold Council, a trade body representing gold miners. South Korea, Singapore, Malaysia and Indonesia all posted gains of more than 30 per cent. Initial worries of China and Asia getting hit the hardest by Trump's tariffs led to 'super strong' demand for gold in the region, said Kenny Hu, a commodity strategist at Citigroup. Concerns about local currency depreciation also means gold remains the go-to asset for Asian investors who played a key role in the metal's rally since 2024. Investors in South-east Asia lacking other investment options have started recognising gold as a strategic asset, said Brian Lan, managing director of GoldSilver Central, a Singapore-based precious metals dealer. 'South-east Asians who have memories of the war understand that gold is a form of insurance during periods of uncertainty,' he said. In the US, profit taking is part of the equation given gold's stunning climb – up 59 per cent since the beginning of 2024 to US$3,274.33 an ounce last Friday (Jun 27). But Wall Street banks are split over whether the rally has ended. Goldman Sachs reaffirmed a US$4,000-an-ounce forecast by next year and Morgan Stanley expects US$3,800 by the end of this year, while Citigroup sees prices dipping below US$3,000 next year. 'When there's fear, they own more gold and less risk assets,' said Hu of Citigroup. 'And now maybe they're thinking things are actually fine. Tariffs are not that bad. Things will get negotiated out. Geopolitics eventually will de-escalate and US growth may be not that bad.' BLOOMBERG
Business Times
8 hours ago
- Business Times
Gold-rich Laos hits mother lode with S-E Asia's first bullion bank amid inflation, currency blues
[VIENTIANE] In the heart of a resource-rich continent famed for metals and gems, one of South-east Asia's smallest economies quietly launched the region's first dedicated gold bank – a bold bid to draw tonnes of the precious yellow metal back into the formal financial system. With protracted double-digit inflation (though gradually easing), hefty debt levels, and renewed kip depreciation plaguing the landlocked nation, Laos is betting big on the safe-haven asset. It is a well-timed gambit, seeing how gold prices hit multiple fresh highs through 2024 before peaking in April 2025 to breach US$3,500 per ounce. This year, the metal has gained some 28 per cent so far. In an interview with The Business Times, Lao Bullion Bank chief executive Chanthone Sitthixay said: 'There are so many commercial banks in Laos and the limitation is that the local currency, the kip, cannot be transacted at the international level. But gold can.' And so he pitched the creation of a local gold ecosystem in 2020 to former Lao prime minister and current President Thongloun Sisoulith, before the bank's eventual launch in December 2024. Dr Chanthone Sitthixay, the CEO of Lao Bullion Bank, pitched the idea of creating a local gold ecosystem to the government back in 2020. PHOTO: LAO BULLION BANK Research suggests that the country still holds more than 1,000 tonnes of gold underground – worth an estimated US$100 billion, said Dr Chanthone. 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, private households currently hold some US$10 billion worth of the precious metal, he added, noting that responsibility falls on the Lao Bullion Bank to coax the wealth back into the formal financial system. Six-month track record As at the first half of 2025, Lao Bullion Bank amassed between 500 kg and 600 kg of gold from private households. Once its refinery – which has a capacity of up to 150 tonnes a year – is completed in end-June, the bank anticipates onboarding gold miners as a new customer segment, noted the CEO. Dr Chanthone expects mining contributions to then make up some 30 per cent of the bank's assets – with households still accounting for the bulk. The target, however, is to scale up refinery services so that gold from miners eventually accounts for 70 per cent of the bank's assets, added the 49-year-old business tycoon. To achieve this, Lao Bullion Bank is eyeing a timeline of around one year, following a government directive requiring all miners to refine their gold to a purity of more than 99 per cent before it can be exported, he said. Miners in the country traditionally exported only the raw metal to foreign markets because of the absence of a comprehensive gold ecosystem that encompasses mining, refining, trading and investment. In the six months since its opening, the bank has opened more than 2,000 accounts and is seeing an increase of about 10 new ones each day. 'We haven't really been bombarding people with promotional campaigns and such,' explained Dr Chanthone. 'We are trying to make sure that the systems and infrastructure are in place.' On customer demographics, the CEO shared that the bank serves both locals and foreigners, including expatriates who work in the country. Interestingly, the bank has observed a higher number of younger clients, driven by growing interest in investing, but whose deposit volumes remain modest. Conversely, it has fewer clients who are older, but they contribute more, he said. Blueprint for growth Within the next three years, the bullion bank intends to expand into four other major Lao provinces: Luang Prabang, Oudomxay, Savannakhet and Champasak, said Dr Chanthone. It currently operates out of a five-storey building in the capital, Vientiane. Bank counters and tellers occupy the ground floor, while the second floor houses a laboratory for testing modest amounts of gold. The third floor holds the information technology and trading rooms, while the upper levels are reserved for office and meeting spaces. Like a traditional commercial bank, it offers deposit, withdrawal and transfer services. What is unique, however, is that the Lao Bullion Bank issues certificates to clients who deposit their gold, and these documents can be used as collateral by customers seeking loans from commercial banks and financial institutions in Laos, said Dr Chanthone. He explained: 'We have 37 banks in Laos and the total deposit amount at these commercial banks is 110 per cent of our gross domestic product (GDP). For gold, we estimate it to be about 100 per cent of GDP.' These deposits combined will make up more than 200 per cent of Laos' GDP, which would demonstrate the country's strong liquidity, he said. 'If customers only deposit gold with the bank, it will not be liquid,' continued Dr Chanthone. 'But once the certificate is issued, they can get financing from other banks, which creates liquidity.' Another novel offering of the bank is its automated vending machines that operate just like conventional ATMs, except that these dispense gold. The machines now offer four types of gold bars – weighing 1 g, 7.5 g, 15 g or 30 g – that come in either a standard design or limited designs of national landmarks That Luang and Patuxay. Two of the 10 machines the bank has are currently placed within the building, while the remaining eight will be installed in hotels, markets and other public places once safe, populated locations have been identified, said the CEO. Two of Lao Bullion Bank's 10 gold vending machines are housed on the ground floor of its building. PHOTO: LAO BULLION BANK Dr Chanthone noted that the primary target audience for these gold vending machines are tourists. He hopes that tourists will come to associate Laos with its gold – the same way Myanmar is known for its jade, Thailand for its rubies, and Sri Lanka for its sapphires. A screen capture of the Lao Bullion Bank's website on Jun 26. The bank sells four different types of gold bars – weighing 1 g, 7.5 g, 15 g or 30 g – that come in either a standard design or limited designs of national landmarks That Luang and Patuxay. SCREENSHOT: LAO BULLION BANK WEBSITE Other initiatives in the pipeline include gold-trading services on international platforms, with the bank's trade team poised to officially begin operating in August. Golden ticket to fiscal stability Set up as a public-private partnership, Lao Bullion Bank is 25 per cent owned by the government, with the remaining 75 per cent share belonging to primarily family-owned investment holding company PTL Holding. The initial capital of US$60 million injected into the bank was accumulated from the various family businesses, said Dr Chanthone, who holds a master's degree and PhD in strategic business management. On whether the move was part of a wider de-dollarisation narrative exacerbated by the US' tariff volatility, the CEO demurred. 'The main objective is to focus on strengthening the local currency by (transitioning it) from non-convertible to convertible; and the country has gold, which can be considered near-cash.' As the third-largest gold producer among Asean member states, Laos aims to become an Asian trading hub for the yellow metal by 2030. The way Lao Bullion Bank supports the nation's goals, said Dr Chanthone, is 'by bringing gold that's out of the system back into the system, making it more liquid… and reducing the supply of M2 in the economy'. M2 is a broad measure of money supply, used by economists as an indicator of potential inflation. Global appetite for gold continues to hold firm, with demand hitting its highest first-quarter level since 2016, according to an Apr 30 report by the World Gold Council on Q1 2025 gold demand trends. Quoting the council's head of Asia-Pacific (ex-China) and global head of central banks Fan Shaokai, the release wrote: 'With the full impact of tariff measures still unfolding, investors continue to turn to gold, recognising its role as a portfolio diversifier that has historically performed well during periods of uncertainty.' Neighbouring Indonesia also opened its first two state-owned bullion banks on Feb 26, some two months after the Lao Bullion Bank's launch. Asked whether there exist opportunities for collaboration with South-east Asia's largest gold producer, Dr Chanthone concurred, noting that the bank has 'really good connections' with the Indonesian government. The bank is a foreign associate member of the Singapore Bullion Market Association. On his hopes for the bank and the country, the magnate concluded: 'The problems of Lao people must be solved by a Lao. I don't just do business; I want to do something that is impactful for the country.' He added: 'We do our best to make the country prosperous.'
Business Times
9 hours ago
- Business Times
China's rare earths are flowing again, but not freely
[BEIJING] The threat of mass shutdowns across the automotive supply chain is fading as Chinese rare earth magnets begin to flow, though automakers and suppliers say production plans still face uncertainties and a continued risk of shortages. European suppliers have received enough licences to avoid the widespread disruptions predicted earlier this month but hundreds of permits remain pending, said Nils Poel, head of market affairs at supplier association Clepa. The rate of issuance is 'accelerating' and has risen to 60 per cent from 25 per cent, he said, but cases where the end users are based in the US, or where products move through third countries like India, are taking longer or not being prioritised. 'Overall the feeling is that we probably will still have production in July and that the impact will be manageable,' he said. 'Maybe here and there a production line will be affected, but we have avoided that for the moment.' On Friday (Jun 27), Ford chief executive Jim Farley said during an appearance in Colorado that the company has had to shut down factories over the past three weeks because of magnet shortages, without elaborating. 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 Volkswagen said in a statement to Reuters its supply of rare earth components was stable while rival Stellantis said it had addressed its immediate production concerns. China restricted exports of seven rare earths and related magnets in April in retaliation for US tariffs. Three months later there remains huge uncertainty about how it intends to police its opaque and complex export licensing system. Since the restrictions were imposed, rare earth magnet exports from China have fallen roughly 75 per cent, forcing some automaker production lines to halt in Asia, Europe and the US. The White House said on Thursday it had signed a deal with China to speed up rare earth approvals without providing details. Beijing said hours later both parties had confirmed details of the deal struck in London earlier this month, which was meant to resolve the rare earth issue, and it would process export licences in accordance with the law. Neither party detailed any changes to the existing export licensing system. US Treasury Secretary Scott Bessent said in an interview with Fox Business Network on Friday that, under the agreement announced on Thursday, rare earth shipments to the US from China would be expedited to all companies that have previously received them on a regular basis. 'I am confident now... the magnets will flow,' Bessent said. 'This is a de-escalation.' Two weeks ago the car industry was in a 'full panic', but licence approvals by China have sped up and there is now less threat of a sudden stop, according to an executive at a leading US automotive supplier and a source with knowledge of the supply chain at a major European carmaker. Both asked not to be named because of the sensitivity of the issue. China is approving the 'bare minimum' of critical licences for European firms to avoid production stoppages, a European official told Reuters, also speaking on condition of anonymity. US magnet maker Dexter Magnetic Technologies, which has defence clients, among others, has received just five of 180 licences since April, CEO Kash Mishra told Reuters, adding those were intended for non-defence sectors. 'It's an extended delay,' he said. 'It's 45 days trying to get the paperwork right for the supplier, and then it's 45 more days or so before any licences are granted.' REUTERS
