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Straits Times
3 minutes ago
- Straits Times
North Korea says South Korea's overtures ‘great miscalculation'
Ms Kim Yo Jong said South Korea President Lee Jae Myung's pledge of commitment to South Korea-US security alliance shows he is no different from his predecessor. SEOUL - North Korea has no interest in any policy or proposals for reconciliation from South Korea, the powerful sister of its leader Kim Jong Un said on July 28 in the first response to South Korean liberal President Lee Jae Myung's peace overtures. Ms Kim Yo Jong, who is a senior North Korean ruling party official and is believed to speak for the country's leader, said Mr Lee's pledge of commitment to South Korea-US security alliance shows he is no different from his hostile predecessor. 'If South Korea expects to reverse all the consequences of (its actions) with a few sentimental words, there could be no greater miscalculation than that,' Ms Kim said in comments carried by official KCNA news agency. Mr Lee, who took office on June 4 after winning a snap election called after the removal of hardline conservative Yoon Suk Yeol over a failed attempt at martial law, has vowed to improve ties with Pyongyang that had reached the worst level in years. In one measure aimed at easing tensions, Mr Lee suspended loudspeaker broadcasts blasting anti-North propaganda across the border and banned the flying of leaflets by activists that had angered Pyongyang. Ms Kim, the North Korean official, said those moves are merely a reversal of ill-intentioned activities by South Korea that should never have been initiated in the first place. 'In other words, it's not even something worth our assessment,' she said. Top stories Swipe. Select. Stay informed. Singapore Sewage shaft failure linked to sinkhole; PUB calling safety time-out on similar works islandwide Singapore Workers used nylon rope to rescue driver of car that fell into Tanjong Katong Road sinkhole World Three dead, several injured after train derails in Germany Singapore Not feasible for S'pore to avoid net‑zero; all options to cut energy emissions on table: Tan See Leng Singapore With regional interest in nuclear energy rising, S'pore must build capabilities too: Tan See Leng Business State-sponsored hackers eye Singapore's businesses for cyber ransom payoffs Singapore New Mandai North Crematorium, ash-scattering garden to open on Aug 15 World US and EU clinch deal with broad 15% tariffs on EU goods to avert trade war 'We again make clear the official position that whatever policy is established in Seoul or proposal is made, we are not interested, and we will not be sitting down with South Korea and there is nothing to discuss.' REUTERS
CNA
22 minutes ago
- CNA
EU, US strike biggest trade deal
TURNBERRY, United Kingdom: The United States and European Union on Sunday (Jul 27) clinched what President Donald Trump described as the "biggest-ever" deal to resolve a transatlantic tariff stand-off that threatened to explode into a full-blown trade war. Trump emerged from a high-stakes meeting with European Commission President Ursula von der Leyen at his golf resort in Scotland to announce that a baseline tariff of 15 per cent would be levied on EU exports to the US. The deal, which the leaders struck in around an hour, came as the clock ticked down on an Aug 1 deadline to avoid an across-the-board US levy of 30 per cent on European goods. "We've reached a deal. It's a good deal for everybody. This is probably the biggest deal ever reached in any capacity," said Trump. Trump said the 15 per cent tariff would apply across the board, including for Europe's crucial automobile sector, pharmaceuticals and semiconductors. As part of the deal, Trump said the 27-nation EU bloc had agreed to purchase "US$750 billion worth of energy" from the US, as well as make US$600 billion in additional investments. Von der Leyen said the "significant" purchases of US liquefied natural gas, oil and nuclear fuels would come over three years, as part of the bloc's bid to diversify away from Russian sources. Negotiating on behalf of the EU's 27 countries, von der Leyen had been pushing hard to salvage a trading relationship worth an annual US$1.9 trillion in goods and services. "It's a good deal," the EU chief told reporters. "It will bring stability. It will bring predictability. That's very important for our businesses on both sides of the Atlantic," she said. She said bilateral tariff exemptions had been agreed on a number of "strategic products", notably aircraft, certain chemicals, some agricultural products and critical raw materials. Von der Leyen said the EU still hoped to secure further so-called "zero-for-zero" agreements, notably for alcohol, which she hoped to be "sorted out" in coming days. Trump also said EU countries, which recently pledged to ramp up their defence spending within NATO, would be purchasing "hundreds of billions of dollars worth of military equipment". "BEST WE COULD GET" The EU has been hit by multiple waves of tariffs since Trump reclaimed the White House. It is currently subject to a 25 per cent levy on cars, 50 per cent on steel and aluminium, and an across-the-board tariff of 10 per cent, which Washington threatened to hike to 30 per cent in a no-deal scenario. The bloc had been pushing hard for tariff carve-outs for critical industries from aircraft to spirits, and its auto industry, crucial for France and Germany, is already reeling from the levies imposed so far. "Fifteen percent is not to be underestimated, but it is the best we could get," acknowledged von der Leyen. Any deal will need to be approved by EU member states, whose ambassadors, on a visit to Greenland, were updated by the commission Sunday morning. They were set to meet again after the deal struck in Scotland. German Chancellor Friedrich Merz rapidly hailed the deal, saying it avoided "needless escalation in transatlantic trade relations". The EU had pushed for a compromise on steel that could allow a certain quota into the US before tariffs would apply. Trump appeared to rule that out, saying steel was "staying the way it is", but the EU chief insisted later that "tariffs will be cut and a quota system will be put in place" for steel. "THE BIG ONE" While 15 per cent is much higher than pre-existing US tariffs on European goods, which average around 4.8 per cent, it mirrors the status quo, with companies currently facing an additional flat rate of 10 per cent. Had the talks failed, EU states had greenlit counter tariffs on US$109 billion of US goods including aircraft and cars to take effect in stages from Aug 7. Trump has embarked on a campaign to reshape US trade with the world, and has vowed to hit dozens of countries with punitive tariffs if they do not reach a pact with Washington by Aug 1.
Business Times
33 minutes 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.'
