Asian Markets Mixed Amid Trade Developments and Rate Cut Hopes
Asian equities ended the trading week on a mixed note on June 27, as optimism over geopolitical developments and US rate cut expectations was offset by weak economic data and profit-taking in key markets.
Investor sentiment received a partial boost after US President Donald Trump announced a rare earth trade deal with China and teased a forthcoming agreement with India.
Meanwhile, the ceasefire between Iran and Israel held steady, and soft US economic data bolstered hopes for Federal Reserve (Fed) rate cuts.
Japan led regional gains, with the Nikkei 225 surging 1.43% to 40,150.79, its highest close since December, while the Topix rose 1.28% to 2,840.54. Tech stocks tracked US peers higher amid easing Middle East tensions and tariff extension speculation.
In contrast, China's Shanghai Composite fell 0.7% to 3,424.23 after data showed industrial profits dropped 9.1% in the first five months of the year, highlighting persistent deflationary pressures and a troubled property sector. Hong Kong's Hang Seng slipped 0.17% to 24,284.15 despite confirmation of a US-China agreement to expedite rare earth shipments.
South Korea's Kospi declined 0.77% to 3,055.94, as investors locked in gains in battery and automotive stocks. LG Energy Solution dropped 3%, while Hyundai Motor fell 2.2%.
Australia's S&P/ASX 200 gave up early gains to close 0.43% lower at 8,514.20, weighed by losses in banking stocks. The broader All Ordinaries shed 0.34% to 8,743.60.
New Zealand bucked the regional trend, with the S&P/NZX-50 rising 0.83% to 12,583.59, marking its second consecutive day of gains.
In commodities, gold slipped over 1% to trade below US$3,300 an oz and the dollar index hovered near a two-year low ahead of the release of the US May Personal Consumption Expenditure price index. Oil prices were poised for their worst weekly loss since March as supply concerns eased.
Investors now turn their focus to key US inflation data for further cues on the Fed's next move. Related
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New Straits Times
32 minutes ago
- New Straits Times
RMAF must go high-tech to meet evolving threats, say experts
KUALA LUMPUR: The Royal Malaysian Air Force (RMAF) must prioritise technological capabilities, cyber integration and layered air defence to adapt to evolving global conflicts, say defence experts. Chasseur Group security and defence analyst Munira Mustaffa said Malaysia could draw important lessons from conflicts such as the war in Ukraine, where a smaller force has managed to deny air superiority to a more powerful adversary. "Air superiority is no longer about numbers. Ukraine has shown that effective, mobile ground-based air defence systems and strong electronic warfare (EW) capabilities can deny access to contested airspace," she said. Munira was commenting on a statement by new RMAF chief Lieutenant-General Datuk Seri Muhamad Norazlan Aris on Thursday that the air force would adapt its long-term posture based on conflicts involving Russia, Ukraine, India, Pakistan, Iran and Israel. Under the Capability Development Plan 2055 (CAP55), the RMAF aims to enhance relevance by shaping its war-fighting capability to ensure threats are deterred and contained. CAP55, among others, calls for the procurement of unmanned aerial systems, airborne early warning platforms, long-range ground-based air defence radars as well as a ground-based air defence system. Munira said the RMAF should focus on several key areas, including investing in mobile and dispersed air defence systems, enhancing joint air-ground integration, expanding offensive and defensive electronic warfare (EW) capabilities, and building low-cost counter-drone systems using small, attritable platforms. "These drones have proven to be highly effective at a fraction of the cost of conventional platforms. For a country like Malay-sia, they offer lethality at range, economy of effort, and are well suited to our defensive doctrine. "Malaysia's current defence budget of US$4.8 billion, of which US$1.3 billion is allocated for maintenance and new procurement, means the RMAF will have to compete for limited resources across the armed services," she said. Munira also said the RMAF must adopt a phased and cost-efficient strategy that leverages existing assets while introducing new capabilities. "Rather than chasing expensive single-solution platforms, the RMAF should look at layered, interoperable systems. "Upgrading current assets, tapping into dual-use technologies with the Home Ministry, and seeking regional training and procurement partnerships are all viable options," she added. Cyber defence should be treated as the foundational priority, given the increasing dependence on autonomous and software-driven systems. "A cyberattack could compromise multiple systems, undermining both EW and drone capabilities," she said. She added that electronic warfare should come next, as it accounts for the majority of counter-drone operations and plays a crucial role in neutralising near-term threats. While she acknowledged the importance of conventional air power, Munira said the RMAF's future edge lied in integrating new and traditional capabilities. "The objective is to integrate cyber, EW and drone systems into a cohesive, layered defence structure." Meanwhile, Universiti Utara Malaysia defence expert Associate Professor Dr Mohamed Faisol Keling said the RMAF must consider the technological aspects of the current geopolitical conflicts, the influence of major powers and the role of international bodies in conflict resolution. "With a limited budget, focus should be given to more critical sectors rather than areas that can be modified, such as management or lower-cost contracts. "The RMAF should work with various universities and industry players to develop high-technology equipment using local expertise," he said. "Many universities can be brought in to collaborate on developing defence assets that align with our national capabilities. "We can look at how Indonesia is now producing its own defence products through local talent."
New Straits Times
an hour ago
- New Straits Times
G7 agrees to exempt US multinationals from global minimum tax
OTTAWA: The Group of Seven nations said Saturday they have agreed to exempt US multinational companies from a global minimum tax imposed by other countries -- a win for President Donald Trump's government, which pushed hard for the compromise. The deal will see US companies benefit from a "side-by-side" solution under which they will only be taxed at home, on both domestic and foreign profits, the G7 said in a statement released by Canada, which holds the group's rotating presidency. The agreement was reached in part due to "recently proposed changes to the US international tax system" included in Trump's signature domestic policy bill, which is still being debated in Congress, the statement said. The side-by-side system could "provide greater stability and certainty in the international tax system moving forward," it added. Nearly 140 countries struck a deal in 2021 to tax multinational companies, an agreement negotiated under the auspices of the Organisation for Economic Co-operation and Development (OECD). That agreement, deeply criticised by Trump, includes two "pillars," the second of which sets a minimum global tax rate of 15 per cent. The OECD must ultimately decide to exempt the US companies from that tax -- or not. The G7 said it looked forward to "expeditiously reaching a solution that is acceptable and implementable to all." On Thursday, US Treasury Secretary Scott Bessent had signaled that a "joint understanding among G7 countries that defends American interests" was in the works. He also asked US lawmakers to "to remove the Section 899 protective measure from consideration in the One, Big, Beautiful Bill" -- Trump's policy mega-bill. Section 899 has been dubbed a "revenge tax," allowing the government to impose levies on firms with foreign owners and on investors from countries deemed to impose unfair taxes on US businesses. The clause sparked concern that it would inhibit foreign companies from investing in the United States. - AFP
Borneo Post
2 hours ago
- Borneo Post
Wrong timing, weak planning: Why businesses are bracing for impact as SST expansion approaches
While aimed at strengthening fiscal resilience, many business associations and industry commentators argue that the move has come at the worst possible time – amid a fragile economic recovery and rising global uncertainties. – Stock photo from Pixabay THE Malaysian government's decision to expand the Sales and Services Tax (SST), set to take effect this July 1, is stirring significant concern across industries as businesses groups sound the alarm on potential impacts on our domestic economy. A tax in troubled times While aimed at strengthening fiscal resilience, many business associations and industry commentators argue that the move has come at the worst possible time – amid a fragile economic recovery and rising global uncertainties. Recent GDP figures reflected this vulnerability as Malaysia's economy grew by 4.4 per cent in the first quarter of 2025, a notable dip from the 4.9 per cent recorded in the final quarter of 2024. The World Bank has also recently revised its 2025 GDP growth forecast for Malaysia downwards from 4.5 per cent to 3.9 per cent, further reinforcing expectations of a slowing domestic economy. Key domestic sectors, including construction and manufacturing, have also begun to slow, while external pressures such as the escalating US-China trade war, US tariffs and escalating geopolitical tensions threaten to further dampen export performance. Amid these headwinds, industry pundits pointed out that the SST expansion risks compounding domestic challenges rather than alleviating them. What's different under 2025 SST expansion? Announced under Budget 2025, the upcoming SST expansion represents a significant widening of the tax base. This includes the expansion of the sales tax to non-essential items such as king crab, salmon, imported fruits, racing bicycles, and antique artworks, while the service tax will now cover a wider spectrum of services such as renting and leasing, construction, financial services, private healthcare, education, and beauty treatments. Finance Minister II Datuk Seri Amir Hamzah Azizan has estimated that the expanded SST will generate RM5 billion in additional revenue in 2025, bringing total SST collection to RM51.7 billion. Of this, RM2.2 billion is expected to come from the sales tax component, while RM2.8 billion from services. Amir Hamzah has emphasized that these changes aim to support government expenditure and social programs without overburdening the lower-income group. Yet, business sentiment seems to paint a different picture. Businesses sound off In a joint statement issued on June 15 by six business associations – the SME Association of Malaysia, Malaysia Retail Chain Association (MRCA), Malaysia Retailers Association (MRA), Bumiputera Retailers Organisation (BRO), Malaysia Shopping Malls Association (PPKM), and the Federation of Malaysian Business Associations (FMBA) have expressed firm opposition to the SST rollout. In particular, the statement criticized the eight per cent service tax on commercial property rentals and leasing services, calling its timing 'gravely misguided'. 'Implementing such a broad-based tax hike amid a fragile recovery will exacerbate inflation, cripple SMEs (small and medium enterprises), discourage investment, and erode consumer confidence,' the consortium said. Already under pressure from cost inflation and sluggish demand, SMEs and retailers who find themselves having to grapple with tighter margins and elevating operating costs may inevitably find themselves having to pass these costs onto consumers which would further reduce household purchasing power and threaten the viability of retail operations. The result, they say, could be widespread downsizing, closures, and job losses – all of which would further weaken the domestic economy. That said, the associations stressed that their opposition is not to the principle of taxation, but rather to the current approach, which they describe as lacking consultation and sensitivity to the current economic realities. Lack of engagement with industries, consumers While the Ministry of Finance had earlier stated that the Royal Malaysian Customs Department was engaging with industry stakeholders to finalise the scope and rate of the tax back in February, the response from many associations suggests otherwise. The Malaysian Iron and Steel Industry Federation (MISIF), for instance, issued a statement on June 20 warning that the SST and the proposed carbon tax would severely undermine the competitiveness of the steel sector especially in the current macroenvironment. MISIF pointed out that over 240 steel-related products – including coking coal, coke, and steel scrap – would be affected. 'These are critical raw materials, and the added cost burden could encourage cheaper imports, discourage local production, and erode Malaysia's manufacturing base.' The association also argued that taxing machinery and equipment contradicts the goals of the New Industrial Master Plan 2030, which emphasizes automation, green steel, and advanced technologies. Moreover, a 10 per cent tax on steel mesh which is widely used in Industrialised Building System (IBS) projects could also slow construction progress, as it shifts contractors away from automation, and increase their reliance on manual labour and foreign workers. Further discord emerged when the Minister of Plantation and Commodities, Datuk Seri Johari Abdul Ghani, announced that his ministry had called for an urgent consultation with stakeholders in the palm oil and oleochemical industries following negative feedback over the imposition of a five per cent SST on oleochemical products. 'I have instructed the ministry to engage with industry players. We want to know specifically which parts are affected. The SST is a taxation system that has already been implemented in our country. 'When receiving significant negative feedback, I said we should not just react; instead, we need to engage with the industry to understand the impact. If it affects competitiveness, only then will we review it,' he told the media after officiating at the Malaysian Palm Oil Board's Technology Transfer Programme 2025 on June 19. While the move indicates a willingness to engage, it also raises questions about the quality and depth of earlier consultations with stakeholders if such an urgent response had to occur. And the chorus of discontent seems to have continued to grow steadily over the last few weeks with associations like the Federation of Malaysian Manufacturers (FMM), the Malaysian Rubber Glove Manufacturers Association (Margma), the Real Estate and Housing Developers' Association (Rehda), the Association of Private Hospitals of Malaysia, and the Master Builders Association Malaysia (MBAM) all calling for the SST changes to be delayed, revised, or restructured. Even consumers have pushed back with many questioning certain aspects of the SST expansions like the broad inclusion of imported fruits as they argue that many daily staples are imported. To this end, Prime Minister Datuk Seri Anwar Ibrahim announced on June 26 that the government had decided to 'compromise' and exempt apples and oranges, which are consumed by the masses from the SST expansion. 'Tax reform is not the issue, a lack of strategy is' Commenting on the issue, Hedki Heng, a corporate culture researcher and serial entrepreneur, regarded the reform of the SST as 'not an inherently wrong move, but doing so without a well-communicated strategy is just lazy policy, which may erode the people's trust'. 'We're not unwilling to contribute. We just want to know what we're contributing toward. How long must we bear it? Is it worth it? In an age of uncertainty, every government decision builds or breaks public trust,' he said. 'When we voted for a government promising reform, transparency, and hope, we weren't just asking for salary reviews or tax tweaks. We wanted long-term structural change. 'But instead we what we got was policies that change so frequently both businesses and the rakyat can't plan ahead, rising taxes and falling subsidies with no real measures to boost incomes, vulnerable communities being pushed to breaking point, and a 'tax first, aid later' model that contradicts with the intent to help and disconnects people from policy,' he lamented. He argued that his current 'change first, explain later' attitude towards new policies gambled with the trust of citizens, and 'is the true crisis at hand'. 'There is a collapse in public trust. The more policies we have, the less trust we seem to gain. And when hope is betrayed, disappointment becomes even heavier. 'Please don't let this opportunity for reform become another chapter of national disappointment,' he warned. 'So, what can we do to fix this?' Well, for Heng, the answer seems obvious. 'What we desperately need now is a clear medium-to-long-term fiscal roadmap that will tell us exactly how Malaysia's revenue will be sustained, how our economy will be restructured and what our tangible fiscal goals are. 'Once that's done then, and only then, can we move towards introducing new policies that have been thoroughly studied and discussed with industry stakeholders. 'Every major policy must include clear explanations of who will be affected, how the pain will be cushioned, and what support systems are in place. No more trial-and-error policies with no accountability,' he stressed. And finally, Heng also emphasised that for the people to tighten their belts for fiscal reforms, the government must also lead by example by reforming government linked corporations (GLCs) and trim inefficiency. 'A bloated public sector and excessive spending cannot be the rakyat's burden anymore.' businesses focus lead SST tax
