Market Focus Daily: Thursday, June 19, 2025
Global stocks edge lower today; Investors take cover in safe havens; The US dollar gains as financial markets are on edge and markets will look to a string of central bank policy decisions out of Europe for any possible catalysts.
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 by: Howie Lim (howielim@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
4 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
5 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
Business Times
a day ago
- Business Times
Mid-year insights: Opportunities amid globalisation's discontents
IN THESE days of waning US-centric investment, some investors are betting that US President Donald Trump's tariff rhetoric may not translate into action, while others pursue strategies tilted toward industrials-heavy nations that may be benefiting from increased defence spending. Either way, the tide turned decidedly global during the first half of 2025. Diversification vs tariff sensitivity Building upon lessons from the Russia-Ukraine war, the United Kingdom recently unveiled plans to significantly raise defence spending and accelerate the development of next-generation security capabilities. The notable rise tracks the trend we've seen in military expenditure across the globe, which reached US$2.7 trillion last year – an increase of 9.4 per cent in real terms from 2023. We believe this localisation of defence production should continue to spur job growth and revitalise smaller industrial centres. South Korea's market has also been lifted given its recent aerospace and defence company gains resulting from global expansion moves and expectations for increased orders on higher European defence spending. A leading South Korean aerospace company formalised its plan to establish a production base in Germany in addition to pursuing other projects in Poland, Romania and Canada, as it moves to strengthen its leadership in the sector. To date this year, South Korea's market saw exchange-traded fund (ETF) net inflows rise more than 121 per cent – higher than any other major Asian economy for the period. It has also widely outperformed the US market year-to-date, returning 21.3 per cent as measured by the Kospi Index (versus 1.1 per cent for the S&P 500 Index). We are optimistic that the recent landslide victory by South Korea's new president Lee Jae-myung can usher in a long-awaited political normalisation for Seoul, following months of political crisis stemming from the impeachment of the country's former leader in December. 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 Eurozone/Germany For the second half of the year, we foresee ongoing opportunities in Germany and the eurozone, which offer differentiated sector allocation compared to the tech-heavy S&P 500 Index. By contrast, Germany's information technology (IT) sector is its third largest. Similarly, the Stoxx Europe 600 Index holds top weightings in financials (around 23 per cent) and industrials (about 19 per cent) firms, with IT making up just 7 per cent of the index. Europe's stock market got an early boost in March when German officials proposed spending hundreds of billions of euros on infrastructure and defence, a notable departure from Berlin's reputation for fiscal austerity. In a significant turnaround for the long-sluggish market, the Stoxx 600 Index outpaced the S&P 500 by about 20 percentage points in US dollar (USD) terms at the end of May. Moreover, the US administration is considering taxing foreign owners of US assets from countries with 'unfair' tax practices, a move that could potentially discourage capital inflows and weaken the USD. This is leading investors to reassess their dollar exposure, particularly after April's simultaneous selloff in US stocks, bonds and USD, which revealed reduced diversification benefits. We believe a stronger euro, resilient corporate earnings and attractive valuations are making the region increasingly appealing, drawing investor attention back to the eurozone. Year-to-date, ETFs focused on the Europe region drew net flows of US$33 billion, bringing total net inflows to US$238.97 billion. Net ETF inflows have risen 19 per cent year-to-date. Germany's proposed infrastructure spending alone, by some estimates, may raise economic output by more than two percentage points per year over the next decade. Such comprehensive reforms stand to benefit not only its defence sector but the overall economy by stimulating job growth and key development areas such as manufacturing, green technology, and digital infrastructure. Titans of Latin America: Mexico and Brazil Notwithstanding the current uncertainties over tariffs facing steel industry exports to the United States, we believe Mexico should continue to benefit by capturing a disproportionate share of nearshoring opportunities. Whether Trump can justify his tariff policy in the courts remains to be seen, and steel duties facing Brazil and Mexico pose key risks, in our opinion. Mexico is also coping with a marked decline in remittances – a significant component to its economy – which recently registered their largest annual drop in more than a decade as US lawmakers mull taxing the transfers and continue with crackdowns on immigration. Last year, Mexico received nearly US$65 billion in remittances – roughly 3.5 per cent of its gross domestic product. An extended decline could affect consumption in Latin America's second-largest economy. Mexico's stock market, however, is heavily weighted toward sectors like consumer staples and communication services, known for their stable cash flows and reliable dividends, offering some resilience in uncertain times. In our analysis, valuations also appear attractive compared to historical averages: Over the past five years, the average 12-month adjusted price-to-earnings ratio for Mexican stocks was some 19 times. Currently, the S&P/BMV Total Mexico Index is trading at 12.6 times, based on forward earnings estimates. Brazil As companies continue to pivot to a 'China plus' strategy – maintaining operations in China while expanding production elsewhere – we believe Brazil may also be poised to benefit. China, Brazil's largest trading partner, is already shifting further demand for agricultural goods to Brazil, which was spared more of a direct hit in the tariff war as the country faces the lowest level of reciprocal US tariffs. President Luiz Inácio Lula da Silva's recent visit to Beijing resulted in planned investments and agreements of about US$4.8 billion, underscoring Brazil's growing economic ties with China. Despite the country's current fiscal challenges, we believe Brazil's strategic positioning as a key commodity exporter, particularly in soybeans and meat, should bode well for its economic growth. During the second half of this year, politics should weigh more heavily on Brazil's market with its 2026 presidential election coming into clearer focus. Given Lula's low approval ratings, concerns over his health (emergency brain surgeries and chemotherapy treatments) and age (81), there is speculation that fresh candidates may emerge and increase the potential for markets to react positively to any signs of change. Over the near term, we'll be keeping close tabs on the divergence of each country and region's unique characteristics as they highlight the varying opportunities and risks, especially amid Trump's particular approach to reciprocal policymaking, and underscore the need for more nuanced investment strategies. The writer is head of global index portfolio management at Franklin Templeton
