CHINA, MALAYSIA
China-Malaysia trade to triple
China and Malaysia agreed yesterday to elevate bilateral ties to a “comprehensive strategic partnership,” aiming to boost military cooperation and nearly triple two-way trade to US$160 billion by 2017. Chinese President Xi Jinping (習近平) and Malaysian Prime Minister Najib Razak spoke soon after US President Barack Obama cancelled a week-long tour of four Asian nations, including Malaysia, due to the US government shutdown. Najib said he agreed with Xi, who is visiting Malaysia ahead the APEC summit in Indonesia that Obama was to have attended, to encourage more joint military exercises and visits between the nations. China is already Malaysia’s largest trading partner, with two-way trade last year totalling 181 billion ringgit (US$57 billion). Trade between the two countries is expected to hit US$70 billion by the end of this year.
US ECONOMY
US Treasury talks recession
The US Department of the Treasury has warned that the economy could plunge into a downturn worse than the Great Recession if Congress fails to raise the federal borrowing limit and the country defaults on its debt obligations. A default could cause the nation’s credit markets to freeze, the value of the US dollar to plummet and US interest rates to skyrocket, according to the Treasury report released on Thursday. Treasury officials hope by laying out potential consequences they will be able to bring pressure on Congress to act. US Secretary of the Treasury Jacob Lew has said he will have used up the extraordinary measures at his disposal for avoiding a breach of the debt ceiling by Oct. 17. After that, the government will have about US$30 billion of cash on hand. Private economists said that the Treasury’s report did not overstate the potential fallout if Congress does not raise the current US$16.7 trillion borrowing limit and the government defaults on its debt payments.
BANKING
JPMorgan boss gives up title
JPMorgan Chase & Co chairman and CEO Jamie Dimon has given up the title of chairman of the company’s main bank subsidiary to conform with a new internal policy on multiple roles. Dimon has been under regulator scrutiny since the company last year disclosed it was losing billions of US dollars on derivatives in what has become known as the “London Whale” trades. At this year’s annual meeting, he won a vote of confidence called, in part, because of a breakdown in risk controls. Dimon turned over the title of chairman of the deposit-taking unit, JPMorgan Chase Bank, NA, to a fellow director, William Weldon, on July 1, a JPMorgan Chase & Co spokesman said.
IRELAND
Lottery sells for half a billion
Ireland has agreed to sell a 20-year national lottery operating licence for 405 million euros (US$552 million) to a joint venture that includes the owner of British operator Camelot, Ireland’s spending minister said yesterday. The deal is the first step in a privatization drive agreed under Ireland’s EU-IMF bailout that aims to bring in 3 billion euros, which will be used to pay down debt and to fund a jobs stimulus program. A joint venture between Ireland’s state-owned postal service, An Post, and Camelot’s owner, the Ontario Teachers Pension Plan, has been selected as the preferred bidder with a deal due to be finalized by the end of the year, a government statement said.
ADVANCED: Previously, Taiwanese chip companies were restricted from building overseas fabs with technology less than two generations behind domestic factories Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), a major chip supplier to Nvidia Corp, would no longer be restricted from investing in next-generation 2-nanometer chip production in the US, the Ministry of Economic Affairs said yesterday. However, the ministry added that the world’s biggest contract chipmaker would not be making any reckless decisions, given the weight of its up to US$30 billion investment. To safeguard Taiwan’s chip technology advantages, the government has barred local chipmakers from making chips using more advanced technologies at their overseas factories, in China particularly. Chipmakers were previously only allowed to produce chips using less advanced technologies, specifically
The New Taiwan dollar is on the verge of overtaking the yuan as Asia’s best carry-trade target given its lower risk of interest-rate and currency volatility. A strategy of borrowing the New Taiwan dollar to invest in higher-yielding alternatives has generated the second-highest return over the past month among Asian currencies behind the yuan, based on the Sharpe ratio that measures risk-adjusted relative returns. The New Taiwan dollar may soon replace its Chinese peer as the region’s favored carry trade tool, analysts say, citing Beijing’s efforts to support the yuan that can create wild swings in borrowing costs. In contrast,
VERTICAL INTEGRATION: The US fabless company’s acquisition of the data center manufacturer would not affect market competition, the Fair Trade Commission said The Fair Trade Commission has approved Advanced Micro Devices Inc’s (AMD) bid to fully acquire ZT International Group Inc for US$4.9 billion, saying it would not hamper market competition. As AMD is a fabless company that designs central processing units (CPUs) used in consumer electronics and servers, while ZT is a data center manufacturer, the vertical integration would not affect market competition, the commission said in a statement yesterday. ZT counts hyperscalers such as Microsoft Corp, Amazon.com Inc and Google among its major clients and plays a minor role in deciding the specifications of data centers, given the strong bargaining power of
TARIFF SURGE: The strong performance could be attributed to the growing artificial intelligence device market and mass orders ahead of potential US tariffs, analysts said The combined revenue of companies listed on the Taiwan Stock Exchange and the Taipei Exchange for the whole of last year totaled NT$44.66 trillion (US$1.35 trillion), up 12.8 percent year-on-year and hit a record high, data compiled by investment consulting firm CMoney showed on Saturday. The result came after listed firms reported a 23.92 percent annual increase in combined revenue for last month at NT$4.1 trillion, the second-highest for the month of December on record, and posted a 15.63 percent rise in combined revenue for the December quarter at NT$12.25 billion, the highest quarterly figure ever, the data showed. Analysts attributed the
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