PETER’S BUSINESS & FINANCE BRIEFING – Wednesday 26 March 2025, 06:00 Hong Kong
● Trump pledges auto & pharma tariffs in ‘near future’ ● China explores services subsidy to boost weak domestic demand ● Bank of Japan minutes point to further interest rate hikes
Wednesday’s Opening Call
Hang Seng (Hong Kong) Projected Open: 23,578 +233 points +1.0%
Nikkei 225 (Japan) Projected Open: 38,080 +299 points +0.8%
Quick Summary - 4 Things To Know Before Asian Markets Open
Donald Trump said he will soon announce tariffs targeting automobiles and pharmaceuticals. He later added the lumber and semiconductor industries to his list. “We’ll be announcing cars very shortly,” Trump said at a Cabinet meeting. “We already announced steel, as you know, and aluminium.” “We’ll be announcing pharmaceuticals at some point,” he said, “because we have to have pharmaceuticals.” “So we’ll be announcing some of these things in the very near future, not the long future, the very near future,” Trump said. Trump at another White House event later Monday added the lumber and semiconductor industries to his list, saying tariffs on those two sectors would come “down the road.”
China is considering including services in a multibillion-dollar subsidy programme to stimulate consumption, according to officials and academics. The potential support for travel, tourism and sports would come in addition to an existing “trade-in” programme for goods such as mobile phones or cars. The programme, which would seek to spur purchases of services in sectors such as travel, tourism and sports, could be launched in the second half of this year if consumption continues to lag behind expectations.
Minutes from the Bank of Japan’s (BoJ) January meeting indicated that policymakers remain open to further interest rate hikes, depending on wage growth and inflation trends. The BoJ will continue to raise interest rates if the country’s economy and inflation continues to develop “in line with its outlook”, minutes from the central bank showed. One of the BOJ’s board members pointed out that real interest rates were expected to remain significantly negative after the policy interest rate hike, and the Bank should continue to raise rates so that the negative real interest rates would shrink.
Australia unveiled an unexpected tax cut and an extension of energy rebates in a pre-election budget to help secure Prime Minister Anthony Albanese a second term in office. With an election potentially to be called within days, Treasurer Jim Chalmers is aiming to win back voters frustrated by higher consumer prices, elevated interest rates and a housing shortage. The budget includes measures such as reducing the lowest rate of income tax to 14%, increasing the threshold for a government-run health care system levy, and providing energy rebates for households and small businesses.
US Agrees Maritime Ceasefire Deal With Ukraine & Russia
The US said it has reached agreements with Ukraine and Russia for a ceasefire in the Black Sea, following talks with both parties in Saudi Arabia. The White House said on Tuesday that Kyiv and Moscow had agreed “to ensure safe navigation, eliminate the use of force, and prevent the use of commercial vessels for military purposes in the Black Sea”. But it remained unclear when the deal would be implemented. The agreement also falls well short of the Trump administration’s proposed 30-day ceasefire, which would have included the 1,000km frontline, a proposal that was supported by Kyiv but rejected by Moscow.
President Zelensky accused Russia of "lying again" about the terms of the deal. “There’s no faith in the Russians,” he said. “But I believe we will act constructively and do our part to implement the outcomes of the US-Ukraine meeting.” While Kyiv said it would comply immediately, Moscow said first sanctions need to be lifted on banks involved in international trade in food and fertilisers, as well as being fully reconnected to Swift, a network that facilitates secure financial messaging, a move that would require EU approval. When asked by a reporter about the sanctions Russia says need to be lifted by the US before it implements the Black Sea deal, Donald Trump said, "we're thinking about all of them right now. We're looking at all of them."
Trump Pledges Auto & Pharma Tariffs In ‘Near Future’
Donald Trump said he will soon announce tariffs targeting automobiles and pharmaceuticals. He later added the lumber and semiconductor industries to his list. “We’ll be announcing cars very shortly,” Trump said at a Cabinet meeting. “We already announced steel, as you know, and aluminium.” “We’ll be announcing pharmaceuticals at some point,” he said, “because we have to have pharmaceuticals.” “So we’ll be announcing some of these things in the very near future, not the long future, the very near future,” Trump said. Trump at another White House event later Monday added the lumber and semiconductor industries to his list, saying tariffs on those two sectors would come “down the road.”
The president’s latest comments at a Cabinet meeting came hours after he unveiled a plan to slap 25% tariffs on all countries that buy oil and gas from Venezuela. It was unclear whether the newly announced sector-specific tariffs would take effect after the tit-for-tat “reciprocal tariffs,” which are set for April 2. Increasing the confusion, Trump said at the same event that he “may give a lot of countries breaks” on the reciprocal tariffs, which are set to take effect April 2. When pressed for clarification on whether sectoral tariffs will also start that day, Trump initially said, “Yeah, it’s going to be everything.” Then he said, “but not all tariffs are included that day.” He also hinted that tariffs on autos may be announced before the reciprocal tariffs kick off. “We’ll be announcing that fairly soon over the next few days, probably, and then April 2 comes, that’ll be reciprocal tariffs,” he said.
There were 4,650 import restrictions in force among the Group of 20 leading economies as of March 1, including tariffs, antidumping duties, quotas and other import curbs, according to Global Trade Alert. That is up 75% since 2016, and almost 10 times the number of such restrictions in force at the end of 2008. Economists and historians say the flurry of recent moves suggest the world could be heading toward the largest, broadest surge in protectionist activity since the US Smoot-Hawley Tariff Act of 1930 touched off a global retreat behind tariff walls that lasted until after World War II.
Countries That Purchase Oil From Venezuela Face 25% Tariffs
Donald Trump said Monday that the US will impose 25% tariffs on countries that buy oil and gas from Venezuela, as he seeks to increase pressure on President Nicolas Maduro over immigration but in the process, risks roiling the global energy trade. China, which is already in Trump’s crosshair for 20% levies unless it does more to reduce the supply of ingredients for fentanyl to the US, could be particularly hard hit. Countries that buy oil and gas from Venezuela will face tariffs on any trade they have with the US, Trump said in a post on his social media platform Truth Social. The tariffs take effect on April 2, the president said. “If they buy their oil from Venezuela, they have to pay a 25% tariff to do business with the United States, that’s on top of existing tariffs,” Trump said during a press conference at the White House.
South Korea’s Hyundai Announces $21bn US Investment
Hyundai, meanwhile, is looking to get ahead of the trade war. The South Korean conglomerate on Monday announced a roughly US$21 billion investment in the US. A new steel plant in Louisiana, which is part of the investment, is set to hire more than 1,400 employees and will produce next-generation steel that will be used by Hyundai’s two US auto plants to manufacture electric vehicles. The South Korean company is a top seller of electric vehicles in the U.S, competing directly with Tesla. It already has two major automotive plants in the US, one in Alabama and the other in Georgia. Hyundai on Monday also announced the opening of a third automotive plant, also in Georgia.
Hyundai’s announcement comes as major international conglomerates are racing to dodge tariffs and avoid a trade war ahead of Trump’s April 2 tariff deadline. Taiwan Semiconductor Manufacturing Co. and Japan’s SoftBank are among the major foreign players that have visited the White House in the last two months to announce big US onshoring plans. Donald Trump called the investment “a clear demonstration that tariffs very strongly work.”
Tesla Sales Plunge In The EU
Tesla sales in the European Union tumbled for a second consecutive month, despite an overall increase in demand for electric vehicles. New car registrations for Teslas fell 47% in February from a year earlier to 11,743 cars, according to the European Automobile Manufacturers' Association. Overall battery electric-vehicle sales jumped 24%, said the trade group.
BYD Sales Top $100bn For First Time
Chinese EV maker BYD sales topped US$100 billion, leapfrogging past Elon Musk’s Tesla, which is now reeling from a backlash over his prominent role in the Trump administration. Shenzhen-based BYD said revenue rose 29% to Rmb 777bn (US$107bn) last year, surpassing the Rmb 766bn forecast by analysts, on the back of strong demand for plug-in hybrids. The group’s net income climbed 34% to Rmb40bn from a year ago.
Unlike its US rival Tesla, which only sells fully electric vehicles and reported revenue of US$98bn last year, BYD has benefited from resurgent demand in China for hybrid vehicles. It comes as Tesla faces a backlash around the world over Musk's ties to US President Donald Trump, while Chinese carmakers have been hit with tariffs in Western countries. BYD sold around the same number of EVs as Tesla last year – 1.76 million compared to 1.79 million, respectively. But when sales of the Chinese company's hybrid cars are taken into account it is much bigger, selling a record 4.3 million vehicles globally in 2024.
On Sunday, BYD announced a new model to take on Tesla. Its Qin L model has a starting price in China of 119,800 yuan (US$16,500), while a basic version of Tesla's Model 3 is priced at 235,500 yuan. BYD has been impressing consumers with a wide range of electric and hybrid cars packed with high-tech features. This year alone, BYD has unveiled a new ecosystem that allows EVs to charge for 400 kilometres in just five minutes and included advanced driver assistance technology in even its most basic models.
HSBC Weighs Outsourcing Some Trading Operations To Lift Returns
HSBC is considering outsourcing part of its sprawling trading business as executives struggle to justify making technology investments needed to keep up with larger rivals, Bloomberg News reported Tuesday. Europe’s largest lender is said to have held preliminary discussions about directing parts of its fixed income trading order flow to an outside market maker, a move that would allow HSBC to save millions of dollars in IT costs associated with running trading desks around the globe. HSBC is said to be open to a deal with firms including Citadel Securities and Jane Street Group.
The bank’s willingness to consider such a deal shows that even systemically important banks with huge Wall Street operations, the lender operates one of the world’s largest debt capital markets teams, are struggling to make the necessary technology investments to properly compete in trading. Under those nascent plans, the market maker would manage the guts of the trading desks, including technology, analytics and order execution, while banks would continue dealing with the customers.
Malaysia To Crack Down On Nvidia Chip Flows Under US Pressure
Malaysia is coming under US pressure to stem the illicit flow of high-end chips from California-based Nvidia to China, the country’s trade minister told the FT. Trade minister Tengku Zafrul Aziz said Washington was demanding Malaysia closely track the movement of high-end Nvidia chips that enter its territory over suspicions that many are ending up in China, in violation of US export rules. He added that he had formed a task force with digital minister Gobind Singh Deo to tighten regulations around Malaysia’s burgeoning data centres sector, which relies on chips from industry leader Nvidia. “The US is asking us to make sure that we monitor every shipment that comes to Malaysia when it involves Nvidia chips,” Zafrul Aziz told the Financial Times. “They want us to make sure that servers end up in the data centres that they’re supposed to and not suddenly move to another ship.” The US has imposed export controls on advanced semiconductors and related equipment in an effort to obstruct China’s development of next-generation technologies, including AI, which may have military applications.
China Explores Services Subsidy To Boost Weak Domestic Demand
China is considering including services in a multibillion-dollar subsidy programme to stimulate consumption, according to officials and academics who spoke to the Financial Times. The potential support for travel, tourism and sports would come in addition to an existing “trade-in” programme for goods such as mobile phones or cars. The programme, which would seek to spur purchases of services in sectors such as travel, tourism and sports, could be launched in the second half of this year if consumption continues to lag behind expectations, the FT said. “There is a serious discussion” about a services subsidy programme, an official familiar with the matter told the FT. They added that if consumption was not as strong as expected in the first half of 2025, it was “highly likely” services would be included in the trade-in programme. The officials and academics did not offer a figure for the expected size of the programme, but China this month pledged to double funding for the consumer goods trade-in scheme this year to Rmb300bn (US$41bn).
Australia Unveils Tax Cutting Budget
Australia unveiled an unexpected tax cut and an extension of energy rebates in a pre-election budget to help secure Prime Minister Anthony Albanese a second term in office. With an election potentially to be called within days, Treasurer Jim Chalmers is aiming to win back voters frustrated by higher consumer prices, elevated interest rates and a housing shortage. The government’s books will show a deficit of A$42.1 billion (US$26.5bn), or 1.5% of gross domestic product, in the 12 months through June 2026, according to the budget papers released in Canberra. The budget includes measures such as reducing the lowest rate of income tax, increasing the threshold for a government-run health care system levy, and providing energy rebates for households and small businesses.
“Every Australian taxpayer will get a tax cut next year and the year after,” Chalmers said in his budget address to Parliament. “This will take the first tax rate down to its lowest level in more than half a century.” Under the plan, the government will reduce the lowest rate of income tax to 15% in mid-2026 from 16% now, and then to 14% in mid-2027. The Labor government must hold an election by May 17 and is currently running neck-and-neck in opinion polls with the centre-right opposition coalition. No Australian prime minister has won consecutive elections for more than 20 years.
Bank Of Japan Minutes Point To Further Interest Hikes
Minutes from the Bank of Japan’s (BoJ) January meeting indicated that policymakers remain open to further interest rate hikes, depending on wage growth and inflation trends. The BoJ will continue to raise interest rates if the country’s economy and inflation continues to develop “in line with its outlook”, minutes from the central bank showed. One of the BOJ’s board members pointed out that real interest rates were expected to remain significantly negative after the policy interest rate hike, and the Bank should continue to raise rates so that the negative real interest rates would shrink. Other members also noted concerns over inflation, saying that risks to prices had become more skewed to the upside. The BOJ’s forecast in January showed that the bank is expecting core inflation to come in at 2.4%, while GDP growth is expected to be at 1.1%.
South Korea's Consumer Sentiment Falls In March
The Composite Consumer Sentiment Index (CCSI) in South Korea decreased to 93.4 in March, down from 95.2 in the previous month. While current sentiment remained stable, future expectations showed slight declines. Perceptions of current domestic economic conditions held steady at 55, though expectations for the future weakened, dropping three points to 70. Inflation expectations for the upcoming year were at 2.7%, with both the three-year and five-year inflation forecasts remaining at 2.6%.
Hong Kong Exports Climb To Over 1-Year High
Exports from Hong Kong jumped 15.4% year-on-year to $327.9 billion in February from an eleven-month low of 0.1% gain in the previous month. This marked the strongest growth in exports activity since January 2024. Among major destinations, shipments went up to Vietnam (114.2%), Taiwan (73%), and Mainland China (29.5%). However, shipments declined to UAE (-30.8%), India (-29.8%), and the USA (-18.5%).
Imports to Hong Kong surged by 11.8% year-on-year to $364.2 billion in February following a 0.5% increase in the previous month. This marked the highest import growth since January 2024. Hong Kong's trade deficit narrowed to $36.3 billion in February from $41.7 billion in the corresponding month of the previous year.
Taiwan Retail Sales Tumble In February
Retail sales in Taiwan fell by 3.8% year-on-year in February, slipping from an upwardly revised and eleven-month high of 5.5% increase in the previous month. This marked the first decline in retail activity since October 2024. On a monthly basis, retail sales dropped by 20.2% in February, following a 2.8% gain in the preceding period.
Taiwan Industrial Output Surges In February
Industrial production in Taiwan surged by 17.9% year-on-year in February from a downwardly revised 4.9% gain in the previous month. Output increased at a much faster pace for manufacturing (18.9% vs 5.3% in January). On a seasonally adjusted monthly basis, industrial production climbed 4.8% in February, recovering from an upwardly revised 3.8% drop in the previous month.
US Consumer Confidence Falls To 12-Year Low
US Consumer confidence in where the economy is headed has hit a 12-year low. The Conference Board’s measure for future expectations tumbled 9.6 points to 65.2, the lowest reading in 12 years and well below the 80 level that is considered a signal for a recession ahead. The board’s monthly confidence index of current conditions slipped to 92.9, a 7.2-point decline and the fourth consecutive monthly contraction. Economists surveyed by Dow Jones had been looking for a reading of 93.5.
The index measures respondents’ outlook for income, business and job prospects. “Consumers’ optimism about future income, which had held up quite strongly in the past few months, largely vanished, suggesting worries about the economy and labor market have started to spread into consumers’ assessments of their personal situations,” said Stephanie Guichard, senior economist, global indicators at The Conference Board.
In addition to the general pessimism, the outlook for the stock market slid sharply, with just 37.4% of respondents expecting higher equity prices in the next year. That marked a 10-percentage point drop from February and was the first time the view turned negative since late 2023.
Asia-Pacific Markets Follow Wall Street Higher
Asia-Pacific markets outside of Hong Kong largely rose Tuesday, following Wall Street higher overnight on hopes that Donald Trump’s tariffs could be less aggressive and more targeted than expected. Japan’s benchmark Nikkei 225 rose 0.5% to 37,781. Japan’s Topix briefly hit 2,818, its highest level in eight months. Japan’s 5-year government bond yield rose to 1.17%, the highest level since October 2008. Yields on the 10-year government bond gained more than 3 bps to 1.58%, hovering near the highest levels since late 2008. Bank of Japan Governor Kazuo Ueda has taken in his stride the recent rises in bond yields and reiterated on Monday the central bank will continue to hike interest rates if inflation stays on track to hit its target band, despite potential losses on the government bond holdings.
Over in South Korea, the Kospi index closed 0.6% lower. Shares in Hyundai Motor rose 3.3% Tuesday, after it said it would invest US$21 billion in the United States. The amount to be invested includes a new US$5.8 billion plant for Hyundai Steel in the state of Louisiana, which will create over 1,400 jobs and produce over 2.7 million metric tons of steel annually. The plant is also expected to supply steel to auto plants in Alabama and Georgia.
Australia’s S&P/ASX 200 climbed 0.1% ahead of the country's budget which was tabled by Treasurer Jim Chalmers later in the day.
India’s benchmark Nifty 50 gained 0.1% on Tuesday. It was the seventh consecutive positive session for the index. The Nifty is up 0.1% so far this year.
Hang Seng Drops Over 2% After Trump Tariff Threats
Hong Kong stocks dropped over 2% as investors assessed Donald Trump’s tariff threats. S&P Global warned that Beijing’s stimulus efforts may not fully offset the impact of new US tariffs amid slowing growth. The Hang Seng Index tumbled 561 points, or 2.4%, to a three-week low of 23,344. Still, the city’s benchmark index is up 16.4% since the start of the year.
The Hang Seng Tech Index was down 3.8%. Chinese technology stocks have retreated from a three-year high to the brink of a correction in just five sessions, fuelled by a lack of positive surprises in earnings and Xiaomi’s jumbo share sale. Alibaba sank 3.8% following its chairman’s warning on a potential bubble in AI data centre construction. The worst performers include BYD Electronic, a chipmaking unit of BYD, the world’s largest electric vehicle maker, which plunged 9.6% and Sunny Optical which lost 10.1%. BYD was down 3.5%, despite posting revenues that exceeded US$100bn for the first time ever.
Beijing-based carmaker Xiaomi raised about US$5.5 billion in an upsized share sale, capitalizing on a stock-price surge to help raise funds to expand in EVs, according to Bloomberg. The offering comes weeks after EV giant BYD’s US$5.6 billion fundraising. Beijing-based Xiaomi placed 800 million shares at HK$53.25 each or 6.6% below Monday’s close. The stock closed 6.3% lower on Tuesday. The company is investing aggressively in its nascent EV business to drive growth and plans to use the proceeds to accelerate business expansion and invest in research and development. The fundraising puts Hong Kong on course to have its biggest quarter for share sales since the last three months of 2021.
On the mainland, the CSI 300 Index was down 0.1% at 3,932. The index has relinquished its gains for the year and is down 0.1% in 2025.
European Stocks Higher Despite Tariff Uncertainty
European markets closed higher on Tuesday even though uncertainty remained over the scope and breadth of Donald Trump’s trade tariffs. The pan-European Stoxx 600 index ended the day 0.7% higher. Frankfurt's DAX built on early gains to close 1.1% firmer, halting four consecutive sessions of losses, supported by strong domestic data. London’s FTSE 100 was up 0.3%.
German biotech firm Bayer rose 5.2%, making it the top performing stock in the Stoxx, recovering from a 7% loss in the previous session after announcing over the weekend that it had been ordered by a U.S. court to pay US$2.1 billion in damages relating to its Roundup weed killer. British oil major Shell gained 1.5%, after the company announced plans to boost investor returns, cut spend and doubled down on its liquified natural gas (LNG) push. Kingfisher slumped 14.1% in London, leading decliners in the Stoxx. The British home-improvement retailer reported a disappointing 2026 outlook, weighed down by its French and Polish businesses.
German Bunds rose slightly after the IFO Institute published its Business Climate Index showing business optimism rose to the highest level since June 2024. Germany’s 10-year Bund yield was up 2 bps to 2.80% on Tuesday after Germany’s Business Climate Index increased to 86.7 points in March, up from 85.3 points in February. The index recorded a significant increase in sentiment in the manufacturing sector. Optimism also picked up in the service, architectural, engineering, and trade sectors.
US Stocks Notch Small Gains
US stocks edged higher Tuesday, with hopes for a moderate outcome on tariffs outweighing another drop in consumer-sentiment data. The major indices swung between small gains and losses throughout the session, before late-session gains pulled the S&P 500 up 0.2% to close at 5,777. The Dow rose 4 points, leaving it almost flat on the day at 42,588. The tech-heavy Nasdaq Composite climbed 0.5% to 18,272. Markets have calmed this week, with stocks rallying Monday following reports that the tariffs expected in April could be more narrowly targeted than some had expected.
Tesla rebounded from earlier losses after news that the EV maker’s sales in Europe plunged 40% in February. The company’s sales have dropped in the region in 10 of the last 12 months. Tesla shares ended the session 3.5% higher.
Treasury Yields Drop After Consumer Confidence Data
Treasury yields were lower after the Conference Board reported Tuesday that its consumer confidence index fell around seven points to 92.9, a slightly bigger drop than economists had expected. Forward-looking expectations for income, business and labour market conditions dropped to the lowest level in 12 years. The yield on the 10-year note dropped 2 bps to 4.32%. The 2-year yield was 3 bps lower at 4.02%. This week’s GDP and personal consumption expenditures reports, the latter of which serves as the Federal Reserve’s preferred inflation gauge, as well as next week’s jobs report, may give further clarity on the state of the economy.
Asian Currencies Depreciate
The US Dollar Index was unchanged at 104.22. But Asian emerging market currencies fell across the board against the US dollar on Tuesday. The Indonesian rupiah depreciated 0.5% against the US dollar, after falling to its lowest level since June 1998. Indonesia’s central bank intervened to prop up the local currency amid deepening concern over President Prabowo Subianto’s policies. This comes after Bank Indonesia held the 7-day reverse repurchase rate at 5.75% in its meeting last week. The Thai baht weakened 0.4% against the dollar, while the Malaysian ringgit was down 0.2%. Elsewhere in Asia, the Korean won was down 0.2% against the dollar. The Chinese yuan was 0.1% lower against the dollar at Rmb 7.2658. The Japanese yen bucked the downward trend, rising 0.5% to ¥149.89.
Gold Edges Higher
Gold rose 0.3% to $3,020 per ounce on Tuesday, following three consecutive sessions of losses, as traders assessed US tariff developments.
Copper Prices Hit Record High
US copper futures prices ended Tuesday at new records, lifted by buyers who are stockpiling ahead of potential tariffs on the industrial metal as well as a weaker dollar. Futures for March delivery settled at $5.183 a pound, topping the high notched last May. Trump has threatened 25% tariffs on US imports of copper, which is used in electronics and construction to convey electricity and water in wires and pipes.
Oil Prices Steady Amid Supply Concerns
Brent crude oil futures remained steady just above $73 per barrel on Tuesday, as investors weighed tightening global supply against broader economic uncertainty. Potential Russian oil exports from the Ukraine-Russia ceasefire talks and the looming decision on the scope of US tariffs kept investors on edge.
Bitcoin Above $88,000
Bitcoin climbed slightly to regain the $88,000 level. Over the past 24 hours, the cryptocurrency rose 0.8% to just above $88,500.
Peter Lewis’ Money Talk Podcast
On Wednesday’s “Peter Lewis’ Money Talk” podcast, I’ll be joined by Richard Harris, Chief Executive Officer at Port Shelter Investment Management and Tim Huxley, Chairman of Mandarin Shipping. With a view from Japan is Dan Kerrigan, CEO of Interactive Brokers Securities Japan.
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