Aurelia Butler

“This rising interest rate environment is set to further boost our margins for the year,” Chief Executive Wee Ee Cheong said in a statement. “We continue to see economic activity picking up as borders reopen and investment flows resume.”The bank posted net profit of S$1.11 billion ($805 million) in the quarter to June 30, in line with market estimates, against S$1 billion a year earlier. Net interest income jumped 18% while net fee income dropped 3%.($1=1.3793 Singapore dollars) More

SEOUL (Reuters) – South Korea’s property market has abruptly gone from sizzling hot to floundering, piling pressure on some of the world’s most debt-saddled consumers as the sector experiences the fastest interest rate hikes on record.Prices of Seoul apartments last week reported their sharpest decline in 26 months, while transaction volumes in the capital dropped 73% in June from a year earlier.The 2.6 quadrillion won ($1.97 trillion) debt tied to the property market faces a major test as borrowing costs rise, with a slump and higher mortgage repayments likely to result in weaker consumption.With nearly three quarters of household wealth tied to real estate, policymakers worry higher mortgage rates could increase defaults and take the economy closer to a financial crisis.Ordinary Koreans are already feeling the squeeze – for Jane Jeon, a 36-year-old mother of a six-month old in central Seoul, growing mortgage stress means she has had to make some hard choices.”My husband’s pay now isn’t enough to cover our monthly repayment so I need to cut my maternity leave short and return to work,” said Jeon, who had initially planned to take 15 months off.Her family now pays 720,000 won more each month than last year for their 500 million won mortgage, which her broker said will probably rise further by year-end, bringing their total monthly repayment to almost 4 million won, or 70% of her husband’s pay.Financial regulators expect the number of people that could default on their loans to rise by half a million to 1.9 million once the average mortgage rate reaches 7% from current 5-6%.With services and commodities consumption from construction investment accounting for about 15% of economic activity, a property slump, combined with dwindling exports, would pose a big drag on growth.”South Korea’s financial system is one of the most vulnerable in the world to interest rate hikes, as the debt increase over the pandemic has been one of the highest,” said Seo Young-soo, an analyst at Kiwoom Securities.”Those that had recently taken out both a mortgage and credit loans on top of that (for investment) face the most trouble.”PLENTY OF DOWNSIDEThe Bank of Korea has raised interest rates by 1.75 percentage points since August last year, including an unprecedented 50 basis point hike this month.The policy rate [KROCRT=ECI] is widely seen peaking by year-end at 2.75% from 2.25% currently, which will squeeze indebted families further as local mortgage rates rise from current nine-year highs.Over the past five years, Seoul home prices more than doubled in what began as a stimulus-fueled search for homes and turned into a national pastime, even as heavier loan restrictions threw many millennials into financial distress.South Korea had one of the world’s highest household debt-to-GDP ratios at 104.3% in the first quarter, data of 36 major economies from the Institute of International Finance shows.Regulators have sought to mitigate the impact of any household debt on the wider financial system by offering borrowers a chance to refinance loans at a fixed rate. That relief came just two weeks after the BOK’s supersized rate hike this month.”We will improve the structure of household debt in a swift manner,” finance minister Choo Kyung-ho said earlier this week. “When the planned refinance package takes off, the proportion of household debt on variable interest rates should fall by up to 5 percentage points, to under 73% from 78%.”The debt to disposable income ratio reached 206% at the end of last year, meaning household debt is now double what they have for living expenses.”Our apartment is everything we have so we’re going to make it work,” said Jeon. “I’d hate to move out of Seoul.”($1 = 1,316.1100 won) More

Foreign secretary Liz Truss has rejected suggestions of a windfall tax on the profits of energy companies, despite British Gas owner Centrica’s announcement of huge earnings amid calls for increased support with fuel bills for struggling UK households. Truss, who in recent weeks has led the polling in the race to become leader of the Tory party and the next prime minister, said the move would “send the wrong message” to the world, adding that the government should be encouraging Shell and other companies to invest in the UK. Speaking to Conservative members in Leeds on Thursday during the first of 12 party hustings, Truss argued that, in the face of a global economic crisis and war in Ukraine, now was “not the time for the status quo”, as she outlined policies to boost growth and rein in the cost of living crisis.“What I would do is create low-tax investment zones, encouraging those companies to invest in our country,” she told the audience. The foreign secretary added: “Actually, what we need to be doing now is using more of our North Sea reserves to help people with the cost of living and that’s what I’ve been doing alongside having a temporary moratorium on the green energy levy to really help people with their bills.”Her comments were made as Centrica’s operating profits surged to £1.3bn in the first six months of the year, compared with £262mn in the same period last year. The company, the UK’s biggest energy retailer, is expected to pay a dividend of 1p a share, amounting to £59mn.Chief executive Chris O’Shea is among those calling on the government to provide more support to energy customers, stating: “You look at the average household income in the UK [and] you can see it’s going to put a lot of pressure on people.”Consultancy BFY Group has warned that the UK’s energy price cap will surge to an average of £3,840 next January, with gas and electricity bills predicted to rise to an average of £500 per month. Meanwhile, rival Rishi Sunak pushed back on criticisms that his pledge to cut VAT on domestic fuel was a U-turn, as he reiterated the importance of remaining fiscally responsible. “What I won’t do is embark on a spree borrowing tens and tens of billions of pounds of unfunded promises and put them on the country’s credit card, and pass them on to our children and our grandchildren,” he said. Sunak added: “But of course, once we grip inflation and ensure that mortgage rates don’t rise and cripple people, I’m going to cut taxes.”The former chancellor also proposed the notion of a “buyers’ cartel” on energy prices as a means to clamp down on president Vladimir Putin’s regime in Russia and tackle energy prices. “We can have a buyers’ cartel in the world where everyone would agree to pay a fixed amount for Russian energy, and enforce that through secondary sanctions . . . That would be a way to make sure we get the energy we need at prices that are far better for us and deprive Russia of revenue that is funding its war effort,” he said. Next week more than 150,000 Conservative party members will receive ballot papers to vote on the next party leader and prime minister, with the results due to be announced on September 5.Early polling has placed Truss in the lead. Data published by YouGov this month showed that 62 per cent of Tory members polled would vote for her, while 38 per cent would vote for Sunak. However, Sunak’s allies have argued that he is beginning to narrow the gap. Notably, polling from YouGov published on Wednesday showed that Sunak has an edge among swing voters. In a wide-ranging hustings, the candidates were quizzed on topics ranging from immigration to the Scottish independence referendum. Sunak rejected suggestions from an audience member that he had “stabbed” Boris Johnson in the back through his resignation as chancellor this month. He argued that the decision to step down was “difficult”, adding that the move was driven by differences in economic policy with the prime minister. Both Sunak and Truss on Thursday outlined new policy announcements in a bid to shore up their support.

The foreign secretary reiterated her commitment to tackling Russian aggression in Ukraine, pledging that as prime minister she would update the integrated review on security and defence and commit Britain to a “new Marshall Plan” for Ukraine as part of reconstruction efforts.Sunak, as part of his domestic agenda, has pledged to double the number of foreign national offenders deported every year. Defence secretary Ben Wallace has meanwhile come out in favour of Truss in a newspaper interview. “I’ve sat next to Liz in the cabinet for two and a half years. I’ve sat next to her in National Security Councils. I’ve sat next to her at Nato and international summits. I’ve seen her in action,” he told the Sun on Thursday. “And, you know, she’s authentic. She’s honest. And she’s experienced.” More

(Reuters) -Intel Corp slashed its annual sales and profit forecasts on Thursday after missing estimates for second-quarter results as demand for its chips used in personal computers cools, sending shares down 10%. The company also forecast current-quarter results well below expectations, blaming the “sudden and rapid decline” in economic activity and execution issues.Runaway inflation and the reopening of offices and schools have led people to spend less on PCs than they did during lockdowns, when many bought computers for work and school as they stayed home during the pandemic. Chipmakers are also under pressure from a spate of COVID curbs in key PC market China and the Ukraine war that have worsened supply-chain snarls and dragged demand further. Global shipments of PCs are expected to drop 9.5% this year, according to IT research firm Gartner (NYSE:IT). “The economic shift was harsher and drove not only consumption changes in the marketplace, but also dramatic moves in the inventory position of key customers,” Intel (NASDAQ:INTC) Chief Executive Pat Gelsinger told Reuters.”Those effects caused a very sharp shift in the business, and we didn’t execute particularly well.”Intel now expects fiscal 2022 revenue between $65 billion and $68 billion, compared with its earlier forecast of $76 billion. It also forecast adjusted profit of $2.30 per share, down from a prior outlook of $3.60 per share. Still, Intel will not delay its $20 billion investment for a new mega chip factory in Ohio because of this tougher period, Gelsinger told Reuters. “You just don’t build factories like this based on a couple of quarter cycles,” said Gelsinger. “The semiconductor industry is doubling over the decade and I need capacity to grow into that opportunity.”While Intel took a major hit with the latest downturn, its competitors fared much better. Taiwan Semiconductor Manufacturing Co Ltd and Samsung Electronics (OTC:SSNLF) Co Ltd, which, while warning about dampening PC and smartphone demand, delivered stronger sales growth in the by-gone quarter.TSMC projected current quarter sales if achieved could be its highest in the 10 quarters, and raised its full year sales forecast. (https://reut.rs/3zFpGdr)Intel said sales from Datacenter and AI Group (DCAI) fell 16% to $4.6 billion, coming in lower than analysts’ target of $6.46 billion, despite strong growth analysts expect for the overall datacenter market.”Intel is very dependent on the PC industry, as well as data centers, and OEMs have slowed orders for 2H22,” said analyst Ryan Reith of market intelligence firm IDC. “Peers Samsung (KS:005930) and TSMC have much broader exposure into mobile, auto, etc…” Intel, which draws about half of its revenue from selling the chips that power desktops and laptops, also forecast current quarter revenue in the range $15 billion to $16 billion, also lower than an average of estimates of $18.62 billion, according to Refinitiv. For the reported quarter, sales at Intel’s Client Computing Group (CCG), which supplies PC makers and is the largest contributor to the company’s revenue, fell 25% to $7.7 billion in the reporting quarter. According to IT research firm Gartner, global shipments of PCs are expected to drop 9.5% this year.Intel’s revenue dropped 22% to $15.3 billion – its seventh straight quarter of decline and were below expectations of $17.92 billion. On an adjusted basis, the company earned 29 cents per share, missing expectation of 70 cents. More

Xi Jinping warned Joe Biden not to “play with fire” as the Chinese and US presidents spoke for the first time since Beijing was angered by a planned visit to Taiwan by House of Representatives speaker Nancy Pelosi.In a statement posted on the Chinese foreign ministry’s website after the two leaders talked on Thursday, Xi did not directly mention Pelosi’s possible visit but said his administration would “resolutely safeguard China’s national sovereignty and territorial integrity”. “Those who play with fire will perish by it. It is hoped that the US will be clear-eyed about this,” China’s president added. Asked whether the US interpreted the comments as a threat, a senior administration official said China has regularly used the metaphor previously when discussing Taiwan. The Biden administration said the conversation between the leaders was part of an effort to keep rising tensions between the two countries at bay. During the call, Biden and Xi directed their teams to schedule an in-person meeting between them, a senior US administration official said. In its own account of the call, the White House also avoided mention of Pelosi’s possible visit. However it said Biden “underscored that the United States policy has not changed and that the United States strongly opposes unilateral efforts to change the status quo or undermine peace and stability across the Taiwan Strait”.Go deeper: Nancy Pelosi’s visit has lent urgency to Taiwan’s war games.Thanks for reading FirstFT Asia. I hope you have a restful weekend. See you next week. — EmilyFive more stories in the news1. China’s central bank seeks $148bn bailout for real estate Beijing is seeking to mobilise up to Rmb1tn ($148bn) of loans for millions of stalled property developments, in its most ambitious attempt to revive the debt-stricken sector and head off a backlash by homebuyers.2. US economy shrinks for second consecutive quarter The US economy shrank for the second quarter in a row, meeting one of the common criteria for a technical recession and complicating the Federal Reserve’s push to stamp out soaring inflation with a string of aggressive rate rises.More US news: President Joe Biden on cusp of two legislative wins ahead of the midterm elections after Congress passed its Chips and Science Act and a Democratic senator made an unexpected U-turn.3. Kim Jong Un says Korean peninsula on the ‘brink of war’ The North Korean leader has accused the US and South Korea of bringing the Korean peninsula to the “brink of war”, as Seoul and Washington prepare for their first large-scale joint military exercises in four years. In remarks reported on Thursday, Kim threatened to “wipe out” South Korean forces with nuclear weapons in the event of a confrontation.4. US tech earnings round-up In a busy week for tech earnings, Amazon shares rose 10 per cent on Thursday after it reported better than expected quarterly revenue and issued strong guidance for the current quarter. Apple’s revenues grew slightly on the back of iPhone sales and its services division despite headwinds from supply chain shortages and factory shutdowns in China. Intel, however, reported a surprise slump in revenue. 5. Missfresh stops paying salaries as it runs out of cash The Tiger Global-backed Chinese grocery delivery start-up that was once valued at $3bn told hundreds of employees that it had run out of cash, as a group of unpaid suppliers protested at its Beijing offices.Did you keep up with the news this week? Take our quiz.The days aheadJapanese economic data The country’s monthly unemployment rate, June retail sales figures and preliminary June industrial production data will be released today.Eurostat GDP Eurostat’s first estimate of second-quarter gross domestic product, out today, is expected to show an expansion of 0.1 per cent from the previous quarter, according to a poll by Reuters. That would be the weakest performance since a surge in coronavirus infections and restrictions dragged the bloc into a short recession at the start of 2021. US-Japan EPCC meeting US secretary of state Antony Blinken and Secretary of Commerce Gina Raimondo co-host the first meeting of the US-Japan Economic Policy Consultative Committee in Washington on Friday.New Cities Summit 2022 Global political leaders, business and thought leaders will gather in Singapore to discuss best practices for creating liveable and sustainable cities. The event, hosted by the new Cities Foundation, kicks off on Sunday.What else we’re readingThe cricket match that helped fund Imran Khan’s political rise Despite laws banning foreign funding of politics in Pakistan, documents show a money trail from Oxfordshire via the UAE to the coffers of Khan’s party. The funds are at the centre of a years-long investigation by the Election Commission of Pakistan, an inquiry that has taken on even greater importance as Khan plots a political comeback.

Imran Khan and Arif Naqvi © FT montage: Bloomberg/Reuters

Extreme heat is a wake-up call for investors on infrastructure Europe’s heatwave made clear failings of existing infrastructure in extreme weather. Trains moved more slowly. A runway at Luton airport buckled. Schools closed. In a hotter world, infrastructure will need to adapt. All this creates opportunities for investors, writes Alice Ross. Musk saga hits Twitter’s ads business Twitter chief executive Parag Agrawal is leading an increasingly fraught effort to keep the company running smoothly amid a legal battle to prevent Musk from backing out of a $44bn deal to acquire Twitter. Company insiders, former staffers and ad industry executives and say tension is rising between staff and management.WFH debates must include what ‘home’ actually is From affordable accommodation in city centres to commute lengths, the question of where employees live is all important, writes Emma Jacobs. Employees’ decisions to move further away from work during the pandemic are now causing tensions.Go deeper: Some companies are taking location flexibility a step further with “work from anywhere” perks, which encourage employees to travel and work abroad. Read more in this week’s Working It newsletter. Enter the inner sanctum of elite chess As eight chess grandmasters gathered in Madrid earlier this month for an international summit, they were also playing for the future of the game. Oliver Roeder takes us inside the inner sanctum of elite chess.Food and drink Asia is home to ideas still in early stages of research but potentially transformative in feeding more people, with fewer resources, in the decades to come. Innovations such as lab-grown meat and 3D-printed food are at the forefront of efforts to rethink how, and what, we can feed the region’s next billion.

A nugget made from Eat Just’s lab-grown chicken is served with a waffle at the JW Marriott Singapore. © Weixiang Lim More