Economy

UNITED NATIONS (Reuters) – The United Nations has been planning for the possible return of Donald Trump and the cuts to U.S. funding and engagement with world body that are likely to come with his second term as president.There was a sense of “déjà vu and some trepidation” at the 193-member world body, said one senior Asian diplomat, as Republican Trump won Tuesday’s U.S. election over Democratic Vice President Kamala Harris. “There is also some hope that a transactional administration will engage the U.N. on some areas even if it were to defund some dossiers. After all, what bigger and better global stage is there than the United Nations?” said the diplomat, speaking on condition of anonymity. A U.S. retreat at the U.N. could open the door for China, which has been building its influence in global diplomacy. Trump has offered few specifics about foreign policy in his second term but supporters say the force of his personality and his “peace through strength” approach will help bend foreign leaders to his will. He has vowed to solve the war in Ukraine and is expected to give strong support to Israel in its conflicts with Hamas and Hezbollah in Gaza and southern Lebanon. Among the top concerns at the U.N. are whether the United States will decide to contribute less money to the world body and withdraw from key multinational institutions and agreements, including the world Heath Organization and the Paris climate agreement. U.S. funding is the immediate worry. Washington is the U.N.’s largest contributor – with China second – accounting for 22% of the core U.N. budget and 27% of the peacekeeping budget.A country can be up to two years in arrears before facing the possible repercussion of losing its General Assembly vote. ‘EXTREMELY HARD’Trump came to power last time proposing to cut about a third off U.S. diplomacy and aid budgets, which included steep reductions in funding for U.N. peacekeeping and international organizations. But Congress, which sets the federal U.S. government budget, pushed back on Trump’s proposal. A U.N. spokesperson said at the time the proposed cuts would have made it impossible to continue all essential work.”The U.N. secretariat has known that they could face a Trump comeback all year. There has been prudent planning behind the scenes on how to manage potential U.S. budget cuts,” said Richard Gowan, U.N. director at the International Crisis Group.”So (U.N. Secretary-General Antonio) Guterres and his team are not totally unprepared, but they know the next year will be extremely hard,” he said. Trump’s team did not immediately respond to a query about his policy toward the U.N. after he takes office in January.During his first term, Trump complained that the U.S. was shouldering an unfair burden of the cost of the U.N. and pushed for reforms. Washington is traditionally slow to pay and when Trump left office in 2021 the U.S. was in arrears about $600 million for the core budget and $2 billion for peacekeeping. According to U.N. figures, President Joe Biden’s administration currently owes $995 million for the core U.N. budget and $862 million for the peacekeeping budget.”I don’t want to pre-empt or speak about policies that may or may not happen, but we work with member states in the way we’ve always worked with member states,” Guterres’ spokesperson Stephane Dujarric told reporters on Wednesday. In 2026, the U.N. Security Council will choose Guterres’ successor, a decision in which the Trump administration will hold a veto power.’GREAT NEWS FOR CHINA’During Trump’s first term, he was critical of the United Nations and wary of multilateralism. He announced plans to quit the World Health Organization, and pulled out of the U.N. Human Rights Council, the U.N. cultural agency UNESCO, a global climate change accord and the Iran nuclear deal.When Biden succeeded him in 2021, he rescinded the U.S. decision to withdraw from the WHO and returned the U.S. to UNESCO and the climate agreement. Trump’s campaign has said he would quit the climate deal again if he won office. “It will survive. But, of course, it will probably survive severely undermined,” Guterres told Reuters in September of a second withdrawal from the climate pact by Trump. Ahead of the U.S. election, a senior European diplomat said a Trump win would be “great news for China,” recalling that during Trump’s first term “the Chinese influence in the U.N. increased a lot because it was an open bar for the Chinese.”The diplomat, speaking on condition of anonymity, said that if Trump again cuts U.N. funding and withdraws from international pacts “it will just give China the opportunity to present itself as the supporter number one of multilateralism.” U.S. funding for some other U.N. agencies is also in question. One of the first moves by the Trump administration in 2017 was to cut funding for U.N. Population Fund (UNFPA), the international body’s agency focused on family planning as well as maternal and child health in more than 150 countries.Trump’s administration said UNFPA “supports … a program of coercive abortion or involuntary sterilization.” The U.N. said that was an inaccurate perception. Biden restored U.S. funding for UNFPA.If Trump again cuts funding, UNFPA warned that “women will lose lifesaving services in some of the world’s most devastating crises” in places like Afghanistan, Sudan and Ukraine.Under Trump’s first presidency, the U.S. also opposed long-agreed international language on women’s sexual and reproductive rights and health in U.N. resolutions over concern that it would advance abortion rights.A senior African diplomat, speaking on condition of anonymity, summed up the impending return of Trump for multilateralism and the United Nations: “The heavens help us.” More

SHANGHAI/SINGAPORE (Reuters) – Investors hoping China would announce extra fiscal buffers for an economy girding for another Donald Trump presidency were disappointed on Friday.China’s top legislative body, the standing committee of the National People’s Congress (NPC), did as was expected, approving bills to allow local governments to allocate 10 trillion yuan ($1.40 trillion) towards reducing off-balance sheet, or “hidden”, debt.But investors had built their anticipation around the timing of the NPC and Trump’s win just a couple of days earlier, and hence expectations of something special to pre-empt another round of fractious Sino-U.S. tensions and trade barriers.”I think markets are on the disappointed side as there were rumours that the policy could be larger if Trump won the U.S. election,” said Lynn Song, ING’s chief economist for Greater China.Reuters had reported last week authorities were considering a more than 10 trillion yuan ($1.4 trillion) plan to boost growth and help local governments address debt risks.After confirming that on Friday, Finance Minister Lan Foan signalled that more stimulus would come.Analysts say China needs to do more to support consumers as the world’s second-largest economy tackles a property market downturn and weak confidence, and meet the Communist leadership’s 5% growth goal.Donald Trump’s return to the White House could bring fresh headwinds. Among other things, Trump has vowed to adopt blanket 60% tariffs on U.S. imports of Chinese goods. “It is going to disappoint the market because China needs more essentially,” said UBP’s Asia senior economist Carlos Casanova.Casanova said China needs a 23 trillion yuan package to resolve the local debt and property problems, which is about 15% of its economy, and is probably “going to hold back some of that fire power until they have a better idea of what President Trump is planning”.Beijing has been ramping up efforts to boost the fragile economy. Since late September, it has rolled out interest rate cuts and property measures and kicked off an unprecedented 800 billion yuan ($111.60 billion) rescue package for the stock market. Stock prices rallied sharply in late September but have since lost momentum. The blue-chip CSI 300 Index is still up 20% since then while the Hang Seng Index is down nearly 10% from an October peak.TURN TO TRUMP TRADE Investors who had been waiting to hear from the Standing Committee may also now move decisively to position for a second Trump presidency. So far, selling has been limited to exporters and even that has been relatively modest, with stock markets in Shanghai and Hong Kong logging their best week in a month on Friday. Trump’s threats of high tariffs seem so far to have been viewed as negotiable, and China’s economy is seen as more insulated to trade restrictions than it was eight years ago. “We do think that China is in a good position to navigate tariff risk going forward, whatever may be proposed,” said Robert St Clair, head of investment strategy at Fullerton Fund Management in Singapore, which is bullish on China’s outlook. “There is a tension, but there is also an interdependence between China and the U.S.,” he said. Some investors also see opportunity for China in a more inwardly focused U.S. administration. “Trump’s America First policy is not just targeting China, but also the EU, Japan, South Korea, Taiwan and other allies, which could help China make breakthroughs against Western curbs,” said Wan Chengshui, head of investment at Guangdong-based asset manager Golden Glede.($1 = 7.1685 Chinese yuan renminbi) More

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BEIJING (Reuters) -China unveiled a 10 trillion yuan ($1.40 trillion) debt package on Friday to ease local government financing strains and stabilise flagging economic growth, as it faces fresh pressure from the re-election of Donald Trump as U.S. president.The measures confirm last week’s Reuters report, and mark a departure from the all-out stimulus strategies to revive growth China has deployed in the past. They aim to repair municipal balance sheets as a longer-term objective, rather than directly inject money into the economy.Finance Minister Lan Foan said more stimulus was coming, with some analysts saying Beijing may not want to fire all its weapons before Trump takes over officially in January.In an apparent reaction to the U.S. election and the intensifying risks to trade, state media CCTV reported that China’s cabinet on Friday approved expanding coverage of export credit insurance and will step up support for trade firms.But for now, those investors who speculated on a fiscal bazooka may be disappointed.”I don’t see anything that exceeds expectations,” said Huang Xuefeng, research director at Shanghai Anfang Private Fund Co, in Shanghai. “It’s not huge if you look at the fiscal shortfalls.””The money is used to replace hidden debts, which means it doesn’t create new work flows, so the support to growth is not that direct.”Local governments, facing high debt and falling revenues, have been cutting civil servants’ pay and amassing debts with private sector companies, choking money flows to the real economy and fanning deflationary pressures.Their strains, stemming from a severe property crisis since 2021 which decimated revenues from residential land auctions to developers – a key source of funds for cities and provinces – had put China’s 2024 growth target of roughly 5% at risk.China’s longer-term outlook is further clouded by Trump’s threat of tariffs in excess of 60% on all Chinese goods, which has rattled Chinese manufacturers and accelerated factory relocation to Southeast Asia and other regions.Exporters say the tariffs will further shrink profits, hurting jobs, investment and growth in the process. They would also exacerbate China’s industrial overcapacity and the deflationary pressures it fuels, analysts said.The package, unveiled at the end of a week-long parliament meeting, included raising the local governments’ debt quota by 6 trillion yuan over the next three years, with the new funds to be used to repay “hidden debts”. It also gave municipalities the greenlight to use for the same purpose another 4 trillion over five years in issuance that Beijing had already approved. Beijing uses “hidden debt” to describe the loans, bonds and shadow credits of local government financing vehicles, or LGFVs.Lan said those debts stood at 14.3 trillion yuan at the end of 2023, which authorities planned to trim to 2.3 trillion yuan by 2028. The International Monetary Fund, however, estimates debts of LGVFs amounted to 60 trillion yuan at the end of 2023, or 47.6% of GDP.Swapping hidden for official debt is expected to save 600 billion yuan in interest for local governments over five years. Carlos Casanova, Asia senior economist at UBP, estimated China needed a debt package of 23 trillion yuan to reduce the inventory of unsold homes and repay maturing LGFV debt.The measures announced on Friday “are going to disappoint the market because China needs more essentially,” he said. MORE SUPPORT Lan also reiterated officials will issue policies to support state sector purchases of unsold apartments and reclaim undeveloped residential land from property developers, as well as replenish the capital of big state banks.He did not give details on the size or timing of those measures, which would represent a much more direct way of injecting fiscal oomph into the economy.”The lack of direct fiscal stimulus suggests that policymakers would leave policy room for the impact of Trump 2.0 later,” said Xing Zhaopeng, senior China strategist at ANZ.Also without detailing, Lan said Beijing will “intensify efforts” to support manufacturing equipment upgrades and expand a consumer subsidy scheme that targets purchases of appliances and other goods.Many economists have long argued for stronger consumer stimulus, especially as Beijing faces increasingly higher tariffs on its exports from Washington and other capitals in Europe and elsewhere.Low wages, high youth unemployment and a feeble social safety net leave China’s household spending below 40% of GDP, or about 20 percentage points behind the global average. “I don’t think that we will see direct fiscal stimulus aimed at consumption anytime soon,” UBP’s Casanova said. “I think you will need a lot more pain for that to materialize,” he said. “China is probably going to hold back some of that fire power until they have a better idea of what President Trump is planning.” ($1=7.1533 Chinese yuan renminbi) More

The measures include expanding coverage of export credit insurance, improving cross-border e-commerce development and facilitating personnel exchanges, state media CCTV said. China will also improve its trade shipping security capability and step up support for trade firms to secure jobs, CCTV said. More

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(Reuters) -Singapore Airlines on Friday flagged its earnings would stay under pressure despite robust travel demand in the second half of the year, while it reported a profit fall reflecting stiff market competition coupled with rising costs. The city-state’s flag carrier said the aviation sector was struggling with macro-economic uncertainty, rising geo-political tensions, inflationary cost pressures and increased competition.”The Group will remain nimble and agile, adjusting its passenger network and capacity to match evolving demand patterns,” the airline said while signalling a healthy air freight demand heading into the year-end peak. Singapore Airlines (OTC:SINGY) Group includes the flag carrier and budget airline Scoot.Singapore’s leading airline operator posted a 48.5% plunge in net profit to S$742 million ($561.65 million) for the April-September period and declared an interim dividend of 10 Singapore cents per share. The group reported net profit of S$1.44 billion a year ago. SIA’s total expenses rose to S$8.70 billion for the half-year ended Sept. 30, a 14.4% rise, due to a jump in both fuel and non-fuel costs, while its passenger yield, a proxy for air fares, fell 5.6% in the first half.Revenue rose by 3.7% from a year ago to S$9.50 billion.Passenger load factor — a measure of how many seats are filled on planes — was 86.4% in the first half for the group as a whole, compared with 88.8% a year earlier. “Increased capacity and stronger competition in key markets led to yield moderation, resulting in lower operating profit,” Singapore Airlines said. Airlines globally have ramped up the number of flights and routes to cater to robust air travel demand, which has resulted in increased competition, putting pressure on ticket prices and squeezing profit margins. Analysts at Morningstar have flagged in a note that the rise in international capacity by global airlines had begun to be reflected in increasing competition. AIR INDIA-VISTARA MERGER PROGRESS Singapore Airlines said it will record a non-cash accounting gain of S$1.1 billion once the Air India-Vistara merger completes, which the firm expects by November. Singapore’s flagship carrier announced a plan to merge the decade-old Vistara and Tata-owned Air India in November 2022, in a bid to create a dominant full-service airline in the domestic and international markets.Singapore Airlines (SIA), which is set to get a 25.1% stake in Air India, will inject S$498 million into the new combined entity, through subscription of new Air India shares. ($1 = 1.3211 Singapore dollars) More

(Reuters) -U.S. stock index futures edged lower on Friday, taking a breather after a sharp rally powered by a sweeping Trump win and an expected interest-rate cut took the S&P 500 futures above the 6,000 mark for the first time. It surpassed the psychologically important milestone on Thursday on expectations of an easier regulatory regime under President-elect Donald Trump, with lower borrowing costs boosting the sentiment. The Fed cut the benchmark rate by 25 basis points as Chair Jerome Powell said the election outcome would not have a “near-term” impact on monetary policy.”Strong earnings and economic growth, coupled with the forceful ‘Fed put’, (are) set to continue to propel the market higher over the medium term,” said Michael Brown, senior research strategist at Pepperstone. “Cleaner positioning after participants hedged their books pre-election, and expectations of Trump’s anticipated tax cuts and fiscal stimulus, is helping to further juice the upside in risk.” However, Trump’s fiscally expansive spending plans and proposed tariff hikes could push up inflation, complicating the Fed’s policy path. The Fed chief said the central bank would begin estimating the impact on its twin goals of stable inflation and maximum employment when the new administration’s proposals take shape.Traders have already trimmed expectations for rate cuts next year, and bond yields have jumped to multi-month highs. Still, the immediate impact on Wall Street has been fairly muted as all three major indexes closed around record highs on Thursday. The Dow and S&P 500 are set for their best week in nearly a year, while the Nasdaq is on track for its best in two months. Dow E-minis were down 17 points, or 0.04%, S&P 500 E-minis were down 10.5 points, or 0.17% and Nasdaq 100 E-minis were down 83.75 points, or 0.39%. Shares of chipmaker Nvidia (NASDAQ:NVDA) eased 1% in premarket trading, after the AI pioneer became the first in history to surpass a $3.6 trillion in market value on Thursday. Airbnb dropped 5.3% after missing third-quarter profit estimates, while Pinterest (NYSE:PINS) slumped 12.2% after a disappointing revenue forecast. U.S.-listings of Chinese companies lost ground after investors were left unimpressed by the government’s latest fiscal support measures. JD (NASDAQ:JD).com dropped 4.2% and Alibaba (NYSE:BABA) fell 3.8%. Investors were also keeping an eye on a likely “Red Sweep”as Republicans were set to keep their narrow lead in the House of Representatives after winning control of the Senate. That would make it easier for Trump to enact his legislative plans. The University of Michigan’s preliminary consumer sentiment survey data for November is due later in the day, while Federal Reserve Board Governor Michelle Bowman is expected to speak. More