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South Korea’s central bank on Tuesday slashed interest rates and its annual growth forecast as it looks to bolster the economy in the face of US tariffs and the fallout from President Yoon Suk Yeol’s brief declaration of martial law last year.Asia’s fourth-largest economy expanded less than expected in the final three months of 2024 as Yoon’s martial law move hit consumer confidence and domestic demand.That compounded fears over US President Donald Trump’s hardball trade policies that have seen him impose a broad range of levies on some of his country’s biggest economic partners since taking office in January.An official at the Bank of Korea told AFP it expected gross domestic product to expand 1.5 percent in 2025, down from its initial estimate of 1.9 percent in November.The benchmark interest rate would also be lowered by a quarter of a percentage point, the official said.In a statement released after the meeting, the bank said it projected a “slower recovery in domestic demand and export growth than initially expected”.It blamed “the effects of weakening economic sentiment and the US tariff policy” as well as political uncertainty stemming from the “martial law situation”.”There is a high level of uncertainty regarding the future growth path, including major countries’ trade policies, (and) the direction of the US Federal Reserve’s monetary policy,” it added.Trump warned last week that he would impose tariffs “in the neighbourhood of 25 percent” on auto imports and a similar amount or higher on semiconductors and pharmaceuticals.South Korea is home to the world’s key chipmakers, Samsung and SK hynix, and was the fourth-largest exporter of steel to the United States last year.Governor Rhee Chang-yong said South Korea would continue to face challenges with tariffs unless it develops new industries.”What our government should feel most painfully about the past 10 years is that no new industries have been introduced during this time,” he told reporters.”If we don’t address this issue, these problems will keep recurring,” he added.- ‘Weak’ data -South Korea’s trade ministry last week said it had asked Washington to exclude it from planned US tariffs on steel and aluminium.The country’s steel industry was already facing intense pressure in recent years as it grappled with oversupply — particularly from China — and a decrease in global demand.The US tariffs are likely to intensify those challenges.Analysts warn that should cheap Chinese steel which has been barred from the US market begin to flood regions such as Southeast Asia and Europe, South Korean steel producers will face deepening price competition.The Bank of Korea also said Tuesday that employment had continued to slow.”The data for early 2025 have been weak amid signs the political crisis is weighing on the economy,” Gareth Leather, senior Asia economist at Capital Economics, said.But he added that even if the crisis is resolved soon, growth is likely to remain weak because of a “downturn in the property sector and tight fiscal policy weighing on demand”.Dave Chia, associate economist at Moody’s Analytics, said he expected at least one more rate cut this year.”The boom in artificial intelligence should sustain shipments of advanced memory chips,” he wrote in a note. But a “slowdown in other major categories” stands to limit South Korea’s export growth, he added.

Frankfurt equities squeezed out gains Monday after conservatives led by Friedrich Merz won Germany’s national election, with investors hoping that Europe’s largest economy can emerge from recession.Elsewhere equities mostly slid with investors still concerned about the inflationary effect of US President Donald Trump’s plans to slap tariffs on various trading partners and their impact on interest rates and economic growth.Major US indices finished mostly lower after Trump signaled plans to proceed with tariffs on Canada and Mexico once a 30-day suspension expires.”Markets like certainty,” said Adam Sarhan of 50 Park Investments. “Right now there is high uncertainty.”But earlier, Frankfurt’s DAX index jumped 0.8 percent at the start of trading but gave up part of its gains as the day wore on, closing 0.6 percent higher.Merz urged a speedy formation of a new coalition government, warning that Trump was driving rapid and disruptive changes and that “the world isn’t waiting for us.””The hope that the conservatives’ win might help pull Germany out of economic stupor and help bolster collective defense has lifted investor spirits,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown.European defense stocks gained, with Germany’s Rheinmetall up more than six percent and Britain’s BAE Systems up nearly four percent.With more than 28 percent of the vote, Merz’s CDU/CSU bloc handily defeated Chancellor Olaf Scholz’s Social Democrats (SPD) and the Greens, as the anti-immigration Alternative for Germany celebrated a record of over 20 percent.Merz said he would reach out to the Social Democrats with hopes of forging a stable ruling alliance of the two traditional big-tent parties.But CMC Markets analyst Konstantin Oldenburger said the failure of the DAX to hold onto its gains “can likely be attributed to the understanding that the crucial negotiations between the (conservatives) and the SPD are yet to come.”The euro rose against the dollar and the pound.Elsewhere Monday, shares in Amsterdam-listed Just Eat Takeaway soared almost 54 percent after it received a 4.1 billion euro ($4.3 billion) takeover offer from investment giant Prosus.Asian equity markets mostly fell following a dour end to last week for Wall Street fueled by disappointing economic data, with a report on Friday showing that activity in the US key services sector hit a 25-month low in February and that consumer sentiment dived almost 10 percent from January.This week’s calendar includes earnings from artificial intelligence giant Nvidia, key US inflation data and a different reading on consumer confidence.Among individual companies, Starbucks rose 1.3 percent as the coffee giant said it would cut 1,100 corporate and administrative jobs as part of a reorganization under new CEO Brian Niccol.But Alibaba tumbled 10.3 percent after announcing plans to spend more than $50 billion on artificial intelligence over the next three years, sparking worries about profitability.- Key figures around 2140 GMT -New York – Dow: UP 0.1 percent at 43,461.21 (close)New York – S&P 500: DOWN 0.5 percent at 5,983.25 (close)New York – Nasdaq: DOWN 1.2 percent at 19,286.92 (close)Frankfurt – DAX: UP 0.6 percent at 22,425.93 (close)Paris – CAC 40: DOWN 0.8 percent at 8,090.99 (close)London – FTSE 100: FLAT at 8,658.98 (close)Hong Kong – Hang Seng Index: DOWN 0.6 percent at 23,341.61 (close)Shanghai – Composite: DOWN 0.2 percent at 3,373.03 (close)Tokyo – Nikkei 225: Closed for a holidayEuro/dollar: UP at $1.0468 from $1.0458 on FridayPound/dollar: DOWN at $1.2623 from $1.2632Dollar/yen: UP at 149.76 from 149.73 yenEuro/pound: UP at 82.91 pence from 82.79 pence Brent North Sea Crude: UP 0.5 percent at $74.78 per barrelWest Texas Intermediate: UP 0.4 percent at $70.70 per barrelburs-jmb/bfm

Chinese tech giant Alibaba said Monday it will spend more than $50 billion on artificial intelligence and cloud computing over the next three years, a week after co-founder Jack Ma was seen meeting President Xi Jinping.Investors have piled into Chinese technology stocks since the start of the year, with Alibaba — which runs some of the country’s biggest online shopping platforms — seeing its shares soar to three-year highs.But shares of the e-commerce behemoth nosedived in New York after the big investment push raised worries that the spending would dent profitability.”The main takeaway is that Alibaba’s ambitious spending plans for fiscal 2025 are creating some anxiety that the company’s bottom-line will take a sizeable hit this year, negating the momentum that it has garnered,” said a note from Briefing.com.Near 16:35 GMT on Monday, shares of Alibaba were down more than nine percent.Alibaba plans to “invest at least 380 billion yuan ($53 billion) over the next three years to advance its cloud computing and AI infrastructure”, a company statement said.The firm said its strategy was aimed at “reinforcing (Alibaba’s) commitment to long-term technological innovation… (and) underscores the company’s focus on AI-driven growth”.The statement did not detail how the company would allocate the funds or what specific projects would be supported.It did add that the investment would exceed its total AI and cloud spending over the past decade.Alibaba last week reported an eight percent bump in revenue for the three months through December, beating estimates to reach 280 billion yuan — and triggering a 14 percent surge in its Hong Kong shares on Friday.CEO Eddie Wu said last week that the quarterly results “demonstrated substantial progress in (Alibaba’s) ‘user-first, AI-driven’ strategies and the re-accelerated growth of our core businesses”.The company and its industry peers endured years of dampened investor confidence after Beijing launched an aggressive regulatory crackdown on the tech sector in 2020.But they have been riding higher in recent months, buoyed by the launch of a chatbot by Chinese startup DeepSeek that has upended the AI industry.The turnaround comes as the world’s second-largest economy continues to battle sluggish consumption and persistent woes in the property sector.At a rare meeting with business luminaries last week, Xi hailed the private sector and said the current economic problems were “surmountable” — a move widely interpreted as a show of support for big tech.Co-founder Ma remains an influential figure despite no longer being an Alibaba executive and shunning the limelight since authorities brought down affiliate Ant Group’s high-stakes IPO in 2020.His inclusion in the meeting hinted at the billionaire magnate’s potential public rehabilitation following the tangle with regulators.

With “Monster Hunter Wilds” pitting intrepid players against a menagerie of rampaging beasts on PC and consoles from Friday, the game’s creators tell AFP they hope the 20-year-old franchise can still find new audiences.It has been seven years since the last major instalment saw fans draw oversized swords and bows together, in a series whose success is built on cooperative play to take down dragons and other spectacularly-rendered creatures.Co-op is “really the heart of the series and at the core of its DNA,” said the game’s director Yuya Tokuda.Long queues to test the new instalment at conventions and mass participation in an online open test weekend in October have underscored the anticipation in recent months.”Rather than feeling pressure… it’s actually more of a useful chance for us to see the players’ reactions and also get data about what it is we should be working on,” Ryozo Tsujimoto, the series’ 50-something longtime producer said during a trip to Europe weeks ahead of the release.”Wilds” is the first “Monster Hunter” instalment built for latest-generation consoles.Tsujimoto says this will allow for “even more seamless” play, highlighting that there will be no loading screens between players’ base camp and the monster-haunted open world beyond.Such changes “make you feel like you really are part of the ecosystem from start to finish every time you play the game,” he said.But even on more powerful machines, it was “really quite difficult” to populate the environment with the huge numbers of monsters and other creatures that the developers wanted, Tsujimoto added.There were “lots of programming challenges and also hardware challenges,” he said.- Stoking the hype -The “Monster Hunter” series has shipped more than 108 million units since the first release on Playstation 2, making it a second tentpole franchise for Japanese publisher Capcom alongside the “Resident Evil” zombie saga.It took time and several instalments for “Monster Hunter” to win popularity outside Japan itself.Back then, “we didn’t really have a development schedule… set up for simultaneous localised release around the world,” Tsujimoto remembers.That meant delays of up to a year for different language versions to be adapted, undermining the hype around new releases beyond the home market.”All the news about what was going to be in the game, which monsters and features, had already come out globally, players felt like they’d seen it all from looking online,” Tsujimoto said.These days releases are synchronised around the world to strike while the anticipation is at its peak.- Broadening reach -“Monster Hunter” has also benefited from vastly more players able to join in online with high-quality connections.”Breaking down each of those barriers… is what finally brought us out of niche status in the West and into a global blockbuster,” Tsujimoto said.Nevertheless, “there are still people out there who don’t know about ‘Monster Hunter’,” he added.It was up to the studio to “try and find new ways to make sure that the ‘Monster Hunter’ name spreads among as large an audience around the world as possible”.A first film set in the universe of the games, released in 2020, was a relative flop.That hasn’t put off Tsujimoto, who says “image licensing” is “something we’re aways considering as being on the table”.Although naming no plans for the immediate future, the producer is “always thinking of ways to expand the series around the world”, including to “people who don’t play games”, he said.Tsujimoto and Tokuda did not comment on whether “Wilds” would be available for Nintendo’s hotly-anticipated Switch 2 console, set for release later this year.But looking to the future, “we do still have plenty of monster ideas up our sleeves,” Tokuda said.

Frankfurt equities and the euro rose Monday after conservatives led by Friedrich Merz won Germany’s national election, with investors hoping that Europe’s largest economy can emerge from recession.Elsewhere, London and Paris slipped tracking losses in Asia, while Wall Street rebounded from heavy selling at the end of last week.Frankfurt’s DAX index gained 0.6 percent in afternoon deals after Merz urged a speedy formation of a new coalition government. He warned that as US President Donald Trump is driving rapid and disruptive changes, “the world isn’t waiting for us”.”The hope that the conservatives’ win might help pull Germany out of economic stupor and help bolster collective defence, has lifted investor spirits,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown.European defence stocks gained, with Germany’s Rheinmetall up 4.5 percent and Britain’s BAE Systems up 3.8 percent.The gains came “off the back of Merz’s call for Europe to seek independence from the US — with the obvious inference that the continent needs to take more responsibility for its own security”, said AJ Bell investment director Russ Mould. With more than 28 percent of the vote, Merz’s CDU/CSU bloc handily defeated Chancellor Olaf Scholz’s Social Democrats and the Greens, as the anti-immigration Alternative for Germany celebrated a record of over 20 percent.”Investors welcomed the outcome of Germany’s election, which saw centrist parties positioned to form a coalition,” said City Index and FOREX.com analyst Fawad Razaqzada.”However, while the initial reaction was upbeat, it remains to be seen whether the enthusiasm will be maintained deeper into the week, or even the session once US investors come to the fray,” he added.Elsewhere Monday, shares in Amsterdam-listed Just Eat Takeaway soared more than 53 percent after it received a 4.1-billion-euro ($4.3-billion) takeover offer from investment giant Prosus.Asian equity markets mostly fell following a dour end to last week for Wall Street fuelled by disappointing economic data, with a report on Friday showing that activity in the US key services sector hit a 25-month low in February.The drop in was “attributed to political uncertainty, with tariff threats and Federal spending cuts dampening services,” said market analyst David Morrison at Trade Nation.Meanwhile separate data indicated that consumer sentiment dived almost 10 percent from January.The readings follow a recent run of figures pointing to a softening of the labour market and prices continuing to rise faster than the Federal Reserve’s target rate.Investors have increasingly feared the inflationary impact of Trump’s plans to impose import tariffs and slash taxes, immigration and regulation.That has led investors to scale back expectations for how many interest rate cuts the Fed will make this year.Shanghai fell and Hong Kong retreated from Friday’s blockbuster rally fuelled by tech firms, in particular e-commerce titan Alibaba.Oil prices edged up after dropping as much as three percent on Friday as the weak US data sparked demand fears, while there are also growing expectations Trump will ease the sanctions that have limited Russian oil exports.- Key figures around 1430 GMT -New York – Dow: UP 0.4 percent at 43,579.31 pointsNew York – Dow: UP 0.3 percent at 6,030.99New York – Dow: UP 0.3 percent at 19,590.85Frankfurt – DAX: UP 0.6 percent at 22,421.31 Paris – CAC 40: DOWN 0.6 percent at 8,103.74London – FTSE 100: DOWN 0.1 percent at 8,649.14Hong Kong – Hang Seng Index: DOWN 0.6 percent at 23,341.61 (close)Shanghai – Composite: DOWN 0.2 percent at 3,373.03 (close)Tokyo – Nikkei 225: Closed for a holidayEuro/dollar: UP at $1.0468 from $1.0462 on FridayPound/dollar: UP at $1.2638 from $1.2628Dollar/yen: UP at 149.63 from 149.32 yenEuro/pound: UP at 82.82 pence from 82.81 pence Brent North Sea Crude: UP less than 0.1 percent at $74.12 per barrelWest Texas Intermediate: UP less than 0.1 percent at $70.44 per barrelburs-rl/js

Asian markets mostly fell Monday following a dour end to last week for Wall Street fuelled by disappointing economic data, but Frankfurt and the euro rose after conservatives won Germany’s closely watched election.After a healthy performance on Friday, Asian investors struggled to maintain momentum after big losses in New York, where the Nasdaq lost more than two percent.The selling came after a report showed activity in the key services sector hit a 25-month low in February, while separate data indicated consumer sentiment dived almost 10 percent from January.Meanwhile, another study revealed that expectations for inflation hit a three-decade high.The readings follow a recent run of figures pointing to a softening of the labour market and prices continuing to rise faster than the Federal Reserve’s target rate.There have been increasing fears since Donald Trump regained the US presidency that his plans to impose import tariffs, and slash taxes, immigration and regulations would reignite inflation.That has led investors to scale back their expectations for how many interest rate cuts the Fed will make this year.Hong Kong retreated after Friday’s blockbuster rally fuelled by tech firms, particularly an eye-watering rise of more than 14 percent in ecommerce titan Alibaba.Shanghai, Seoul, Mumbai, Taipei, Manila, Jakarta, Bangkok and Wellington were also in the red.Sydney and Singapore also edged up but the rest of the region struggled.London edged up at the open but Paris slipped.Frankfurt’s DAX index and the euro were boosted by news that conservatives won a closely watched election in Germany, with leader Friedrich Merz urging the speedy formation of a new coalition government.Merz’s CDU/CSU alliance won more than 28 percent, according to projections, crushing the Social Democrats (SPD) of outgoing Chancellor Olaf Scholz, which came third.But there was some nervousness after the far-right Alternative for Germany (AfD) came second, almost doubling its score to more than 20 percent.Merz said he wanted to quickly form a government, warning that as Trump is driving rapid and disruptive changes, “the world isn’t waiting for us”.”Markets will like that, presuming it is achieved,” said National Australia Bank’s senior forex analyst Rodrigo Catril.But SPI Asset Management’s Stephen Innes said: “With these results, the next government’s first priority won’t be fixing Germany’s stagnating economy — it’ll be damage control.”Expect a hard pivot toward stricter immigration policies, not because of economic necessity but because mainstream parties are now in full-blown panic mode over the AfD’s rise.”Oil prices extended losses after dropping as much as three percent on Friday as the weak US data sparked demand fears, while there are also growing expectations Trump will ease the sanctions that have limited Russian oil exports.- Key figures around 0815 GMT -Hong Kong – Hang Seng Index: DOWN 0.6 percent at 23,341.61 (close)Shanghai – Composite: DOWN 0.2 percent at 3,373.03 (close)London – FTSE 100: UP 0.1 percent at 8,665.27Tokyo – Nikkei 225: Closed for a holidayEuro/dollar: UP at $1.0500 from $1.0462 on FridayPound/dollar: UP at $1.2643 from $1.2628Dollar/yen: UP at 149.45 from 149.32 yenEuro/pound: UP at 82.96 pence from 82.81 pence West Texas Intermediate: DOWN 0.3 percent at $70.16 per barrelBrent North Sea Crude: DOWN 0.2 percent at $73.88 per barrelNew York – Dow: DOWN 1.7 percent at 43,428.02 (close)

Indonesia on Monday launched a new sovereign wealth fund that will aim to manage state assets worth more than $900 billion as President Prabowo Subianto looks to turbo-charge growth in Southeast Asia’s biggest economy.The recently inaugurated leader has pledged to take the archipelago’s annual growth from five to eight percent, ordering billions of dollars worth of cuts across government that last week sparked the first protests of his rule.Prabowo signed a document at the presidential palace in Jakarta initiating the new fund known as Daya Anagata Nusantara, or Danantara, which is modelled on Singapore’s investment arm Temasek and received approval this month in a parliament dominated by the president’s ruling coalition. “I, as the president of the Republic of Indonesia, sign… the government decree… about the organisation and governance of the Investment Management Body, Daya Anagata Nusantara,” he said at the palace.”It is not just an investment body, it is an instrument for national development that will optimise the way we manage our wealth. We are committed to being a developed nation.”Danantara will take control of government holdings in state companies, with an initial budget of $20 billion, according to state news agency Antara.Investment Minister Rosan Roeslani has been picked as the chief executive of the fund, Coordinating Minister for Economic Affairs Airlangga Hartarto told reporters after the signing.The government has not specified which state-owned companies will fall under control of the fund but Prabowo has said he wants it to manage more than $900 billion in assets.As of 2023, government data showed state-owned enterprise assets were worth $637.5 billion, much lower than Prabowo’s target.He will use the fund as an investment vehicle and said it would “be invested in 20 or more high-impact national projects” this year.Prabowo said the initial funding would be used for projects in nickel, bauxite, copper, food production, renewable energy and building an AI centre, oil refinery and petrochemical factory.- ‘New era’ -Danantara will be Indonesia’s second sovereign wealth fund, after the Indonesia Investment Authority which was launched in 2021 and holds $10.5 billion in assets.”This event marks a new era in the transformation of strategic investment management in the country,” presidential secretariat spokesman Yusuf Permana said in a statement Sunday.”It is also part of the government’s commitment to realising… a grand vision aimed at elevating Indonesia’s economy to a higher level through sustainable and inclusive investments.”Prabowo’s cuts to fund Danantara and an ambitious multi-billion-dollar free lunch programme have stoked student-led protests by thousands across Indonesia’s cities, including the eastern city of Makassar where police fired tear gas.Austerity measures announced by Prabowo in late January sparked the rallies last week, underpinned by a social media movement known as “Dark Indonesia”.The fund will also report directly to Prabowo and some experts have cautioned that it will need proper monitoring and management, otherwise it could raise governance concerns.Danantara’s launch was also met with some opposition on social media by Indonesians angry at the government’s handling of finances in a country long known for red tape and corruption.”The state can’t even manage life insurance properly. How can it manage a Danantara-style Sovereign Wealth Fund?” asked one user on X.

Asian markets mostly fell Monday following a dour end to last week for Wall Street, where a disappointing round of data added to concerns about the world’s number one economy.The euro started on the front foot after conservatives won a closely watched election in Germany, with leader Friedrich Merz urging the speedy formation of a new coalition government.After a healthy performance on Friday, Asian investors struggled to maintain momentum after big losses in New York, where the Nasdaq lost more than two percentThe selling came after a report showed activity in the key services sector hit a 25-month low in February, while separate data indicated consumer sentiment dived almost 10 percent from January.Meanwhile, another study revealed that expectations for inflation hit a three-decade high.The readings follow a recent run of figures pointing to a softening of the labour market and prices continuing to rise faster than the Federal Reserve’s target rate.There have been increasing fears since Donald Trump regained the US presidency that his plans to impose import tariffs, and slash taxes, immigration and regulations would reignite inflation.That has led investors to scale back their expectations for how many interest rate cuts the Fed will make this year.Hong Kong advanced in early Asian trade, building on Friday’s blockbuster rally fuelled by tech firms, particularly an eye-watering rise of more than 14 percent in ecommerce titan Alibaba.The Chinese firm piled on more than one percent, while JD.com was up 0.9 percent.However, while Singapore also edged up the rest of the region struggled.Shanghai, Sydney, Seoul, Taipei, Manila, Jakarta and Wellington were all in the red.The euro got a lift from news that Merz’s CDU/CSU alliance won more than 28 percent, according to projections, crushing the Social Democrats (SPD) of outgoing Chancellor Olaf Scholz, which came third.The far-right Alternative for Germany (AfD) came second, almost doubling its score to over 20 percent.Merz said he wanted to quickly form a government, warning that as Trump is driving rapid and disruptive changes, “the world isn’t waiting for us”.”Markets will like that, presuming it is achieved,” said National Australia Bank’s senior forex analyst Rodrigo Catril.Oil prices extended losses after dropping as much as three percent on Friday as the weak US data sparked demand fears, while there are also growing expectations Trump will ease the sanctions that have limited Russian oil exports.- Key figures around 0230 GMT -Hong Kong – Hang Seng Index: UP 0.1 percent at 23,494.24Shanghai – Composite: DOWN 0.3 percent at 3,370.56Tokyo – Nikkei 225: Closed for a holidayEuro/dollar: UP at $1.0521 from $1.0462 on FridayPound/dollar: UP at $1.2682 from $1.2628Dollar/yen: UP at 149.45 from 149.32 yenEuro/pound: UP at 82.96 pence from 82.81 pence West Texas Intermediate: DOWN 0.2 percent at $70.27 per barrelBrent North Sea Crude: DOWN 0.1 percent at $73.97 per barrelNew York – Dow: DOWN 1.7 percent at 43,428.02 (close)London – FTSE 100: FLAT at 8,659.37 (close)

Hong Kong and Singapore are the front-runners in a push by Asian governments to become cryptocurrency hubs as they look to capitalise on the global resurgence of the sector thanks to the support of US President Donald Trump.Bitcoin recently hit a record of close to $110,000 while others have also rallied on the back of Trump’s pro-crypto promises. With forecasts that they could rise further, governments are keen to get a piece of the action.Hong Kong regulators said Wednesday that the city needed to tap “global liquidity” and laid out plans including the possibility of offering riskier crypto products such as derivative trading and margin financing. “The one word that we need to think about always is liquidity,” Eric Yip, an executive director at the Securities and Futures Commission (SFC), said at an industry conference in the financial hub.”How do you bring liquidity to this market, hence commercial value, hence ecosystem?”The collapse of exchange FTX in 2022 took along with it around $8 billion from customers who used it to buy, sell and store cryptocurrencies.The funds were later recovered, but regulators around the world are anxious to avoid a repeat, and the sector has since moved away from its freewheeling, anti-establishment origins to embrace regulation.Officials stress the need for investor protection while still hoping their rules will be business-friendly.”There was a lot more scrutiny two or three years (ago), right after FTX… (Regulators) want to make sure that they do the proper due diligence,” said Hong Fang, president of another exchange, OKX.- Crypto capital -Officials in Malaysia and Thailand are mulling crypto-related policy shifts, while Japan, South Korea and Cambodia have made incremental moves, according to Bloomberg News.But Hong Kong and Singapore, along with Middle East standout Dubai, cemented their front-runner status during a period when US regulators under Joe Biden’s administration were sceptical toward crypto.In an executive order last month, Trump — who has pledged to make the United States the “crypto capital of the planet” — said he will instead provide “regulatory clarity and certainty” to support blockchain and digital asset innovation.Animoca Brands group president Evan Auyang said the anticipation surrounding a new US playbook is a game changer and will influence regulators worldwide.Singapore’s Monetary Authority has issued “Major Payment Institution” licences in relation to digital payment tokens to 30 companies, including OKX, which it added last year.The city-state has had a head start in regulating digital assets, including with efforts such as the 2022 Project Guardian that brought regulators together with major global banks to explore asset tokenisation.That project showed Singapore “engaged early on central banks, regulatory bodies, international standards setting bodies”, Leong Sing Chiong from the Monetary Authority of Singapore said in November.Hong Kong, which uses a different approach, has granted “Virtual Asset Trading Platform” licences to 10 companies.The Chinese finance hub is “number two… behind Singapore” when it comes to crypto regulation, said Animoca’s Auyang.While Hong Kong has fewer exchanges, they saw a spike last year in terms of value received, according to blockchain research platform Chainalysis.In the first half of 2024, Hong Kong’s centralised exchanges collectively received $26.6 billion, almost triple the year before and almost double Singapore’s $13.5 billion.- Spurred into action -Hong Kong overhauled its legal framework for crypto exchanges in mid-2023, with the SFC put in charge of vetting and licensing.China has banned crypto since 2021 and exchanges in the semi-autonomous enclave cannot serve mainland Chinese clients.But Yat Siu, executive chairperson of Animoca Brands, said pro-crypto policies have Beijing’s “blessing” and that Hong Kong benefits from being China’s financial gateway.Aside from exchanges, the SFC on Wednesday said it will explore a range of regulations, including for custody services, staking and over-the-counter trading.”Hong Kong isn’t sitting back and saying, ‘Look at the US, we’re just going to sort of kick back’,” Siu said. “It actually spurs it more into action.”However, the city’s regulators have learned that the devil is in the details.Hong Kong regulatory lawyer Jonathan Crompton said: “Anybody who engages in (exchange licensing) is going to have to commit to a very serious governance regime… It’s not for the faint-hearted.”Over the past two years, some companies have reportedly found it challenging to hire specialised compliance personnel. The SFC vetting team, too, is understaffed.The regulator’s website lists eight pending candidates, while 13 have withdrawn their applications.”The SFC has been stuck between a rock and a hard place,” Crompton told AFP. “People have complained that, on one hand, it’s not quick enough to introduce a regulatory regime, and on the other hand, they have not provided enough protection.”

Hong Kong is facing its toughest fiscal test in three decades following a painful run of mammoth deficits, with experts urging the government to make careful cuts as the economy wobbles.The Chinese finance hub last saw a string of deficits after the Asian financial crisis in the late 1990s — but their scale was a fraction of the HK$252 billion ($32.4 billion) shortfall in the 2020-21 fiscal year.Hong Kong has recorded annual deficits exceeding $20 billion in three of the past four years, according to official figures.The city’s finance chief Paul Chan said Sunday that the deficits were caused by “multiple internal and external challenges” and that a new budget unveiled on Wednesday will tightly control public spending.While Chan earlier predicted a return to surplus in “three or so years”, a former government minister told AFP that the situation is “not just due to economic cycles” spurred by the coronavirus pandemic.”If you look at Hong Kong versus other economies in the region, for example Singapore, those other economies have done much better,” said Anthony Cheung, who oversaw transport and housing policies.Adding to the headache is the exodus of companies and high-paid workers as the city’s international reputation took a hit after Beijing quelled pro-democracy protests and imposed a sweeping national security law in 2020.Singapore and Hong Kong suffered towering deficits in 2020 because of the pandemic, but the former has been able to keep spending relative to income in check as firms shift there from the Chinese city, helping it outperform its fiscal targets.The challenge for Hong Kong is not just to balance its books, but to find fiscal sustainability amid US-China tensions and a slowdown in the world’s second-largest economy, Cheung said.”In the past, we assumed that Hong Kong was geopolitically well-positioned… Now we have to be more careful about such presumptions.”- Plunging land sales -Hong Kong is required by its mini-constitution to “strive to achieve a fiscal balance” — a holdover from British colonial rule that kept the market mostly free from government intervention.After returning to China in 1997, it kept taxes low and refilled its coffers with the help of land-related revenue, selling land to developers with deep pockets. But last year Hong Kong collected just $2.5 billion that way, from a peak of $21.2 billion in 2018. “(Land-related revenue) by itself has contributed to the majority of the income decline,” said Yang Liu, a financial economist at the University of Hong Kong.”We have a very inactive land market and declining housing prices. That’s one reason that people (don’t) trade, so there’s no tax (income),” Liu told AFP.Hong Kong still has healthy cash reserves and low government debt compared with most economies around the world. But the prospect of three straight years in the red has fuelled public debate on how to spend less.”All the new initiatives will be under much stronger scrutiny, so (the government) will be a lot more disciplined, a lot more careful,” Liu said.In his upcoming budget speech, the finance chief is set to put the latest deficit at “under HK$100 billion”, adjusting for money raised from bond sales.There are calls to roll back a transport subsidy for those aged 60 to 64, which can grow into a major burden on the government as Hong Kong’s population ages.Lawmaker Edmund Wong cautioned against pay cuts for civil servants, which he said may cause private-sector employers to follow suit, but urged the government to slim down.”In the long term, we can greatly reduce the manpower which the government is employing now,” he told AFP. – ‘Welcoming’ image -The deficits could prompt Hong Kong to rethink how it makes money, though past discussions on expanding the tax base — such as a goods and services tax — went nowhere.The city’s low ratio of debt to GDP — which the government last year put at no more than 13 percent — means it can afford to issue bonds to fund huge undertakings, experts say.Officials have signalled they will push ahead with a massive infrastructure project in northern Hong Kong, while backing away from a separate plan to create artificial islands.As tensions flare between the United States and China, Hong Kong is seeking untapped growth potential in the Middle East and Southeast Asia that can translate to government revenue down the line.The city’s economic fortunes are ultimately tied to how investors view the city as a regional and global hub, said Cheung, the former minister. “We have to continue to showcase Hong Kong as a city that welcomes all kinds of views, all kinds of people, so long as they stay within the parameters of the national security legislation,” Cheung said.