S2E4: Japan’s trade win, bond yields and Singapore’s big bet on the STI
This is a podcast from the Business Times. Hi everyone, welcome to Market Focus Weekly from the Business Times. Every Friday, we’ll be breaking down the biggest market moving stories in Asia. I’m Emily Leu. It’s Friday, July 25th, 2025. It’s been a huge week for Asian markets. Japan just signed a major trade deal with the US and that has sent the topics and the NIK to record highs. But is all this excitement justified or are markets getting ahead of themselves? We’ll look into that. We’re also seeing long-term bond yields climbing. What’s going on over there? And over in Hong Kong, Chinese tech stocks are continuing their record rally, especially with signs that the US might be easing on chip restrictions. We’ll take a look at the outlook over there. And back home, the Monetary Authority of Singapore is pumping billions into the Singapore stock market. Will this make a difference? Today in the studio we have Hugh Chong, chief investment officer of Endows to give us some answers. Hi Hugh. Hey, good morning Emily. Nice to be in here. How’s your week been? Uh, it’s been pretty busy. I think markets have continued to make um, you know, make us busy, but yeah, it’s been good. So, let’s dive into what’s happened this week. I think the biggest headline is the Japan US trade deal. All around the region, markets reacted very positively. also in the US. Why is this such a big moment? Do you think this optimism is justified? Yeah, I think the market’s reacting positively because I think there’s a renewed sense of I guess I wouldn’t say optimism per se, but kind of coming from a panic background that people are more confident that the trading parties would act rationally, right? And if you look at what happened in Japan, they actually lowered uh the auto tariffs or the US lowered the auto tariffs going in imported into the US while the bilateral tariffs were actually increased a little bit. So on balance it was positive for Japan but I think there is a belief that parties will react positively and therefore that was the trigger for risk rally. Now having said that the global equities market rose about a percent this week so moderate pretty good but still moderate is really the Nikkay as you said that rose about 6%. And I think part of it is because Nikk was a real lagard to the rest of the world over the last kind of 12 months compared to not just US but Europe other emerging markets and also Korea right which is a neighboring country to Japan which has done phenomenally well this year right so I think there’s a little bit of a catchup now is the market a bit complacent potentially yes I think there are certain parts where valuations are high but I mean the US market also did well because of earnings right earnings have actually held up and the economy is holding up. So it’s very hard to say the market is irrational but yes there are pockets of the market that are a bit rich. If we look at the bond market uh we saw long range yields really climb this week in Japan and also in China. What’s driving this selloff that we see here? Right. I think the um Japan and the China long yields are slightly different situation. And if you look at Japan, as you pointed out, the 30-year, particularly the long yield, the 30-year has passed 3%. Which is something that Japan has not seen for decades, right? And it’s because Japan was fighting deflation for a very, very long time. And it’s only recent that this has changed and we’re seeing inflationary pressure. And I think there’s a strong correlation between the long yields going up and inflation expectations moving higher. So, it’s largely driven by inflations. Now there are some technical factors. I think the implication of that is that Japan used to be the main kind of what we call carry trade which means you borrow from Japan and you invest in other markets right but if Japan yields are moving higher the risk is that the domestic you know investors invest in Japan instead of overseas and the carry trade gets unwounded which part of we saw last year in August. So if this continues, it could have an impact on other markets like US treasuries. Right now for China, yes, the yields have rose a little bit recently, but you have to remember China’s facing an opposite problem. It was facing deflation for the last few years and interest rates have come down quite a bit and the recent blip is quite small. So it’s very hard to put Japan and China in the same category. But you’re right. I mean, yields selling off, particularly on the long yield, has been a trend globally as investors are looking for more um they’re looking for more compensation to hold long-term assets. So, I think I guess related to that is the interest rates around the world. Um I know we have a few central bank decisions coming up next week. Yeah. In the US, in Japan, and also in Singapore. What’s your outlook for how interest rates will move there? I would say generally speaking in the US and Japan again it’s opposite situation because Japan is wondering whether there should be another rate hike. US is looking for another rate cut right and I think both situations I would think nothing will happen. I think we’re in a situation where both the Fed and the BOJ are kind of watch mode in terms of you know the data points in terms of the uncertainties around tariffs and so on and so forth. So far I think inflation prints have come in largely within expectations. have to remember in Japan there was an election recently as well and you know the ruling party did not get its majority right so there’s a lot of uncertainty around and unless there’s a very strong reason I don’t think they will take action I think in Singapore obviously the sing dollar is a key barometer that people are looking for it’s been quite strong it’s the upper end of its ban I think inflation in the Singapore has also been in line with expectation so you know it’s possible we see a bit of a pullback in SGD, but I would say overall it should be fairly stable. Still to come, is Chinese AI overhyped? Plus, the surprising strength of Singapore’s stocks. More with Hu Chung from Endows in a moment. [Music] Money Hacks by the Business Times delivers useful financial tips every Monday. Subscribe to the playlists in Spotify, Apple Podcasts, or wherever you listen to podcasts. But if watching is your thing, we’ve got you covered. Subscribe to the Money Hacks playlist in the podcast tab of BT’s YouTube channel and watch as Howie Limb gets the inside scoop on the best money hacks. Subscribe and watch today. Welcome back to Market Focus Weekly. Let’s take a look at Chinese stocks, especially the ones listed in Hong Kong. They have been on a roll ever since January when deepseek kind of broke into the global consciousness and now it seems like the US has also reversed their ban on Nvidia selling AI chips to China. What’s your outlook for Chinese tech stocks this year? Yeah, that’s a great question. I think so. Deepseek when it happened and I think caught a lot of people by surprise. So I think there was a concern that oh you know if there’s competition then it’ll be potentially a zero sum game whereas what actually happened was increased or it accelerated the pie and what we’re seeing thus far is a fairly symbiotic relationship between the US and China tech sectors whereby they’re they’re less competing but growing the pie together. So actually you’re seeing US tech and China tech grow or at least in from a share price perspective grow as well as their fundamentals and I think that will probably continue and if you look at what we call hen tech there’s really not just hardware tech but a lot of it is internet as well right so you have the 10 cents and the Alibabas and so on and you have to remember that while it looks like a strong rally from the bottom a lot of them are still below their peak levels in 2021 right which is very different from the US market. So valuations are generally quite reasonable. I think if you look at globally, China is probably the only other region where there is kind of real innovation around AI. So I yeah I think it’s definitely a sector worth monitoring in mid to long term as well. So you don’t think it’s just a blip from you know the hype currently? Well I personally think that the whole AI kind of view and industry is not a hype. I actually think I mean yes selectively within there there could be areas where it’s overvalued near term but as a industry I think it has a very very strong implication to a lot of different sectors right so I don’t think it’s a hype as an industry right so mid to long-term investors I think you need to be exposed in some way or another to AI oh right that’s good to know one of the major investment narratives this year has been moving away from the dollar dd dollararization. I know especially among Asian investors that’s been a concern. Do you see that trend changing so far this year? I mean the US equities seem to be still going really strong. So is that narrative changing? I think there’s two aspects to that. One is as you say dd dollararization. So this whole notion that you know dollar is not the global reserve currency and so on and so forth. And I think that part is it’s going to take a really really long time because if you look at you know reserve currencies around the world if you look at the trading if you look at you know whether it’s trading not just equities but oil like like all sorts of aspects of the real economy I think the vast majority of the trading volume comes from dollar right so it’s very difficult to replace that on the second point if you look at the underlying US dollar assets whether it’s equities or treasuries and so on and so forth It’s again still a line share of the asset class. So US equities is probably around 60% of all global equities. I mean public listed, right? So I think it’s very difficult to replace that. Now whether dollar is overvalued or not is a separate question, right? I think that is kind of what’s been moving the markets because dollar until recently has been trading at a 20-year high and relative to euro, Japanese yen and so on. And that’s kind of come back. And I think the reason it’s come back was a few reasons. One is that this whole what we call US exceptionalism which is triggered by you know the tech companies and generally a lot of US dollar assets doing well. I think that kind of premium came down a bit. The other thing is the trust in the US assets and system and so on has on the margin obviously gotten less just because of tariffs and all of that. So I think a lot of that has happened. Now again I we don’t predict the direction or the level of the dollar but I would say the peak level of concern is probably peaked. I think it doesn’t mean that dollar is not going to further weaken but I think the velocity and the concern that we see has actually been you know somewhat. So I I think we need to really look at it less from a tactical perspective but more from a matching your liability and because sing dollar investors you have sing dollar liability so you the matching is more important than whether taking a view on the dollar or not. I think it’s good that people are thinking about diversifying out of just US assets which has been our view all along but now it’s like the flip of like oh should I bring everything out and put it into so none of that is correct. I think you should always have a diversified portfolio. Well, then I mean even my dad is like, “Oh, I’m trying to move things from the US to the Euro and stuff like that.” So, where would you say people are moving into? Yeah, I think you’re right. I think within developed markets, there’s really only a few choices. One is Europe region, the other is Japan. Also, Asia X Japan, so China, India, Korea, you know, like our hometown Singapore. We just launched our partnership with the Mundi together. We, you know, launched an STI index fund for the first time. So there’s a lot of interest outside of the US that way. I don’t think it’s just one region, right? Well, talking about the Singapore Straits Times Index, the monetary authority of Singapore is also trying to make some moves here. The plan is 5 billion Singapore dollars into the Singapore exchange under a program called the Equity Market Development Program. And this week they announced the first 1.1 billion chunk of that. So how will this shake up Singapore stocks uh and the SDI? Do you think this is a good move? Yeah, I think I we’ve already kind of written about this. It’s a good move I think because I think the primary objective I think is to raise awareness, you know, increase liquidity. Liquidity is a very very important part of an index, right? and also for the smaller cap companies that are lesser known you know raising research capabilities transparencies etc etc I think that those are all good initiatives having said that I think looking at a little bit deeper like the STI index is really only an index of 30 stocks and out of that’s 30 stocks around close to half of it are the three banks right and it’s done really well by the way the STI index is one of the best performing indices in the world over the last 1 year 3ear 5year basis on a sing basis. So part of it is because Sing dollar’s strengthened, but it’s done really well. Why? Because Singapore is a very stable political sovereign as well as there’s been capital inflows and the business has been doing generally pretty well and the dividend yields are very high and I think kind of building that a stronger home kind of investment ecosystem I think is quite encouraging, right? So we view it quite positively. That’s it for this week’s market focus weekly. Thank you Hugh for coming in today. Thank you. We’ll be keeping a close watch on what happens next. And if you have any questions or feedback, drop us a note at btodcast.com.sg. I’m Emily Louu. See you next Friday. This is a podcast by the Business Times. Find more BT podcasts at business times.com.sg/mpodcasts or wherever you get your podcasts. This podcast is meant to provide general information only. PH Media accepts no liability for loss arising from any reliance on the podcast or use of third parties products and services. Please consult professional advisers for independent advice.
Japan’s trade deal with the US has sent markets rallying — but is the optimism warranted?
This week on Market Focus Weekly, host Emily Liu sits down with Endowus CIO Hugh Chung to unpack what’s behind the surge in Asian stocks, the rise in long-term bond yields, and whether Chinese tech is still a buy.
They also discuss what Singapore’s $5 billion stock market injection means for local investors, and if the de-dollarisation narrative still holds water.
Highlights:
01:12 Japan-US trade deal
02:54 Japan, China bond yields
04:41 Upcoming interest rate decisions
06:47 Chinese tech rally
08:59 Is de-dollarisation still a trend?
12:19 S$5 billion injection into SGX
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Send us your questions, thoughts, story ideas, and feedback to btpodcasts@sph.com.sg.
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Written and hosted by: Emily Liu (emilyliu@sph.com.sg)
With Hugh Chung, chief investment officer, Endowus
Edited by: Chai Pei Chieh & Claressa Monteiro
Produced by: Emily & Chai Pei Chieh
A podcast by BT Podcasts, The Business Times, SPH Media
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