International News 05/09
-
The rate of inflation in South Korea has reached its lowest level in 3.5 years.
The latest official data from South Korea reveals that the country's inflation rate in August was the lowest it has been for nearly 3.5 years. This is in line with market expectations regarding the implementation of monetary policy easing by the central bank. The consumer price index increased by 2.0% year-on-year, representing the slowest annual rise since March 2021 and aligning with economists' forecasts. On a monthly basis, the index rose by 0.4%, representing the fastest pace in six months and exceeding expectations. Despite the Bank of Korea maintaining interest rates at a 16-year high last month, there is now renewed speculation of policy easing in the near future due to concerns about economic growth outweighing worries about inflation. The core consumer price index, which excludes food and energy items, also demonstrated a deceleration, rising by 2.1% from the previous year, representing the weakest increase since November 2.
Investors Turn to Swiss Franc as Funding Currency
Investors have shifted their focus to the Swiss franc as an alternative to the Japanese yen for risk carry trades, leading to a notable appreciation in the value of the franc. The franc is regarded as a favoured currency for yield preservation, whereby traders borrow a low-interest currency and exchange it for another currency to purchase higher-yielding assets. The Swiss franc has gained in popularity as a result of the weakening of the yen. The volume of carry trades using the yen fell in August due to a sudden rally in the yen and weak US economic data, which led to increased market volatility globally. The Swiss National Bank (SNB) was the first major central bank to commence an easing cycle, thereby facilitating the borrowing of francs at a low rate for investment purposes elsewhere. In comparison to other countries, including the United States, the United Kingdom, and the eurozone, Switzerland offers significantly lower interest rates. Consequently, the franc has reached an eight-month high against the dollar and a nine-year high against the euro, thereby further consolidating its status as a funding currency.
https://internasional.kontan.co.id/news/investor-beralih-ke-franc-swiss-sebagai-mata-uang-pendanaan
Tiktok's parent company seeks US$ 9.5 billion in bank loans
ByteDance, the Chinese owner of TikTok, is seeking a $9.5 billion loan, representing the largest dollar-denominated financing facility in Asia outside Japan. The financing is being coordinated by Citigroup, Goldman Sachs and JPMorgan, with a three-year maturity and an option to extend for a further two years. This loan demonstrates ByteDance's intention to access the Asian credit market, which currently has substantial liquidity despite a slow deal flow. However, data indicates that US dollar lending volumes in Asia, excluding bilateral facilities, decreased by 44% to $45.5 billion during the first half of 2021, reaching the lowest level since 2010. Proceeds from the loan will be used to refinance a previous $5 billion facility raised earlier this year, with the remaining funds allocated for working capital purposes. The loan also includes an over-allotment option, allowing for a potential increase in size. No comment was provided by ByteDance in response to Bloomberg's request for information.