Commentary | Response tariffs are not the ideal answer to Trump's aggressive tactics

While the impulse to fight back is understandable, there are more effective strategies that won't damage local economies as tariffs tend to.

However, it's uncertain why revenge is considered standard and favorable when the tariffs that instigate them are rightfully seen as absurd. Policymakers in other areas must not overlook the reality that Trump has decided to ignore: the primary burden of tariffs is carried domestically.

The urge to fight back is innate. To discourage a playground tormentor, one needs to challenge him with resolute resistance. However, instead of discouraging Trump, tariffs imposed by other nations will only fuel his misguided complaints. Crucially, the rationale of counterattack doesn't apply in this situation.

Despite Trump's assertions, it's predominantly American consumers and businesses utilizing imported resources who bear the cost of US tariffs. Hence, the idea of an "ideal tariff" that could potentially allow a country to profit by wielding monopoly power on global markets, doesn't appear to be relevant.

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US halts duties on Canada and Mexico

Yum, the company in charge of KFC in China, plans to persist in their expansion efforts and promotion of value menus. Their strategy includes launching as many as 1,800 new outlets in 2025, a goal similar to the one they set the previous year. Their aim is to exploit opportunities in less developed cities.

The quick-service restaurant corporation announced its strategies as it disclosed a 5 per cent rise in 2024 sales compared to the previous year, reaching US$11.3 billion. This met the projections of the market.

"We still have numerous chances to establish shops in both premier and subordinate cities," stated CEO Joey Wat during a Thursday briefing. Yum China plans to concentrate on more compact Chinese cities with "less capital involved, reduced menu options, and a less complex business structure", she further mentioned.

Yum plans to allocate around 50% of its projected capital expenditure, ranging from $700 million to $800 million, for the inauguration of new outlets this year.

"Deutsche Bank analyst Han Zhang emphasized that the company's commitment to offering cost-effective deals remains strong, backed by several promotional offers," in his analytical report. He mentioned that Yum was hesitant to project any growth in sales for individual stores by 2025, as the unpredictability of the larger economic environment could lead to a more conservative approach to consumer spending.

Yum's guidelines for brand new store launches indicate that they plan to open between 1,600 and 1,800 new locations in 2025, in contrast to the 1,751 they launched last year. In the final quarter of 2024, they inaugurated 534 new stores.

Decade in China: The Transformation of Global Businesses' Supply Chains Amidst Trump 2.0

Companies are diverting their products through a range of emerging markets to escape the expanding tariff system of the US – stretching from Poland to South Africa.

During his initial tenure, US President Donald Trump instigated a trade conflict with Beijing. Consequently, numerous multinational corporations implemented a "China+1" approach to cope with the unpredictable new circumstances.

The plan involved moving sections of their supply chains out of China's manufacturing centers and into emerging investment areas like Vietnam and Mexico, in order to lessen the effects of US tariffs targeted at Chinese imports.

Presently, certain companies are recognizing that they might have to reassess their plans in order to manage the potential challenges of a more assertive second Trump administration.

Ever since resuming his role, the American President has declared his intentions to impose a 25% tariff on both Mexico and Canada, as well as increase the tax on Chinese commodities by 10%.

Numerous investors are concerned that the US may impose additional restrictions on markets deemed to be transit points for Chinese products. As a result, some are exploring various new markets, stretching from India to South Africa, for diversification.

HSBC lowers price target for New World, proposing a debt strategy and capital infusion to reassure investors. The company's stock has fallen by 37%, equivalent to a decline of approximately US$822 million in market value, since the end of November when a change in management didn't manage to placate investors.

Analysts at HSBC Holdings suggest that New World Development (NWD) might require a strategy to decrease debt or a monetary contribution from the wealthy Cheng family to alleviate a cash flow crisis and reassure stockholders.

The firm's stocks have plummeted by 37 per cent, which equates to a market value loss of HK$6.4 billion (US$821.7 million) since late November, due to a failed management restructuring that left investors unsettled. Even though the stocks saw a 4.6 per cent increase in a late surge on Friday, they were still close to an all-time low of HK$4.04 recorded on January 25. HSBC has also reduced its stock-price forecast for the second time this year, due to a bleak profit projection.

"A comprehensive and all-encompassing plan to reduce debt, as opposed to refinancing, could serve to ease the worries of investors," state HSBC analysts Raymond Liu and Michelle Kwok in their report. "Robust backing from its parent company, potentially in the form of a capital infusion, might also be beneficial."

HSBC has reduced its price target for NWD to HK$3.66, following a previous decrease to HK$4 from HK$5.60 on January 7, as per Bloomberg data. Of the 19 analysts monitoring the stock, 11 recommend selling NWD, while four suggest holding and four endorse buying. Jefferies is the most pessimistic, setting a price target of HK$2.

DeepSeek's AI technology provides a significant enhancement to China's smart glasses industry, challenging Meta. The cost-effective and robust models of this start-up have essentially transformed the financial aspects of AI implementation, according to the founder of smart glasses company Rokid.

Zhu believes that DeepSeek is revolutionizing the industry. By leveraging China's strength in hardware supply chain and optics, DeepSeek's AI models provide a more adaptable approach for the smart glasses market. This could potentially boost the acceptance and use of these products, he suggested.

DeepSeek cautions about fraudulent social media profiles as the AI app gains immense popularity. The Chinese AI company has advised people to be alert about accounts pretending to be its founder or trading cryptocurrencies under its brand name.

The firm stated that their flagship chatbot application can be downloaded at no cost and they have not released any form of cryptocurrency. They further clarified that any social media circles requesting fees under DeepSeek's name are likely scams.

Five o'clock

Could China's affordable DeepSeek signal the downfall of Nvidia's reign in the chip market?

The rising fame of DeepSeek, along with its discreet presence, has turned the company into a major subject for false information.

In Perspective | Trump's 'exploit and extract' approach exacerbates worldwide environmental crisis

The significant damage lies in the strengthening of the American fossil fuel sector and the coercion on US financial powerhouses to divert from financing environmental objectives.

The Centre for American Progress critiques Trump's choice, stating it blatantly dismisses scientific facts, sabotages decades of committed international teamwork, damages the US economy and its citizens, and sends a perilous message that the country majorly accountable for the climate crisis is neglecting its ethical and pragmatic duties.

Trump seems indifferent to this issue. Currently, the US is one of only four countries that remain detached from global climate initiatives, along with Libya, Iran, and Yemen. Under regular circumstances, the US might label this unusual alliance as a coalition of climate adversaries.

What damage has Trump truly inflicted? In terms of immediate, tangible impact, he has pulled away monetary backing from the UN Framework Convention on Climate Change (UNFCCC), a program whose goals are implemented through the Paris Agreement.

The Hong Kong Monetary Authority (HKMA) intends to introduce a facility worth US$13.7 billion to aid in international trade settled in yuan. The RMB Trade Financing Liquidity Facility is set to be revealed on February 28 by the HKMA.

The Hong Kong Monetary Authority (HKMA) announced that banks would be provided with yuan funding for trade finance. This would be based on the onshore interest rate, also known as the Shanghai Interbank Offered Rate (SHIBOR), which is usually less than the offshore rate. Additionally, a premium of 0.25% would be added. The loan periods available are one, three, or six months, which exceed the existing yuan liquidity facilities of the HKMA that only offer loan periods of up to a week.

The HKMA indicated that the establishment was forecasted to offer "cooperating banks a reliable resource of capital at a lesser expense, which would potentially simplify the process for [businesses] to secure RMB trade financing from banks at reduced interest rates".

The establishment is available for supplying yuan funding to both foreign and domestic businesses. The HKMA plans on implementing a gradual process for distributing quotas to banks and has asked them to express their intent to participate in the program, including the quotas they wish to have. The organization stated it plans to liaise with banks in the forthcoming two to three weeks.

The popularity of the yuan for settling international trade deals has grown as businesses aim for cost reduction and supply chain variety due to ongoing US-China conflicts, according to high-level financial experts from recent discussions.

Natixis emphasizes that China needs to redirect its renewable energy investments towards distribution instead of production.

The power equipment sector in China, according to Natixis, must reallocate their investments towards infrastructure for storage and distribution.

The scale of China's funding towards sustainable power technologies is so immense that even under the poorest circumstances of energy shift, it will suffice to meet its domestic demands and uphold its leading role in the worldwide renewable equipment market for a considerable period, stated Alicia Garcia Herrero, the chief economist for the Asia-Pacific region at the bank, on Wednesday.

"There are additional technologies that China could explore in the eco-friendly sector, which would enable its industries to continue investing without the danger of oversupply."

In the previous year, the production of solar panels in China surpassed the worldwide need, leading to an oversupply in the European Union – their primary customer, according to Mu Haoxin, an economist at Natixis.

Funds channeled into power production surged to 1.2 trillion yuan (US$165 billion) last year, a leap from the figures of 2021, according to Mu. This overshadowed the capital invested in the power grid during the same timeline. Consequently, the sector is faced with the challenge of bridging a significant gap to alleviate grid congestion.

China's National Energy Administration (NEA) has reported that with a 27.8% increase in solar farm installations last year, the volume of solar energy produced but not utilized due to grid restrictions has grown to 3.2%, up from 2%. In the case of wind energy, this figure has increased to 4.1% from 2.7%.

The AI company, DeepSeek, is drawing the attention of young job hunters in China as it escalates its hiring process. This start-up, based in Hangzhou, has numerous positions available in the field of research and development for artificial general intelligence.

AGI is a type of software that possesses intelligence comparable to humans and can self-learn, enabling it to carry out tasks it wasn't specifically trained to do.

"As a recent graduate with a degree in automation and a resident of Hangzhou, Liu Yuanjie expressed his desire to meet with them and inquire about their plans for AI agent development,"

A different individual seeking employment, identified by the last name Shen, expressed that he journeyed for four days, traveling from the southwestern region of Sichuan province to Hangzhou, all in the hopes of applying for a position at DeepSeek. He regards this company as a national treasure due to its accomplishments in artificial intelligence. Shen declared his willingness to accept any role within the company, whether it be maintenance or transportation.

Shares in Hong Kong rise as investors overcome trade anxieties, focusing on stimulus initiatives

Analysts state that investors anticipate trade talks between the US and China, directing their attention towards potential policy backing.

Shares in Hong Kong saw an increase on Thursday, mirroring the upward trend in the US. This occurred as traders continually adjusted to the ongoing news about the trade conflict between the two biggest global economies, while also closely observing policy developments from Beijing.

The Hang Seng Index increased by 1.4 per cent, closing at 20,891.62, marking its potential fourth straight week of gains. Meanwhile, the Hang Seng Tech Index saw a rise of 2.6 per cent.

Benchmarks in Mainland China experienced an increase, with both the CSI 300 Index and the Shanghai Composite Index seeing a growth of 1.3 per cent.

BYD Electronic, a tech-product manufacturer, and BYD, an electric car maker, were the leading gainers among prominent firms, surging by 19.6% to HK$53.75 and 11.5% to HK$315.80 respectively. Meanwhile, Sunny Optical Technology also saw a significant increase of 9.9% to HK$79.50, and Lenovo Group's shares rose by 5.1% to HK$11.50.

China Literature, an e-book retailer supported by Tencent, experienced a 7.8 per cent rise to HK$29.05. In the meantime, Hua Hong Semiconductor saw a 7.5 per cent increase to HK$27.20, and Semiconductor Manufacturing International, a comparable company, witnessed a 7.2 per cent leap to HK$47.90.

In the category of falling stocks, the web behemoth Baidu saw a decrease of 1.3 per cent, bringing its value down to HK$86.65. Similarly, the pork processing company WH Group experienced a 1.6 per cent drop, landing at HK$6.15. The tech platform Meituan also suffered a minor slump of 0.5 per cent, settling at HK$

"Prepare for increased instability was our strategy for the second phase of Trump," stated Louis Luo, the leader of multi-asset investment solutions for Greater China at Abrdn, in a statement on Wednesday. Amidst the trade tension between the US and China, his company is channeling more investments into China, as he believes it is in a more advantageous position compared to other emerging markets in the short run, he further noted.

Technology Battle: Huawei's 2024 earnings spike by 22% in spite of US penalties

Huawei's revenue of US$118 billion last year was their second largest on record, signifying a 22% annual increase.

The Chairman of Huawei, Howard Liang Hua, stated that the company's performance in 2024 was up to par, attributing the success to the expansion of its consumer business, encompassing smartphones and wearable tech, as well as the swift development of its smart car solution operations.

Huawei's revenue for 2024 was the second largest in the company's history, only surpassed by their record-breaking earnings of 891 billion yuan in 2020. This peak in revenue occurred after the US initially placed sanctions on Huawei's profitable mobile phone and international business units.

Huawei's most recent earnings show a strong 22% annual growth from the 704.2 billion yuan reported in 2023. Although Huawei is not a publicly traded company, it consistently shares its financial information.

Liang revealed the figures at a convention organized by the Guangdong provincial administration in Guangzhou, however, the chairperson did not share the yearly earnings for that period.