GT Capital leads stock market’s rebound

LOCAL stocks rebounded Tuesday even as traders grew increasingly concerned that US lawmakers remain far apart in talks to raise the country’s borrowing limit to avert a default.

The PSE index, the 30-company bellwether of the Philippine Stock Exchange, gained 65 points, or 1.01 percent, to close at 6,588.90, as five of the six subsectors advanced, led by holding firms.

The index representing all shares also went up by 28 points, or 0.81 percent, to settle at 3,519.36 on a value turnover of P5.18 billion. Gainers edged losers, 94 to 91, while 53 shares were unchanged.

All 10 most active stocks ended in the green, led by GT Capital Holdings Inc. which climbed 4.21 percent to P495.00 and Ayala Corp. which rose 2.13 percent

PSEi May 16, 2023

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to P670.00.

Meanwhile, Asian markets were mixed as data showing China’s economic recovery remained sticky weighed on investor sentiment.

While there is a general feeling that an agreement will be reached, Republican House Speaker Kevin McCarthy warned Monday that staff-level meetings were “not productive at all” and they were “nowhere near reaching a conclusion”.

For their part, Republicans are demanding spending cuts as a condition for passing the bill while Democrats want a “clean” increase of the borrowing limit with no strings attached.

US President Joe Biden, who has expressed confidence the two sides can bridge the gap, is scheduled to meet with McCarthy and other congressional leaders at the White House later Tuesday.

McCarthy’s comments came after Treasury Secretary Janet Yellen again said the government would likely run out of cash on June 1, meaning it would not be able to meet its debt repayment obligations, sparking a potentially devastating default. Meanwhile, two top Federal Reserve officials suggested they were in favor of pausing the US central bank’s interest rate-hiking drive next month.

Chicago Fed boss Austan Goolsbee said he wanted to wait for the effects of more than a year of increases aimed at bringing inflation down from multidecade highs.

“There is still a lot of the impact of the 500 basis points we did in the last year that’s still to come,” he told CNBC. “And you add on that there are tight credit conditions, and I think that we should be extra mindful.

“We need to take that into account, and the only way to do that is sit and watch it.”

Atlanta Fed president Raphael Bostic added that he favored staying put at the June meeting, though he threw cold water on any hope for a cut before the end of the year.

While Bostic made clear he favors putting the policy on hold for now, he also suggested that the next move may be more likely up than down, given the persistence of price pressures.

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‘DIESELGATE’ HEARING. Rupert Stadler (center), former CEO of German car manufacturer Audi, sits in a room of the regional court in Munich, southern Germany, on May 16, 2023. Stadler pleaded guilty in connection with the ‘Dieselgate’ emissions cheating scandal. AFP

China courts Central Asia as Russia’s in uence wanes

BEIJING—China is renewing its push for massive infrastructure projects in Central Asia as Beijing aims to fill the vacuum left in former Soviet states by Russia, which is ensnared in a widening net of Western sanctions over the Ukraine war.

Central Asia has become key to China’s trillion-dollar Belt and Road Initiative, a defining geopolitical project for President Xi Jinping. Around 150 countries have received Chinese funds to build roads, ports, railways or hydroelectric dams.

Beijing says trade with Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan reached $70 billion in 2022 and expanded 22 percent year-on-year in the first quarter of 2023.

Analysts say Russia’s war in Ukraine has further shifted the dynamic in Beijing’s favor—leading many in the region to question their long-standing ties with Moscow and seek economic, diplomatic, and strategic assurances elsewhere.

“After the Russian aggression in Ukraine, the Central Asian republics started to fear for their sovereignty,” Ayjaz Wani, a fellow at the Observer Research Foundation in Mumbai, told AFP.

Xi will host the leaders of the five countries in the western city of Xi’an this week for a summit Beijing has described as of “milestone significance”.

Bound by shared borders and a long history, the choice of Xi’an—the historic eastern end of the Silk Road—is fitting.

The summit is likely to see efforts to push ahead with vast transport links and pipelines, including a long-stalled $6 billion China-Kyrgyzstan-Uzbekistan railway and an expansion of the Central Asia-to-China gas pipeline.

“China’s approach to Central Asia has been very consistent,” said Nargis Kassenova, director of the Central Asia program at Harvard’s Davis Center for Russian and Eurasian Studies, pointing to long-standing ties in security, infrastructure and development.

Russia’s war in Ukraine, she said, only “pushed Central Asian countries deeper into China’s embrace”.

‘Growing phobias’

China’s inroads into Central Asia have not always been popular, however. In 2019, protests broke out in Kazakhstan, which has described itself as the “buckle” in the Belt and Road project, over perceived Chinese expansionism in the country.

The following year, a Chinese investor that had planned to pour nearly $300 million into a trade and logistics center in Kyrgyzstan quit the project over local protests. AFP