international

Korean Air has reported a 4 per cent decline in cargo revenue for the second quarter of its financial year, attributing the decrease to continued market volatility, largely influenced by changes in United States tariff policies. The South Korean flag carrier, also one of Asia’s leading air freight operators, noted that its cargo segment had previously enjoyed consistent annual growth driven by a surge in e-commerce shipments from China. In the same quarter last year, cargo revenues had increased by 14 per cent year-on-year, marking a sustained upward trend until this latest reversal. Recent disruptions stem largely from a shift in US trade policy. According to data cited by Reuters, air cargo volumes from Asia to the United States dropped sharply in May following the removal of a tax-free exemption for low-value packages from China. The move significantly impacted cross-border e-commerce shipments, a key revenue stream for Korean Air’s cargo division. In a statement, Korean Air said it responded to the challenging environment by broadening its cargo portfolio and prioritising high-yield shipments. The airline highlighted increased focus on sectors such as semiconductors, batteries, solar cells, and seasonal perishables to cushion the effects of declining e-commerce volumes. Despite the contraction in cargo performance, the company’s total revenue remained steady compared to the same quarter a year earlier, standing at 4 trillion won (approximately US$2.90 billion). However, operating profit declined by 3.5 per cent, with the airline citing rising personnel and depreciation costs as offsetting the benefit of lower fuel prices. Korean Air completed its acquisition of Asiana Airlines last year in a US$1.30 billion deal, positioning it among the largest carriers in Asia by capacity and market share. -Reuters

Danantara, Indonesia’s newly established sovereign wealth fund, is expected to draw down an initial US$3 billion from a US$10 billion credit line secured through a consortium of international banks, according to sources with direct knowledge of the matter. The financing arrangement, sourced from five foreign banks, marks the first instance of private sector funding for Danantara and is set to become the largest facility of its kind disbursed in Southeast Asia by private banks, should it be fully utilised. Danantara, formally known as Daya Anagata Nusantara, was launched in February and oversees assets exceeding US$900 billion. This development aligns with President Prabowo Subianto’s ambitious economic strategy to accelerate Indonesia’s GDP growth to 8 percent—up from the current rate of 5 percent. The fund is envisioned as a key vehicle for driving large-scale investments and catalysing economic transformation across the archipelago. Among the first investment initiatives supported by the facility is a US$800 million chlor-alkali and ethylene dichloride plant, developed by petrochemical group Chandra Asri Pacific. The facility is expected to contribute to key downstream sectors, including water treatment, soap, alumina, and nickel production. Danantara and the Indonesia Investment Authority previously signalled potential participation in the project in a joint statement issued in June. Additionally, Danantara has signed separate co-investment agreements with the Qatar Investment Authority and China Investment Corporation earlier this year. However, the specific projects earmarked under these partnerships for funding through the initial drawdown have yet to be confirmed. DBS, HSBC, Natixis SA, Standard Chartered, and United Overseas Bank were named lead arrangers for the US$10 billion facility. These institutions were selected from a competitive pool of 11 international banks that submitted proposals, one source noted. While DBS, Natixis, and HSBC declined to comment, the remaining banks had not responded to inquiries at the time of publication. The credit facility will remain available to Danantara over a three-year term. The interest rate is understood to be on par with yields on Indonesian sovereign bonds. Each participating bank has committed US$1 billion on an unsecured basis, with no requirement for a government guarantee—an unusual feature for transactions of this scale. A source remarked, “Danantara is a sovereign.” In January, Indonesia issued five-year US dollar-denominated sovereign bonds with a 5.30 percent yield, offering a reference point for the pricing of the current facility. While proposals from other foreign lenders were considered, they were ultimately rejected due to their requirement for government backing. As is standard in such syndications, the lead arrangers are expected to engage additional banks to contribute towards the full value of the facility. At present, Danantara has no immediate plans to issue bonds. Danantara did not respond to a request for comment. -Reuters

AirAsia is close to finalising discussions with strategic investors as it nears the completion of a major restructuring initiative, according to Deputy Group Chief Executive Officer Farouk Kamal. Speaking at the Reuters NEXT Asia summit on Wednesday, Kamal confirmed the Malaysia-based low-cost airline is advancing towards a pivotal stage in securing new funding and operational consolidation. The carrier, a unit of Capital A Berhad, was designated as financially distressed by Bursa Malaysia in 2022. In response, the group is currently coordinating a RM1 billion (approximately $235 million) equity injection, alongside efforts to finance its substantial aircraft order book. In March, Capital A Group Chief Executive Officer Tony Fernandes stated that the RM1 billion private placement was “done”, although no further details regarding investor identities have been disclosed. He declined to comment on a Bloomberg report that named Saudi Arabia’s sovereign wealth fund as a potential contributor of $100 million. Kamal highlighted that the investment discussions are reaching a comprehensive conclusion, encompassing more than equity alone. “It’s not just from an equity injection perspective, but from an overall transactions perspective,” he said, adding that an official announcement is expected in due course. AirAsia remains one of Asia’s largest low-cost carriers and a major client of Airbus, with approximately 360 aircraft currently on order. The airline further expanded its commitment to the European aircraft manufacturer last Friday by signing a memorandum of understanding to acquire 50 long-range A321XLR aircraft, with conversion rights for an additional 20 units of the same model. As part of the restructuring efforts, Capital A is in the process of divesting its aviation business to long-haul affiliate AirAsia X. The consolidation is intended to unify both long-haul and short-haul services under the AirAsia brand. Fernandes recently reiterated his ambition to remove the group from its financially distressed classification once restructuring measures are finalised. -Reuters

Chinese artificial intelligence start-up Zhipu is reportedly weighing a move to list in Hong Kong, shifting away from its original plans for a domestic IPO in mainland China. According to sources familiar with the matter, the potential listing could raise approximately US$300 million (RM1.28 billion), positioning the company to benefit from a renewed surge in equity capital markets activity in the city. Backed by Chinese tech giants Alibaba Group Holding Ltd and Tencent Holdings Ltd, Zhipu is said to be working closely with financial advisers to prepare for a first-time share sale. While deliberations remain ongoing and a final decision has yet to be reached, the start-up has not ruled out returning to its initial plan for a domestic listing, sources noted. Zhipu has not commented on the matter. Founded in 2019 and based in Beijing, Zhipu is one of China’s emerging AI firms vying for global competitiveness against players like OpenAI. The company is known for its proprietary AI agent, AutoGLM, and open-source GLM-series models, designed for deep research and advanced natural language processing. The company recently secured one billion yuan (US$139 million or RM593.0 million) in funding from a state-backed venture capital firm affiliated with the Zhangjiang Group in Shanghai, bolstering its capital base ahead of a potential public offering. Zhipu is part of a new wave of fast-scaling AI companies in China, including DeepSeek, Moonshot, and MiniMax, which are accelerating the rollout of low-cost, high-performance AI solutions. These firms are positioning themselves at the forefront of the country’s ambitions to set benchmarks for the future of artificial intelligence. Hong Kong’s equity markets are witnessing a marked revival, with IPOs and follow-on offerings raising around US$40 billion so far in 2025, according to Bloomberg data. This figure represents a significant rebound from the US$5.7 billion raised during the same period in 2024 and is the highest since the record-setting year of 2021. MiniMax, another prominent AI start-up and one of China’s so-called AI “Dragons” or “Tigers”, is also reportedly aiming to go public as early as this year. As investor appetite for high-growth technology firms regains momentum in the region, Zhipu’s potential IPO could serve as a bellwether for China’s next generation of AI innovators seeking access to international capital. -Bloomberg

Indonesia’s Attorney General’s Office (AGO) has detained an employee of commodity trading firm Trafigura Group alongside seven other individuals as part of a sweeping corruption investigation involving state-owned energy company PT Pertamina. The case centres on alleged irregularities in oil procurement processes between 2018 and 2023 and is emerging as one of the country’s most significant graft probes in decades. In a statement released late Thursday, the AGO confirmed that eight suspects are now in custody, with authorities actively pursuing a ninth individual believed to be located overseas. The allegations concern purported misconduct in export-import activities, vessel and terminal leasing, as well as product compensation schemes. Among those detained is a former business development manager at Trafigura’s Indonesian unit. The other suspects include two individuals affiliated with private sector entities and six former executives of Pertamina and its subsidiaries. The AGO has not released the full identities of the individuals, disclosing only initials and professional roles. A spokesperson for Trafigura noted that the detained employee had been cooperating with the authorities prior to being named a suspect. The company is currently providing legal representation while awaiting further information regarding the case. Pertamina has stated via text message that it is committed to cooperating fully with the ongoing legal proceedings and will respect due process. The suspects have yet to be formally charged. Under Indonesian law, the AGO may detain individuals for an initial period of up to 20 days, after which it must either file formal charges, request a detention extension, or release the individuals. Prosecutors now estimate that the graft has cost the state approximately 285 trillion rupiah (equivalent to US$17.6 billion or RM74.73 billion), a significant increase from the 193 trillion rupiah previously reported in February. The revised figure reflects the broader economic impact of the alleged misconduct, according to Abdul Qohar, a director at the AGO. The investigation, which continues to widen, poses a key test for President Prabowo Subianto’s administration. President Subianto has publicly committed to addressing corruption across Indonesia’s extensive network of state-owned enterprises. The nation ranked 99th out of 180 countries in Transparency International’s 2024 Corruption Perceptions Index. Since February, authorities have detained over a dozen individuals connected to Pertamina, its affiliates, and various trading firms. The probe has involved questioning more than 250 witnesses. Prosecutors have alleged that the suspects orchestrated inflated oil imports through opaque trading structures, directing refineries to procure crude oil and refined products at above-market prices. In May, Indonesian investigators approached several Singapore-based oil traders for meetings in the city-state, a major storage hub for refined petroleum products and a critical node in the regional energy supply chain. The AGO is currently working with overseas legal representatives to locate and repatriate the final suspect, with efforts focused on neighbouring Singapore. “We’ve received information that the individual is there,” Qohar said. “We’re taking all necessary steps to locate and bring him back.” -Bloomberg