Welcome to this week’s edition of top stock market highlights.
Trump’s tariffs
It seems that there is never a week that passes where we do not hear about Trump and his ongoing tariff trade war.
This time, the US president has declared a 25% tariff on imported vehicles.
This new levy will take effect on 3 April and will affect cars and light trucks.
These new tariffs come on top of the previously-declared steel and aluminium tariffs on goods from Mexico, China, and Canada.
Trump also plans to announce reciprocal tariffs in retaliation to the countries he claims are responsible for the US trade deficit.
The US imported a total of US$474 billion of automotive products last year, with passenger cars taking up almost half that amount at US$220 billion.
The biggest suppliers of these products were Mexico, Japan, South Korea, Canada, and Germany.
These tariffs are used as a tool to increase revenue for the US government as an offset to Trump’s promised tax cuts and to restore the country’s industrial base, which has been declining for some time.
Shares of automakers such as Toyota Motor (NYSE: TM) in Japan and Hyundai Motor (KRX: 005380) in South Korea fell on the news, and shares of US automakers also fell in tandem.
American automakers’ supply chains are highly integrated with plants and suppliers in both Canada and Mexico, hence these tariffs will end up raising their costs as well.
Customers are the ones feeling the eventual brunt of these tariffs as automakers will raise prices to counteract these tariffs.
Brazil’s president has commented that tariffs risk damaging the US economy as inflation may rear its ugly head again with the increase in the prices of goods and services.
Straits Times Index (SGX: ^STI)
The Straits Times Index continued its strong performance into 2025 after notching up an impressive 23.5% total return last year.
The bellwether blue-chip index touched a new all-time high of 3,990 in the morning of 27 March, led by both Sembcorp Industries (SGX: U96), or SCI, and Singapore Technologies Engineering (SGX: S63), or STE.
Both companies had their fair values adjusted upwards by analysts after reporting their latest 2024 earnings.
STE’s consensus target price was raised from S$5.02 to S$6.85 while SCI saw its target price raised from S$6.82 to S$7.32.
STE’s share price has surged 43.4% year-to-date as of 26 March and is one of the best-performing blue-chip stocks on the local bourse.
SCI’s share price has risen 15.7% year-to-date over the same period.
BYD Company (SGX: HYDD)
BYD is setting an ambitious sales target for this year.
The Chinese electric car (EV) company is aiming to double its sales outside China to more than 800,000 cars in 2025.
It will also look at assembling cars locally to avoid Trump’s tariffs.
BYD sold 417,204 units last year and sees good opportunities to grow in Britain, Latin America, and Southeast Asia.
These countries were quoted as being receptive towards Chinese brands.
BYD is aggressively extending its presence globally by opening showrooms in Australia and Germany with chairman Wang Chuanfu telling analysts that overseas profits will eventually form the bulk of the company’s total net profit.
As part of its strategy, the EV company is constructing factories in Brazil, Thailand, Hungary, and Turkey.
BYD will not sell any cars to both the US and Canada to avoid bruising tariffs of 100% of Chinese-made EVs.
The company has upset the Chinese auto market with the introduction of more affordable models, including one that retails for less than US$10,000.
Management also plans to expand its intelligent software and components team to as many as 8,000 people, up from the present 5,000.
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Disclosure: Royston Yang does not own shares in any of the companies mentioned.
The post Top Stock Market Highlights of the Week: Trump’s Vehicle Tariffs, Straits Times Index and BYD appeared first on The Smart Investor.
