This weekly newsletter pulls together summaries of the top ten most-read Insights across Macro and Cross Asset Strategy on Smartkarma.
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1. UK Politics: The Wrong Trousers
- Policy is shifting activity from the private to the public sector, with little austerity, while lower immigration is all about workers avoiding the UK, while shirkers still come.
- Reversing Brexit is not possible, and the concessions needed won’t realistically find support. A little socialism was bad; more socialism under Burnham would be worse.
- Starmer is the least bad option for the economy as Labour faces its own Thucydides Trap. A weak leader can’t do as much damage during their death throes.
2. RBNZ Hold With Hawkish Tilt
- The RBNZ held its cash rate at 2.25% on a knife‑edge vote, decided by the new Governor, but signals hikes will come sooner and go further than its February track.
- The energy‑driven inflation shock shifts risks: upside for inflation, downside for growth, reinforcing a hawkish, data‑dependent reaction function.
- Multiple future rate hikes hinge on 2‑year inflation expectations, wage dynamics, firms’ pricing power and evidence of slack constraining pass‑through.
3. Technically Speaking Breakouts & Breakdowns – HONG KONG (May 2026)
- The Hong Kong market has been range-trading over the last month, with pockets of strength in the AI-related sectors. Korea and Taiwan markets are the star performers in Asia YTD.
- Value and dividend yield factors have been the best-performing in the market, with the growth factor showing negative returns. Energy, industrials, and conglomerates are the best-performing sectors YTD.
- Huaneng Power International (902 HK) broke out to new highs. The company has rapidly expanded its renewable energy segment and has benefited from AI/datacenter demand.
4. Asian Equities: Above-Average Valuations Tell Us Asia Is Fully Valued; Few RV Trades Look Appealing
- Forward PE and forward P/BV multiples for Asia ex Japan, especially the latter, are significantly above their long-term averages. Though earnings estimates continue to rise, some caution is warranted.
- Historically, Asia and each of the constituent markets have been driven predominantly by earnings. Currently, upgrades to forward EPS are robust, but the AxJ index has overshot the underlying EPS.
- EPS estimates for India and China are rolling over. On growth-adjusted PE and ROE-adjusted P/BV, India, Taiwan, Onshore China appear overvalued. Korea, HK, Indonesia, Philippines appear undervalued on both parameters.
5. BUY/SELL/HOLD: Hong Kong Market Update (5/27/26)
- The Hong Kong market continues to trade sideways, with pockets of AI-themed stocks surging. IPO activity remains robust in the technology sector.
- Growth and momentum factors have underperformed so far in 2026, as stagnation in mainland domestic consumption is reflected in the underperformance of the consumer discretionary and staples sectors.
- Baidu (9888 HK) received a BUY rating from Deutsche Bank with a target price of $186. The company’s cloud infrastructure revenue rose 79% in 1Q26.
6. CHARTING COURSE: From TACOs to NACHOs, China’s Nasdaq Smackdown (May 23)
- US/Iran negotiations are centered on opening the Strait of Hormuz (SOH), a problem that did not exist before the US launched its war against Iran.
- Iran is controlling the negotiations and will extract concessions from the US to partially open the SOH in the near term as the ceasefire is extended for further negotiations.
- China is cracking down on illegal overseas stock trading accounts held by mainland investors to stem hot money outflows, increase tax compliance, and redirect investments toward its domestic markets.
7. US-Iran De-Escalation: Looking Beyond Risk Premiums
- Potential de-escalation may compress risk premiums, but Treasury yields around 4.5–5.0% still compete with equities, suggesting broader participation may remain selective near term.
- Aluminium increasingly stands out as inventories declined approximately 7–8% and physical conditions tightened, while copper remains broadly consistent with surplus expectations.
- Evidence remains more supportive for energy security and infrastructure themes, including uranium, AI infrastructure and offshore rigs, while coal and lithium still require clearer signs of tightening.
8. Korea Edges Towards Rate Hikes
- BOK holds its base rate at 2.50% as expected, but a hawkish tone and dissenting votes to hike raise the odds of tightening soon.
- Upgraded growth and inflation forecasts, plus household debt and housing risks, have shifted the bias from easing to data‑driven rate hikes.
- Future moves hinge on inflation, semiconductor‑led growth and financial stability; market pricing should lean towards gradual hikes.
9. HEW: Neither Over Nor Out
- Hopes have risen over a US-Iran MOU to extend the ceasefire and reopen the Strait of Hormuz. Even if vessels leave the region, the energy shock builds until more return.
- We remain concerned that carriers will be unwilling to risk encumbering more assets in the Gulf. Also, how the UK Labour leadership hopefuls are blind to socialist blunders.
- June begins with EA inflation data set to rise again ahead of an ECB hike. US payrolls and the BoE’s decision maker panel survey are our other highlights next week.
10. Indian Fund Positioning — the Micro Picture
- HDFC Bank is held by 67.7% of EM funds — yet 9.6% of funds closed ICICI Bank and 8.5% closed Tata Consultancy Services over the last twelve months
- Bharti Airtel and Mahindra & Mahindra sit at all-time ownership highs, bucking the country-level trend and pointing to selective conviction rather than wholesale retreat
- A new cohort of rising stars — Bharat Electronics, Ashok Leyland, APL Apollo Tubes — is quietly building an institutional investor base well below the mainstream radar
