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. KOPSI’s ROLLERCOASTER: Is Korea Uninvestable?
- The Korean market has become uninvestable for many foreign institutional investors, regardless of its inexpensive valuation metrics. Foreign investors have withdrawn record amounts from the market since early this year.
- The KOSPI has suffered from a convergence of high-concentration risks, extreme leverage through margin lending and leveraged ETFs, and continuous circuit-breaker triggers, resulting in historically high volatility.
- Although the government is instituting regulations to calm market volatility, many retail investors who have lost substantial amounts have vowed not to re-enter the market.
2. HONG KONG ALPHA PORTFOLIO: (July 2026)
- The Hong Kong Alpha portfolio gained 5.79% in July, outperforming its benchmark by 0.30%. The portfolio has outperformed Hong Kong indexes by 52% to 74% since inception.
- The portfolio’s largest exposures are in the industrial, financial, and technology platform sectors. The portfolio has no exposure to the materials or energy sectors.
- The portfolio has generated a Sharpe ratio of 1.20 since inception, compared with 0.69 for the benchmark. The portfolio’s annualized mean excess return is 19.4%.
3. HEM: Aug-26 Views & Challenges
- The energy supply shock has intensified, forcing markets to care, but it is mostly seen in physical prices and low-inventory risks.
- ECB action helps EA inflation back to 2% in 2027, while UK excesses persist and the US outlook sits in between.
- We see hikes from the BoE in Nov-26 and the ECB in Sep-26. The hawkish BoE/Fed spread went far enough given the dovish bias.
4. Iran Gives the US Another Chance at Peace
- Iran and Oman are completing an agreement on how they will administer the Strait of Hormuz. The US negotiating team has not been part of the discussions.
- President Trump is in a weak negotiating position with high inflation and energy prices, declining poll numbers, reduced stockpiles of critical weapons, and elections in 90 days.
- The US will need to accept Iran’s terms for administration of the SOH as the cost of delay now exceeds the cost of compromise.
5. Why Trillions in Yen Intervention Couldn’t Change the Trend
- Japan’s massive currency interventions have only delivered short-lived relief, highlighting that a wide U.S.-Japan yield gap continues to dictate the yen’s direction.
- Despite firmer June inflation, the BoJ sees price pressures easing ahead. Lower inflation forecasts strengthen the case for a gradual and patient policy approach.
- Options market continues to favour a weaker yen, with a 1.19 put-call ratio reinforcing growing bearish conviction ahead of the Fed’s next policy decision.
6. Malaysia Politics: Barisan Bags Second Landslide in Negeri Sembilan
- Barisan Nasional (BN), allied tactically with Perikatan Nasional (PN), won 25 of Negeri Sembilan’s 36 seats, driven by consolidation of the Malay vote and weakening support for Pakatan Harapan (PH).
- Despite successful cooperation in Negeri Sembilan and Johor, a comprehensive nationwide BN–PN pact remains unlikely: competition between UMNO and PAS for Malay-majority constituencies remains fundamentally zero-sum.
- The defeat increases pressure on PH and Prime Minister Anwar Ibrahim to delay the general election, pursue a more electorally generous budget and rebuild party machinery.
7. Chairman Warsh’s Poor Communication Skills Spook Bond Investors as Rate Hike Pressures Rise
- Despite the hawkish pivot in June, the FOMC left its policy rate unchanged after its latest meeting. Chairman Warsh failed to define price stability convincingly, scaring Treasury bond investors.
- Under Chairman Warsh, the Fed’s communication will shift from providing forward guidance and will become less frequent, thereby making it necessary to monitor policy conduct through different mechanisms.
- History suggests that new Fed leaders have often defied expectations after assuming office, but they have always respected the convention of the FOMC determining policy settings.
8. Sentiment Matters: Heatmap Update
- Sentiment: Slightly Bullish. More noise than index-moving action. Rotation has shifted sentiment significantly beneath the surface, but much less at the overall market level.
- Technology Conundrum. Despite weaker performance, Technology sentiment indicators remain close to bullish extremes. There is no sign in our data that bullishness towards the sector has washed out.
- Value Reversal. Our Value SMA has been the biggest riser over the past few weeks. While Technology sentiment still looks remarkably bullish, its opposite has also become more popular.
9. Walker’s Weekly: Dr. Jim’s Summary of Key Global Macro Developments – 31 July 2026
- We produced a Peregrinations report earlier this week on trade and external balances, subtitle: Turbulence. It was a rundown for each country in the region of the import and export growth rates as well as the latest current account position. In short, it’s a very mixed bag across the region and, as we have been arguing for some time, very difficult to interpret given all the price changes that are going on just now.
- In other news, we have been arguing that, given normal profit cycles, Chinese profit data should be turning around this year given the poor run of returns in 2023 (negative) and both 2024 and 2025 (flat). Given the normal shakeout in industries, we should start to see a resurgence in profitability. To be fair, it hasn’t happened yet in ROE numbers but the latest data industrial profits data brought year-to-date profit growth to 18.7% YoY, which appears to be a significant turnaround.
- India’s industrial production for June came in at 7.3%, that was much higher than expectations. India continues to roll along quite nicely. We still believe that increased exposure to the Sensex would be a good equity strategy for international investors at the moment. The country remains the fastest growing economy in Asia at the moment.
10. Overview #72 – The Accelerant
- A review of recent events/data impacting our investment themes and outlook
- The dollar has maintained its breakdown, with positive implications for our themes
- We continue to look for investments not correlated with the AI trade
