Smartkarma Daily Briefs

• European peace optimism driving continental asset prices, especially equities, while Chinese tech stocks sizzle hot in Asia
• US real yields impacting global risky asset markets, with Fed’s dovish reaction function leading to plummeting real yields
• Dollar likely to stay soggy in short term until potential FOMC hawkishness or tariff-related events reignite Trump trades and boost dollar bullishness, while yen strength may not be sustainable due to BOJ policy and yield spread factors.

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• Peace hopes are higher and tariff fears have subsided for now
• China hosting summit with tech entrepreneurs could boost economy
• Markets becoming complacent over Trump’s policies, uncertainty remains on future developments

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• Fed is unlikely to cut rates in the near term, with a majority of participants pointing to a still restrictive policy stance
• Front end treasury yields are anchored by Fed’s current stance, leading to low range volatility and ongoing support for the treasury market
• Discussion on balance sheet policy suggests QT may end earlier than expected, with reinvestment of MBS proceeds likely to be in T bills, potentially impacting term premium and yield curve dynamics

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• KOSPI and KOSDAQ are up 10.2% and 14%, respectively YTD, outperforming S&P 500 is up 2.2% in the same period.  so far. 
• One of the big drivers of higher share prices of Korean stock market this year has been the strong net buying by the NPS.
• Some of the major stocks that have been net purchased by the NPS so far this year include Samsung Electronics, SK Hynix, LG Energy Solution, Hyundai E&C, and Samsung Biologics.

• The first 5 weeks of the year have seen international equities outperforming the S&P 500: European and Chinese stocks have rallied harder than US stock indexes, and certain emerging markets like Chile or Poland are doing even better.
• My main thesis for the first half of the year remains to be positioned with an ‘’International Risk Parity’’ portfolio: long US bonds, and long stocks around the world.

• The chart above shows that the US growth exceptionalism might be over. The Aggregate Income Growth series is a great proxy for nominal growth in real time: it includes private sector job creation, workweek hours, and wage growth – effectively reflecting the growth rate of nominal income US workers are bringing home.

• Apollo posts better profits than leader MRF in Q3 FY 2025
• JK Tyres faces the worst fall of 75% in net profit 
• Raw material prices look flattish in Q4 and demand robust\

• U.S. oil and gas rig count rose by four for the week ending 21/Feb, marking the fourth straight weekly gain and bringing the total to 592—the highest since June.
• For the week ending 14/Feb, U.S. oil production held steady at 13.49 million bpd, showing little change from the previous week.
• The number of U.S. oil rigs rose by 7 to 488, while gas rigs fell by 2 to 99. The rig count in the Permian basin remained unchanged at 304.  

• US-Dollar Reversal Incoming? The signs become more that the USD is topping out. This is the result of our latest currency-assessment.
• Particular interesting could be setups in AUDUSD as well as CADUSD – two currency pairs that have been hit the hardest by the strong USD-cycle over the last months.
• Both pairs trade at multi-year support and are heavily oversold across all metrics.

• The past week saw insights on Grab Holdings (GRAB US), XL Axiata (EXCL IJ), Siam Commercial Bank (SCB TB), Delta Electronics Thailand (DELTA TB) and Minor International (MINT TB).
• There was also a macro insight on Indonesia and sector insights on Indonesian Banks and rubber, as well as a company visit note on Boustead Holdings (BOUS MK). 
• The Week That Was in ASEAN@Smartkarma is filled with an eclectic mix of differentiated substantive, and actionable insights, macro and equity bottom, from across Southeast Asia.

• Switzerland’s economy is projected to show moderate growth in 2024, 2025 and 2026, with real GDP growth rates of 1.34%, 1.34%, and 1.80% respectively, an improvement compared to 2023’s slow growth of 0.75%, according to the IMF.
• In addition, Real GDP per Capita is expected to increase from CHF 87,577.63 in 2022 to CHF 89,415.98 by 2026.
• Total investments are projected to stay steady at around 24%-25% of GDP, a small decrease from 26.41% in 2021.