Macro

• Prime Minister Takaichi started a firestorm with her comments about attacking  China over the Taiwan issue. Japan’s missile deployment near Taiwan further inflamed the situation.
• President Xi called President Trump on the matter, and Trump followed up with a call to Takaichi soon after.   Takaichi’s miscalculation in provoking China may have led to U.S. concessions.
• PM Takaichi’s fiscally reckless budget is adding fuel to a fire as the yen, JGBs, and stock market are falling simultaneously.  Inflation, currently at 3% is rising again.

• BOJ minutes from the October meeting show 8 of 13 members backing near-term hikes, raising odds of tightening in December–January as wage negotiations strengthen.
• Japan’s JPY 21.3T fiscal package and rising JGB yields highlight a growing policy clash, pushing the yen toward the prior 160 intervention zone.
• Historical patterns of rapid yen reversals indicate that a BOJ hike alongside emerging Fed cut expectations materially increases the probability of a near-term yen appreciation.

• Breadth of Asian market-sectors with robust earnings estimate upgrades improved remarkably. We spot 24 with upgrades over the past 1-month, 3-months and 6-months. Couple of weeks ago there were 18.
• The new sectors that joined the list from our previous study are Chinese technology services, Korean utilities, Indian energy, Malaysian consumer durables and financials and Philippines basic materials.
• Across Asia, basic materials, financials and electronic technology are prominent earnings gainers. They are driving upgrades in the US also. The AI capex and base metal demand themes seem robust.

• China has ‘won’ the first phase of the trade war, with exports up 5%YoY and imports down 1%YoY in Jan-Oct’25 despite an appreciating RMB and high US tariffs (now stabilised). 
• FAI has declined YoY since Jun’25, declining 12.5%YoY in Oct’25, and severe PPI deflation has persisted for 37 months. Declining imports widened the 12m rolling-sum trade surplus to US$1.17trn. 
• Stagnant FX reserves show net capital and service/income outflows of US$825bn in Jan-Oct’25. Domestic vulnerabilities, however, are being papered over by the trade truce with the US. Bullish for China.

• Cover Story: The AI Boom’s Unsettling Paradox
• In Depth: How China’s Unified QR Code System Is Redefining Cross-Border Payments
• China’s Online Exporters Face Tax Scrutiny as Platforms Share Data
• Saudi Central Bank Chief Sets Out Vision for the Kingdom’s Fintech Future

• Crude oil futures closed higher Monday, rebounding from early lows in choppy trade, as investors eyed an updated peace deal to end the war between Russia and Ukraine.
• Front-month Jan26 ICE Brent futures were trading at $63.39/b (1950 GMT) versus Friday’s settle of $62.56/b, while Jan26 NYMEX WTI was at $58.86/b against a previous close of $58.06/b.
• Oil had dropped to one-month lows last week after the Trump administration gave Ukraine a Thursday deadline to accept the terms of a ceasefire drafted by Washington, with alleged significant input from Moscow.

• Whatever Rachel Reeves comes up with in her 26 November budget, she is bound to run into criticism from within her own parliamentary party.
• Bond markets seem set to react badly to this, especially if it seems likely that her overall objectives will be undermined by internal resistance to proposed measures.
• She and the PM will probably survive this, but a market-unsettling change and slide to the left look increasingly likely by mid-2026, followed by defeat at the next election.

• Gold prices have been steadily rising, with projections of reaching $10,000, possibly as soon as 2026.
• The recent surge in gold prices has attracted more institutional investors and retail buyers, especially in countries like Australia and China.
• The volatility in gold prices has also increased, with the potential for rapid gains as smaller percentage increases can lead to significant profits.

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• Strong gold demand in 3Q25, totaling almost 980 tons, leading to a surge in demand inflow
• Expectation of continued central bank buying and investor demand growth in 2026
• Bullish outlook for gold prices, with potential risks including rate sensitivity and potential tariff uncertainties for other precious metals

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Highlights

• Consumption outpaces domestic production growth

• Imports decline despite steady industrial demand

• Fresh probe into halobutyl rubber dumping

The first four months of the financial year illustrated an industry striving for balance — one still navigating between domestic self-sufficiency ambitions and dependence on imports for certain specialized grades. Demand from tire makers, which account for nearly two-thirds of synthetic rubber use in India, remained stable amid mixed trends in automotive production and exports. 

• ASEAN is scaling into a top-tier economic engine, targeting a US$4.2T GDP in 2025 and cementing its position as the world’s fifth-largest bloc.

• Regional exports are set for a breakout phase—BCG projects ~90% growth by 2031 to US$3.2T annually, far outpacing sub-30% global trade expansion.

• The uplift is anchored by supply-chain integration across autos, electronics, apparel, agri-food, and data/IT services, supported by policy tailwinds and US–China realignment.

• Prolonged quantitative easing by the Fed has made balance sheet shrinkage difficult without producing periods of cash shortages in the banking system, and has raised the neutral federal funds rate.
• Regional Federal Reserve Bank Presidents have become more hawkish since September about  inflation, arguing against a December policy easing, but September’s Employment Situation report did justify previous policy rate reductions.
• Chairman Powell remains cautious about tariffs. Recent historical research by the Federal Reserve Bank of San Francisco suggests that higher unemployment and disinflation are the long-term outcomes of higher tariffs.

• Ray Dalio actually made an art form of it: his All-Weather Portfolio spreads risk across economic scenarios like inflation, deflation, growth, and slowdowns.
• You can improve on it by layering a simple trend filter on top. Do that, and the risk-adjusted returns get a serious boost: drawdowns shrink and the ride is smoother.
• The traditional All-Weather Portfolio, 2x leveraged, delivered an 8.7% annual return with 13.8% volatility, and a Sharpe of 0.48. The trend-filtered version 8.2% return and a Sharpe 0.71.

• Technological revolutions follow a sequence: they start with a disruptive “installation phase”, then go through a critical “turning point”, and are finally followed by a “deployment phase”.
• According to Carlota Perez, AI isn’t the start of a new technological revolution: it’s a critical milestone in the current, longstanding “information and telecommunication” revolution.
• Being aware of different phases is valuable when investing. It can help you play the contrarian card – staying cautious during the frenzy and making bolder bets during the downturns.

• Aluminium prices have been hitting three year highs and outperforming copper
• China’s five year plan emphasizes consumption and trade links, but there are concerns about economic slowdown
• Chief economist Doug Porter discusses Fed funds rate and potential rate cuts, leaning towards a dovish view for 2026

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• Webinar with former Prada board member discussing luxury landscape and investor trends
• Nvidia’s strong earnings initially sparked global rally, but tech stock sell-off signals market caution
• Dior executive predicts return to growth in luxury market by 2026, emphasizes product innovation and pricing discipline for success

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• The recent market pullback may have been attributable to a combination of breadth deterioration and a highly bifurcated market.
• In the short term, technical price action and sentiment have become stretched to the downside that a bounce is more or less inevitable.
• We continue to believe stock prices will rally into year-end, but we are watching for signs of a bullish follow-through after the reflex rally for confirmation.

• The US market is weakening again as an interday reversal after Nvidia results foreshadows continued selling in the AI theme.  Market breadth is weakening and stocks at 52-week lows surging.
• Volatility has reached levels last seen during the tariff tantrum in April. Insider sales of Nvidia have surged since June. Private credit and private equity markets are showing stress.
• US consumption has narrowed and is highly dependent on stock market gains. Household debt levels are at new highs, and consumer sentiment is lower than during the GFC in 2008/09.

• A market leadership review shows a gradual rotation from growth to value leadership, and from high-octane momentum names to fundamentally driven investment factors such as quality and dividend growth.
• However, macro factors such as the possibility of Fed easing and short-term technical rotation patterns raise the odds of a growth rebound.
• We reiterate our view that long-term equity investors should diversify by adopting a barbell allocation to U.S. growth and non-U.S. developed market value stocks.

• Risk assets have suffered, despite decent Nvidia results suggesting AI demand hasn’t turned yet, and the macro data remaining resilient. Fears are more theme-specific.
• US labour market activity entered the shutdown solidly, and low jobless claims suggest it survived fine. Meanwhile, UK inflation only lost a little excess, and our forecast rose.
• Next week’s UK Budget is the lowlight of our week, but it may struggle to live up to all the noisy hype. Sneaky backloaded tax hikes will close the latest forecast hole again.

• U.S. data releases are expected to clarify economic conditions while political pressure complicates monetary policy sentiment.

• Japan’s new leadership has escalated geopolitical tensions with China through unnecessary provocative statements.

• Asian growth remains mixed but resilient, led by strong performances in Vietnam, India, Taiwan, and Malaysia.

• A High Court ruling has affirmed Sabah’s constitutional entitlement of 40% of state-derived revenues. The ruling exerts fiscal and political pressure on the federal government.  
• The ruling is part of a structural trend where East Malaysian states have used their leverage over the federal government to push for greater policy autonomy. 
• While a fiscal or political crisis is not imminent, the ruling may accelerate a shift in Malaysia towards a more federal, decentralised model of economic policymaking. 

• Saudi’s Crown Prince successful visit in Washington.                             
• Housing costs still driving inflation in GCC.
• Construction an important part of Saudi activity. FX, watch out for the year-end turn.

• Combination of concerns about Fed rate trajectory, AI capex monetization, Chinese growth slowdown and Japanese Yen carry trade unwinding brought the US and Asian markets 4-5% down since late October.
• Expensive valuations are now justifiably correcting. Notwithstanding worries about a December cut, the interest rate trajectory remains resolutely downwards. Asian disinflation offers several central banks further room for monetary easing. 
• AI capex monetization worries will wax and wane. But Asian AI enablers’ cash flows seem safe and valuations inexpensive. Corporate earnings environment is solid in US and recovering in Asia.

• Sentiment in Japan has reversed sharply showing strains in the JPY and JGB markets.  The Nikkei 225 has retraced all its gains since the election of Prime Minister Takaichi.
• The market is nervous about the size of Takaichi’s economic package, which will be ¥21.3 trillion; 27%. more than her predecessor pledged. It will increase bond issuance substantially.
• Tensions from Takaichi’s provocation of China show no sign of easing.  China has started economic and other measures to respond. The US has removed a missile launcher from Japan.

• US payroll data revealed resilience going into the US government shutdown, with jobs growth the strongest since April and annualising to a pace capable of plateauing growth.
• Surging labour force participation drove unemployment up in the least disappointing way, with the employment to population ratio making a contradictory improvement.
• Jobless claims suggest stability into the shutdown’s end, besides noisy federal claims. The FOMC may not get the evidence it needs to cut again in December. It may not exist.

Highlights

• Choppy and rangebound price movement expected in November 

• Narrowing SIR 20 vs INE spread could encourage substitution

• September import and export trend diverged

• Downstream restocking was selective rather than programmatic, leaving spot premiums capped

• In Depth: China’s Pharma Pioneers in Africa Dig In for the Long Haul
• AI and Data Offer China, EU Space to Cooperate as Trade Tensions Rise
• China’s State-Owned Financial Institutions Brace for Pay Cuts

Highlights

• Ambitious yield goals target 1120 kg/ha

• China still takes around three-quarters

• Replanting financing remains a pivotal constraint

Production and yield dynamics in 2025 show rubber remains one of Myanmar’s industrial cornerstone crops. Available estimates place annual output around 300,000-350,000 metric tons, out of a total plantation area of over 600,000 hectares.

• Crude oil futures closed slightly lower Thursday following another choppy session amid huge uncertainty around sanctions on Russia, plus a mooted peace deal.
• Front-month Jan26 ICE Brent futures were trading at $63.34/b (1953 GMT) versus the prior settle of $63.51/b, while Jan25 NYMEX WTI was at $59.01/b against a previous close of $59.25/b.
• Benchmarks again tested one-week lows on rising US inventories and reports that the US was brokering a Russia-Ukraine truce, a move that would lower the geopolitical risk premium.

• UK disinflation relied on smaller utility price hikes and only went as far as the 3.6% forecast before September’s dovish surprise. It does not mean a path to 2% lies ahead.
• A broad rebound in price increases took the annualised median impulse above 4% to average 2.5% over two months, or 3% on the year, as the underlying problem persists.
• The BoE’s December decision pivots around the Governor, who seemingly needs upside news to avoid delivering a cut, so this outcome preserves that riskily dovish course.

• Slower food price inflation nibbled the EA rate down to 2.1% in October, while services increased to their fastest pace since April. Labour costs are still rising too fast.
• Underlying inflation metrics are broadly a bit beyond target, risking a slight overshoot in the medium term, but the median impulse is reassuring, weighed down by France.
• Energy prices are set to bump inflation around the target in 2026, averaging above the consensus in our view. The ECB would need tightness elsewhere to shift rates, though.

• Global oil outlooks diverged in November as the EIA cut demand forecasts, and the IEA lifted projections. However, both agencies expect supply to grow faster than demand.
• The EIA, IEA, and OPEC flag a rising risk of oversupply heading into 2026, noting that expanding production and already-elevated inventories could keep the market looser.
• Strong U.S. LNG exports prompted the EIA to raise its Henry Hub forecasts, signalling price strength will rely more on robust export demand than on domestic consumption this winter.

• In Depth: China Puts Industry, Consumers at Heart of Next Five-Year Plan
• Investors Flock to Chinese eVTOLs Chasing Regulatory Green Lights
• Hong Kong Expected to Swing to Budget Surplus on Stock Market Boom

• Bank Indonesia paused rate cuts at 4.75%, shifting focus from growth to rupiah stability. This outcome was no surprise to the consensus as external risks intensified.​
• Further easing depends on rupiah stabilisation, not inflation alone. Elevated term premia and expanded FX operations reflect caution.​
• Macroprudential incentives and FX measures aim to support growth while monitoring weak credit transmission after previous rate cuts.

• Metals X shareholder and non-executive chair of Mount Gibson interviewed about the company’s journey and capital allocation
• Discusses turning around Metals X from a complicated company with distressed assets to a streamlined operation with focus on tin asset
• Successfully sold off Nifty and Wingona Nickel Cobalt assets, spun off Wingollina into a separate listed company, and retained convertible notes for return on investment

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• Crude oil futures ended lower Wednesday as benchmarks remained under pressure from oversupply fears and uncertainty around the global economic outlook.
• Front-month Jan26 ICE Brent futures were trading at $63.49/b (1950 GMT) versus Tuesday’s settle of $64.89/b, while Dec25 NYMEX WTI was at $59.25/b against a previous close of $60.74/b.
• Markets remain torn between the flagged surplus through 2026 and growing supply risks from a variety of geopolitical events, particularly tighter measures on Russian exports.

• The dollar has strengthened in the face of weakening equity markets, however it is not the Dollar Smile theory supporting its move this time.
• A more hawkish Fed signals a break with past conditioning for a Fed Put to bail out the stock market.  Post-COVID inflation caused by Fed policies will constrain aggressive easing.
• Safe-Haven support for the dollar and Treasuries broke down during the April selloff, indicating a change in foreigners’ perception of holding USD assets and leading to significantly increased dollar hedging.

• How China Unlocked Simandou to Reshape the Global Iron Ore Trade. On an October morning along the Atlantic coast of West Africa, a bulk carrier named Winning Youth waited quietly in the port of Morebaya.
• It carried nearly 10,000 metric tons of blood-red earth, freshly extracted from deep inside Guinea’s remote southeastern mountains.
• The iron ore, loaded days earlier on to the first train to run on the Trans-Guinea Railway, had traveled hundreds of kilometers across ridges to reach this point.

• Surging U.S. LNG exports, stronger power demand, and shifting weather models have tightened fundamentals, driving Henry Hub futures to near three-year highs despite record output and above-average storage levels.
• Henry Hub’s rally since mid-October has been driven by record LNG exports and colder winter forecasts, which outweighed rising U.S. production and above-average storage levels.
• Options positioning shows short-term caution but growing medium-term optimism, with higher call interest across later contracts signaling expectations for firmer Henry Hub prices into early-2026.

• Crude oil futures ended lower Monday despite rebounding from a soft start in response to reports crude loadings had resumed at the Black Sea port of Novorossiysk.
• Front-month Jan25 ICE Brent futures were trading at $64.09/b (2031 GMT) versus Friday’s settle of $64.39/b, while Dec25 NYMEX WTI settled at $59.91/b against a previous close of $60.09/b.
• Ship tracking data showed two oil tankers had docked at Novorossiysk over the weekend, while Reuters quoted local officials saying that crude loadings had resumed following Friday’s drone strikes.

• Asian IPOs’ spike in 2025 (21% higher till October) has been driven primarily by HK/China. Indian IPOs are almost at the same level as in a very strong 2024.
• Policy thrust for “New Productive Forces” are driving capital raising from industrials, materials, technology and utilities and shall continue to do so. Healthcare should also be a buoyant capital raiser.
• India’s policy focus on manufacturing and listing of PE-funded companies should drive IPOs from industrials, materials and consumer discretionary. Financials shall also remain a large issuer sector.

• Crude oil futures ended higher after a soft trading session earlier when immediate concerns around disruptions to Russian crude receded as loadings resumed from the crucial Novorossiysk port.
• Front-month Jan26 ICE Brent futures were last trading at $65/b (2017 GMT) versus Monday’s settle of $64.20/b, while Dec25 NYMEX WTI was at $60.78/b against a previous close of $59.91/b.
• Benchmarks have struggled in the early part of the week after loadings resumed from the key Black Sea oil hub following a two-day suspension in the wake of drone strikes.

• IMF’s mission in Cairo early December.                           
• CBE sees the financing gap increasing for the next 2 years.
• The Pound deals below 47, best since May 2024. Offshore investors keep buying bills.

• Japan has intentionally stepped into the middle of the geopolitical battle between the U.S. and China with Prime Minister Takaichi’s policy-changing Taiwan comments to Japan’s parliament.
• China’s retaliation has been swift and tactical, issuing travel warnings, high-level diplomatic reprimands, and conducting military exercises near the Senkaku Islands.  China has promised a continuing substantial and broad-based response.
• We expect China’s response to include rare earth export and Japanese trade restrictions and targeted boycotts of Japanese goods on the mainland.

• Concerns about excessive investment activity have occurred before in US economic and financial history. Relative to GDP, the current AI-related infrastructure spending binge already exceeds the internet bubble. 
• Unlike Japan in the late 1980s, US AI-related infrastructure spending has largely been financed by free cash flow, but debt funding has been rising, thereby raising some concerns.
• Assessing AI’s impact on earnings growth is complcated by increased circularity within the ecosystem. Metrics are not showing that US equities are in a bubble similar to the late 1990s.

• It was reported that the Chinese government advised its citizens to refrain from traveling to Japan, which is likely to positively benefit the Korea in-bound tourism related stocks.
• If the political tensions between China and Japan are not quickly resolved but continues to last, this would have further negative impact on the Japanese consumer/tourism/leisure related companies. 
• On the flip side, this could have a positive impact on the Korean consumer/tourism/leisure related companies such as Lotte Tour Development, Hotel Shilla, and Paradise. 

• TOP STORY China Should Launch Property Tax at ‘Appropriate Time,’ Ex-Finance Chief Says A nationwide property tax, though difficult to implement amid an ongoing real estate downturn, should be rolled out at an “appropriate time,” a former Chinese finance minister said Friday.
• China’s Property Transition Will Take at Least Five More Years, Ex-Finance Chief Says China’s property market downturn will persist and its transition to a new model will not be completed in the short term, requiring expansionary fiscal policy and structural reforms, according to former Finance Minister Lou Jiwei.
• FINANCE & ECONOMY China’s Securities Chief Makes Global Pitch in Paris, Rio Wu Qing, chairman of the China Securities Regulatory Commission (CSRC), traveled to Paris and Rio de Janeiro this week in a bid to strengthen cross-border financial cooperation and boost foreign investor confidence.

• China’s bank-centric funding model is an under-reported risk that appears to be lost amidst the current rally in Chinese stocks
• While it powered China’s investment boom previously, this model now misallocates capital, warehouses property losses on bank balance sheets, blunts PBoC easing, prolongs deflation risks and echoes Japan-style balance-sheet stagnation
• Without credible bank clean-up and a shift toward bond, equity and REIT funding, China’s rally risks remaining tactical rather than structural. The current rally does not signal a multi-year bull-run

• Thailand’s rubber exports up by .5% MoM to 204,095 MT in Sept

• Chinese imports decline while US imports sharply rise

• Significant disruption to production due to rains

  Thailand, which continued to witness unusually heavy rains during its ongoing production season, saw rubber export volume increasing marginally from August to September, while the returns also increased correspondingly as tight supply prevented prices from falling further.

• The combination of positive price and fundamental momentum points to a rally into year-end.
• Sentiment readings are not extended, which is supportive of a beta performance chase
• There are also early signs of a leadership shift from growth to value, indicating broadening breadth, but that’s not a necessary condition for an additional price advance.

• The economy is undergoing a K-shaped expansion. While the top-end consumer is doing well, the middle and bottom ends are struggling.
• Equity investors are still enjoying AI-related gains driven by the promise of productivity gains.
• While the employment market appears weak, there are also signs that the jobs market may be improving, which could lift the bottom of the K in 2026.

• Crude oil futures on Friday continued to recover from three-week lows as Russian supply disruptions and broader geopolitical concerns got the better of oversupply fears at least for the day Front-month Jan25 ICE Brent futures were trading at $64.35/b (2015 GMT) versus Thursday’s settle of $63.01/b, while Dec25 NYMEX WTI was at $60.04/b against a previous close of $59.70/b.
• The latest drone strike from Ukraine targeted the Black Sea export hub of Novorossiysk overnight Thursday.
• Multiple reports, including from Russian and Ukraine media, reported a major blaze at the terminal, suggesting significant disruption in loading crude from the Black Sea hub.

• The trade war detente between the US and China is over. US legislation to further restrict China’s access to chips was initiated the day after the Busan meeting.
• China is formulating its US-style Validated End User (VEU) system for Rare Earth Element (REE) exports, which will restrict shipments for US military use.
• The real conflict between the US and China over technology and rare earths is likely to involve many volatile periods in the coming year as both attempt to achieve self-sufficiency.

• A review of recent events/data impacting our investment themes and outlook
• We highlight a  commodity sector with  a strong risk-reward ratio
• Precious metals have likely just completed Wave B of their correction