Macro

• China and HK stocks dominate the list of rising exposures among EM funds
• Trip.com, CATL, and Xiaomi have reached new highs following sustained rotation, while Meituan and JD.com are rebounding after periods of consolidation
• Aubrey and Putnam initiate stakes in Xiaomi, GIB open Trip.com exposure, and the Alger EM fund enters Meituan.

• Gold has staged a relative breakout against the S&P 500 and 60/40 portfolio is a signal of financial stress ahead and an era of hard asset outperformance against paper assets.
• While we are long-term bulls on gold, it is highly extended and investors seeking to deploy cash into this investment theme should consider the energy sector as an alternative.
• Our base-case scenario calls for a tactical recovery in stock prices into April. What happens next will depend on the evolution of economic data.

• The trade infrastructure established during the globalisation period will not be entirely dismantled during the second Trump administration.  Globalisation has entered a new phase, shaped by national security considerations.
• Control of natural and strategic resources will feature prominently in the new environment, bringing inflationary implications that will impact bond markets in the absence of fiscal discipline.
• Complex production processes in the strategically important semiconductor sector make changes in fabrication location expensive and disruptive. The new trade environment makes displacing market leaders more difficult, particularly in EVs.

• Trump’s ultimate game plan is to reshore manufacturing by reversing the effects of globalization by harvesting the goodwill from U.S. alliances since the end of World War II.
• The long-term costs of these policies are a stall in productivity, and an increase in the cost of capital to U.S. companies through the removal of the USD’s “exorbitant privilege”.
• The market is undergoing a regime shift of unknown proportions. The phrase “past returns are no guarantee of future performance” will especially be true today.

• A review of recent events/data impacting our investment themes or outlook
• Indian market has discounted some of the issues the country faces 
• The best performing assets in Q1 2025 continue to be our favourites

• Strong US and UK PMIs boosted the US economy, however, low CPI hindered the bullish effect on the BoE. The UK government manipulated its Spring Statement to adhere to its rules, resulting in increased issuance due to slippage.
• Next week’s flash EA inflation is expected to be low, with impending US tariff announcements causing concern.
• The most significant monetary policy announcement is expected from the RBA, with numerous other speeches and US payrolls data set to influence expectations.

• For the week ending 21/Mar, U.S. crude inventories fell by 3.3m barrels (vs. expectations of 1.5m build), gasoline and distillate stockpiles fell less than expected.
• US natural gas inventories rose by 37 Bcf for the week ending 21/Mar, in line with analyst expectations. Inventories are 6.5% below the 5-year seasonal average.
• Shell to boost shareholder distributions to 40-50% of CFFO and cut costs by USD 5-7 billion by 2028. Exxon plans 250 layoffs in the UK by 2026.

• Social workers / In Depth: The social workers helping patients navigate China’s health care system
• Carbon /: Steel, cement and aluminum sectors join China’s carbon trading market
• Robots /: Meet the leading players in China’s humanoid robotic revolution

• The announcement of individual reciprocal tariff rates for US trading patterns on 2 April is a significant event for investors.
• This announcement is part of a drive to re-industrialise America.
• Despite its significance, this could merely represent the initial stages of a prolonged trade war.

• Copper pricing reporter Han Lu, sulfuric acid reporter Ong Jialun, and China content reporter Lucy Tang share insights on copper market trends and trade flows
• China copper concentrates assessments have hit negative levels in 2025 due to tight supply and growing demand from China and India
• Smelters are running at production losses due to low TCRC but continue to buy in the market to meet output targets and maintain production levels

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• Australia: RBA rate decision on 1 April. Expect no change.
• Japan: Nikkei 225 rebalancing effective 31 March at the close.
• US reciprocal tariffs will keep everyone on their toes on 2 April.

• Podcast delayed, markets rebounded last week, led by news of reduced impact of Trump’s tariffs
• Fed slowed pace of quantitative tightening, reducing pressure on treasury market liquidity
• Bitcoin and gold prices fluctuate, Chinese stocks rebound, DAX up 20% year to date, US equities impacted by tariffs and job losses

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• This is a quick note with the results of Real Estate Foresight’s annual ‘Draw the Line’ survey, which focused on China’s new home sales for 2025
• Responses concentrate in the -5% to -10% range but vary from -20% to +20%, vs -14% actual for 2024
• Jan-Feb 2025 actual figure published mid-March by NBS shows an improvement from -14% to -12% (12 months rolling vs prior 12 months)

• Confidence among consumers in China’s large and midsize cities is returning and willingness to spend is increasing, with more people feeling financially better off and expecting higher incomes this year, a new survey shows, suggesting government stimulus measures that started in September are having an impact.
• However, while attitudes on income and spending have improved, more survey respondents said prices have been rising over the past few months and sentiment toward the property market remains weak, according to the latest quarterly survey of consumers by German investment bank Deutsche Bank AG.
• The survey was conducted during the first quarter among individuals aged 18 to 65 in first- and second-tier cities.

• The Norges Bank held the policy rate at 4.5%, consistent with expectations, as inflation accelerated to 3.6% in February, well above prior forecasts, prompting delays in the signalled rate cuts.
• Strong wage growth, broad-based price pressures, and resilient domestic activity led the Committee to judge that a restrictive policy stance remains warranted for longer.
• The policy rate is now projected to fall to 4.0% by year-end, but heightened uncertainty around inflation and global trade developments will shape the timing and extent of future easing.

• Shipping /In Depth: U.S. targets Chinese shipping to ‘resurrect’ domestic industry
• Social workers /In Depth: The social workers helping patients navigate China’s health care system
• Tesla /: Tesla’s Full Self-Driving trial in China delayed by regulatory checks

• Rubber worth US$341 million exported in January 2025
• Companies initiate moves to cash in on higher rubber prices
• Tariff war may come to Vietnam’s advantage

• US recession risks persist despite no immediate red flags, with soft economic data and potential weakness in services if government spending cuts materialize.

• Japan’s economy remains stagnant, with weak consumption, declining business investment, and diminishing benefits from a weaker Yen.

• China shows early signs of recovery, with industrial profits stabilizing after last year’s declines, while India’s rate cuts could provide further market support.

• UK CPI inflation slowed by 15bps to 2.84%, rounding slightly under expectations. The services rate was surprisingly resilient, and January’s upside news broadly persisted.
• Downside news from clothing and core goods prices occurred because January sales extended broadly and unusually. Postponed Spring lines should drive a March rebound.
• Headline inflation outcomes are benign enough not to threaten the BoE’s likely cut in May, but ongoing resilience still makes that the final move in our forecast.

• Attempts to recreate fiscal headroom after slippage rely on implausible and optimistic assumptions. Further tax rises and delayed prudence are likely in the Autumn budget.
• Replacing aid resources with capital defence spending helps loosen fiscal policy inside the budgetary rules. Policy changes are relatively neutral over the next few years.
• Without corrective action, the gross financing requirement path is £18bn a year higher than in the Autumn, and almost £50bn higher than last Spring, burdening gilt issuance.

• US$127 million tire recycling plant coming up in Sunderland
• TRA calls for immediate action to end the T8 exemption
• ATMA’s stress to rein in ELT imports comes as wakeup call for UK

• Greetings from Copenhagen, and welcome back to our weekly editorial on everything macro and markets.
• The tariff headlines are back in a more digestive fashion as the broad tariff scare seen over the past couple of weeks have been more or less cooled down by US officials late last week and over the weekend, which is very benign news for a market who feared that tariffs would hit right around everyone around the globe, which is the reason why businesses, households and consumers have changed behaviour and delivered a US growth scare over the past month – and it will likely continue going into April as trends currently persist rather than turn.
• The tariff campaign will hence be a lot more targeted than previously communicated, which is probably what most people expected initially (until Trump went rogue), with the reciprocal part of the tariffs being a race to the bottom and vice versa – which evidently looks to be the case now.

• We analyze FIIs’ and DIIs’ buying/selling trend across sectors and their sector-wise stances relative to benchmarks to assess which sectors they would buy or sell in the near term.
• FIIs and DIIs have bought consumer discretionary and healthcare secularly. They recently started buying financials and IT, after prolonged selling.  They’ve also secularly bought industrials, barring the last two quarters.
• We conclude that both FIIs and DIIs shall continue to buy financials, industrials and consumer discretionary. They would also buy healthcare and sell materials, energy, IT and consumer staples.

• Welcome to our weekly editorial on everything geopolitics- and commodities! We are approaching the “Liberation Day” on Apr 2 where we will (hopefully) get more clarity around the tariffs plans from Trump.
• We have recently seen a semi-u-turn from the Trump administration on the severity and depth of the reciprocal tariffs announced next week, and the base-case is a softer stance with some negotiated exemptions for big partners.
• This is also exactly what paves the way for a very decent comeback in US risk assets now, something that we expect to continue into April when the softened USD and slightly lower USD bond yields start feeding through via easier financial conditions.

• SCF /In Depth: Taming the Wild West of China’s supply chain finance
• EVs /Chinese EV maker Neta on brink of collapse as $600 million funding round falls through
• BYD tops Tesla: Chinese electric-vehicle (EV) giant BYD Co. Ltd. is on a roll, overtaking U.S. rival Tesla Inc. with revenue of 777 billion yuan ($107 billion) in 2024. 

• We are overweight US equities and forecast one 25bp rate cut in 2025. Bias is towards growth and momentum stocks – industrials, tech hardware, banks and traditional energy.
• US inflation is picking up but won’t spike upwards, even with US import tariffs  rates rising.
• While recent macro data have been weak, the business cycle is intact and talk of a recession overblown. The on-going stock market correct is an opportunity to buy on dip.

• US recession chatter is back. During past recessions, US declined less than Asia. Within Asia, select consumer staples, telecommunication, energy outperformed. Surprisingly, so did Korea and Taiwan tech, HK industrials.
• Asian equity drawdown was driven more by valuation derating than by earnings decline. During every US recession, all Asian currencies depreciated and FIIs sold almost all Asian markets. 
• In the event of a US recession, we think Asia would outperform US. We like attractively valued domestic-focused sectors and stocks, unless a globally linked stock is egregiously undervalued.

• Washington’s apparent disengagement from its European partners is troubling Asian governments who are rethinking their own foreign policy and security strategies.
• So far, the region has not been targeted by the US administration. But their persistent trade surpluses and security arrangements expose them to potentially aggressive measures.
• Domestically, political stability has deteriorated in Thailand, the Philippines, and Indonesia, distracting governments from providing effective leadership in a riskier world.

• EM sustainable debt universe is now $1.4 trillion, making up 14% of EM hard currency bond stock and 3% of EM local currency debt stock
• Use of proceeds bonds are the largest part of the sustainable debt asset class, with green bonds dominating at 59% of the outstanding notional
• EM corporate sustainable bonds have seen significant growth, with the stock of bonds increasing by over 40 billion to 360 billion in the past year, driven by strong issuance trends and a diversifying issuer base across regions, sectors, and countries

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• Overweight German  value and quality stocks with a sector bias towards consumer staples, tech hardware and defence. Avoid industrials and stay focussed on consumer related stocks.
• New chancellor Mertz is under pressure to revitalise the economy and restore competitiveness to corporates. 
• His Agenda 2030 proposal to cut tax rates, reduce red-tape and deregulating together with a raising of the debt break would turnaround the economy. Expect Mertz to deliver on both.

• US base oils demand likely to get support from seasonal pick-up in requirements that coincides with round of plant maintenance work.
• Mostly-steady outright base oils prices so far this year contrast with higher prices in other markets.
• Steady export base oils values vs VGO so far this year contrast with slump, then surge in base oils values from H2 March 2024.

• Asia’s base oils demand could hold steady even with high heavy-grade prices and seasonal slowdown in consumption at start of Q2 2025.
• Asia’s lube demand likely to peak in month of March, before holding at lower levels over following months.
• Lube demand in Q2 2025 likely to remain well above levels in Q1 2025 even with slowdown at start of Q2 2025.

• US base oils prices hold steady versus feedstock/competing fuel prices.
• Base oils margins hold in narrow range even as wave of plant maintenance work in North America coincides with seasonal rise in demand.
• Any tightening of supply fundamentals would typically first impact spot shipments for export markets.

• Global base oils prices mostly weaken vs higher feedstock/competing fuel prices.
• Lower prices of light-grade base oils relative to heavy-neutrals leave those supplies more exposed to impact of higher feedstock costs at a time when demand faces seasonal rise.
• FOB Asia base oils prices fall vs Singapore gasoil.

• Asia’s heavy-grade base oils prices stay high versus feedstock/competing fuel prices.
• High margins point to tight supply-demand fundamentals, incentivizing refiners to maintain or raise output.
• Light-grade base oils prices stay low vs feedstock/competing fuel prices, cutting incentive for refiners to raise output.

• Robots / Cover Story: Humanoid robots are poised to march into the real world
• Tariffs /Analysis: Who will bear the brunt of Trump’s tariffs?
• Fiscal /China’s finance minister vows to speed up fiscal stimulus

• The Fed, Bank of England, and BOJ all left rates unchanged with their own unique perspectives
• Market volatility continues with equities bouncing and the dollar rebounding
• Fed Chair Powell emphasized keeping options open and uncertainty in the economy, with no immediate rate cuts expected

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• A resurgence in the US and UK services PMIs seems inconsistent with renewed dovish pricing that assumes activity weakness. Vibes may be throwing surveys beyond reality.
• Labour demand growth seems to be trending close to supply, signalling monetary conditions close to neutral. That is broadly the story across a broad basket of countries.
• We still believe rate pricing is too dovish for the Fed and, to a lesser extent, the BoE. Noisy survey vibes and spurious assumptions of tightness are likely to be misleading.

• How should investors react to the increase in policy uncertainty? The latest FOMC statement and subsequent press conference were full of references to “uncertainty”. 
• In the short run, stock prices are rebounding from an oversold condition in response to the sanguine reaction of the credit markets to policy uncertainty.
• Longer term, equity investors have to be prepared for a deterioration in the growth outlook, which is bearish for equities.

• OPEC’s output decision is seen as the most influential factor for the oil market, with prices tumbling and Brent crude trading just above $70
• OPEC shows tolerance to potential economic fallout from tariffs and plans to increase crude oil output starting in April 2025
• Uncertainty remains in the market as geopolitical tensions escalate in the Middle East and President Trump proposes a new Iranian nuclear deal with a two-month deadline, putting pressure on Iran and other countries subject to sanctions

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• Market is seeing an uptick in CNY fixing, potentially halting the DXY bear trend temporarily
• Investors are focused on upcoming tariff event risk on April 2, leading to de-risking behavior
• Various potential scenarios for tariff implementation and FX response, with uncertainty around delivery and impact of tariffs on different sectors and countries

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• For the week ending 21/Mar, U.S. natural gas prices fell by 3% due to milder weather forecasts and larger-than-expected build in the U.S. natural gas inventories.
• Henry Hub dropped by 6.4% on 20/Mar (Thu) after the EIA reported a 9 Bcf build in U.S. inventories. Prices ended the week below the 9-day and 21-day moving averages.
• Henry Hub OI PCR increased to 1.05 on 21/Mar from 1.03 on 14/Mar. Call OI rose by 3.6% WoW, while put OI grew by 5%.

• Recent fall in US inflation breakevens driven by change in growth expectations and trade policy developments
• US breakevens appear somewhat cheap versus fair value framework, with near term inflation risks still skewed to the upside
• European breakevens have outperformed due to seismic shift in German fiscal policy, leading to a backup in intermediate yields on the German curve.

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• Private markets are evolving and becoming a mainstream part of investment portfolios
• Access to private market investments is no longer limited to just institutional investors
• Growth in private market universe is driven by demand for private capital and innovative structures for investor access

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• The Indonesian market has seen a sharp sell-off with a confluence of concerns centred around the execution and implementation of government policy but the fall was mainly driven by retail.
• The sell-off does not reflect an underlying deterioration of growth prospects for the economy or indeed earnings, although 4Q2024 results saw a slower performance for some sectors. 
• The government has already taken note and has determined to take action to reassure investors through policy measures. Valuations have already reached a historically attractive level.

• Prices crosses the magical level of INR 200/kg after five months  
• Supply short but farmers who stock and didn’t rainguard benefit  
•  Rubber Board starts geo-mapping of rubber plantations

• Global equity markets saw a sudden reversal in risk appetite out of the Magnificent Seven.
• While risk appetite has recovered in the U.S. equity market and a relief rally will likely continue, the jury is still out on whether the stampede into non-U.S. will continue.
• Reiterate our view that any relief rally is unlikely to be sustainable. Investors may be better served by diversifying their U.S. exposure into non-U.S. equities for the coming market cycle.

• The initial target range for the S&P in the US bear market is 4800 to 5000. This level also coincides with the technical level of -20% from the top.
• The stock market and economy in the US are highly co-dependent, and the bear market will cause consumption to fall more than in previous market downturns.
• Foreign investors have started to reduce their overweight US allocations quickly.  Retiree “Sequence of Returns Risk” will add to selling pressure in the US market.

• Micon management blaming soft NAND pricing, yet the outlook looks bright with price hikes on the horizon for April.
• Trump announcing the F-47 fighter jet after his status as 47th president sending Boeing up and Lockheed down
• Mega banks and Reginal banks posted sizable gains in Japan last week on expectations for higher yields. Looks priced in, but markets need something to chase with AI fever waning. 

• The Fed modestly revised economic growth expectations downwards for 2025 and next year and chose not to alter forward guidance. Two anticipated policy rate reductions in 2025 remain intact.
• Significant tapering of quantitative tightening was announced in anticipation of a debt ceiling agreement being reached. Higher Treasury borrowing could reduce reserves in the banking system, potentially creating financial instability.   
• Short-Term survey-based measures of consumers’ inflationary expectations have seemingly become more unhinged in 2025, but this should not prevent the Fed from switching to easier policy settings if required.

• Mixed data from China shows property prices down 5-7% YoY and lower land sales YTD, while weaker U.S. consumer sentiment has also negatively impacted overall commodity prices.
• China’s total social financing (TSF) for Jan-Feb reached 9.29 trillion RMB (Vs. consensus 9.75 trillion RMB). However, this figure is +16.6% YoY, signaling that substantial stimulus measures are in effect.
• We expect iron ore prices to remain rangebound between 95-120 USD/ton over the next few months as cost support is strong at the 100 USD/ton level. 

• Copper prices are receiving a favorable lift following the announcement of China’s “Special Action Plan to Boost Consumption” made early last week.
• Total Social Financing (TSF) increased by 16% YoY for Jan-Feb to 9.29 trillion RMB. Despite being below the analyst forecasts (which were revised upwards), this is a strong number.
• Coupled with weaker supply (Post Results FY24: Mine-By-Mine Plan Production + Commentary on Copper From Global Listed Companies ), copper prices can surpass 10k USD/ton in the medium-term. 

• Fed policy choices could create two distinct market paths: a growth-driven rally if rates fall to 2-2.5% or a defensive rotation if rates stay near 5%.
• Understanding equity as a call option explains why changing interest rates dramatically impacts sector performance and overall market returns.
• Practical strategies exist for navigating both scenarios, focusing on portfolio positioning that can adapt to either Fed outcome.

• A review of recent events/data impacting our investment themes or outlook
• The investment world has turned upside down where established norms have gone into reverse.
• The new investing environment needs to be paid attention to.

• The latest UK labour market report shows ongoing resilience in hard data compared to soft data, with policymakers focusing more on hard strength to avoid decision-making being influenced by negative factors. Easing cycles are evolving beyond expected outcomes.
• The upcoming UK Budget is not exempt from the prevailing uncertainty, with potential deferrals of some unlikely spending cuts being more about political convenience.
• UK inflation data for February is expected to be relatively stable, with Monday’s Flash PMIs also anticipated to draw attention.

• For the week ending 14/Mar, U.S. crude inventories rose 1.7m barrels (vs. expectations of 0.8m build), gasoline stockpiles fell below expectations, and distillate inventories declined more than anticipated.
• US natural gas inventories rose by 9 Bcf for the week ending 14/Mar, more than analyst expectations of a 3 Bcf build. Inventories are 10% below the 5-year seasonal average.
• Barclays cut Exxon’s price target to USD 135 from USD 137 with an Overweight rating, while Citigroup lowered Occidental’s target to USD 51 from USD 56 with a Neutral rating.

• We discuss an emerging concern in the global financial markets which is that many high-profile PE owned companies around the world are increasingly experiencing bankruptcies or near bankruptcies.
• The excessive leverage that MBK has tried to use on Homeplus has backfired due to higher interest rates, greater competition from Emart/Coupang, COVID-19, and lower buying power from asset sales.
• Although it may be premature to declare these bankruptcies/near-bankruptcies to be a prelude to the next Big Short 2, they indeed raise so many alarming bells.

• Math / In Depth: Tsinghua program shows the challenges of nurturing world-class mathematicians
• Consumption /: Chinese consumers are more confident and willing to spend, survey shows
• EVs /: Tariff turmoil roils Chinese electric-bus maker’s Mexico plans