Macro

• Labour failed to campaign on a platform up to the UK’s structural problems, depriving it of the support to deliver change in its first year. Reform UK now lead most polls.
• Spending cut U-turns compound the fiscal hole exposed by the slippage of optimistic assumptions, making further tax hikes and more persistent deficits seem inevitable.
• Far-centrism has been rejected, but challenges to Labour’s right and left break its ability to triangulate back towards success. Investors may not stay so forgiving.

• Germany’s GDP declined 0.2% in 2024, Japan’s industrial production contracted 1.1%. Meanwhile, America’s service-focused economy outperforms manufacturing-heavy competitors consistently.
• Tooling costs are 10x higher in America than China. Even 145% tariffs insufficient—need 350% tariffs to make domestic manufacturing viable.
• US services exports surpass lost manufacturing profits. Services employ 84% of private sector, pay more than manufacturing ($36 vs $35/hour).

• Surface Strength, Underlying Fragility: Despite record highs in U.S. equities, narrow market breadth, inter-market divergences, and macro-cycle pressures signal growing instability beneath the surface.
• Rising Tail Risks: Geopolitical tensions (e.g., fragile Iran-Israel ceasefire) and shifting U.S. trade policy (potential 70% tariffs) threaten to disrupt market momentum and trigger volatility.
• Prepare for Inflection: Timing models and liquidity indicators point to a Q3 turning point; investors should rebalance toward quality, raise cash, and deploy tactical hedges ahead of possible late-year turbulence.

• The RBNZ unanimously held the OCR at 3.25% after six consecutive cuts, marking the first pause in its easing cycle as inflation edges towards the top of the 1-3% target band.
• The Committee maintains an explicit easing bias, signalling that further rate cuts are expected if medium-term inflation pressures continue to ease as projected.
• Future monetary policy decisions will be heavily influenced by global trade tensions, domestic economic recovery momentum, and inflation expectations amid an explicitly uncertain outlook.

• BNM trimmed the OPR to 2.75%, a move anticipated by just over half of surveyed economists, reflecting a mildly surprising tilt towards accommodation.
• Future rate decisions hinge on tariff negotiations, subsidy rationalisation, and whether subdued core inflation persists within the 1.5%–2.5% comfort band.
• With liquidity bolstered by an earlier SRR cut and inflation benign, the MPC retains scope for one further 25 bp reduction should external demand weaken further, but ringgit stability and fiscal adjustments will temper the pace of any additional easing.

• Beijing’s push to cut inefficient capacity may support steel margins and create a steady floor for iron ore prices.
• Malaysia’s anti-dumping tariffs of 3.86-57.90% target Chinese steel exports, posing limited short-term impact but signalling broader risks to China’s iron ore demand over time.
• Portside inventories may continue rising as iron ore arrivals increase and weak pig iron output slows cargo pick-up across Chinese ports.

• Huawei /: Huawei cedes some control over sales to automaking partners, sources say
• IPO /: Li Ka-shing’s son takes insurer FWD public in Hong Kong
• Hikvision /: Chinese surveillance-gear maker fights Canadian ban

• Dovish market fears from April have unwound for the Fed, yet deepened for the BoE, despite broadly resilient data and cautious guidance from policymakers reluctant to cut.
• Equity prices have relied on this resilience to recover, yet expectations for extended rate-cutting cycles imply it breaks. Payrolls only forced half of the gap to close.
• We expect ongoing resilience to keep rolling market pricing for rate cuts later, with the unnecessary easing ultimately never being delivered by the BoE, Fed, or ECB.

• Trump offers another three weeks of reprieve on reciprocal tariffs with an extension of the deadline to 1 Aug from 9 July
• Tariffs remain cumbersome for Asia despite some reductions. Japan and Malaysia see 1ppt increase.
• Ongoing development reinforce our core views of a slowdown in H2 and more monetary easing. However, relative forecasts are subject to re-evaluation.

• Global upstream oil and gas development spending is expected to decline by about 1.1% to $543 billion, with reductions in all regions except the Middle East
• Major Chinese National Oil companies, US E&P operators, and Russian companies like Gazprom are all cutting their capital spending in response to lower oil prices and increased costs due to tariffs
• Despite strategic shifts towards low carbon projects, there is a significant reduction in investment in these areas, with upstream investment not seeing any benefits

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• Market participants should look at a bigger picture view of positioning in US equities, rather than narrow metrics like IMM or market participants only
• European countries, as well as Canada and Australia, are large holders of US equities, with pension funds being major players
• Australian pension funds have over 800 billion in US equities, with a flow rate of 1.2% of GDP going into foreign equities, and have low FX hedge ratios which could be raised in the future

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• Overall bearish market conditions in China
• Mixed trade data underscore tepid demand conditions
• Arbitrage window might open as spread between Chinese and international prices narrows 

• U.S. Copper Market Gap: 1.3 Mt refined copper supply gap due to limited 0.4 Mt refining capacity against 1.7 Mt demand, despite 1.1 Mt mined ore.
• Impact on Market and Users: 50% tariff may raise prices 15–25%, adding $200–400/vehicle and 3–5% construction costs, while boosting refining investment.
• Way Forward: Expand refining capacity, streamline permitting, and ensure policy stability to process exported ore and cut import reliance by 2030.

• COMEX spreads blew out to over 2,500 USD/ton (a ~25% premium) last night as President Trump announced a likelihood of a 50% import tariff on the metal. 
• We believe this move will deplete inventories further at the LME (to be shipped to the COMEX) and lead to a rally in copper prices on the LME as well.
• Follow our prior insight, Copper Breaches 10k USD: Easy Journey to 11k USD/Ton On Lower Inventories In The Short Term 

• The podcast episode discusses the shift towards systematic global macro investing and the advantages of using quantitative models and algorithms.
• The sources highlight the importance of technology and data in driving this shift, but also emphasize the value of human judgment in certain situations.
• Listeners are encouraged to explore the freely available Google Colab Jupyter notebook for replicating sector performance analysis discussed in the episode.

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• Property / Cover Story: Developers impose deeper ‘haircuts’ on creditors in latest debt overhauls
• Livestreaming /In Depth: China’s livestreaming apps face a reckoning over gambling
• Refugees /: Global displaced population hits record as UN refugee agency faces funding cuts

• The RBA surprised markets by maintaining the cash rate at 3.85%, rejecting consensus expectations for a cut and citing the need for further confirmation that inflation is sustainably on track to the 2.5% midpoint.
• The decision reflects persistent uncertainty in the global economic environment and a domestic outlook characterised by robust labour market conditions but only gradual recovery in household demand, with risks on both sides of the inflation outlook.
• The Board’s split vote and explicit data-dependent stance signal that future interest rate decisions will be highly sensitive to forthcoming inflation and labour market data, as well as evolving international developments.

• Economic activity is robust with a tight labour market.
• Price and wage inflation are generally above 2%.
• Despite predictions of a downturn, the current economic regime remains stable.

• Structural drivers of the USD’s dominance are weakening, but powerful network effects, unrivalled market depth and lack of viable alternatives will prevent a full dethronement.   
• Rather than a single replacement, a multicurrency reserve system is set to emerge — which includes several Asian currencies — especially in trade settlement and funding. 
• Given Asia’s extensive holdings of USD assets, even a slight shift in allocations could send reverberations across currency and financial markets.

• Crude oil soared on conflict and sank just as fast on ceasefire. Prices surged to a 5-month high following the U.S. strikes on three Iranian nuclear facilities.
• June’s price action was driven by geopolitical shocks, not sustained fundamentals. Oversupply concerns remain dominant.
• On 05/Jul, eight key members of OPEC+ alliance agreed to raise oil output in August. Instead of the anticipated 411kbpd increase, the group opted for a steeper hike of 548kbpd.

• It had looked like the big story for June was going to be how Build Back Better, the Globalist Mantra used to cover for a huge increase in spending on the Green Industrial Complex, was being attacked by the proposed spending constraints under a different BBB, the Big Beautiful Bill that is now in the process of going through the Senate.
• Until that is we got a third BBB, the Bunker Busting Bomb as the US bombed Iran.
• As we discussed in the Ratchet and the Sausage Machine, the fall out over the BB Bill between Trump and Musk was less one of direction and more one of ideological purity; Musk despises the pork barrel nature of US political horse trading while Trump 2.0 recognises what is needed to get things done – in this case fulfil his pre election promises and prevent his previous tax cuts from being reversed.

• It is essential to track and evaluate the global economy amid a multitude of negative and positive shocks at this time
• My experimental Diffusion of Growth Indicator (DoGI) offers a timely directional view of the global economy
• The signals from the DoGI combined with the breadth of GDP contractions can effectively assess the likelihood of a global recession

• During the week, Trump muscled his Big Beautiful Bill through a divided congress. With that, the bill got passed even right before 4th of July.
• The nearly-900 page bill includes a tax-cut and spending package that is projected to increase the national debt by $3.3 trillion over a decade.
• Cost-saving to reduce the government debt seems to be completely from the table. The DODGE department seems compared to this bill like a joke.

• Asia’s base oils price-premium to Singapore gasoil price stays at elevated levels for heavy grades, lower-than-usual levels for light grades.
• Base oils margins incentivize refiners to maintain higher production levels for heavy grades, and to consider adjusting production levels for light grades.
• Any such moves to maintain or adjust output would coincide with rise in regional production capacity following completion of most plant-maintenance work.

• For the week ending 03/Jul, U.S. natural gas prices fell by 8.8% due to cooler weather forecasts, rising output, and U.S. natural gas storage builds.
• For the week ending 27/Jun, the EIA reported that U.S. natural gas inventories rose by 55 Bcf, higher than analyst expectations of a 48 Bcf build.
• Henry Hub OI PCR rose to 0.86 on 03/Jul compared to 0.85 on 27/Jun. Call OI grew by 4.5% WoW, while put OI increased by 5.3%.

• US Group II export base oils price-premium to vacuum gasoil starts Q3 2025 at slightly lower levels than at start of Q3 2024.
• In Q3 2024, US base oils price premium to VGO extends rise after surging from end-Q1 2024.
• US base oils price-premium to VGO extends surge in Q3 2024 even with less feasible arbitrage to outlets like Europe, Middle East and India.

• Global base oils values mostly hold firm versus feedstock/competing fuel prices, even as they remain down from recent highs in Q2 2025.
• Firm base oils margins coincide with strong diesel premium to crude oil that incentivizes refiners to boost output of the motor fuel.
• Any such move would likely impact light-grade base oils more than heavy grades, whose firm margins incentivize refiners to maintain high output of the product.

• US equities have fully recovered from their selloff following the announcement of reciprocal tariffs .  Investors believe the US economy will benefit greatly from the adoption of generative artificial intelligence.
• The late 1990s provide a cautionary lesson on the limits of purported productivity gains due to technological changes. Higher AI-induced productivity growth will raise the real neutral federal funds rate.
• High federal government borrowing could raise the funding costs of AI-related capital spending in the private sector.  Borrowing capacity has risen significantly due to the Big Beautiful Bill’s passage. 

• Recap of last week’s events including good inflation news, pressure on Fed to cut interest rates, tensions between Israel and Iran escalating, and market outcomes
• Factors showing risk-on sentiment with sales growth up, EPS growth strong, volatility and quality return on equity fluctuating
• Discussion on factors influencing return on equity and quality, with insights into market trends and data analysis techniques

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• It’s official, our long-term market timing model has confirmed a buy signal at the end of June.
• The S&P 500 is trading at a forward P/E of 22. Can a new bull truly begin at such elevated valuations?
• We interpret the buy signal from our long-term market timing model as a buy signal for global equities, and not just the U.S. market.

• The market is taking on bubbly characteristics. However, momentum is still strong and sentiment is not excessively stretched.
• The market is due for a short-term pullback or consolidation.
• We believe traders should buy the anticipated weakness next week and embrace the bubble conditions as the melt-up has further room to run.

• Following nearly a year of being in the negative, China’s steel mill margins have finally turned positive, primarily driven by a decline in coking coal prices.
• Iron ore prices have bounced 3% WoW, to 96 USD/ton, due to short-lived positive sentiment. We reiterate a short-term bounce to the 100 USD/ton level.  
• In the medium term, we anticipate iron ore prices declining to $85/ton by early next year, when Rio’s 120 million-ton Simandou project commences.

• This follows our insight, Copper Breaches 10k USD: Easy Journey to 11k USD/Ton On Lower Inventories In The Short Term. 
• Informal miners are disrupting Peruvian copper transport at the Las Bambas (320 kt annual production) and Constancia (110 kt) mines owned by MMG (1208 HK) and Hudbay Minerals (HBM CN). 
• Peru is the third largest copper producing country in the world (2.6 million tons or 10% of global production), and so following these disruptions is critical. 

• Context: Central Bank rate decisions, index changes and political events can move markets and affect volatility. Exchange holidays and option expiration schedules might influence liquidity on these days.
• Highlights: The week of July 7 to July 11 is packed with the expiration of the pause on reciprocal tariffs, two Central Bank decisions, and options expiries.
• Why Read: Plan ahead and take into account known market events when making investment and trading decision.

• Dovish rate pricing had been ignoring resilient data until US payrolls delivered a rude awakening. We believe rates remain too dovish relative to reality and equity prices.
• BoE surveys also revealed resilience in defiance of dovish pricing, while the rise in EA unemployment merely matched ECB forecasts and was heavily reliant on Italy.
• Next week’s deadline for US tariffs is the main risk event, as not all countries will likely get an extension. Monetary policy decisions come from the RBA, RBNZ, BNM, and BOK.

• Reduced shipments and increased hot metal output buoyed iron ore prices. However, long-term demand faces pressure from Chinese steel stagnation and looming supply from Simandou.
• Analysts foresee a balanced iron ore market in 2025, but warn that trade tensions and shifting Chinese policies could undermine demand and price stability.
• Prices are trading above short-term moving averages, suggesting ongoing upside momentum, while the MACD above its signal line confirms the prevailing bullish trend.

• Policy / In Depth: Key challenges China’s next five-year plan needs to tackle
• Chip /: U.S. lifts export ban on chip design software to China amid trade thaw
• Regulators /Exclusive: Two securities officials fall to their deaths amid China’s graft sweep

• For the week ending 27/Jun, U.S. crude inventories rose by 3.8m barrels (vs. expectations of a 3.5m barrel decline). Gasoline stockpiles rose more than expected.
• The EIA reported a 55 Bcf storage build, while analysts forecasted a 48 Bcf increase. Storage levels are 6.2% above the five-year average but 5.6% below year-ago levels.
• BlackRock may offload its gas pipeline stake back to Aramco, while JP Morgan cut its 12-month PT on SLB and Goldman Sachs did the same for Halliburton.

• Continental, Michelin, Bridgestone pivot to premium with local focus  
• MRF expands in EV, defence, and export markets amid capacity growth  
• Apollo restructures in Europe, bolstering premium bicycle

• The Decision Maker Panel and Credit Conditions Surveys remained resilient. Price and wage inflation are stuck at excessive levels, and US trade policy makes little difference.
• Default rates are falling while the availability and demand for credit are rising to reveal a loosening of monetary conditions. There is no evidence of policy being too tight.
• Inflation and labour market data matched BoE forecasts from May, when most members were biased to slow easing. Resilient surveys should discourage it from cutting again.

• FX volumes expected to remain steady in the next month and a half before potentially increasing later in Q3
• Dollar risk reversals are priced expensively for puts, suggesting the need for alternative option structures
• Consideration of bullish yen option trades in lower beta crossian underlyings like CNH as alternatives to dollar yen positions due to stretched spec positioning and high carry costs

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• Exam / In Depth: Can China provide middle-schoolers long-promised exam relief?
• Tourism /: Thailand falls out of favor with Chinese tourists
• Drugs /: China cuts new path for commercial insurance holders to get pricey drugs

• China’s NBS Manufacturing PMI edged up to 49.7, while Caixin jumped to 50.4, highlighting a divergence driven by survey scope, timing, and domestic demand strength.
• Taiwan’s 20.15% steel tariffs may slash Chinese exports, triggering domestic oversupply, weaker prices, and reduced iron ore demand amid growing regional trade uncertainty.
• Portside inventories climbed as arrivals rose, outpacing stable port demand and pointing to further stockpile growth.

• OPEC maintained steady demand forecasts, while the IEA and EIA cut 2025 growth estimates. All agencies see limited near-term catalysts for a meaningful rise in global oil demand.
• OPEC, EIA, and IEA project rising oil supply, driven by non-OPEC producers and near-term OPEC+ overproduction.
• The EIA remains bullish on Henry Hub gas prices, forecasting strong demand and tightening supply through late 2025.

• Two weeks ago, we flagged our Tanker Equity Basket as a potentially interesting place to look for opportunities.
• The week after we flagged it, the basket bounced, presumably on events in the Middle East, and this week has given back most of those returns.
• The basket has now fallen below the 10-day moving average and is bouncing along the 200-day moving average.

• In H1, Asia climbed several walls of worry. Valuations are slightly higher than long-term average. H2 could be more modest, as export driven growth moderates and trade agreements become contentious.
• Our end-2025 targets are: MXASJ 850, SHCOMP 3760, Sensex 85000, HSI 26000, KOSPI 3400, TWSE 23500, Strait Times 4200, JCI 7450, SET 1150. Overweights on Korea, HK/China, India, continue.
• Asian currencies should continue to appreciate, driving more FII flows. Benign inflation and headroom for monetary easing are key tailwinds. We expect two rate cuts by the Fed in 2025.

• China’s soybean imports surged 129% MoM in May, yet excess inventory and weak feed demand continue to suppress soybean meal prices.
• Technical indicators turned bearish with a June 25 death cross and sustained price drop below the 50-day DMA.
• Despite near-term bearishness, call option buildup from July to November suggests medium-term recovery hopes.

• Commodity trends remain bifurcated: gold, copper, and uranium are surging, while iron ore, and coal struggle under oversupply and weak demand.
• Top picks: Zijin Mining Group (601899 CH)Shandong Gold Mining (1787 HK)JSW Steel Ltd (JSTL IN), Lloyds Metals & Energy (LYDM IN) , Paladin Energy (PDN AU) 
• Top shorts: Hindalco Industries (HNDL IN) , Nippon Steel Corporation (5401 JP)Coal India Ltd (COAL IN)Tata Steel Ltd (TATA IN) 

• In this insight, we discuss numerous gap trade opportunities involving Korean preferred and common shares in 3Q 2025.
• In particular, five pairs of common and preferred stocks have experienced more than 20% widening of their share prices in the past six months. 
• These companies (Doosan Corp, Mirae Asset Securities, KIS Holdings, Daishin Securities, and LG Chem) are more likely to revert to closing their gaps in the coming weeks.

• EA unemployment’s rise to 6.3% matched the ECB forecast underlying recent hawkish guidance and narrowly relied on Italy, which offset a broad tightening elsewhere.
• Unemployment is still broadly lower than a year ago and pre-pandemic. That will not help a disinflationary move along the Phillips Curve, let alone shift it lower.
• Without a disinflationary surprise, the ECB should not be shocked into a rate cut as it describes the prevailing setting as well-positioned. We still see no more ECB cuts.

• Recent Impact: India’s BIS mandate has disrupted steel imports overnight, stranding shipments and pressuring MSMEs.
• Pricing: While prices have remained broadly stable so far, rising input tightness and seasonal factors suggest upward pressure is likely ahead.
• Global Trends: Around 25–35% of global steel trade is now under protectionist measures, reflecting a broader shift toward regionalization and defensive trade policies.

• Pop Mart / In Depth: How Labubu proved Pop Mart right: A new line of collectibles featuring Labubu sold out within seconds of its online launch on June 12
• IPOs /: Chinese companies rush to list amid stable markets
• PMI /: China manufacturing expands despite muted foreign demand, Caixin PMI shows

• How did our major investment themes do so far in 2025?
• Review of the performance of the major markets and asset classes we focus on 
• We revisit our outlook for each of those asset classes for H2 25

• Linglong Tire’s new plants in Brazil, Kenya and Anhui in China  
• Yongsheng Rubber to take advantage of Morocco’s FTA with West  
• CNTR’s car tire facility to come up at Alexandria in Egypt  

• Inflation during the second half of March was 0.21% biweekly (bw), driven by the increase in agricultural products. On an annual basis, inflation now stands at 3.93%.
• Inflation came in line with market expectations (0.21% bw) and below our forecast of 0.30% bw.
• The forecast error is explained by larger-than-expected increases in tomato prices and smaller-than-anticipated declines in onion, chicken, and egg prices.

• We expect inflation for the first fortnight of March to be 0.17% bw, below the historical average, due to lower energy prices.
• Inflation for this period typically stands at 0.29% bw. Our lower forecast is explained by an estimated decline of -0.76% bw in energy prices (historical average of +0.37% bw).
• According to our price monitoring, low octane gasoline would have decreased by -1.5% bw. 

• The minutes suggest that the Banxico Governing Board would be willing to reduce its policy rate by 50 bps in May.
• However, some voices are beginning to point out that the market may be pricing in more rate cuts than what could ultimately materialize.
• According to the minutes, three members of the Board consider that the current economic slowdown, combined with the absence of significant inflationary effects stemming from trade-related factors, would allow the continuation of 50-basis-point rate cuts in the upcoming meeting on May 15.

• An unsurprising achievement of the 2% target might urge a celebration at the ECB, but it does not demand policy action. Energy price declines can’t be relied upon to repeat.
• The early consensus forecast was surprised on the upside, but raised by last week’s releases in France and Spain. So, while reassuring, this outcome is not dovish.
• We expect inflation to stay close to the target, whereas the ECB forecasts a substantial drop below it, while calling policy well-positioned. We still see no more rate cuts.

• In this insight, we highlight the recent pricing gap divergences of the major Korean holdcos and opcos which could provide trading opportunities in 3Q 2025.
• A whopping 87% (33 out of 38) holdcos/quasi holdcos outperformed their opco counterparts in the past three months, which is one of the best ever in the past two decades.
• This appears to be one of the classic “buy the rumor, sell the news” trading opportunities.

• During the past two weeks we highlighted that the upside for oil is only minimal and that trading the “war event” may be the rational thing to do.
• So far, this turned out to be the right call.
• Investment banks seem to be a bit more emotional about the topic.

• Bankruptcy / Cover Story: The rise and fall of China’s ‘fentanyl king’ in corruption-fueled bankruptcy
• Hikvision /: Canada kicks out Chinese surveillance-gear maker
• Nike /: Nike to cut China footwear output to counter $1 billion tariff hit

• Global Group II heavy-grade base oils prices stay at elevated levels relative to feedstock and competing fuel prices.
• Group II heavy-grade prices maintain steep premium to Group I heavy-neutrals prices in Asia and especially in Europe.
• Group II heavy-grade price-strength extends to markets like India, even with recent strength in Group I prices in that market.

• Global base oils prices recover versus feedstock/competing fuel prices after crude prices fall.
• Firmer base oils price-differentials curb pressure on refiners to adjust output in response to squeezed margins.
• Firmer margins, and easing pressure to adjust output, coincide with prospect of easing supply-demand fundamentals in coming weeks.

• WTI futures dropped by 11.3% for the week ending 27/Jun, marking its steepest weekly fall since March 2023. The decline was due to the ceasefire between Israel and Iran.
• The U.S. rig count fell by seven to 547. The oil rig count fell by six to 432, while gas rigs dropped by two to 109.
• WTI OI PCR rose to 0.93 on 27/Jun compared to 0.87 on 20/Jun. Call OI rose by 8.3% WoW, while put OI increased by 15.4%.

• The timing of Israel’s unprovoked strike had all to do with self-preservation – specifically for Netanyahu rather than the Israeli people – and scuppering the US-Iran nuclear deal.
• Whether the Israel-Iran truce will hold is left to be seen, but the world has dodged a Kamikaze for now and all involved parties are claiming victory.
• Iran is not as fragile as you think; by Q1 2024, its economy was 21% larger than it was pre-pandemic, compared to 14% growth for Israel.

• For the week ending 27/Jun, U.S. natural gas prices fell by 2.8% due to cooler weather forecasts, Israel-Iran ceasefire, and U.S. natural gas storage builds.
• For the week ending 20/Jun, the EIA reported that U.S. natural gas inventories rose by 96 Bcf, higher than analyst expectations of an 88 Bcf build.
• Henry Hub OI PCR remained unchanged at 0.85 on 27/Jun compared to 20/Jun. Call OI decreased by 14.4% WoW, while put OI fell by 14.2%.

• Oil supply is projected to outpace demand growth through 2026, leading to rising inventories and sustained downward pressure on Brent crude to below USD60pb.
• Opec+ output increases, quota disputes (especially with the UAE), and the potential unwinding of voluntary cuts could further flood the market.
• US shale producers and international oil companies are reducing investment due to lower prices, but current Brent levels are not yet low enough to force significant cuts.

• Price edge and stable grades help Indonesia stage a good show  
• US demand strengthens despite Trump tariffs  
• China demand softens, Japan slides as tariffs take effect  

• In this insight, we discuss the increasing popularity of EB issues with treasury shares as the base assets in Korea. There were seven EB issue announcements in Korea in June.
• Going forward, more Korean companies are likely to issue EBs in the next several months, prior to the actual official changes in regulations of treasury shares in Korea.
• These companies that issue EBs using treasury shares as underlying assets are prime targets of short selling/underperformance.

• Dollar decoupled from US rates and equities, investors expected to chase dollar lower
• Dollar positioning not as crowded as perceived, global holdings of US equities still large
• Unlikely for significant repatriation of Japanese foreign bond investments, focus on rebalancing rather than one-way repatriation; implications of upcoming election on Yen uncertain

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• How did our major investment themes do so far in 2025?
• Review of the performance of the major markets and asset classes we focus on
• We revisit our outlook for each of those asset classes for H2 25

• Regional rotation places DM Europe as clear consensus overweight among active Global equity funds.
• Seventy-Five percent of funds are overweight UK stocks, with 69.6% overweight France and 70.2% overweight the Netherlands
• Novo Nordisk, ASML, Schneider Electric, and AstraZeneca remain key holdings, while a resurgence from European banks and select names like Spotify and LSEG is also starting to stand out.

• UK active funds are buying back in to the UK Homebuilding sector, with ownership showing consistent increases from the lows of early 2024.
• Over the past six months, Homebuilding recorded the third-largest increase in fund participation, trailing only Agricultural Commodities and Pharmaceuticals.
• At the stock level, the sector remains highly concentrated. Four companies — Taylor Wimpey, Bellway, Barratt Redrow, and Persimmon — account for 81% of the total allocation.

• After a slow start in Q1, ASEAN has benefitted from front-loading of exports and favourable tariff differentials with China in Q2. But the momentum is likely to falter in H2.
• With the 9 July deadline for reciprocal tariffs approaching and limited progress in trade talks with the US, tariffs could increase for the region within days.
• Even if tariffs remain unchanged, exports and growth will likely slow as businesses and consumers adjust to higher costs and inventory restocking in the US gives way to declining demand.

• DM swap spreads exhibit correlation but also have idiosyncratic drivers
• Central bank balance sheet evolution and money market rates are identified as top drivers of DM swap spreads
• Fed expected to continue QT, ECB and BoJ expected to normalize balance sheets, impacting swap spreads

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• Overweight, Indian equities with a bias towards industrials, property and consumer stocks.
• But investing in India is  ultimately about the domestic story
• While its progress in AI, the green transition, and advanced manufacturing lags far behind China—disappointingly so—business cycle indicators are improving, and the multi-year structural growth narrative remains compelling.