Macro

• Market pricing is not expecting a rate cut at the ECB September meeting, but further easing may still be on the table later in the year.
• Swap spreads typically narrow in August, but this year they have been stable, potentially due to French political developments.
• Seasonality and potential volatility could still drive narrowing in swap spreads in the near term, despite weakening relationships with German swap spreads.

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• From July’s recent peak of US$17.3bn, onshore investors’ net Southbound buying declined to US$14.3 bn in August. Average daily turnover continued to climb, reaching an all-time high of US$19.8bn.
• Buying in Tencent, Xiaomi and Alibaba re-commenced, after selling for 3-4 months. The semiconductor giants – SMIC and Hua Hong – are being bought as well. 
• Investors’ long-standing preferences for e-commerce, food delivery, biotech and dividends continue. Meituan and Kuaishou continue to be bought, despite the recent losses. Akeso, XTALPI and Innovent occupy the biotech space.

• Market Structure Signals Stability: Gold futures have remained range-bound near technical resistance, with intraday volatility compressing—suggesting a market more likely to drift than break.
• ETF and Vault Flows Show Steady Demand: Sustained inflows into the SPDR Gold Trust and consistent London vault holdings point to underlying investor interest, even without aggressive price action.
• Positioning Data Reveals Divergence: Commercial hedgers are easing short exposure while speculative players show mixed sentiment, hinting at a market caught between caution and latent bullishness.

• Private assets, gold, and real estate are recommended for investment to recreate what our parents had financially
• Private credit is reshaping wealth portfolios, with a shift towards insurance companies funding the majority of assets in private credit
• The role of private credit has grown significantly post-financial crisis, with a focus on higher quality, lower risk assets and loans to hard assets such as infrastructure.

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• Copper Bull Case: Electrification and constrained supply support a bullish $10k/t copper outlook, positioning Japan Inc. as a strategic beneficiary of the energy transition.
• Japan Inc. Exposure: ~0.95 Mt attributable output (~63–66% demand) drives ~$6bn EBITDA; SMM and JX Advanced Metals are most leveraged, trading houses offer diversified exposure.
• Growth Optionality: Nittetsu’s Chile projects add near-term growth (2026–28), while Quechua provides long-dated optionality into the 2030s, enhancing Japan’s copper security.

• Legacy systems can’t handle usage-based billing, slowing down product launches
• Metronome allows for quick roll out of new pricing models in minutes
• Guest interview with Liz Truss discussing economic challenges and the need for policy shifts

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• The current and expected deterioration of the underlying fiscal trend is troubling
• But the empirical and theoretical relationships between fiscal variables and longer-term interest rates are complex
• My decomposition of longer-term rates and econometric estimates can potentially add to the available research on this

• Fenix Resources (FEX AU) has secured an exclusive 30-year mining right to the Weld Range Project, which has 290 million tons of resource and will significantly extend Fenix’s mine life.
• Initial plans are to increase production from the Weld Range to 6 million tons, taking Fenix Resources (FEX AU) to a 10-12 million ton production profile. 
• Fenix Resources (FEX AU) has already nearly tripled its production from 1.5 million tonnes to 4.4 million tonnes and trades at a 1.7x price-to-OCF (at a $100/tonne iron ore price). 

• Persistent inflationary pressures pared dovish guidance and pricing for the BoE and ECB, but Fed pricing is stuck.
• Blocking a rare resumption of Fed easing looks unlikely, but history suggests cuts would be shallow and reversed.
• Peer pressure is weak during a policy mistake. The BoE faces domestic problems that prevent further easing.

• Hong Kong Alpha portfolio gained 11.34% in October outperforming its benchmark and HK indexes.  The portfolio’s Sharpe ratio increased to 2.91 and the beta and correlation to its benchmark decreased.
• The Hong Kong Alpha portfolio is generating significant alpha (idiosyncratic) returns since launch, with 40% of returns represented by superior stock selection, with the remaining due to sector weighting.
• At the end of August, we bought Luk Fook Holdings Intl (590 HK) for the portfolio as retail demand for gold products in mainland China increases.

• The timing of Fed Chairman Powell’s apparent dovish pivot at Jackson Hole appears strange due to the large amount of economic data awaiting release before the next policy meeting. 
• The Fed has just revised its long-term policy operating framework that is no longer centred around a zero per cent federal funds rate dominating the economic and financial landscape.
• President Trump’s clash with the Fed has taken a fresh twist with his sacking of Governor Cook due to alleged mortgage fraud, who launched a legal challenge against her dismissal.

• Major agencies now align on a possible consensus: the crude market is entering a phase of structural imbalance.
• Inventory builds and shifting producer strategies are setting the stage for a market environment not seen in years.
• Historical parallels suggest that the coming quarters may test price resilience more than recent memory.

• We remain intermediate-term bullish on equities as global trends point to higher prices in the coming months.
• However, the risks of a bond market tantrum are increasing as global rising inflation expectations threaten the bond market.
• It’s unclear how a bond market tantrum might affect equities. Higher nomination growth and inflation should be equity bullish, but the market’s technical internals call for short-term caution.

• Silver has rallied nearly 40% over the past year, outpacing other precious metals on the back of record industrial demand and renewed investor flows.
• Persistent structural deficits, led by solar PV and EVs, point to a supportive multi-year backdrop even if investment flows remain volatile.
• For Japan, Dowa Holdings’ 30% stake in Los Gatos offers the only meaningful listed exposure to primary silver mining, with earnings leverage that is underappreciated by the market.

• India’s growth projections are still very high compared to both developed and emerging countries, with expectations of Real GDP growth rates of 6.20%, 6.27% and 6.47% from 2025 to 2027.
• Inflation remains below the 2% target of most economies, with QoQ% CPI standing at -1.83% and 0.33% in the first two quarters of 2025, signaling that the inflationary pressures of 2024 are not a threat anymore.
• The latest data regarding the Labor Market, suggest that the unemployment rate is near the lowest point of the last years, standing at 4.03% in the Q4 2024.

• An important and controversial research paper was presented at Jackson Hole, which came to the startling conclusion that “debt could reach 250% of GDP without pushing up interest rates”.
• While there were some holes in its assumptions, the paper offers cover for fiscal authorities to declare that “deficits don’t matter (very much)”.
• The risk is that it provides a license for fiscal authorities to engage in financial repression and force a regime of fiscal dominance, inflation and a falling currency.

• The Euro area economy has lost momentum following strong growth at the start of the year 2025, with recent indicators pointing to subdued activity in Q2.
• Survey data suggest that overall business activity weakened compared to the first quarter of the year despite marginal improvements in June.
• Both Germany and France registered volatile industrial production figures partly driven by temporary factors such as frontloaded exports to the US.

• Iron ore miners lift output guidance, signalling confidence despite China’s property slump and slowing steel demand.
• India emerges as a critical growth driver yet cannot offset China’s structural steel demand weakness.
• Rising supply from Simandou and peers heightens downside risk, keeping the iron ore outlook cautiously bearish.

• A review of recent events/data impacting our investment themes and outlook
• Chinese onshore markets now on a roll- will it continue?
• The fight over critical materials heats up as the rally broadens out

• In this insight, we discuss the sharp capital flight out of Korea into major stocks in the US in the past several years, especially into the MAG7 stocks.
• We provide seven major reasons why Koreans’ investments in the US stocks (especially MAG7) have been surging in the past several years. 
• When will they sell? We provide some clues on this.

• Videos /In Depth: Micro drama platforms knock down paywalls as viewers lose interest
• Energy /: China’s wind and solar power capacity has more than tripled since 2020
• Education /: Top Chinese students forgo elite universities for vocational schools

• President Trump’s attempt to fire Governor Cook, potentially gaining a supportive majority on the Fed, raises the risk that US policy overstimulates the economy.
• Policy peers should not be pressured to mirror mistakes. The ECB faces data that keep accumulating hawkish pressures, but others are more susceptible, like the BOK.
• Non-farm payroll data provide the last hope of blocking a Fed rate cut in September. Meanwhile, a rise in EA inflation to 2.1% should help rule out another ECB rate cut.

• Transitory factors that drove China’s stronger-than-expected growth in the first half of 2025 are starting to fade, with hits to investment and consumption demand imminent in 2H25.  
• But Beijing is in a bind on its policy response: it is rolling out demand-supporting measures but it is also keen to cut excess capacity and enforce public sector frugality.
• The net impact is that economic growth to decelerate significantly in 2H25. More stimulus measures will be dribbled out but its impact will be stymied by conflicting aims and adverse

• A look at Asian markets’ PE relative to future EPS growth and PBV relative to future ROE re-establishes the conclusion that Korea and Philippines are cheap, and India is expensive. 
• Market buoyancy and EPS estimate downgrades have taken Asia-ex- Japan’s and HK/China’s 12-month forward PE to 15-17% higher than long-term average.  So are Korea (6%), Taiwan (21%) and India (26%).
• We’re cautious on India. We’ll watch HK/China’s valuation closely but aren’t too worried about them. Korea’s valuation can expand further. We’ll turn watchful here only after another 10% appreciation.

• June output rises MoM, but sharply lower YoY  
•  Exports declined 17.3%, with glove shipments softening  
• Price volatility intensified, underscoring demand uncertainty

• ECB rate cuts are stimulating a trend rise in lending growth to levels consistent with no change in policy, as the monetary transmission mechanism delivers the easing.
• Activity surveys are less bullish, but reflect stagnant supply-side potential that can’t be fixed by stimulating demand, which would merely stoke the inflation problem.
• Potentially inappropriate Fed easing does not raise peer pressure like fundamental US weakness would. Domestic news dominates and supports our ECB call for no change.

• GST reforms are set to change with centre proposing a two-rate structure of 5 and 18 per cent
• The announcement is aimed at boosting consumption in the mid-long run, curtailing effects of current higher tariffs.
• However, timing is of utmost importance. Any delay or adverse stance on the rollout could have significant ramifications for the overall economy and the festive season.

• China’s planned steel cuts may lift global prices, while India and Southeast Asia’s infrastructure demand sustains robust iron ore consumption.
• Managed money participants trimmed net long exposure to 18.5k lots last week, with overall futures and options open interest slipping by 0.8%.
• Bullish MA crossover and MACD confirm renewed buying interest and strengthen the case for higher near-term price momentum.

• Renewables / Analysis: Chinese renewables firms turn to new markets, models as trade barriers rise
• Wahaha /In Depth: How Wahaha founder’s daughter took control amid a family squabble
• Law /In Depth: China mulls changes to grassroots governance

• Autos / In Depth: Controversial Li Auto video levels spotlight on ‘customized’ crash testing
• AI /Exclusive: NetEase executive explains how AI agents could build a future of virtual teachers
• E-commerce /: Pinduoduo’s growth slows as competition, tariffs hit Temu expansion

• Exports to Indonesia surge 154% MoM in June  
• China drives monthly rubber trade rebound  
• Typhoon Kajiki disrupts supply and pushes up prices  

• A week after the event, it is clear that the Trump/Putin summit presented the latter with a big win at little, if any, cost.
• Donald Trump is unlikely to come up with anything that will bring Mr Putin to the negotiating table in good faith once his latest two-week ‘deadline’ expires.
• Furthermore, Mr Trump remains philosophically inclined to favour Russia, a leaning that probably poses a greater risk to Kyiv than Mr Putin himself does.

• The current neglect on the role played by money supply and the monetary base is, in our view a serious analytical gap
• In a nutshell, we think private money growth – defined as M2 minus monetary base- is right now in a Goldilocks phase. This augurs well for US inflation
• With the Fed inclined to ease rather than tighten, and with inflation shocks likely to prove one-off, risk assets remain supported

• U.S. LNG capacity is set to nearly double by 2028, reinforcing America’s dominance in global energy markets.
• Golden Pass LNG faces major delays due to contractor bankruptcy, highlighting execution risks in megaprojects.
• Most other projects, including Plaquemines, Rio Grande, and Port Arthur LNG, remain on or near schedule.

• Stocks / Cover Story: China’s stock market roars back to life — but can it outrun economic gravity?
• Trade /: China offers Brazil’s coffee-makers a partial escape from U.S. tariffs
• Chips /: AI chipmaker Cambricon inches closer to becoming China’s priciest stock

• Asia’s base oils price-premium to Singapore gasoil holds firm at levels that incentivize refiners to maintain or raise output.
• Firm margins point to still-tight supply-demand fundamentals.
• Margins hold firm even with prospect of rise in surplus base oils supply in Asia in Q3 2025 in response to pick-up in output and slowdown in demand.

• Fed Chair Jerome Powell’s dovish signal at Jackson Hole boosted markets and broke a five-day losing streak
• July Fed minutes showed a hawkish tone regarding inflation risk and reluctance to cut rates, but Powell hinted at possible rate cut in September
• US labor market concerns deepen with rising jobless claims, while housing market shows weakness and retail sales increase 4% in July; Canada to remove half of retaliatory tariffs on US goods

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• Europe Group I brightstock price stays unusually firm relative to light and heavy neutrals so far in Q3 2025.
• Europe Group I brightstock price stays unusually firm versus feedstock vacuum gasoil price so far in Q3 2025.
• Europe Group I export brightstock price maintains steep premium to imported cargo prices in markets like India.

• Global base oils prices hold at levels versus feedstock and competing fuel prices that sustain incentive for refiners to maintain or raise output.
• Margins hold firm even at time of year when surplus supply typically starts to build amid seasonal slowdown in demand.
• Firm margins could point to supply-demand fundamentals that are tighter than usual for time of year.

• US base oils demand likely to stay cautious in face of healthy availability of supply and lower crude/diesel prices.
• Weaker fundamentals and lower feedstock prices increase exposure to risk of drop in outright prices.
• Recent drop in Group I/Group II domestic prices could ease some of the downward price-pressure.

• The S&P GSCI (GSG) and Bloomberg Commodity Index (BCOM ETF) are the two key benchmarks for commodity investing, but both track futures contracts, not spot prices.
• Over 10 years, spot oil, copper, and gold rose strongly, yet these indices delivered flat to negative returns due to roll yield drag, rebalancing, and higher fees.
• They work best as tactical inflation hedges — GSCI for high-beta oil exposure, BCOM for more diversified commodity exposure — not as long-term compounding assets.

• South Asian Monsoon to be active till Sept-end, may disrupt supply  
•  Indian production to improve next month, can pressure prices  
• Cambodia, Laos equipped to forecast floods five days in advance

• Despite the growing chorus of comparisons, the backdrop to the late 1990s equity bubble was fundamentally different from the current environment, notably in the manner of Fed policy conduct.
• During the late 1990s, Fed policy conduct was characterised by pivots, particularly after the Asian financial crisis and bailout of Long Term Capital Management, helping to prolong the equity bubble.
• Forward P/E multiples on US equities were more elevated in the late 1990s compared with current levels. Valuations have been more volatile in the current cycle, courtesy of Fed policy. 

• Dollar undervaluation has closed in the past three months, but institutional Fed credibility news has not had a durable effect on the price.
• Concerns about exceptionalism in US equity market strength potentially pushing the dollar higher are countered by better growth not being US exclusive and the impact of inflation on currency.
• Despite large inflows into US equities in June, the dollar fell substantially, raising questions about the relationship between flows and dollar strength.

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• Near the end of the earnings reporting season, our earnings estimate tracker identified 11 robust earnings estimate gainers – with consensus EPS estimates up across 3-month and 6-month time horizons.
• Onshore China communications and financials, HK technology, Korean and Singapore financials are the prominent “winner” sectors. Five other ASEAN sectors also figure on the list. 
• Earlier, in June, we detected 16 “consistent winner” market-sectors. The earnings environment has deteriorated slightly. Of the prominent stocks, Tencent, Hana Financials and DBS Group figure in our Model Portfolio.

This Week’s Key Take Aways

• Lithium stock run may already be out of steam
• Like Oil, the Natural Gas markets appear well supplied and are showing near-term weakness.
• No love for North American lumber
• Copper continues to have us on edge, love the long-term story, but we have got to survive the short and medium term to get there.
• Renewable tax credit qualification has a new physical work standard; the race is on to build.

• Asia’s base oils demand likely to stay cautious even with round of stock-replenishment in coming weeks.
• Asia’s lube demand likely to rise over coming months after bottoming out in month of August.
• Lower demand in August likely triggers pick-up in surplus supplies in Asia-Pacific region.

• Following the recent COMEX-LME trade fiasco and the underwhelming TSF data, copper’s market sentiment was positively influenced by Fed Chairman Jerome Powell’s indication of a potential rate cut next month.
• We anticipate that this development could drive copper prices on the LME above $10,000 USD/ton in the near term, before a subsequent reassertion of fundamental factors.
• Earlier, there was downward pressure on copper prices due to China’s softening economic performance and the rising levels of inventory in the market.

• How should investors judge Trumponomics?  The question isn’t whether tariffs or anti-immigration policies should be imposed, but to judge their long run effects on growth, inflation and productivity.
• While it’s too early to render a full judgment of Trumponomics and his policies, it may be a case of short-term pain for long-term gain.
• The preliminary report card is mostly a case of pain and not gain.

• Critical Minerals Outside of China Will Command A Strategic Premium
• As risk appetite in the mining sector increases, the biggest gains will be in the junior miners and exploration companies
• We highlight eight companies as a basket of such miners which should benefit from these trends

• Founder of the DeFi Report and Web3 Strategist, NATO, shares his journey, advice for innovators, and trends shaping asset tokenization, venture capital, and AI convergence.
• Inflation report and Fed’s monetary policy decision discussed, with core inflation increasing 3.1% year over year and market pricing in a 92% chance of a rate cut in September.
• Summary of market performance, with crude falling, value rally in US equities, and Ray Dalio’s recommendation to invest in non US equities in local currency.

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• This is a follow-up on our insight from 2 weeks ago, Iron Ore: Pullback From 102 USD/Ton to 95 USD/Ton, where we estimated a pullback on the iron ore price. 
• With mill margins retreating into negative territory and TSF numbers (although healthy) coming far below street expectations, the stage is set for iron ore to retreat to 95 USD/ton. 
• Despite iron ore prices retreating to the 95 USD/ton level, we like Fenix Resources (FEX AU)(Read: Fenix Resources Tripling of Production Achieved, 1.2x Price/OCF ).

• The evidential hurdle formally shifted in support of a Fed rate cut in September. Still, the data may yet discourage it, or embolden the market to price it as mistaken.
• Flash PMIs broadly reinforced the resilience narrative, while another upside UK inflation surprise sets the BoE up to resist cutting amid persistently excessive expectations.
• A quieter, bank holiday-shortened week leaves the BOK and BSP decisions as monetary policy highlights. Euro area M3 and some national flash HICP prints are our data focus.

• Euro area core inflation may slip to 2.1% in August and stay there in September, with pressure likely coming later in the fourth quarter from wages and goods inflation.
• Headline inflation in the Euro area is forecasted to fall to 1.8% in the fourth quarter of 2025, with core inflation at 2.1% and further declines expected by the end of 2026.
• UK headline inflation is expected to rise to 4% CPI in September before moderating, with front end UK inflation breakevens declining but offering value at these levels.

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• Logistics /In Depth: Digital scammers find analog opportunity exploiting delivery rules
• Default /In Depth: The mystery behind a teetering Chinese private-sector titan
• Food delivery /: Didi and Meituan clash in Brazil as food delivery battle goes to court