Macro

• Iron ore drops on Tangshan curbs, but stable hot metal output underpins near-term price support. 
• Managed money participants remain net long in iron ore, but softer buying momentum signalled profit-taking.  
• Mean reversion and bullish MA crossover signal upside potential for the 62%/65% spread. 

• Markets feel frothy right now – sentiment’s euphoric, valuations are near the ceiling – but trying to call the exact top is usually a losing game. 
• It may be tempting to short the market, but the smarter move is to use efficient, asymmetric hedges: trades that don’t cost but pay out big when things crack.
• Right now, these hedges’ prospects are unusually attractive: risks are stacked high, but insurance – volatility – is still relatively cheap

• As the earnings reporting season nears completion, our EPS estimate tracker reveals a downgrade to Asian EPS. AxJ EPS declined only 0.5%-0.8%. But several constituent markets’ EPS declined much more.
• Asian EPS estimates were supported by China and somewhat surprisingly, Thailand. Indian estimates continued to decline. Even Korea and Taiwan, the recent earnings outperformers, were downgraded during this season. 
• Unlike Asia, US EPS estimates rose during this season. Japan’s and Europe’s declined. In a subsequent note we shall track the estimates of all the sectors in each Asian Market.

• The first full-year budget of the Prabowo government envisions continued adherence to the country’s strict fiscal rules. 
• The fiscal assumptions on growth, revenue, and expenditures, however, are far from conservative. This exerts risks to the fiscal consolidation path. 
• A medium-term goal of balancing the budget by 2028 is unattainable given the government’s spending commitments and headwinds to the economy.

• Asian economies remain resilient in H1 2025, though global weakness and tariffs could pressure exports in the second half.

• Current market strength echoes 2007, masking underlying US and European economic softness with risks of a sharp reversal.

• China’s headline data looks soft, but domestic demand, liquidity, and appliance sales suggest resilience despite persistent property sector weakness.

• Bridgestone reshapes carbon black strategy with Tokai Carbon  
• Hanwa invests in Thai tyre pyrolysis venture  
• Sri Trang bets on AI and workforce upskilling

• Jobs /In Depth: Coding jobs no longer sure thing for U.S.-educated Chinese
• Commodity/: Hong Kong joins LME’s global delivery system with eight certified warehouses
• Delivery /: Couriers hike prices in face of toxic competition crackdown

• Another upside surprise in UK CPI inflation extended the accumulated drift to 1.3pp over the past year, yet was only 0.2pp above our old call.
• This outcome matched the BoE’s latest call, with airfares driving the rise, and median pressures holding slightly above a target-consistent pace, so there is less policy impact.
• The MPC was finely balanced in its support for August’s cut, and this rise will not lead dissenters to support past action, let alone another cut, which we still doubt occurs.

• Inflation’s surprise stickiness at 2% was confirmed in the Euro area’s final print, with pressures broad based and slightly above a target-consistent pace in most countries.
• There has been little progress in inflation’s latent trend or our persistence-weighted measure, despite the Euro’s substantial and sustained appreciation.
• Without dovish second-round effects, the ECB can look through a potential slowing in headline inflation to a tight labour market and persistent pressures, then not cut rates.

• India’s $101B trade deficit with China highlights strategic economic vulnerabilities across key sectors.
• Regulatory barriers since April 2020 sharply limited Chinese FDI, leading to negligible investments and shelved deals.
• India’s import dependency is profound, spanning pharmaceuticals, electronics, chemicals, and railway components, exposing multiple strategic sectors to supply risks.

• Democratic Party lawmaker Kim Hyun-jung has introduced a revised Income Tax Act that would lower the top tax rate on dividend income from 35% to 25%.
• Given that this proposal is coming from the ruling Democratic Party, there is a fairly high probability that this could be passed into law in 3Q 2025.
• We provide a list of 28 mid-cap/large cap stocks in Korea with more than 35% dividend payout and 3% or more dividend yield that could benefit from this new proposal.

• Bank Indonesia’s surprise 25bps cut to 5.00% signals proactive easing amid subdued inflation and global uncertainty.
• The Rupiah’s strength and solid capital inflows provide policy space to support domestic growth despite external risks.
• Further cuts are likely this year, contingent on exchange rate stability, fiscal support, and global economic developments.

• EVs / In Depth: Li Auto pins its all-electric hopes on new SUV
• Corruption /Exclusive: Ex-IPO regulator found with up to 300 million yuan in cash
• Exports /China’s ‘New Three’ exports power ahead, but trade with U.S. slumps

• The RBNZ cut the OCR to 3% in August, matching consensus expectations amid stalled growth and stable medium-term inflation.
• This decision was split, with a minority favouring a larger cut. Further reductions to 2.5% are likely unless inflation surprises persist.
• Weak household demand and global uncertainty may extend the easing cycle, making future rate policy highly data-dependent.

• The Riksbank held its rate at 2% while seeing above-target summer inflation as temporary.
• Weak growth and a fragile labour market sustain rate-cut probability later in 2025.
• The policy outlook hinges on fading inflation pressures, demand recovery, and global risks.

• The Mexican government announced a 25% tariff on footwear imports from countries without a trade agreement, aiming to curb unfair competition and protect the domestic industry.
• The measure responds to complaints from the sector regarding the misuse of the Manufacturing, Maquiladora and Export Services Industry Program (IMMEX), created to import raw materials or semi-finished products without paying tariffs or taxes, process them in Mexico, and then export them.
• However, according to the Ministry of Economy, in some cases the program has been used to bring finished footwear into the country and sell it in the domestic market.

• We expect inflation for the first half of August to stand at 0.08% bw, which would represent an increase in the annual rate from 3.48% to 3.59%.
• Typically, inflation for this fortnight stands at 0.19% bw.
• Our lower estimate is explained by a -1.10% bw decrease in livestock products, compared to the historical -0.27% bw. 

• Key Trends: Precious metals, cobalt, and rare earths sustain leadership, while uranium equities face a short-term correction despite strong structural drivers.
• Key Idea: Markets reward miners with policy support, scale, and cost efficiency, while penalizing those exposed to cyclical weakness or geopolitical uncertainty.
• Key News: China tightened rare earth quotas, India moved forward on steel safeguard duties, and uranium equities corrected even as nuclear fundamentals remain robust

• An end to the Euro’s bullish trend is now revealed to have coincided with a reversal of two critical supports. Frontloaded export levels have normalised without payback.
• International portfolio investment into the EA during April fully unwound between May and June, revealing no investor appetite to hold higher allocations to EA assets.
• The Euro is not benefiting from a structural shift towards it, so we doubt the bullish trend will resume. Belated payback in goods inventories could also eventually weigh.

• After buying Asian equities for three months, FIIs sold Asia in the three weeks of August: notably India (-$2.53bn) and Korea (-$298m). Taiwan (+1.6bn) was the only large market bought.
• It’s too early to call a trend change. Our FII gauge of 6-month cumulative buying as percentage of the market’s capitalization indicates that most markets are neither overbought nor oversold.
• Even though FIIs have bought the large Asian markets lately, none of them are overbought. Taiwan’s FII gauge is relatively closer to the upper limit. Indonesia is unequivocally oversold.

• Welfare / Cover Story: China’s top court reaffirms worker rights in social insurance disputes
• Bonds: /Overseas investors drawn to stability of Chinese bonds
• EVs /: XPeng’s EV tech to power Volkswagen’s gas and hybrid lineup in China

• US base oils demand likely to stay lower as seasonally-slower consumption adds to caution about outlook.
• Expectations of healthy availability of supply give buyers flexibility to maintain lower stocks and top up with smaller volumes more frequently.
• Lower crude oil prices could add to downward pressure on prices that already face pressure from weaker fundamentals and lower export prices.

• Global base oils prices hold firm or rise vs feedstock/competing fuel prices.
• Base oils margins hold firm at time of year when supply-demand fundamentals are typically weaker.
• Firm base oils margins instead point to stronger-than-usual fundamentals for time of year.

• US Group II domestic base oils price-premium to feedstock prices holds steady in narrow range, even if down from year-earlier levels.
• Steady margins could get additional support from any further drop in crude oil prices.
• Steadier margins curb incentive for refiners to trim output.

• Asia’s heavy-grade base oils price-premium to Singapore gasoil holds firm, especially for Group I base oils.
• Group II heavy-grade margins stay high despite lower outright prices.
• High margins point to supply-demand fundamentals that are sufficiently strong to incentivize refiners to maintain high output.

• US Group II base oils export prices weaken versus FOB Asia Group II prices in Q3 2025.
• Prices weaken at time of year when FOB Asia Group II prices typically fall versus US prices.
• Asia prices typically fall to help to avoid or to clear surplus volumes at time of year when regional demand faces seasonal slowdown.

• The upwards trend in consensus inflation forecasts reflects persistent excess effective expectations supporting wages amid policymakers’ failure to re-anchor at the target.
• Easing on the assumption of success predictably negated the required conditions, so we forecasted the problem. Nonetheless, expectations were also stickier than we assumed.
• Without renewed progress, wage growth should keep trending above the BoE’s forecast, discouraging further rate cuts. Hikes may even be needed in 2026 to break excesses.

• revised Fed call expects easing in September with four consecutive cuts
• ECB in data watching mode, final cut expected in October
• Sweden may see lower growth due to trade war impact, inflation to decrease in the autumn, risk of falling below 2% next year. Norway has solid growth outlook, inflation above two and a half percent, minimal exposure to trade war.

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• Dollar index has been consolidating for the last two months, leading to uncertainty
• Conditions for dollar bearishness still intact, with US real yields heading lower and growth slowing down
• Potential catalysts for dollar weakness include Fed capitulation to dovish side or Russia Ukraine resolution impacting energy prices and trade relations.

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• President Trump has broken with tradition by searching for new Fed leadership well ahead of Chairman Powell’s term expiration next May. Two new possible contenders have emerged as potential successors. 
• US growth seems respectable in Q3. Chairman Powell’s assessment of the labour market is being questioned.  A 25 basis point reduction in the Fed’s policy rate is expected in September. 
• US corporate profit growth has been respectable during 2025 H1, but tougher year-ago comparisons suggest more moderate growth in H2.  European profit growth is expected to be good in 2026. 

• The company has been able to lower costs significantly by 12% YoY, improve on its byproduct credits by 37%YoY due to gold prices increasing, while copper prices rose 3.5% YoY.
• Production for H1FY25 rose 10% YoY, led by a ramp-up in Centinala, resulting in EBITDA/profit improving by 60% YoY. 
• While the stock trades at 25x FY25e P/E, we believe that the runway for earnings improvement is enormous as the company ramps up its volumes and manages costs.

• Asia’s base oils demand could get support from pick-up in requirements for replenishment volumes to meet seasonal rise in consumption during final weeks of Q3.
• Simultaneous rise in requirements throughout Asia-Pacific region could magnify pick-up in demand and competition for supplies.
• Blenders’ relatively lower stocks would add to need for additional supplies.

• The S&P 500 advanced to an all-time high based on narrow leadership by large-cap technology stocks.
• RSI readings are overbought, and while it’s possible the market continues to advance on a series of “good overbought” readings, a series of negative divergences call for short-term caution.
• Our base case calls for a short-term pullback or consolidation but no major intermediate-term top.

• Fenix Resources (FEX AU) commenced operations of its third mine, the Beebyn-W11, with the shipment of 60k tons from the port of Geraldton.
• Beebyn-W11, Fenix’s third operating mine in the Midwest, is now operating at the planned FY26 production rate of 1.5 million tonnes per annum (Mtpa).
• As a result, Fenix is now mining, hauling, loading and shipping at a combined run rate of more than 4Mtpa from the Company’s three mines. 

• Rapid decline in Asian inflation is opening up space for central banks to cut rates further. India’s real policy rate is almost at record high and so’s China’s.
• Fiscal space exists in economies with low public debt and low fiscal deficit – Korea, Indonesia, Thailand. China and India have implemented and articulated fiscal expansion intentions.
• Monetary policy easing supports consumption/investments through lower cost of capital and drives funds into risk assets. In last twenty years, rate cut episodes in Asia unfailingly led to equity booms.

• Trump’s pressure for a rate cut from the Federal Reserve is growing.
• The market consensus view settled at a total of two cuts in 2025, which may be regarded as overly dovish.
• Regardless of whether the Fed cuts rates in September, the big picture for investors is a trend toward financial repression. Investors should prepare accordingly.

• After a strong showing in the first quarter of 2025, the Indian economy is likely to see growth normalise. Key drivers of demand are showing mixed performance.
• Across consumption and investment, performance remains uneven across key sectors, leading to signs of softening momentum based on non-GDP demand indicators. 
• Trump’s latest tariff threat against India poses tough questions on the long-term outlook. With its “China+1” strategy in doubt, the economy needs a new playbook to fortify growth.

• Lauren is a bilingual expert in traditional investments and Bitcoin
• Institutions are moving into Bitcoin and exploring UTXO management
• Markets are experiencing unprecedented moves, with Bitcoin and gold leading the way

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• The prospect of jumbo US rate cuts is juicing asset markets
• Overseas Capital is starting to move into domestic Chinese equities
• The Precious metals ETFs are breaking out -looking at laggards

• The Hong Kong Alpha portfolio outperformed its benchmark and all Hong Kong indexes in July.  The portfolio achieved these results while increasing its Sharpe ratio and reducing beta and volatility.
• The shift to the healthcare and materials sectors since Liberation Day in April has aided the portfolio’s performance.  The consumer staples sector lost momentum, and we exited some positions there.
• The HSI now trades above its long-term resistance levels for the first time since 2022.  This signals a good time to rotate back into market leaders in tech.

• Chinese veteran investment banker taken away by graft-busters
• Ding Wei, a former chairman of investment banking giant China International Capital Corp. Ltd.’s (CICC) private equity subsidiary, has been taken away by Chinese graft-busters, Caixin has learned from sources with knowledge of this matter.
• An Yuan, an executive at the subsidiary, CICC Capital Operation Co. Ltd., has also been unreachable recently, the sources said.

• As soon as a data point calms nerves around a theme, a hawkish challenge seems to appear. This week, that was US CPI into PPI and UK unemployment into GDP.
• A bias to ease, triggered by a one-touch round of bad news, has consequences when not sustained. The BoE’s early start to its easing cycle has proved to be a policy mistake.
• Next week is a prime opportunity for Chair Powell to calm dovish excitement about Fed easing. UK inflation seems set to rise by another tenth, while the EA rate sticks at 2%.

• June’s remarkable rebound compounded the resilience revealed by April’s upwards revision, which also broke flimsy fundamental stories blaming tariffs for a slowdown.
• IP no longer declined in April, but the broader growth profile still matches the residual seasonality that spuriously drives GDP dynamics in our forecast. H2 will be weaker.
• The BoE discounts headline GDP volatility without blaming seasonality, so another surprisingly strong quarter will be hard for hawks to ignore, reducing the rate cut risk.

• China’s July lending drop signals weak private sector appetite, while severe weather hampers outdoor construction.  
• Managed money participants trimmed net long futures exposure amid rising prices, signalling profit-taking.
• Bullish momentum has faded as prices dip below key moving averages and MACD signals growing seller control in the market. 

• On July 25, Jinzhou Port Co. Ltd. became the first port operator to be kicked off a Chinese mainland stock exchange.

• The delisting came after the securities watchdog determined the company had fabricated more than 8.6 billion yuan ($1.2 billion) in revenue and nearly 180 million yuan in profit between 2018 and 2021.

• On its last A-share trading day, Jinzhou Port’s market value stood at 1.26 billion yuan, a staggering 80% collapse since the China Securities Regulatory Commission (CSRC) started investigating the company in late 2023.

• Thailand cuts rates to 1.5% amid weak loan growth, but structural reforms and confidence restoration are needed for lasting recovery.

• China’s strong money supply growth counters deflation concerns, though policy risks from propping up inefficient firms remain.

• US policy noise and tariffs push India toward renewed trade ties with China, hinting at a possible “Chindiya” bloc revival.

• Norges Bank unsurprisingly held rates at 4.25% as expected, maintaining a restrictive stance while inflation persists above 2% target.
• The central bank signals 1-2 more cuts as likely in 2025 if the economy evolves as projected, with a September reduction widely anticipated by markets.
• Trade policy uncertainty and sticky services inflation create upside risks, but the gradual normalisation path remains intact barring shocks.

• Inflation expectations have been persistently too high, while productivity trends poorly, driving wage and price inflation forecasts to grind higher in recent years.
• The BoE’s cutting cycle contributed to reversing the trend decline in expectations, and in turning a slight overshoot into a massive one, with a 3.2pp revision since Feb-23.
• We forecasted this excess for these reasons, so it was predictable and therefore a policy mistake to cut so soon. Further surprise should prevent the MPC from cutting again.

• With CPI inflation at 2.7%YoY in Jun-Jul’25, and PCE inflation at 2.6% in June, a belated rate cut is highly probable at the next FOMC meeting in Sep’25. 
• Declining oil prices (-9.5%YoY in Jul’25) were a major factor enabling headline inflation to stay well-contained, alongside mild M2 growth (just +4.7%YoY as of Jun’25). 
• Base effects will cease to be helpful after Oct’25, as oil prices had declined from Nov’24. Tariffs pushing headline PCE inflation toward 3%YoY will preclude further rate cuts.  

• In this insight, we review the relative performances of the 11 Korea Small Cap Gem series published so far in 2025 (as of 13 August).
• We also argue how small caps could be one of the important indicators in the Korean stock market. 
• These 11 stocks are up on average 32.9% (from date of the Korea Small Cap Gem series publication to 13 August 2025).These 11 stocks have significantly outperformed KOSPI and KOSDAQ. 

• Asia’s heavy-grade base oils price-premium to Singapore gasoil holds firm in narrow range, even if down from highs in Q2 2025.
• Firm premium sustains incentive for refiners to maintain high output of heavy grades even amid signs of rise in surplus supply.
• FOB Asia Group II heavy-grade price discount to CFR UAE prices rises to highest in more than a year.

• US Group II light-grade export-price premium to vacuum gasoil holds close to lows in Q1 2025.
• Lower base oils margins and drop in outright export prices suggest recent tightness of light-grade supplies is easing.
• Drop in export prices facilitates removal of any such surplus volumes, keeping fundamentals balanced for longer in domestic market.

• Global base oils margins stay more mixed but mostly hold at levels that sustain incentive for refiners to maintain firm output of the lubricants feedstock.
• Fob Asia light-grade base oils price-premium to Singapore gasoil extends rise, while heavy-grades stay more rangebound.
• FOB Asia Group II light-grade price-premium to gasoil rises to highest since H1 June 2025.

• US Group III 4cSt base oils price-premium to Group II light grades falls at end-July for first time in three months, before extending dip in August 2025.
• Asia’s Group III 4cSt (low) price-premium to Group II light grades starts trending lower from late-June 2025.
• Europe Group III 4cSt (low) price-premium to Group I and Group II light grades continues to edge higher after protracted slump since early-2023.

• Asia’s base oils demand could get support from moves to replenish stocks that were more balanced than expected at start of Q3 2025.
• Blenders could be targeting additional supplies to cover seasonal rise in consumption in final weeks of Q3 2025.
• Stocks could be more balanced than expected because of unusually strong rise in demand at end-Q2 2025.

• US base oils demand likely to stay muted.
• Expectations of growing surplus supplies boost attraction of maintaining lower stocks and procuring smaller top-up volumes more frequently.
• Buyers could seek to maintain sufficient volumes to cover any supply-disruptions as market heads into time of year when Atlantic hurricane activity typically peaks.

• July’s US inflation print reversed all of the increase built in from tariffs over the past several months, despite matching expectations prevailing into the release.
• Core goods inflation eased slightly, suggesting ongoing corporate success in avoiding the tariff shock. But service inflation is stuck too high to be consistent with the target.
• Anti-avoidance measures and belated pass-through will drive further rises. We doubt they will be as severe as many fear, yet still not create much space to cut rates.

• Unemployment broke a four-month streak of increases at 4.66%, with favourable cohort effects risking a fall soon. Payrolls may also be revised to grow again from July.
• The structural hit from tax increases is matched by the cumulative fall in payrolls so far. Fundamental explanations for its divergence from the LFS aren’t supported yet.
• Ongoing resilience in wage growth stokes unit labour cost pressures alongside taxes that are beyond the target. We still expect the MPC to resist cutting rates again.

• Analyzing Asian markets’ long term return cyclicality, we notice that the durations of upcycles and downcycles vary across markets. Within the same market, often the upcycle and downcycle durations differ.
• We conclude that in Q4 2025, Korea, Taiwan and Philippines are likely to move up. Hong Kong, India, Indonesia, Thailand and Singapore seem likely to decline.
• An obvious caveat is: this method of predicting returns involves purely pattern recognition, not fundamental reasoning. While the markets mostly adhere to the observed patterns, they don’t always do so.

• Trump’s tariff-by-tweet tactics are pushing global trade into perpetual uncertainty
• President Donald Trump’s trade policy has entered a new, chaotic phase, where structured negotiations give way to abrupt threats and legally nonbinding agreements that have left global commerce in a state of constant tension.
• After several delays, Trump’s “reciprocal tariffs” took effect on Aug. 7

• Headline CPI inflation eased to 1.55%YoY in Jul’25, implying that the real repo rate was +3.95%, the highest in 6.5 years (and versus +2.19% in Jan’25 before rate cutting began). 
• The RBI is behind the curve, and will need to cut the repo rate another 75bp by Dec’25 in order to adhere to its 2-6% inflation target. 
• Vegetable and food deflation will persist until Oct’25, thereby ensuring 2.8% average CPI inflation in FY26. Countering Trump tariffs with faster INR depreciation also argues for steady rate cuts. 

• It was reported today that the new South Korean President Lee Jae-Myung will meet US President Trump on 25 August in Washington DC.
• In this insight, we discuss in particular how the meeting between Lee and Trump could lead to some outperformance of the North Korean economic reconciliation stocks. 
• We provide a list of 10 South Korean companies that are beneficiaries of increased economic reconciliation with North Korea. These 10 stocks are up on average 109% YTD. 

• In June, industrial activity registered a slight contraction of -0.1% MoM, breaking the growth streak of April and May.
• The manufacturing sector showed resilience, while construction remained stable.
• The observed figure came in below our estimate of 0.3% MoM and the 0.2% MoM expected by the consensus. 

• The RBA cut rates by 25bp to 3.60%, as expected, in the third reduction of 2025, with unanimous board support following July’s surprise 6-3 hold pending inflation data.
• The central bank downgraded its productivity growth assumption to 0.7% from 1.0%, lowering medium-term GDP forecasts and signalling structural economic challenges ahead.
• The Governor signals that a “couple more” cuts are likely, with the cash rate path expected around 3.0% by 2026, while maintaining a data-dependent approach to future policy decisions.