Macro

• In stark contrast to its dealings with other trade partners, Washington is firmly in the position of supplicant in its dealings with Beijing.
• This reflects not only Xi Jinping’s carefully prepared and strong hand but also Donald Trump’s seeming determination to strike a deal with China at more or less any cost.
• Increasingly, therefore, Taiwan stands to be “a pawn in a bigger game”.

• Despite the inaction by the Fed during 2025, policy easing by foreign central banks has produced a supportive global liquidity backdrop for risky assets.
• During 2025, sovereign bond yields in advanced economies have been rising by varying degrees in advanced economies due to a higher term premium being demanded by bond investors. 
• Liquidity conditions in the US financial system are being increasingly influenced by fiscal policy conduct due to the rise of collateral-backed lending underpinned by Treasury securities.

• FAO’s meat price index hit a new all-time high of 127.3 points, up 1.2% from its previous peak in June, as strong import demand from China and the United States boosted beef and sheep meat prices, the agency said.
• U.S. beef imports have climbed after drought led to a decline in the domestic cattle herd.
• Looking at the latest futures prices, live cattle, feeder cattle and even lean hogs remain in a strong uptrend with a significant backwardation remaining within the forward curve.

• We remain long-term bullish on equities. In the short run, realized volatility declined since the “Liberation Day” panic, but conditions are setting up for a near-term volatility spike.
• Uncertainty over Fed policy and government credibility are possible catalysts for a disorderly increase in volatility and market correction.
• As well, the signs of narrow leadership, weak breadth and stretched risk sentiment elevates the risks of a pullback.

• We believe global equity investors should adopt a barbell strategy of overweighting U.S. large cap growth and non-U.S. value stocks in their global equity portfolios
• The trend is your friend: Both are undergoing multi-year uptrends in relative performance.
• The key question is the length and sustainability of U.S. AI leadership. 

• By restricting the announcement of a 50% tariff on copper pipes/wiring and leaving out ores, concentrates, and cathodes, the Trump administration destroyed the COMEX-LME spread in one fell swoop. 
• COMEX prices have plunged, and the spread now is 150 USD/ton from the highs of almost 3000 USD/ton, with high inventories on the COMEX probably needing to be dumped. 
• Short term copper prices may face pressure, but we see an excellent outlook for the longer term, given the elevated China copper imports, which rose 18% YoY in July. 

• Following our bullish call on iron ore, Iron Ore: Small Bounce to 100 USD/Ton On Oversold Levels, we are now less excited on iron ore and see it drift lower. 
• We expected iron ore to test the lower-end of the long-term band of 95-110 USD/ton (vs current spot of 102 USD/ton).
• While iron ore inventories/stocks at ports drift lower, mill margins have capped out and are not rising any further, leading us to call for a short-term decline in ore prices.

• Discussion between Jonathan, CEO of Tradesmen Collective, and Ed, Director of Investor Relations, on tech startups and market trends
• TTC USA’s integrated platform addresses industry inefficiencies with cutting edge software, escrow services, and legal support
• Insight on leading assets like gold, Bitcoin, and Nvidia; mentions of success stories like MicroStrategy integrating Bitcoin and Nvidia integrating software for business growth

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• China’s July steel exports hit highest year-to-date level since 1990, and S&P affirms A+ rating despite property and trade challenges. 
• Managed money participants turned net long in futures after prolonged bearishness, adding positions as prices neared the $100/ton mark. 
• Despite a recent death cross, prices remain firm above short-term MA, nearing bullish crossover, with Bollinger Bands signalling resilience and upside potential. 

• In this insight, we discuss the potential alpha generation from new entries (2025) in the “KOSDAQ Rising Stars.”
• On 7 August 2024, KRX provided a list of 22 KOSDAQ Rising Stars companies (including 15 existing ones and 7 new companies).
• The 7 new KOSDAQ Rising Stars include ST Pharm, Next Bio Medical, Solid, Inc, SEMCNS, DE&T, Truen, and Union Biometrics. 

• The BoE Governor overruled his Chief Economist and Deputy Governor to deliver a rate cut, while Donald Trump appointed a dovish patsy in the hope of achieving the same.
• Whether poor payrolls presage a flow of data that breaks our resilience narrative is more important to the policy outlook. Europe stayed strong, with a retail rebound.
• UK unemployment (4.3%), GDP (0.1% q-o-q) and US inflation are the data highlights next week, with the RBA (cut) and the Norges Bank (unchanged) holding the policy ropes.

• Solar / In Depth: Despite market rally, doubts cloud China’s plan to end solar glut
• Rating /In Depth: China’s scandal-hit credit ratings industry seeks a new beginning
• Vanke /State shareholder throws Vanke new lifeline as $2 billion debt payments loom

• Of the 12 regional economies tracked, only 4 are above the 50 PMI boom-bust line: India (59) continues to lead. Vietnam, Philippines, and Thailand also remain in expansion territory.

• Indonesia reported 5.1% growth—no surprise. It’s the same figure (rounded) they’ve reported nearly every quarter over the past decade, barring COVID. It raises credibility questions.

• Tariff announcements expected this week remain vague, especially concerning China.

• Four MPC members refused to back the rate cut in August, and only one favoured a 50bp cut, but he was forced to vote for a 25bp cut to break the balanced 4:4 split.
• The group favouring a slower pace of easing may have expanded from 5:4 to 6:3, raising the hurdle to another cut. Four don’t even support the prevailing level.
• Inflation forecast revisions keep trending the profile higher. Rolling resilience in the broader data should keep the BoE on hold in November and beyond, like the ECB.

• Banks / In Depth: Why China’s banks are hunting for fortunes stashed abroad
• Quant /Exclusive: DeepSeek-linked quant fund caught up in kickback scandal
• Lending /: Banks gear up for Beijing’s subsidized lending campaign

• The July jobs figure, routine revisions to prior months and the abrupt removal of the BLS commissioner made headlines for various reasons
• The data from the payroll or establishment survey seems to convey a more dour cyclical signal
• But the overall US labor market information from various sources implies more intricate interactions at this time

• Inflation in the second half of July stood at 0.07% biweekly, which allowed the annual rate to decline to 3.48%. This movement is mainly attributed to a base effect.
• For this period, market consensus was at 0.10% biweekly, and our estimate was 0.11% biweekly.
• The observed figure was lower than expected due to reduced pressures in both core and non-core components. Each of these contributed 2 basis points to our forecast error.

• Our analysis of quarterly returns of each Asian market and each of the sectors within them shows clear cyclical patterns of performance, driven, we believe, by market/sector rotation by investors.
• These cyclical patterns indicate that in the near-term, investors could rotate out of onshore China, India, Singapore, Indonesia and Thailand and rotate into Hong Kong, Korea, Malaysia and Philippines.
• Korean Technology, Financials and Industrials, Hong Kong Energy, Communications and Technology Services, and Malaysian and Philippines Industrial Services are the secularly outperforming sectors among these likely beneficiary sectors.  

• The international developer, manufacturer and distributor of high quality and effective rapid tests, wins a new Master Service Agreement (MSA) contract.
• The expected value is around $2.5m and is with a global pharmaceutical company for the development and regulatory approval of a companion diagnostic lateral flow point of care test.
• The project is expected to take approximately 24 months and covers the feasibility, optimisation, scale-up, technical transfer and manufacturing of the completed product alongside comprehensive regulatory support. 

• New newsletter format called “The Briefing” provides quick market synopsis and company information, also available in podcast form on speedwellmemos.com
• Recent market events include S&P 500 reaching all-time high before job report and new tariffs cause market to drop, Fed considering rate cut in response to softening economy
• President Trump criticizes Fed Chair Powell for not lowering rates, Powell cautious on rate cuts to avoid inflation, history of rate mistakes highlighted

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• Consumers need to drive activity growth as tariffs and Euro strength harm export competitiveness. Reassuringly, retail sales returned to their trend after a trimmed fall.
• Growth was broad across countries and categories, taking the annual pace 0.5pp above consensus expectations. Non-food retail is critical and the strongest of them all.
• Surveys are gloomier, especially about the future, but rarely right. Resilient real wage and employment growth can sustain brisk retail trends, preserving economic expansion.

• A closer look at MOSF’s Tax Reform Plan for dividends suggests that it may not have a material impact on most listed companies unless the National Assembly drastically improves it.
• According to MOSF, it currently estimates that approximately 350 of the 2,500 listed companies, or 14%, could meet these requirements (two main dividend tax reduction requirements). 
• We provide a list of 70 companies in the Korean stock market with 40% or higher dividend payouts (excluding companies with smaller market caps). 

• Only one of our non-consensus macro calls are not working and eight of eleven markets are moving our directions. 
• Our latest business cycle indicator assessment points to a better second half. 
• 2025 Investment Strategy maintained. We are overweight equities and underweight government bonds.

• The economy remained stagnant in May due to an unexpected contraction in some services.
• In the second half of the year, we continue to expect a heterogeneous performance across industries, which will result in low economic growth in 2025.
• Monthly GDP showed a 0.01% month-over-month (MoM) increase, falling short of INEGI’s preliminary estimate (0.3% MoM), the market consensus (0.20% MoM), and our own estimate (0.3% MoM).

• We expect inflation for the second half of July to stand at 0.11% bw, due to a lack of price increases in agricultural products.
• On an annual basis, headline inflation would be 3.53%. Typically, inflation for this period is around 0.18% bw.
• Our lower estimate is explained by an expected stagnation in agricultural prices (-0.02% bw). 

• Jobs /In Depth: Cost-cutting freezes over-35s out of China’s job market
• Obituary /: Cho-yun Hsu, influential historian of ancient China, dies at 95
• Services /Chart of the Day: China’s first-half services trade hits 10-year high

• Soft expectations were met by resilient results.
• As expected, weather headwinds and a weak consumer environment weighed on results.
• Nonetheless, while top-line was fairly in line with our estimates, margins contracted less than expected, as companies benefitted from different strategies —along with mix, FX in some cases, and efficiencies— to protect profitability.

• Revisions drove payrolls into a stagnation that runs contrary to our narrative of rolling resilience, but some contributors are spurious and don’t break the broader strength.
• Seasonal adjustment caused 76k of the 258k revision. State and local education workers represented 108k, and are lower since April, despite the DOE closure shifting jobs here.
• Payrolls still grow by 1% y-o-y, like household employment, with JOLTs data fine and the unemployment rate stable. The Fed should resist cutting without follow-through.

• Our out-of-consensus forecast for the U.S. dollar trade-weighted index to strengthen in the second half is playing out
• Maintain an overweight position in unhedged U.S. equities and expect the Fed to cut interest rates by only 25 bps in 2025, providing additional support for the U.S. dollar.
• The biggest long term challenge to the US dollar is not gold but stablecoin and the changing global economic and geopolitical order.

• Stablecoins /Cover Story: Stablecoins face reality check as tech gaps and policy firewalls mount
• China-U.S. /In Depth: China, U.S. race to deny the other economic leverage
• Involution /: China acts to stamp out ‘involution’ and unfair competition

• US base oils demand likely to stay lower amid signs of healthy availability of supply.
• Healthy availability of supply, buyers’ sufficient stocks and seasonal slowdown in consumption incentivize buyers to hold back.
• Ongoing fall in US base oils export prices adds to signs of weaker domestic demand.

• Asia’s Group II heavy-grade base oils price-premium to gasoil holds steady at lower level, close to levels in Q4 2024.
• Lower heavy-grade base oils margins and falling regional cargo price point to weaker supply-demand fundamentals.
• Even at lower level, price-premium remains at level that incentivizes refiners to maintain steady output of the product.

• Group II heavy-grade base oils premium to light grades is almost the same in US, Europe and Asia markets at same time and for first time in more than five years.
• Similar price-spreads in all those markets contrast with diverging fundamentals driving those similar price-spreads, especially in Europe.
• Similar price-spreads in US vs other markets follow sustained weakness of US heavy-grade prices because of persistent surplus supply.

• Global base oils prices mostly fall relative to feedstock/competing fuel prices, with export values under more pressure.
• Even at lower levels, price-differentials mostly hold at levels that sustain incentive for refiners to maintain output of most base oils grades.
• FOB Asia base oils cargo prices hold steady versus Singapore gasoil.

• US base oils export price-premium to feedstock/competing fuel prices extends fall at end-July 2025.
• Weaker base oils export margins and signs of rising surplus supply could incentivize refiners to adjust output.
• Steadier domestic base oils margins, and steady removal of surplus supplies in overseas markets, could instead curb any such moves.

• Asia’s base oils demand could get support from moves to lock in supplies to meet seasonal pick-up in demand during final weeks of Q3 2025.
• Demand could have already got steady underlying support in recent weeks because of tighter-than-expected supply-demand fundamentals at start of Q3 2025.
• Persistently tighter fundamentals could prompt buyers to maintain higher stocks until they are confident about any sustained improvement in supply.

• Recent tariff announcements reflect cautious optimism on the US Dollar and inflation risks
• Tariff rates of 16-17% could lead to gradual pass through to prices, impacting inflation in the coming months
• Q2 GDP growth rebounded, but domestic final demand slowed, suggesting a gradual economic slowdown in the US, while Canada faces economic challenges and BoC takes a dovish stance

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• Jung Chung-Rae, a four term lawmaker, has been appointed the new head of the ruling Democratic Party of Korea (DPK) in the past week.
• His appointment as the head of the DPK party signals that there could be some changes to the 2025 Tax Reform Plan announced by MOSF last week.
• The highest probability event is that the lower threshold for major shareholders for stock capital gains tax may NOT be lowered from 5 billion won to 1 billion won.

• BNM’s heavy reliance on FX forwards created $29 billion in off-balance sheet liabilities, masking true reserve strength and exposing future repayment risks if inflows weaken.
• This is further compounded by a narrowing current account surplus, while capital outflows and rising foreign currency deposits reflect persistent financial account weakness, undermining long-term support for the ringgit.
• While China is Malaysia’s largest trade partner, the U.S. is the main source of trade surpluses. Worryingly, the U.S. recently imposed a 19% tariff, threatening this critical surplus engine.

• July’s $17.28 bn inflow through Southbound was almost triple of that of the May low ($5.85bn). The flows are now on track to recovering to the March-April peak of $20-22bn.
• Investors continue buying dividend plays (CCB), sharp decliners (Meituan), policy beneficiaries (SMIC). Kuaishou and Alibaba were bought after being sold recently. Biotechnology (Innovent, Akeso) and insurance (ChinaLife) are new favorites.
• Expensive consumers and consumer proxies (Pop Mart, Tencent, Xiaomi) continue to be sold. Last three months selling in Xiaomi and Tencent have almost wiped out their cumulative 12 month’s buying.

• Market expected tariffs on cathode and other copper products, but final announcement only included tariffs on scrap
• Change in tariff decision led to collapse in premium of COMEX over LME
• Import influx of copper in US may now flow to LME warehouses, potentially affecting prices and supply security efforts

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• Dollar strengthening due to positioning cleanup and various events this week
• Powell’s statement more dovish, payrolls weaker than expected
• Political pressure and potential Fed chair change could impact future Fed policy and dollar strength

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• Despite the growing interest in the BRICS group as an alternative to Western-led forums, the group is likely to disappoint given its lack of substance and coherence. 
• The bloc is only held together by vague ambitions of shifting away from US hegemony, but members have fundamentally divergent economic ambitions and foreign policy stances.
• Even as major countries like China and India treat BRICS as a side project, the recent wave of expansion risks turning BRICS into an unwieldy, G77-style talking shop. 

• Fed Chairman Powell was more hawkish about the interest rate outlook after the latest policy meeting. Governor Waller’s concerns about weaker labour demand appear vindicated by July’s Employment Situation report.
• The Fed has three mandates that will impart conflicting policy implications in the current environment, particularly given the recent softening in labour demand and higher Treasury borrowing estimates.
• Issuance of coupon Treasury securities will remain unchanged until at least May 2026, which crucially coincides with Chairman Powell’s term expiration at the Fed.

• The story of the week was probably the 20% decline in COMEX copper futures during the week.
• A short recap: The gloating voices would perhaps claim that the Trump administration has realized that the high tariffs on copper would significantly harm its own country in the current situation.
• Copper prices collapsed by roughly 20% on Wednesday after President Trump announced that refined metals including copper cathodes will be exempt from the 50% tariff plans.

• We provide the details of the 11 most recent companies in KOSPI that have announced their Corporate Value Up plans (June and July 2025), including their shareholder returns. 
• These 11 companies experienced a sharp underperformance (from one day prior to their corporate value up announcement to current) versus KOSPI in the past two months.
• Among the 11 companies include Doosan Bobcat, Hana Financial, KCC Corp, Orion Corp, Hanmi Semiconductor, Hanwha Aerospace, Hanwha Systems, Kolmar Holdings, Mirae Asset Securities, and KDHC. 

• The U.S. stock market is undergoing a frothy advance. The intermediate trend is bullish but some technical warnings are appearing.
• We can’t predict the exact nature or timing of a possible market disruption.
• Investors may find it prudent to opportunistically take advantage of the relatively low implied volatility environment to buy cheap downside protection.

• Regardless of who the next Chair will be, the Fed will be faced with a regime characterized by high fiscal deficits and pressure for the Fed to help finance.
• In all likelihood, the Fed will follow the path of the BoJ of cutting short rates, restarting quantitative easing and yield curve control to suppress long rates.
• Against this backdrop of fiscal dominance, investors need to re-examine their investment objectives and policies under the new regime.

• A review of recent events/data impacting our investment themes and outlook
• What the dollar bear market rally means for our themes
• The domestic Chinese market starts to rally, outperforming in Asia

• In this insight, we provide the top 10 stock picks and key catalysts in the Korean stock market for the two weeks ( to 1 August 2025).
• Hanwha Ocean (042660 KS) is up 46% in the past two weeks. It is the top performing stock in KOSPI in this period, as one of the top Korean shipbuilders. 
• Top 10 picks in this bi-weekly include Kangwon Land, Hanil Cement, LG Uplus, Hyundai Elevator, Samsung Electronics, Hyundai Rotem, KT&G, HD Hyundai Heavy Industries, SM Entertainment, and LG Energy Solution. 

• The ECB’s victory party can continue for another month, as inflation proved surprisingly sticky at the target. But the hangover is disappointing, amid broad-based upside news.
• Two-thirds of national outcomes exceeded our expectations, with a slight skew higher, and pressures concentrated in services. Seasonal travel parts would be payback-prone.
• Another upside surprise to the ECB’s forecast makes the profile likely to shift higher in September. The news is the opposite of what is needed for another rate cut.

• Depressing revisions to US payroll data clash with the resilience seen in other data, and compare poorly with the bullish revisions to the Euro area’s labour market.
• Jobs data challenge the Fed’s patient posture, while the Euro area’s sticky inflation and tighter labour markets should encourage it to keep rolling rate cuts later.
• Thursday’s BoE decision sets unemployment’s rise against inflation persistence, leaving the outcome uncertain, yet it is likely to yield another split vote for a rate cut.

• TOP STORIES Policy / China’s Politburo strikes cautious tone on economy, signals flexible policy for second half At a Wednesday Politburo meeting, China’s top policymakers signaled a two-pronged economic strategy — maintaining policy stability while preparing for timely interventions.
• The meeting came as China set the agenda for the Communist Party’s Fourth Plenary Session in October, which will focus on setting the 15th Five-Year Plan.
• While acknowledging the economy’s steady performance — with growth holding above 5% for three consecutive quarters — the Politburo cautioned against emerging risks.

• WTI crude prices are on the way to close the week higher, supported by trade optimism, better economic data from the U.S., and ongoing geopolitical tensions.  
• U.S. natural gas slips as mild weather, strong production, and unclear short-term demand weigh on prices.
• Chevron adds John Hess to its board after merger approval; Shell tops Q2 estimates; Aramco partners with Cloudera to bring AI to energy.