Macro

• One of the major policies that Lee Jae-Myung’s new administration is likely to push through is the 20 trillion won (US$15 billion)+ supplementary budget. 
• The aim of this policy is to revive the sluggish domestic economy. It is a classic “spend first, worry later” government policy.
• The supplementary budget is basically sacrificing the balance sheet of the entire South Korea at the expense of short term economic stimulus which may have just limited impact. 

• The ECB’s 25bp cut took rates to a level that it considers well-positioned for the current outlook, thereby removing the presumption in favour of further easing.
• Lower headline inflation forecasts are already embedded in that judgement, with the temporary role of energy and FX recognised. Downside risks preserve some dovish bias.
• We still see this rate cut as the final one amid tight labour markets that preserve excessive underlying inflationary pressure. Market pricing should be less dovish.

• President Xi agreed to discuss issues including rare earths, chip design restrictions, and Chinese student visas with President Trump.  China warns the US on its increased arms shipments to Taiwan.
• The auto industry is facing disruptions in production due to shortages of rare earth metals.  
• The headline noise is starting to lose its luster as soft and hard data signals begin to pressure markets again.

• AI / In Depth: AI video is becoming a sector to watch in China, but don’t get out the popcorn yet Video generation tools powered by artificial intelligence (AI) have become one of the hottest investments for China’s big tech companies as they look to broaden their revenue streams.
• Since ChatGPT developer OpenAI surprised the world with its text-to-video model Sora in February 2024, Chinese companies have rapidly rolled out similar tools that have been used to make short films and video series.
• Law / China bolsters graft watchdog with new powers China is set to grant its powerful anti-corruption watchdog new investigative powers and significantly extend detention limits for suspects, signaling a further toughening of President Xi Jinping’s signature anti-graft campaign.

• For the week ending 30/May, U.S. crude inventories fell by 4.3m barrels (vs. expectations of a 2.9m barrel decline). Meanwhile, gasoline and distillate stockpiles rose more than expected.
• The EIA reported a 122 Bcf storage build, while analysts forecasted a 111 Bcf increase. Storage levels are 4.7% above the five-year average but 10% below year-ago levels.
• JPMorgan sees Reliance earnings rebounding on better margins; Saudi Aramco cuts Asia crude prices after OPEC+ supply hike.

• Most Asian manufacturing sectors show contraction, with India, the Philippines, and Thailand as rare exceptions.

• Political instability is rising in Japan, Korea, and the Philippines, impacting economic direction.

• Weak retail sales and falling real incomes highlight persistent economic challenges in Hong Kong and Japan.

• Section 899 is generally understood to be about leverage and deterrence.
• It is unlikely to be fully implemented due to the potential harm it could cause to the US.
• There are concerns about what could happen if the EU challenges this approach or if it is partially intended as a method to raise revenue.

• Now that Lee Jae-Myung has become new South Korean President, the uncertainty revolving who will lead South Korea in the next five years is now over.
• In this insight, we discuss four investment themes (related to Lee Jae-Myung becoming the new South Korean President) that could outperform the market for the remainder of 2025.
• The four investment themes include Korean Holdcos/Quasi Holdcos, Korean Cultural Contents, Securities, and SK Group Companies.

• Banks / Cover Story: China’s bank deposit insurance plan is seen needing new support In the spring of 2019, a quiet but historic event shook China’s banking sector: Baoshang Bank collapsed.
• It was the first true bank failure in the country since the founding of the People’s Republic, and the first real test of a deposit insurance system created four years earlier.
• That test would define the future of financial risk management in China.

• The Bank of Canada held its policy rate at 2.75%, as expected, but disappointed market participants who anticipated a dovish signal or rate cut, reflecting a cautious, data-dependent stance.
• Firmer-than-expected core inflation and persistent tariff-related cost pressures have offset the disinflationary effects of a softening domestic economy, prompting the Bank to be vague and non-committal about the potential for further rate cuts.
• The interest rate outlook remains highly uncertain, with future policy decisions hinging on the evolution of inflation, domestic demand, and the unpredictable trajectory of US trade policy.

• First quarter tire and tube exports fall by around 24% YoY  
• SLAMERP asks Govt to talk tariff disparity with US  
•  CEAT’s share in OE tire market tops 90%

• The Hong Kong Alpha portfolio underperformed its benchmark in May by 3%, however it has outperformed Hong Kong indexes by 3 to 19% since its launch 8 months ago. 
• We continue to increase portfolio exposure to the consumption sector.  We have added Alibaba Pictures (1060 HK), ZhongAn Online P&C Insurance C (6060 HK) & Sun Art Retail (6808 HK).
• At the end of May we sold positions in Kingsoft Corp (3888 HK) and Topsports International Holdings (6110 HK). We reduced  Lingbao Gold Co Ltd H (3330 HK) .

• Negative payback in services inflation dragged the headline EA rate down to 1.92% in the May flash. Although only 7bps low on the day, releases last week had cut 0.1pp.
• Inflation now looks set to spend a few months below the target rather than at or even above it, as had seemed likely until recently. This is not because of re-rooted imports.
• Euro appreciation and low energy prices have expanded the ECB’s room to cut rates, but we still see June as the final one amid tight labour markets and peers backing away.

• Asia’s heavy-grade base oils price-premium to Singapore gasoil stays unusually high.
• Firm base oils premium suggests supply remains tight and demand firm, incentivizing refiners to raise output.
• Gap between Group II light and heavy-grade base oils prices widens more even after restart of growing number of base oils units following scheduled maintenance work.

• US domestic Group I SN 500 price rises to premium to Group II N600 price in May 2025 for first time in more than four years.
• In Middle East, CFR UAE Group I SN 500 price discount to Group II N500 shrinks to narrowest in more than seven months.
• In Asia, FOB Asia Group I SN 500 price strengthens vs Group II N500 in May 2025 to firmest level in six months.

• Global base oils prices mostly hold firm vs feedstock/competing fuel prices, especially in Europe and Asia.
• Firm price differentials point to strong supply-demand fundamentals, incentivize refiners to supply more volumes for those markets.
• Demand would need to hold firm to absorb any such pick-up in supplies.

• US base oils demand could get support from stock-building ahead of Atlantic hurricane season.
• Slow end-user consumption, expectations of improving availability of supply and of steady-to-lower prices could curb extent of any such stock-building.
• US refiners’ regular exports of surplus shipments to overseas markets could limit volumes available to cover for any unexpected supply disruptions over coming months.

• We maintain a buy. The sectoral weightings favour industrials, tech hardware, banks, traditional energy, defence and going into the second half of the year consumer discretionary and AI software companies.
• The US is neither headed for a full-blown recession nor another cost-of living crisis.
• Neither updated business cycle indicators nor broad money growth trends signal a downturn and a resurgence in inflation.

• US Group II base oils prices hold in narrow range vs VGO since mid-April 2025.
• Steady price differentials contrast with surge in margins in Q2 2024.
• Steadier margins so far in Q2 2025 coincide with time of year when supply-demand fundamentals are likely to be tighter than usual.

• Q1 2025 sees 14% YoY surge in all-season consumer tire sales  
• Truck and bus tire sales volumes in Q1 2025 fall 4% YoY  
•  Imports of PCLT tires grow by 12% YoY in Jan-Feb 2025

• Companies are adapting to fluctuating trade policies while maintaining strong activity and tight labour markets.
• Despite these positive trends, underlying price and wage inflation remains high.
• While markets anticipate future cuts, the potential for rate hikes in 2026 is often overlooked.

• YTD our absolute return strategy is up 10,6% The Egg-Price-Bubble Has Busted!
• The price of a dozen eggs in the US has crashed from $8 to $2,5 within five months – highlighting extraordinary volatility in the egg market.
• For context: The rise of egg prices can be primarily contributed to the ongoing avian influenza (HPAI) outbreak that began in 2022.

• Asia’s base oils demand could soften as weakening supply-demand fundamentals incentivize buyers to maintain lower stocks.
• Seasonal slowdown in lube consumption set to coincide with pick-up in supply following restart of growing number of plants after maintenance work.
• Weaker demand in markets like Japan frees up more surplus volumes for export, adding to supply.

• For the week ending 30/May, U.S. natural gas prices gained 3.4% on the back of forecasts of a hotter-than-expected summer and tightening supplies.
• For the week ending 23/May, the EIA reported that U.S. natural gas inventories rose by 101 Bcf, moderately higher than analyst expectations of a 98 Bcf build.
• Henry Hub OI PCR fell to 0.86 on 30/May compared to 0.89 on 23/May. Call OI decreased by 12.7% WoW, while put OI dropped by 16.1%.

• Recommendations remain unchanged. The forecast has always been for increased market volatility and a weak 1H , followed by a pick-up in economic momentum in 2H.  
• Business cycle fundamentals continue to show no signs of a full-blown recession or a sustained resurgence in inflation.
• 1Q25 earnings data confirm the corporate profit cycle remains in upswing across the US, Europe, Japan, India, Taiwan and Indonesia. China is the outlier.

• WTI futures fell by 1.2% for the week ending 30/May as concerns over OPEC+ supply hike overshadowed the surprise fall in U.S. crude inventories.
• The U.S. rig count fell by three to 563. The oil rig count fell by four to 461, while gas rigs grew by one to 99.
• WTI OI PCR inched up to 0.83 on 30/May compared to 0.82 on 23/May. Call OI rose by 4.9% WoW, while put OI grew by 5.9%.

• So far, Trump hasn’t criticized Israel too much, he just wants to see if they could stop that whole situation as quickly as possible.
• The US still supplies Israel and US Homeland Security Secretary Kristi Noem (and her makeup crew) visited PM Netanyahu in support.
• European countries who have recently criticized Israel and suspended trade talks or else have been branded antisemite by Bibi and accused of emboldening Hamas. 

• Policy uncertainty still remains elevated despite the China-US tariff truce. Tariffs have created new easing agendas for central banks, while the Fed awaits new incoming economic information. 
• US tariffs threats have forced the Bank of Japan (BoJ) to pause policy normalisation plans. Japanese government bond market stress may increase once the BoJ resumes raising its policy rate.
• Governments and central banks are facing legacy issues from the period of combined easy monetary and fiscal policy stances as bond markets question sovereign governments’ capacity to borrow.

• The recent violation of an upward sloping trend line in the face of positive news reinforces our view that the U.S. equity market is in a wide trading range. 
• Technical conditions point to either a pullback or consolidation in the short-term.
• Elevated valuation and continued uncertainty over trade policy, fiscal policy and the growth outlook all serve to create a roof over stock prices.

• The U.S. Court of International Trade unanimously ruled against the Trump Administration  and struck down a whole range of tariffs by citing a lack of authority.
• In reaction, President Trump doubled down by opposing and appealing the decision. The government has workaround options in light of the court decision: The trade war will continue.
• Investors should continue to tilt toward the “Sell America” trade by avoiding USD assets. The court decision prolongs and exacerbates the uncertainty over the effects of the trade war.

• The FOMC claimed at its last meeting that ‘inflation remains elevated’, although core PCE and core CPI inflation were BOTH at 4-year lows in Apr’25, despite the Trump tariffs. 
• FOMC minutes show members expressing fears about the prospect of both high inflation and high unemployment, NEITHER of which has yet actually transpired. Politics is clouding the Fed’s policymaking ability. 
• Apr’25 was the first month with the tariffs, yet inflation FELL. M2 growth is just 4.25%YoY (Apr’25), so inflation is likely to stay tame. A Jun’25 rate cut is due. 

• Markets danced the Hokey Pokey to a drumbeat of lawfare and whimsical Presidential decrees. Tariffs were in, out, out, in, with tired pricing relatively unchanged overall.
• Underlying GDP trends remain unbroken by the disruptive announcements of recent months, with the superior US productivity performance still internationally enticing.
• Next week’s ECB rate cut remains one of the least uncertain macro stories. However, guidance should be much more hesitant about cutting again, while leaning that way.

• U.S. Q1 GDP fell slightly, distorted by a sharp 42% surge in imports ahead of tariff changes.

• Korea cut rates to 2.5%, with further easing expected to support weak investment.

• Global trade disruptions continue to fuel economic uncertainty and complicate forecasting.

• Corruption / In Depth: Court sounds alarm about corruption in big tech.
• It revealed that in the four years through 2024 the court handled 127 criminal cases involving corruption in the industry.
• The district hosts many internet companies’ offices, both headquarters and local branches.

• Vietnam, Thailand, Cambodia to receive above normal rains  
• Neutral phase of ENSO with La Nina like pattern favoring rains  
•  Weather portends a reasonable production season for Ivory Coast  

• Real GDP grew 7.4%YoY in Q4/FY25 with PCE and GFCF growing 7%+, bringing FY25 growth to 6.5%, and the 4yr moving average of real GDP growth to 8.25% for FY22-FY25. 
• Manufacturing decelerated to 4.5% growth in FY25 (from 12.3% in FY24), as high interest rates constrained GFCF, until a 25bp cut in Feb’25 enabled GFCF to rebound 9.4% in Q4/FY25.
• With interest rates set to decline 100bp from Apr-Dec’25, GFCF should grow 10.5% in FY26, while PCE accelerates to 7.5% growth, enabling real GDP to grow 8.5% in FY26.

• US is focusing on propelling growth with tax cuts, ignoring the debt problem. The obvious consequence, more USD depreciation, could drive more money from US assets into Asia and Europe.
• If 1% of US free float market cap flows into Asia, it would constitute 7.2% of Asia’s market cap. That’s more than 5x the highest ever annual Asian FII inflow.
• Taiwan, Korea and India have seen the biggest FII flow revival. To sidestep the deleterious effect of sharp USD appreciation on Asian exports, investors should play China, India, Indonesia, Philippines.

• Daniel Dicker is a seasoned oil trader and expert on energy markets
• Oil has become less important in the macro landscape, with its influence on stocks decreasing over the years
• Oil’s current price fluctuations are driven more by supply and demand factors rather than financial speculation, with no signs of improvement in the near future, despite recent macro developments.

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• Happy Wednesday from Copenhagen.
• Trump now has to deal with a reality where Russia is not going to end this war without being forced to—probably always the case—but Trump allowed himself to be friend-zoned by Putin in the run-up to these peace talks.
• Various media outlets have already reported that a sanctions package is being prepared to put pressure on Russia, and in the following, we’ll try to assess the potential content and ramifications of such a package.

• Imports frontloaded before tariff rises seemingly disappeared in broadly unrevised US GDP data. Underperformance is exaggerated as an unwind, or revisions, are likely in Q2.
• Final domestic private sales maintained their rudely bullish US trend while drifting back towards stagnation in the EA and are distorted by residual seasonality in the UK.
• Superior US productivity trends preserve its structural attractiveness. Unemployment’s stability also suggests monetary conditions are near neutral, with easing unnecessary.

• There is a supply demand mismatch globally, particularly at the long end of the curve
• Rising term premiums are a concern, especially in the US due to fiscal uncertainty
• While the speed of the recent moves is notable, there are no major financial stability concerns in the US, but Japan may need to take action to address volatility in the super long sector

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• Global dry bulk trade is facing its sharpest contraction in nearly a decade, with year-to-date 2025 volumes down 1.5%, according to DBX data.
• This decline is primarily driven by weakening demand from China, rising domestic production in key markets, geopolitical instability, and weather-related disruptions.
• Coal, iron ore, and grain exports have borne the brunt, while bauxite flows remain robust. 

• The Bank of Korea reduced its base rate by 25bp to 2.50%, as widely anticipated, in response to a marked deterioration in growth prospects and persistent domestic demand weakness.
• While inflation remains stable and near target, the MPC flagged rising household debt and FX volatility as key risks, indicating future rate decisions will carefully weigh financial stability against the need for further stimulus.
• The policy outlook remains dovish, but the pace and extent of additional easing will depend on incoming economic data, developments in global trade policy, and the evolution of financial market risks.

• Steel /In Depth: British Steel takeover leaves Chinese firm in limbo
• Wanda /: Wanda to sell 48 malls to ease debt woes
• ID /China stresses soon-to-launch national digital ID will be voluntary
• Interest rate /Commentary: Is China headed for a zero interestrate era?

• For the week ending 23/May, U.S. crude inventories fell by 2.8m barrels (vs. expectations of a 1m barrel build). Meanwhile, gasoline and distillate stockpiles unexpectedly fell.
• The EIA reported a 101 Bcf storage build, slightly more than the 98 Bcf forecast. Storage levels are 3.9% above the five-year average.
• Chevron will cut 800 Texas jobs in an effort to reduce its global workforce by 20%. TotalEnergies is selling its 12.5% Nigerian offshore stake to Shell for USD 510 million.

• Yield steepenings may be linked to fears of fiscal profligacy and concerns of inflation expectations
• US Exceptionalism theme unraveling, dollar facing downward pressure
• US tax bill moving through House, expected to have modest stimulative economic impact

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• Concerns about US fiscal policy have pushed term premium higher in the US, leading to a steeper yield curve globally.
• US-China tariff de-escalation and improved sentiment have reduced recession risks in the US, leading to higher GDP forecasts and reduced easing expectations from central banks.
• In Sweden, GDP forecasts have been revised higher, with a 25 basis point rate cut expected from the Riksbank in June. Opportunities in Sweden include cautious long positions in duration.

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• Field latex cross INR 200 (US$2.34) mark, sheet still short of it  
• Over 40% of smallholders complete rainguarding as rains set in  
• Compound rubber import worries farmers, traders  

• In this insight, we provide five major factors that may have caused higher share price movements (up 7.6%) of 10 major Korean holdcos/quasi holdcos today.
• This is the best one day share price performance on average for these stocks so far in 2025.
• Emphasis on improving corporate governance by both leading Presidential candidates and potential mandatory cancellation of treasury shares are among the five major factors. 

• The speaker discusses events surrounding the downgrade of the US economy and the response from government officials
• The speaker highlights the increasing adoption and performance of bitcoin compared to traditional assets like gold
• The discussion transitions to the business efforts and partnership of Lisa and Dan, who met at a Houston bitcoin meetup in 2021.

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• Technical analysis can help you keep your zen as it cuts through the noise by providing a set of rules on when to buy, sell, or just sit tight.
• There are many technical indicators, but using both the simple moving average and the moving average convergence divergence can tell you most of what you need to know
• Here’s how the two indicators work, what makes them so effective when using them together, and a look at a few major stock ETFs,  gold, bitcoin, and the Mag 7.

• Australia’s active global fund ownership has dropped to record lows of 38.55%, with average weight halving from pre-2020 levels. 
• Major underweights persist across Financials, especially the four big banks at record-low ownership levels. 
• Insurance names like QBE and Suncorp see modest rebounds, but Australia remains stuck between growth and value headwinds.

• Central Bank Rate Decisions, including from the Reserve Bank of India (RBI), the Bank of Japan, and the Fed.
• Index Rebalancings for the Australian, Indian, Hong Kong, and US benchmark indices. 
• Elections: South Korea Presidential Elections on 3 June; potential for the opposition party to win the presidency.

• 12th May: Cobalt Holdings, a Company created primarily to purchase and hold physical cobalt, offering public equity investors pure-play direct exposure to the price of cobalt, confirmed its intention to raise approximately US$230m through its Global Offer and the Admission on to the Main Market in June 2025.
• Glencore International AG and certain entities and affiliates managed by Anchorage Structured Commodities Advisor, have agreed to participate as cornerstone investors, agreeing to invest, in aggregate, an amount representing approximately 20.5% of the Shares to be offered pursuant to the Global Offer.
• 9th May: iFOREX Financial Trading, the fintech business with a proprietary online and mobile trading platform for multi-asset contracts for difference, announces that it has confirmed its intention to IPO onto the Main Market.

• The RBNZ reduced the Official Cash Rate by 25 basis points to 3.25%, in line with consensus expectations, citing subdued core inflation, spare economic capacity, and global headwinds.
• The decision, reached by a 5-1 majority, reflects internal debate over the pace of easing and a shift toward a more data-dependent policy approach, with no explicit guidance on further rate cuts.
• Evolving global trade tensions will influence future interest rate decisions, domestic inflation expectations, and the pace of economic recovery, with the OCR projected to reach 3.00% by year-end but subject to heightened uncertainty.

• Ursula von der Leyen had a call with Donald Trump on 25 May.
• The call can be interpreted as a ‘win’ for Trump as he had threatened to impose 50% tariffs on the EU from 1 June.
• Another perspective could be that Trump’s reversion is a new manifestation of the TACO principle.

• Morning from Europe.
• Trump’s classical stop-and-go approach to negotiations is starting to get baked into markets, but we’re still surprised by the extent of market moves when these impulsive threats are announced on Truth Social — and markets remain poor at assessing the “realistic outcomes” of this approach.
• On Friday, markets at one point priced in a 40–60% probability that 50% tariffs on the EU would actually take effect on June 1.

• Korea Exchange announced its KOSPI200 rebalance changes on 27 May. It added 8 companies and deleted 8 companies. KRX also added 9 companies and deleted 9 companies in KOSDAQ 150. 
• These 8 new inclusions in KOSPI200 are up on average 49.8% in the past one year. The 8 deletions to KOSPI200 are down on average 45.2% in the past one year.
• There were numerous surprises to the KOSDAQ150 rebalances.  In particular, three companies are relative surprises to the KOSDAQ150 additions including Solid Inc, Zeus Co, and Wemade Max.   

• ASEAN’s underperformance could continue. The low growth region is facing the additional risk of increasing Chinese exports, which could dent domestic companies’ revenues and margins and engender a deflationary spiral.
• China exports more to ASEAN than to the US or EU. Margin pressure in consumer and industrials is palpable. Thailand is in deflation and inflation is nosediving in the region.
• We recommend playing the region through markets with low China import intensity (Indonesia, Philippines) and through consumer services and select banks. We have Digiplus, DBS, BCA in our model portfolio.

• Global base oils prices mostly hold firm vs feedstock/gasoil prices.
• Firm margins in Asia and Europe point to still-tight supply-demand fundamentals, incentivizing refiners to maintain high output levels.
• Weaker margins in US point to diverging fundamentals compared with other regions.

• In April 2025, global coal markets showed a diverging trend between thermal and metallurgical segments.
• Thermal coal remained under pressure amid softening prices, high stockpiles in China and India, and collapsing power demand in Europe, where electricity generation fell sharply due to warm weather, a major blackout in Spain, and ongoing economic stagnation in Germany.
• As a result, API2 and API4 prices slipped further, with month-ahead API2 contracts trading at $93/ton, API4 at $88/ton, and Newcastle coal easing to $95/ton, despite a brief rebound to $99 mid-month.

• Gun stores ! Trump is very explicit when he describes people that Mexico is supposed to be sending to the US. Terrorists, rapists, criminals, cartel gangs etc.
• But for all the violence coming allegedly from Mexico, there is only two legal gun stores in all of Mexico ! Two !
• In the US, there are over 17 000 gun and ammunition stores and 70 000 licensed gun dealers ! In Mexico , a dozen documents are required before being approved and it can take a few months. 

• US Group II heavy-grade base oils prices stay unusually weak relative to CFR India prices for the time of year.
• Persistent US price-discount to CFR India prices coincides with steady flow of heavy-grade base oils shipments from US to India and especially to Pakistan.
• Arbitrage shipments highlight persistent surplus of heavy-grade base oils in US market.

• US base oils prices continue to edge lower versus feedstock/competing fuel prices.
• Margins fall because of steady outright prices and higher feedstock costs.
• Margins previously rose in first few weeks of Q2 2025 because of lower feedstock costs while outright prices mostly held steady.

• US base oils demand likely to remain more muted as concern about strength of end-user consumption and expectations of improving supply incentivize buyers to maintain low stocks.
• Demand could get support from procurement of additional stocks as buffer against any weather-related supply disruptions during Atlantic hurricane season.
• Any such stock-building would be despite expectations of more readily-available supply over coming months.