Macro

• Foreigners sold a record ₩148trn of Korean equities in 1H26, with Samsung and SK hynix accounting for ~87% of the exit.
• Retail absorbed the selling at the top, but September turnover has halved and leveraged demand is now fading as the buyback became an exit door.
• Position for the structural bid: favour value-up banks and holdcos, be selective on Samsung/SK hynix, and avoid leveraged AI and IPO exposure.

• Corporate Japan absorbs ¥20trn of equity in 2026 against ¥10trn the market must clear; on a share-count basis about 2% of market capitalisation is being retired.
• Seventeen IPOs raised ¥144bn in 1H26 against ¥16.2trn of buybacks and 128 delistings; insurers’ zero-holding targets run to FY2029–30, but disposal pace is slowing.
• Post-BoJ hike: overweight cash-funded buyback names and take-private candidates; underweight Growth market, JGB duration and yen cash; neutral yen, hold Japan equities unhedged.

• A review of recent events/data impacting our investment themes and outlook
• The Boj, the Fed, and the ECB all tightened rates this week – with different outcomes
• Tightening liquidity globally, but still no signs of a major top

• Leaders of top US AI companies have said human extinction is possible and that AI model development should be slowed.  
• With upcoming IPOs and rapid market-share losses to open-source Chinese models, safety risk declarations and calls for government regulation could help these firms cement an oligopoly in the US market.
• China has read this playbook clearly, calling it “malicious competition” and pivoting its strategy: building domestic chip infrastructure, releasing ultra-cheap open-source models, and positioning itself as the open-AI champion. 

• The BoJ’s 25bp hike to 1.25%, in line with consensus, came with an ongoing cautious tightening bias as inflation nears 2% and FX risks stay elevated.
• A 7–2 split vote and below‑target core CPI argue for gradual, data‑dependent hikes rather than a rapid or front‑loaded rate path.
• Yen weakness after the decision shows markets still see BoJ as lagging behind necessary action, leaving pressure for further rate rises if inflation and FX prove problematic.

• UK inflation and unemployment data confirmed a significant hawkish drift in the BoE’s forecast, but its reluctance to respond disappointed overly hawkish market pricing.
• The Fed and BOJ both hiked like the ECB and are likely to go again, although FX traders also punished the BOJ’s caution. Doves were beaten by peer pressure.
• Next week is the turn of the Norges Bank, SNB and Riksbank to announce their policy decisions, with the latter two being some of the increasingly rare dovish holdouts.

• Indonesia’s currency, reserves, and consumer confidence have stabilised since 2Q26’s turmoil, but the recovery’s foundations remain narrow and may renew amid external stresses. 
• External risks are mounting — Fed hikes, Middle East tensions, agricultural pressures — any of which could inflict renewed turmoil for Indonesia’s economy. 
• Prabowo’s sacking of Purbaya in favour of technocrat Suahasil Nazara is positive, but the rapid turnover signals institutional turbulence in a key economic policy role. 

• A larger-than-usual cargo with a combination of Group II light and heavy grades was set to load from Taiwan in the coming days, with India a likely destination.
• A large cargo of Group II base oils loaded from Taiwan at end-August headed to India, with arrival due this week.
• A large cargo with a combination of Group II light and heavy grades loaded from Taiwan at end-July headed to the US Gulf coast, with arrival due in late-September.

• Analysis: Plunging Yields and Debt Swaps Are Rewiring China’s Credit Market Traditional bank loans have fallen to less than 60% of China’s total credit supply for the first time in seven years, as plunging interest rates drive corporate and government borrowers into the bond market.
• China Tightens Grip on Private Funds With New Monitoring Center China is preparing to set up a new Fund Monitoring Center to centralize oversight of the country’s public and private funds, in what would mark one of the biggest regulatory overhauls for the asset management industry in years, Caixin has learned.
• Hong Kong to Accelerate Push for International Gold Trading Hub Hong Kong plans to accelerate the development of an international gold trading market and is considering increasing the gold reserves of its Exchange Fund, Chief Executive John Lee said Wednesday.

• Crude oil futures early Friday continued to drift lower amid growing optimism that disruptions to Saudi crude after the East-West pipeline attack would be less severe than initially feared.
• Nov26 ICE Brent futures were 0.85% lower at  $103.86/b (0115 BST), while Oct26 NYMEX WTI was at $100.97/b , down 0.9% versus Thursday’s settle.
• It left benchmarks relatively flat on the week as crude pulled back after Saudi Arabia indicated it could restore about half the capacity of its East-West pipeline within days by bypassing a damaged section, with full flows potentially returning by the end of October.

• Crude oil futures retreated for a second session Thursday on hopes that losses from the Saudi pipeline attack would not be as severe as initially feared, while there has been a midweek slowdown in military strikes.
• Nov26 ICE  Brent futures were 1.7% lower at  $104.03/b (2053 BST), while Oct26 NYMEX WTI was at $101.25/b , down 1.15% versus Wednesday’s settle.
• Oil prices had already dropped around 3% Wednesday after Saudi Arabia stepped up efforts to restore its East-West pipeline, easing concerns over how much crude supply will remain disrupted by last week’s drone attack on a major pumping station.

• The Fed hiked by 25bp to 3.75–4.00%, with the dots signalling at least one more increase this year and a long plateau for rates at that higher level.
• Its median rate path is now at 4.1% for 2026–27 and 3.9% for 2028, in a hawkish shift relative to June’s dots and the consensus held until recently.
• A rise in the longer‑run rate to around 3.25% implies a structurally higher neutral 𝑟∗ that pressures peers to reciprocate. We believe the truth is likely even higher than this.

• The BoE’s reiterated 6-3 vote for no change was an unsurprising ongoing failure to rise to the challenge, unlike its peers. But at least members are on course for November. 
• Reliance on a low neutral rate and expectations being anchored at 2%, despite all evidence to the contrary, are critical biases pushing the BoE’s policy failure to persist.
• QT’s expensive mistake is belatedly softened by selling gilts to the DMO, but, like a November hike, this is too little, too late. The fiscal cost could have been avoided.

• In the past several days, Korea’s National Assembly passed an amendment to the Capital Markets Act, codifying a bipartisan compromise known as the “50%+1” rule for tender offers.
• I do not like the new 50%+1 tender offer system in Korea, although it is slightly better than the existing tender offer system in Korea.
• What about the remaining 49.99% of the minority shareholders? Clearly, these remaining minority shareholders are not treated fairly. 

• Brazil’s Copom cut the Selic 25bp to 13.75%, in line with consensus. This keeps a restrictive stance as de-anchored expectations and upside inflation risks persist.
• Above‑target IPCA expectations mean future easing depends on services disinflation developing further and a steadier fiscal‑policy backdrop.
• Global shocks and domestic demand risks keep the rate path data‑driven, with scope for pauses and only cautious further cuts from this lower level.

• Hong Kong’s IPO + placement pipeline has created an estimated HK$1.2trn of net absorbable supply, equivalent to ~5% of free float.
• Thin floats, six-month lock-ups and rising rates are weakening IPO absorption, while A/H discounts point to venue-specific liquidity stress.
• Positioning: favour A-shares, HK cash-returners and HKD cash; underweight the 2026 IPO cohort until supply exhaustion becomes visible.

• India’s 2026 net equity supply is about ₹7.7 lakh crore, 3.7% of free float. The IPO is the smallest line; foreign selling and promoter/PE exits dominate.
• Households absorb it on SIP autopilot, but 51% of August inflows went to small/mid-caps while foreigners sold large-caps. Nifty is down 11% YTD, 23% in dollars from peak.
• OVERWEIGHT large-caps versus mid/small in three gated tranches; UNDERWEIGHT the 2025–26 IPO cohort and INR duration. 

Highlights

• MRF reports a 10% increase in revenue but a 6.52% decline in net profit 

• Apollo records strongest YoY quarterly growth in 14 quarters, at 15.6%

• JK Tyre and CEAT see profitability contract sharply despite continued demand momentum

• In Depth: China’s Auto Export Boom Spurs Push to Manufacture Overseas
• China’s auto export engine was in overdrive in August, shipping more than 1 million vehicles for a third straight month.
• The momentum is fueling expectations that full year exports will hit 10 million cars.

• Yesterday’s oil market behavior once again helped support our scenario of a broad trading range for the prompt NYMEX crude oil contract for the time being.                
• More analysts are stating that oil prices are likely to “grind higher,” but no one appears to be assigning a dollar value to what the peak might be.                                     
• At the risk of being completely “buried” by our price scenario, we would suggest the odds of a material further gain in oil prices are less than a further retracement.           

• Inflation’s August rise matched final forecasts but was 0.3pp above the BoE’s view from July, with resilient services driving the upside along with energy prices.
• Airfares were surprisingly soft, perhaps skewed by sampling and imputation. Underlying price pressures more broadly are still annualising to 3% amid excessive expectations.
• Energy price rises have quadrupled since June’s temporary lows in an intensification of the hawkish shock. The dovishly biased MPC members shouldn’t block a November hike.

• Washington is betting on Venezuelan oil: NABEP gives the U.S. unprecedented influence over future production, including equity, governance rights and priority access to output.
• The supply impact is distant: NABEP’s current production is far below its target, while infrastructure, capital and field development could push meaningful new volumes into the 2030s.
• Hormuz remains a different story: Venezuelan production cannot offset today’s disruption risk, leaving the current geopolitical premium largely intact despite the long-term supply option.

• Sentiment: Cautious Bearish, on a record managed-money long meeting a report that missed on the bearish side, with no flat-price information advantage in a settled crop.
• Treefera’s crop size agrees with the government’s, so the national number holds no edge.
• What is left to trade is which states grew the corn, and who is holding the position. Both sit outside the balance sheet the market is still trading.

• The FOMC unanimously (12-0) voted to raise the Fed Funds rate by 25bp to 3.75-4%, and chair Kevin Warsh emphasised his determination to achieve price stability (PCE inflation of 2%YoY). 
• The median forecast by FOMC members is 4.1% unemployment for the next 3 years, and another 25bp hike in FF rates this year, enabling 2027 inflation to moderate to 2.3%. 
• M2 is growing at a steady 5%YoY (following extreme volatility in Apr’20-Mar’24). Consequently, inflation is likely to moderate (barring oil shocks). No rate hikes in 2027, good for markets. 

• Sentiment: Cautious Bearish, conditional on Black Sea export disruption easing
• Chicago SRW wheat futures (ZW) December 2026 closed at $7.4125 per bushel on 10 September.
• The rally primarily reflects the Russia-Ukraine conflict disrupting Black Sea exports.

• Cautious entry: Indonesian stocks are stabilizing. We may consider a small absolute long on a 6-12-month horizon, either on the country level or with a basket of three stocks.
• Absolute for now: Historically, past downside extremes in Indonesian stocks preceded positive absolute returns 6-12-months forward, but relative performance remained weak over the same time horizon.
• Relative later: Our framework does not support an overweight to Indonesia vs. EM or Asia Pacific until relative trend signals improve. If you’re already underweight, trim it.

• Crude oil futures were drifting lower on Friday but held most of the solid weekly gains as tensions remained high across the Middle East.
• Nov26 ICE Brent futures were 2.5% lower at  $104.92/b (2013 BST), while Oct26 NYMEX WTI was at $100.45/b , down 2% versus Thursday’s settle.
• This week’s huge escalation in the US-Iran conflict had lifted benchmarks by over 10% and taken the two-week gains to 20% after hostilities flared again, pushing benchmarks to four-month highs.

• Yesterday’s bout of NYMEX “profit taking” helps confirm our trading-range scenario, but given this market volatility, it still may be premature to confirm with conviction.                 
• The latest EIA weekly data for implied distillate fuel oil demand continue to reveal a possible moderating trend in U.S. manufacturing activity, thus the stats bear monitoring more than ever.                                   
• If the economy is now finally beginning to respond more adversely to higher oil prices, hopefully the Fed rate hike will not add any fuel to the fire.          

• Brent crude futures surged to near four-month highs on Thursday as investors eyed escalation in the Middle East, monitoring critical energy infrastructure, shipping and strategic waterways.
• Nov26 ICE  Brent futures were 6.5% higher at $107.84/b (2042 BST), while Oct26 NYMEX WTI was at  $102.73/b , up 7% versus Tuesday’s settle.
• Brent closed above $100/b for the first time since July in the previous session following a wave of shipping attacks as the US and Iran intensified tit-for-tat strikes, extending gains Thursday as the regional conflict expanded into Yemen once again.

• Crude oil futures continued to ease early Thursday on hopes that losses from the Saudi pipeline attack would not be as severe as initially feared, while there has been a midweek slowdown in military strikes.
• Nov26 ICE  Brent futures were 1.4% lower at  $104.37b (0155 BST), while Oct26 NYMEX WTI was at $101.24/b , down 1.15% versus Wednesday’s settle.
• Oil prices had already dropped around 3% Wednesday after Saudi Arabia stepped up efforts to restore its East-West pipeline, easing concerns over how much crude supply will remain disrupted by last week’s drone attack on a major pumping station.

• The ONS remembered to conduct the LFS again in July, and responses were resilient after two months of imputation. Unemployment held at 4.9%, contrary to dovish views.
• June’s high single-month rate reflects a cohort that leaves the survey in September, potentially cutting the UR by 0.1pp then. Fundamental signals remain broadly stable.
• Wage growth measures range from 2.9% to 5.1%, with outliers biased and the truth probably around 4%, which is too high to be consistent with the inflation target.

• Cover Story: The Gray Market Behind a Cross-Border Investing Boom
• In the summer of 2026, two cross-border investment blowups rattled investors from the Chinese mainland to Hong Kong and landed on the desks of Hong Kong police investigators.
• Chinese Retail Rush for U.S. Tech Stocks Drains Fresh Offshore Quotas

• Japan’s 30-year yields 4.16%, 236 basis points over the Bank of Japan’s neutral midpoint. Part is fiscal premium; the rest is the price of a domestic bid returning at 4%
• Post-Covid inflation was supply-driven, imported through the yen, oil and food. Inflation excluding food and energy never exceeded 2.7%. Real wages are rising, consumption grows 1%: neutral, not above it.
• The buyers’ strike is ending. Life insurers sold ¥2.1 trillion of super-longs in FY2025 and are buying again; Meiji Yasuda doubled its plan; GPIF is pressed to add domestic assets.

• Global air freight rates edged up again last week according to the latest data from TAC Index, the leading price reporting agency on air freight markets and calculating agent for the Baltic Air Freight indices.
• The global Baltic Air Freight Index (BAI00) gained +0.2% over seven days to September 14, with the impact of surging crude oil and jet fuel prices in recent days yet to be reflected in rates globally – but with the index already at elevated levels of +20.2% year-on-year.
• With crude oil back over $100 per barrel and jet fuel prices now up over +100% YoY according to the latest Platts data, it seems likely rate levels will come under renewed upward pressure well before we reach traditional peak season in the coming weeks.

• Oil prices surged yesterday in response to a further escalation of the Houthi-Saudi conflict, which resulted in a closure of the port of Yanbu and damage to the SANREF refinery.                 
• There is as of yet no indication of any attempt at diplomacy to resolve the situation, although the Houthis claim that transit through the Bab el-Mandeb is “safe.”                                  
• In terms of trading, given the risk of either further oil price gains or this market turning on a dime via a ceasefire/diplomacy, we would continue to concentrate on spreads.          

• Inflation shocks have become more frequent.  Central banks will show greater commitment to their chosen inflation targets, and forward guidance will no longer determine the future path of policy rates.
• More proactive measures by central banks to keep inflationary expectations well-anchored implies more volatile short-term interest rates compared to their long-term counterparts in an environment of higher and volatile inflation.
• US Treasury bond investors will probably demand a higher term premium until they are comfortable with the Fed’s policy reaction function under new leadership without forward guidance.

• Hong Kong imported almost 100 tonnes of Russian gold in 2026’s first seven months, while July transactions showed that Delivery Connect, central clearing and OTC execution can work.
• International-Bank financing is the next test, with global gold OTC derivatives already exceeding US$1.1 trillion outstanding, showing the financial activity that accepted bullion can support beyond physical delivery.
• Longer term, a large pool of internationally accepted bullion could deepen financing and trading beyond each new shipment, extending Hong Kong’s role from physical delivery to offshore gold markets.

Highlights

• Natural rubber production surges 22% MoM in June to 61,000 tonnes.

• Compound rubber imports jump 46% year-on-year to 108,148 tonnes in Q1.

• Natural rubber consumption fell 6.1% year-on-year to 341,000 tonnes in Q1

• Analyzing last 18 year’s year-on-year earnings growth patterns, we conclude that Asian earnings are highly cyclical, with average peak-to-trough length of 24-30 months, unless driven by a sharp liquidity spike.
• Korean and Taiwanese earnings cycles are at their peaks and HK/China is close. Among the large markets, only India is at the bottom of its earnings growth cycle. 
• Onshore China valuations could stay flat; Taiwan PE could correct more. HK and Korean PE should rise. Indian valuations could correct slightly, in line with previous earnings cycle bottoms.

• Sentiment: the froth is gone. Investor sentiment has cooled sharply and is now, at most, moderately bullish.
• Technology SMA near all-time highs. Sentiment is close to all-time highs. Not an immediate sell signal, but a reason to test the Tech case and make sure conviction remains high.
• Gold: getting hot again. Bullish sentiment is building again across indicators, pushing our SMA back to the 96th percentile. Not quite at recent extremes, but close.

• In Depth: China’s Diagnostic Firms Bet on a New Front in Global Health (Johannesburg, South Africa) — For years, funding for global health aid has flowed into this complicated, vibrant metropolis to address public health crises including HIV and AIDS and tuberculosis (TB).
• Analysis: China Adopts Market-Driven Solution to Stale Loan Rate Benchmark For nearly seven years, China’s commercial lenders have relied on a single anchor to price their loans — the loan prime rate (LPR).
• Now, the country’s banking system is testing the waters with a dynamic new benchmark.

• A key element in the equation to watch closely is the interplay between Iran, Saudi Arabia, and the Houthis and how ultimately the Strait of Hormuz issue is resolved.                
• Saudi Arabia postponed a meeting with Iran and other Gulf states due to intensified Houthi attacks on Saudi military and energy assets. Thus far and critically, Abqaiq has been spared.                                 
• If Iran can somehow convince the Houthis to “tone it down”, there is the possibility of an agreement to “manage” the Strait of Hormuz without the United States.         

• The IRI/CCSR prediction plume goes out every month and travels far — onto commodity desks, into insurance notes, through agricultural outlooks.
• It is among the most widely shared forecasts in macro, and among the least well read.
• We backtested all 291 plume starts since May 2002, roughly 6,800 model runs, against the observed Oceanic Niño Index. Three things stand out.

• The US is desperately trying to protect its declining market share in AI.  The recent declarations of safety regulations could set the stage for a ban on Chinese AI models.
• Current AI safety discussions follow many measures the US has taken to stifle the rise of Chinese AI models, including export restrictions, accusations of illegal distillation, and global loyalty pledges.
• The US is faced with a dilemma: whether to protect its domestic AI players and risk lowering economic productivity or allow an open market where Chinese AI models may dominate

• The base oils market is approaching the fourth quarter with a smaller supply surplus than usual, as tighter Asian and Group III balances leave less supply available to absorb further disruptions

• The base oils market is approaching the fourth quarter with less surplus than usual, after the third-quarter slowdown failed to produce the usual supply build.

• China and India are putting more pressure on available barrels, with China’s Group II balance tightening as India’s demand extends its recovery.

• Several cargoes of Group II base oils loaded from Taiwan at end-August and early September, with all of them heading to Southeast Asia and one likely bound for India.
• A cargo of Group II base oils loaded from Taiwan in late July was set to reach East Coast South America at the end of this week.
• Singapore took delivery of more base oils from the Netherlands, adding to a shipment from the same country last week.

• Gold round-tripped 4,696 to 4,410 as Bessent’s expanded buyback failed in public — $5.19bn bought against a $10bn whisper — and Iran forced a liquidity flush into cash and oil.
• The selling is mechanical, not fundamental: ETF buying accelerated through the decline while US and Japanese 30-year yields broke to 2004 highs and all-time records respectively.
• BULLISH, Fair Value US$4,780 unchanged — now the WGC’s own key barrier at US$4,769-4,774. Add zone 4,225-4,283 at the rising 55-day, the WGC’s ideal floor.

• Given the ongoing uncertainty regarding the Strait of Hormuz, compounded by the uncertainty of the Bab el-Mandeb Strait, it is still hazardous to call a top to this oil market.
• We see some analysts now emerging and stating that the market is now poised for a new phase of renewed price strength well above $100.00 per barrel.           
• At this point, from a trading standpoint we will reserve final judgement in terms of the flat price, and remain focused on spread relationships.          

• A review of recent events/data impacting our investment themes and outlook
• Government bond markets continue to exert pressure on other assets
• The Japanese Yen has likely confirmed a trend change – expect more volatility

• Sunken Iranian tankers in the Strait of Hormuz and Houthi control of Bab-el-Mandeb are compounding the energy supply shock, squeezing prices to highs as hopes hit lows.
• Activity is still remarkably resilient, so the trade-off screams hawkish, causing the ECB to hike and probably go again in December. The BoE seemingly prays for a warm winter.
• Another 6-3 BoE vote to hold is likely, but with two more members open to a November hike. The BOJ is set to hike, and the Fed likely will too.

• We aggregate the published asset-allocation views of more than 50 asset managers across 70+ assets, highlighting where buy-side consensus is building or breaking down.
• Risk appetite: Four of five RoRo indicators rose, taking the aggregate to the third-highest level in Tracker history, while equity sentiment hit a record +81% net bullish.
• Still not all-in: EM equities, Tech and EM FX are very popular, but safe-haven positioning is less extreme; the Swiss franc is the least popular asset at -46% net bearish.

• It was with a large pang of sadness this week that we saw the news of the passing of Tung Chee-hua, the first chief executive of Hong Kong post 1997. We were sad not because he was a particularly good leader and that everything in Hong Kong was rosy under his administration, but because he was a perfectly good man with the territory’s best interests at heart. 
• On the other hand, the current US Treasury Secretary, Scott Bessent simply leaves the impression of being arrogant and egotistical. He challenges the markets to take him on as regards what he’s going to do with the bond market and more so with the yen. He says “Don’t mess with my Yen agenda”, but seems to forget he is US Treasury Secretary, not the Finance Minister of Japan (or a hedge fund manager).
• We published a Peregrinations report earlier this week, called Japan: Through AI Glasses. It forms part of the argument behind our long yen call, which at the moment is working because markets are frightened of Bessent and intervention. But it won’t work long term unless the yield differential closes. In our view, the way that it will close is through an accelerated hiking pace by the BoJ, not the way that most analysts expected.

• In Depth: AI Distillation in China Leaves U.S. Tech Giants at Odds

• The U.S. government has leveled sweeping new accusations against China’s leading AI developers, claiming that they are conducting systematic extraction of proprietary functionalities and capabilities of American-developed models through industrial-scale knowledge distillation campaigns.

• China’s Online Lenders See Profits Plunge as New Rules Bite

• Recent spike in oil prices and US yields is not deterring foreigners from buying Asian equities. After buying US$4.8bn of Asian Equities in August, FIIs have bought US$1.8bn in September.
• In August FIIs bought Taiwan (US$11bn) and India (US$3.1bn) and sold Korea (-US$8.5bn). In September they have bought Taiwan (US$2bn) and Korea (US$1bn) and have sold India (-US$1.25bn).
• We believe foreign buying shall bounce back in tech-heavy Korea and Taiwan. FIIs would likely buy India too, but in smaller measure than North Asia. We are cautious about ASEAN.

• The ECB’s unsurprising unanimous 25bp rate hike was dubbed a no-brainer by President Lagarde amid upside news on both activity and pipeline inflation pressures.
• Staff forecasts settle above target through the medium term, with upside risks and news since the forecast’s cut-off, signalling a strong case for another hike in December.
• Stale neutral rate estimates aren’t restraining the ECB like they are at the BoE, so its three hikes can achieve the target while the BoE’s one perpetuates its policy failure.

• CTAs are positioned in Asia uptrends, but the stocks that support it are losing momentum.
• We uncovered stocks that sit outside the CTA trade that may be less vulnerable to outflows.
• Tech uptrends remain intact, just lower their weight and make room for less volatile trends in financials.

• In Depth: AI Anxiety in China Fuels a Gold Rush in Job Training Inside a cramped classroom in an office tower, more than 40 young people sat glued to a projector screen.
• For nearly the entire session, the instructor cycled through dry summaries of AI history that anyone could easily find with a quick online search.
• But nobody left.

• India’s economic outlook remains positive, with real GDP growth projected at 6.48% in 2026 and 6.53% in 2027.
• Over the medium term, growth is expected to stabilize at around 6.50% by 2028, with a broadly similar trajectory anticipated for GDP per capita.
• Investment and gross national savings are also expected to remain relatively stable, at approximately 34% and 32% of GDP, respectively.

• In the market battle between geopolitical risk and fundamentals, thus far geopolitical risk is obviously winning, with the prompt NYMEX crude oil contract trading well above $100 per barrel.                
• However, given the latest weekly EIA data, we must now monitor underlying fundamentals more closely than ever for signs that fundamentals may begin to overtake supply risk.                                  
• At the same time, we keep a close eye on the Houthi-Saudi conflict, since any major strike on Saudi energy assets will elicit a response from Pakistan and Turkey.