Macro

• The energy supply shock is squeezing prices and not destroying much demand. UK excesses are backloaded and underappreciated.
• A warm winter could avoid pressures intensifying. Yet monetary conditions and slack look more balanced than dovishly assumed.
• We see hikes from the BoE in Nov-26 and ECB in Sep-26. Market pricing has probably gone too far given dovish policymaker bias.

• The RBNZ’s widely expected 25bp OCR hike to 2.75% extends gradual normalisation towards a ~3% neutral rate, with a conditional tightening bias beyond.
• External economists are split on the terminal rate: some see 3–3.25%, others up to 4%, highlighting a genuinely data‑dependent path for future hikes.
• Fragile domestic demand and export‑led resilience mean the RBNZ will weigh inflation persistence against growth risks before moving rates much above neutral.

• Return dispersion among banks is wide enough to select on. Individual outcomes range from Fukui Bank (8362 JP) at +264% to Rakuten Bank (5838 JP) at -23%.
• Leadership is rotating. Money is moving from small cheap regionals back toward larger names.
• We constructed a barbel portfolio. Leg A holds six trend-confirmed momentum leaders. Leg B holds six accelerating laggards.

• The September RBNZ resolved as we projected: a 25bp hike with the OCR path modestly trimmed, citing on-target core, anchored expectations, and a softening labour market. Hawkish previews were wrong.
• Market pricing followed our mechanism. With the terminal effectively reaffirmed, the one-in-four weight on a hawkish 4% terminal priced out: the terminal fell 20bp to 3.28%; October halved to 30.5%.
• Key risk arrived before the catalyst: right on the RBNZ, stopped trade. US-Iran escalation on 1 September took us out at -15bp; Brent hit $97.04, spiking the 1y1y to 4.14%.

• Supply disruptions and higher freight costs lifted iron ore in August, but squeezed mill margins and weak demand could limit further upside and trigger renewed price pressure.
• Call buildup at the 100 and 105 strikes signals improving upside sentiment, while unwinding beyond 105 points to limited conviction in a sustained rally.
• Managed money’s positioning turned more defensive in August, as greater short exposure and reduced long exposure signaled weaker conviction in further iron ore price upside.

• The BoC held at 2.25% as expected, but highlighted higher inflation risks from energy and tariffs, raising the odds of future tightening.
• Broadening recovery and excess supply justify a wait‑and‑see stance, while trade uncertainty could cap growth and extend the hold.
• Rate cuts look unlikely while headline CPI stays near 3%; multiple hikes remain possible if price pressures spread beyond energy.

• 36 Iran stance events since 28 Feb produced 27 reversals at a median three-day interval, ten deal claims and no durable deal; six of six deadlines lapsed.  
• Oil moves 13-16% on a single fold, Asia 4-6%, US equities 2.5%, the dollar 1%; the fold moves markets two to three times further than the threat.  
• Playbook: buy Brent on deal dumps, sell ultimatums, own VIX below 16, stay short duration, buy gold on liquidation, fade prediction markets above 80%. 

• Global air freight rates edged slightly higher 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 a modest +0.2% over the seven days to August 31 – reversing the previous week’s slight decline – as the usually quiet late summer season continued.
• Nevertheless, the index remained higher by some +18.1% year-on-year – with rates still at elevated levels following this year’s US-Iran conflict, disruption to ocean shipping traffic through the Middle East and surging jet fuel prices. 

• Amidst all the hype and focus on the global supply side of the equation, there may be some developing trends on the demand side that merit close monitoring.              
• Although not perfect by any means and subject to revision, up to now the U.S. implied refined product demand has been holding up well, considering price levels.                             
• More recently, however, we are witnessing some deterioration in major refined product demand, although we caution it may still be too early to declare a trend.      

Highlights

• NR June production surged 31.5% month-on-month to 26,553 tonnes

• NR exports jumped 35.2% to 38,862 tonnes, led by China.

• Q2 production fell 4.7% year-on-year to 65,266 tonnes.

• Imports remain substantial, indicating that the country’s processing and manufacturing industries continue to rely heavily on external supplies

• In this insight, I provide a detailed analysis of the recent major bloodbath margin calls and liquidations in the Korean stock market, especially in the summer of 2026. 
• There are about 1.5 million active margin accounts in Korea, of which more than 1.2 million margin accounts received margin call triggers and 0.36 million have been liquidated this summer. 
• It may take more time for retail Korean investors to regain confidence and re-enter the domestic market more actively due to recent trauma from their margin calls and liquidations.

• EA inflation’s 31bp rise in August to 3.3% more than completed the reversal of June’s premature optimism. Benign food and goods price rises aren’t seen in services and core.
• Resurgent inflationary pressures reinforce the ECB’s July signal that it would hike again in September. Core inflation is too high, and upside risks remain.
• Demonstrated vigilance should help preserve the anchor of expectations at 2%, avoiding the BoE’s ongoing failure. Two hikes should be sufficient if a winter squeeze is avoided.

• HK Alpha portfolio gained 3.45% in August, outperforming its benchmark by 2.67%.  Since inception, the portfolio has outperformed HK indexes by 60% to 84%. HK ALPHA is up 14.35% YTD.
• The Sharpe ratio stands at 1.21, compared with a benchmark of 0.68 since inception.  This higher Sharpe ratio is driven by excess alpha, which represents more than 50% of returns.
• The portfolio gained in the healthcare, industrial, and technology sectors in August, while utilities and telecom exposure dragged on performance.

• Our trading range peak for the October NYMEX contract has obviously been breached, but we suggest the jury remains out in terms of any substantial further upside.              
• We have been recommending that if October hit roughly $88.00 per barrel, we would sell small volumes of December with tight stops; we hope we have not inflicted much damage.                            
• We will hold fast for the time being to see if the market will move much higher, or if the peak will end up only modestly above our previous parameter.       

• Macro-wise, next week is crucial for labour market data, culminating in August’s US employment report (Fri), along with ISM’s manufacturing and services PMIs, revised Q2 productivity, and the Fed’s Beige Book.
• The Bank of Canada meets Wednesday and is expected to hold. Palo Alto Networks, Broadcom, and Snowflake report earnings this week, following the strong reception given to Nvidia, Salesforce, and CrowdStrike last week.
• The ISM surveys (manufacturing Tuesday, services Thursday) will also be closely watched as real-time indicators of whether the US economy is cooling in line with the softer labour data. 

• WTI fell 4.2% in the week ending 28/Aug despite U.S. sanctions on Iran, as recovering oil flows through the Strait of Hormuz eased the geopolitical premium.
• Energy ETFs mostly fell with WTI, but clean energy held up, showing investors treated the sanctions-driven selloff as a short-term event risk.
• Equinor marks a firm shift back to oil and gas, but its power strategy and state ownership still leave capital allocation questions unresolved.

• Financial markets have been forced to contend with various inflationary threats since the  COVID-19 pandemic. Investors’ attention will eventually return to the productivity benefits stemming from artificial intelligence (AI). 
• The AI investment boom and pressure on governments to increase defence spending raises the cost of capital for corporate and sovereign borrowers. China has avoided high cost AI infrastructure build-out.
• The AI investment boom has produced short-term inflationary pressures, but productivity gains are expected to impart stronger disinflationary forces in the long run, particularly in services.

• Global Ex-USA funds have almost eliminated a decade-long Japan underweight, lifting average exposure to 13.64%, just 0.22% below benchmark.
• Japan has seen strong rotation in 2026, with an estimated $3.8bn of net inflows and broadening ownership across Industrials, Financials and Materials.
• Stock selection is shifting towards semiconductors and industrial technology, led by Kioxia, Advantest and Sumitomo Electric, while established holdings including Nintendo and Sony lose ground.

• We had discussed various signals for gold and see some of them reversing at the tail end of the summer as we had discussed on the Precious Metals portal.
• COMEX Gold recently rebounded from lows in the 4000, especially in early August.
• Directional option strategies on MAR27 COMEX Gold could help investors position for the next move.

• Real GDP grew 7.8%YoY in Q1FY27 (Apr-Jun’26), led by 10%YoY growth in the tertiary sector (which constitutes 55% of the economy). For H1CY26, real GDP grew 8.2%YoY. 
• With monsoon rainfall 14% below-normal so far, Agriculture will be weakened, especially in Q3FY27 (kharif harvest). But the rest of the economy will be resilient, delivering 7.6% FY27 RGDP growth. 
• A key factor enabling India to sustain growth is relative price (& interest-rate) stability. The big cuts in excise duties on petrol/diesel cushioned consumers, keeping inflation lower than elsewhere. 

• El Nino trades tend to get discussed as futures positions – long Cocoa, long Sugar, short whatever the weather is punishing this month.
• That is the obvious layer. The less obvious one sits in equities of companies whose operating margins are already so thin that a commodity price move which barely registers for a diversified producer can flip a loss-making segment into a meaningfully profitable one.
• Sudzucker is a live example of exactly that setup, playing out right now.

• It remains to be seen whether the latest U.S.-Iran military strikes were “one-off,” or the tip of the iceberg of a renewed and intensified military conflict.              
• The military exchange appeared to be “measured” at this time, however, and we believe the oil market’s response was “proportional.”                            
• We see no reason to amend our long-standing and previously delineated trading range of roughly $75.00-$88.00 per barrel, basis the prompt NYMEX crude oil contract.      

• The US Treasury targets Banque Misr’s UAE branch in its economic D-Day against Iran.
• GDP grows at 5 % in Q3 2026.                                                     
• Unemployment at its lowest since 2013.

• Offshore relative value: We tested 12-month relative returns across onshore vs. offshore, and both vs. EM. Offshore China is the oversold leg, driven by its own weakness rather than onshore strength. 
• AI rotation: The performance gap reflects capital favoring the onshore industrial upgrades vs. offshore consumption. Re-rating requires offshore earnings pickup regardless of how cheap the multiple looks.
• Stock selection:MSCI China Index (MXCN INDEX) is dominated by Tencent (700 HK) and Alibaba (9988 HK) while dispersion across the index is wide. We built an investable bucket.

• Just when it appeared the “relative calm” would continue, the U.S. and Iran have resumed military strikes.
• At this juncture, however, we see no reason to amend our previously delineated trading range for the prompt NYMEX crude oil contract of roughly $75.00-$88.00 per barrel.          
• However, given Friday’s surge in value, we consider NYMEX RBOB cracks to be overvalued from a fundamental, seasonal basis as we move into September.           

• A review of recent events/data impacting our investment themes and outlook
• Warsh’s “hawkishness” provides an opportunity to pick up precious metals and commodities
• The Chinese platforms follow their Western counterparts in the raise and spend game

Highlights

• Exports remain resilient and increasingly value-added

• Domestic raw-material supply is becoming the main structural constraint

• The outlook is positive for manufacturing but dependent on supply-side reform: 

• Bank of Thailand kept interest rates unchanged at 1%, it's a bit dangerous to be leaving the interest rate unchanged when inflation has picked up and is likely to go higher over the course of the rest of the year. Philippines Central Bank raised interest rates to 5% from 4.75%, not good news for a country where investment is contracting at almost double-digit levels. Bank of Korea also raised 25bps to 3% to ease the inflation pressure caused by the semiconductor industry.
• Taiwanese Central Bank used to be one of the sound money proponents in Asia because it monitored money supply growth and credit growth as the variables which would determine monetary policy, but that is gone as Taiwan moved towards a cheap exchange rate strategy.
• Chinese industrial profits increased about 11% year on year in July, 17.6% year to date, which is very different from what we're seeing in the return on equity in the stock market. The overall profit figures in China are not that badly and that usually is the precursor for an upswing in the business cycle.

• Opportunities to recover from the energy supply shock this summer have been lost, with the inflationary squeeze intensifying, albeit with demand remaining resilient.
• Central banks are responding, with rate hikes in Korea and the Philippines, while the ECB’s Meeting Accounts strongly signal September and Chair Warsh sounds hawkish.
• Next week is the RBNZ’s turn to hike, although Canada should stay on hold amid the trade war’s renewal. Flash EA inflation and US non-farm payrolls are data highlights.

• July’s unanimous hold masked support for a hike. The new meeting Accounts confirm that another rate rise is likely in September unless the inflation outlook improves significantly.
• The Accounts stress persistent upside cost risks from gas, crack spreads and food, with inflation seen above target into 2027 despite softer underlying pressures.
• Some members see rates as not yet mildly restrictive. Robust credit and resilience tilt the bias towards at least one more hike before an extended data‑driven pause.

• The BoK raised its Base Rate by 25bp to 3.00% in a broadly expected back‑to‑back hike, but the hawkish dot plot now points to 3.25–3.50% within six months.
• Stronger growth and sticky core inflation keep inflation above target for “a considerable time”, making further hikes likely unless data undershoot current projections.
• Housing and household‑debt risks now anchor a more pre‑emptive reaction function, limiting scope for early cuts even if headline inflation edges closer to target.

• BSP’s third 25bp hike to 5.0% was expected as above‑target inflation to 2027 extends a tightening bias and delays any hopes for rate cuts.
• Upside risks from El Niño, oil and wages mean future moves hinge on core inflation, expectations and evidence of second‑round effects.
• Despite weak growth, BSP’s inflation forecasts imply a prolonged pause at restrictive levels, with cuts only likely once price risks and expectations ease.

• Crude oil futures were trading lower for a third session on Wednesday, but steadied later in the session as tensions remain high after the US announced a new round of economic sanctions against Iran on Monday.
• Oct26 ICE  Brent futures were 1.2% lower at $87.54/b (2032 BST), while Oct26 NYMEX  WTI was at $81.99/b , down 0.5% changed versus Tuesday’s settle.
• However, benchmarks pared most of the earlier losses that saw Brent print a low of $85.41/b as the situation in the Middle East remains highly volatile, while a lower-than-expected US crude inventory build helped to steady markets.

• Inflation is 1pp above band, but expectations are anchored, unemployment is at a decade high, and domestic inflation is decelerating. The ~4 hikes priced (to ~3.46% terminal) are too rich.
• 2 September MPS is the catalyst: receive NZD 1y1y at 3.90%, target 3.55%, stop 4.05%. Data undershoot May projections; a held or trimmed track leaves pricing two hikes rich.
• The 7 November election adds unpriced optionality. Labour has pledged to restore the employment mandate; a dual-mandate committee facing decade-high unemployment is unlikely to deliver the marginal hikes priced in.

• The healthcare and materials sectors have gained strength and momentum in Hong Kong over the last month, as the overall market has seen broader participation.
• The market continues to see net outflows, although it has technically regained its trend support level, suggesting further gains in 2H26.
• Bloks Group (325 HK) shares have surged on positive news following the announcement of 1H26 earnings.  The company initiated a buyback earlier this year and announced its first dividend.

• Corporate tax revenue surged 19.7%YoY and central GST revenue 16.9%YoY in Apr-Jun’26 (Q1 FY27), suggesting a robust economy that comfortably withstood the oil-price shock, likely growing well over 7%YoY. 
• The YoY acceleration in GST revenue (despite rate reductions in Sep’25) reflects strengthening private consumption. With exports of goods and services also growing double-digits YoY, the economy is buoyant. 
• INR weakened despite the stable current account, mainly on account of large net capital outflows. Debt-creating inflows have stabilised FX reserves, and inflows into equity markets are set to accelerate. 

• Analysis: China Races to Build Its Own Gene-Editing Toolkit — With an AI Assist In a lab in Changzhou, an industrial city in eastern China, researchers at agritech startup Wimi Biotechnology Co. Ltd.
• are doing something that sounds almost too simple: they “cut” a single stretch of corn DNA, let the plant repair itself, and wait to see what new trait emerges — higher yield, a shorter stalk, less water in the kernel.
• (London) — In June 2025, Aqua 1 Foundation, an obscure UAE-based investment vehicle, shocked the cryptocurrency market by announcing a $100 million investment in digital tokens

• After 9 months of relentless selling in Asia foreign institutions bought US$6bn in August. Taiwan (US$10.3bn) and India (US$3.15bn) were bought while Korea was sold (-US$7.3bn).
• In 2026 YTD, FIIs have sold US$109.5bn in Korea, US$42.5bn in Taiwan, US$24bn in India. Sharpest FII investment recovery in India: US$5.3bn buying in July-August after US$29.3bn selling in January-June.
• For this FII recovery to sustain, we need the US treasury yields to moderate and the Asian currencies to stabilize. The other necessity, robust Asian earnings, is panning out well,

• Indonesia’s 2027 Budget projects a narrower fiscal deficit of 2.4%, presenting an apparent return towards fiscal discipline after near-misses in previous years. 
• But much of the consolidation rests on optimistic macro-assumptions rather than genuine spending compression or revenue uplifts. These assumptions are hostage to likely changes in domestic or external conditions. 
• The budget is a ‘satisficing’ response to market concerns rather than genuine course correction. The underlying pressures on fiscal space remain unaddressed.

• Household energy utility prices are not much higher than before the energy supply shock began, and are unsurprisingly announced to be rising by only 4% in October.
• The ongoing supply shortage is squeezing prices higher as winter approaches, with inventory levels perilously low in Europe, relying on a warm and wet El Niño season.
• Pass-Through to the CPI/RPI is dampened this time by the blending of fixed tariffs with a high weight. Except that policy and tax changes hit immediately in April and October.

• Why are all four people that are featured in the South Korean banknotes from the 15th/16th centuries? (Why is there no one from the past 300 years)?
• The real reason why no modern person is included in the South Korean banknote is due to concerns about fracturing the political divide of the country even further. 
• Lee Jae-Myung administration is expected to pass a huge 800+ trillion won budget next year which is likely to pressure the government bond yields even higher. 

• The Hong Kong market has regained momentum and strength since bottoming in June.  The materials and healthcare sectors have outperformed this month, with gold’s advance underpinning metals’ outperformance.
• Growth factor investing continues to lag, while large-cap stocks have had the highest Sharpe ratio over the last year.  Value and dividend yield factors have outperformed in the long-only space.
• GenScript Biotech (1548 HK) broke out to new highs in August, surpassing its 2022 high.  The company has seen a surge in its mainland revenue over the last year.

• In Depth: Shein Heads for Hong Kong IPO as Growth Slows, Regulatory Pressure Mounts In the sprawling industrial districts of Guangzhou, thousands of garment factories operate around the clock, churning out polyester dresses, denim jeans and other viral fashion items destined for consumers around the globe.
• Shein Seeks Up to $1.8 Billion in Hong Kong IPO at $27 Billion Valuation Chinese fast-fashion retailer Shein launched its Hong Kong initial public offering on Monday, seeking to raise as much as HK$13.9 billion ($1.8 billion) at a valuation of about $27 billion.
• China Signals No ‘Bazooka’ Stimulus in Key State Media Commentaries China’s flagship state newspaper has used a prominent pseudonymous commentary series to defend the country’s slowing economic growth and signal that Beijing will resist large-scale stimulus.

Highlights

• Physical premiums compressed as Asian grades lose ground against increasingly competitive African rubber

• Falling exchange stocks provides a cushion despite weak downstream demand and cautious procurement

• June rubber import and tire export rebound signal improved buying after May’s caution.

• Record high US yields could impact Asia through rising cost of capital dampening growth and valuations. Besides, foreign money could continue to move towards safe haven US treasuries.
• The Asian markets where central banks are forced to hike policy rates, and the markets that are steeply valued relative to earnings growth or ROEs could be particularly vulnerable.
• Korea, Indonesia and Philippines are hiking rates. Judging by inflation trajectories and real rates, India and Thailand could join later this year. India and Taiwan appear overvalued relative to ROEs.

• President Trump’s brief interview with Al Jazeera confirmed our long-standing view on U.S.-Iran negotiations, i.e. “we will believe it when we see it.”            
• NYMEX crude oil prices rallied in response, after the October contract achieved a “7 handle” and as such has returned to our “no-man’s land.”                          
• We were disappointed that the decline did not continue and provide the buying opportunity we have been discussing and looking forward to.     

• Three Treasury interventions in three weeks, EUR/JPY sales, FIMA request, doubled buybacks, read as term premium suppression. The Treasury put looks to have a higher strike than the Fed put.
• Rising term premium squeezes the Treasury twice: it inflates the interest bill, and it threatens equities, the one asset class keeping US financial conditions loose. Debt management becomes financial stability.
• Japan’s bill buffer is spent. The next yen defence sells coupons into the long end or borrows through FIMA. By 16 September the cap has moved or it hasn’t.

• In late May we argued that Asia was fully valued and awaited correction. That correction has happened over past two months with Asia’s forward PE declining from 15.1x to 12.7x.
• Some markets have corrected more and have had significant EPS upgrades. These markets should catch up with their earnings trajectory, Korea and Onshore China in particular. HK looks undervalued too.
• Indonesia, though affected by governance-related concerns and fiscal worries, seems cheaper than the headwinds warrant. Other Asian markets are in “no man’s land”: not too expensive, not egregiously cheap either.

• LME cash-to-3M copper spread has eased sharply, but tight nearby supply and concentrated positioning keep the market vulnerable to renewed squeezes.
• Copper options show a firmer upside tilt as CVOL and skew rise, while call-heavy positioning contrasts with cautious managed-money positioning.
• The Government of India’s HCL OFS offers up to 6% stake at INR 514, with non-retail bidding opening Tuesday (25/Aug) and retail bidding Wednesday (26/Aug).

• The US unveiled new policies to impose secondary sanctions on countries that have trade or other relationships with Iran.  These policies assert US control over any nation’s financial sovereignty.
• Iran’s most consequential trading partner is China, and the US has not sanctioned any major Chinese company or bank because of the risk of “blowing up the global economy.”
• As in the military conflict, the US is overplaying its hand and risks substantial global economic consequences by pursuing short-term, impulsive policies rather than proper negotiations to achieve long-term objectives.

• The oil market continued its selloff under the belief that a return to the negotiating table is likely, but again, we will believe it when we see it.            
• • Our energy equities may be telling a bit different story, however, generally holding up better than the commodity thus far.                          
• While the prompt NYMEX crude oil contract remains in our “no-man’s land,” we are buyers in December if October falls below $80.00 per barrel toward our $75.00 per barrel trough.      

• Crude oil futures retreated for a second session on Tuesday amid a relatively calm reaction to the latest round of US sanctions on Iran, although regional tensions remain high.
• Oct26 ICE Brent futures were 3.9% lower at $88.53/b (2030 BST), while Oct26 NYMEX  WTI was at $82.24/b , down 3.3% versus Monday’s settle.
• The US Treasury Department has broadened the list of entities and tankers sanctioned by Washington as part of Operation Economic Outcast, which plans to isolate Tehran from the global financial system.

• Scott Bessent’s “D-Day” did not offer much thus far in terms of the details of new sanctions against Iran and involving any nation that deals with Iran.           
• Right or wrong, our Iranian sources are not concerned about any incremental economic or financial impact beyond that currently in effect.                         
• Yesterday’s oil market selloff appeared to reflect the belief that this “brinkmanship” will lead to a return to the negotiating table, but we will believe it when we see it.    

• Global air freight rates edged slightly lower last week as the often quieter late summer season continued 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) declined narrowly by -0.2% over seven days to August 24, leaving it still higher by +21.0% from 12 months earlier
• With ongoing tensions in the Middle East, disruption to ocean traffic through the Strait of Hormuz and high jet fuel prices continuing to keep rates up at relatively elevated levels.

• WTI rallied 6.6% last week as U.S.-Iran tensions kept a geopolitical premium embedded, before reversing on 24/Aug as markets priced in formally announced sanctions.
• Options positioning turned cautiously constructive as falling implied volatility unwound the risk premium, while energy ETF gains stayed concentrated in upstream names over utilities.
• TotalEnergies posted strong Q2 cash generation on higher prices and refining margins, strengthening its balance sheet while reshaping its portfolio toward LNG, power and reduced Russia exposure.

• Cover Story: China Tech Firms Drive AI Data Center Boom in Southeast Asia Inside the Hong Kong Convention and Exhibition Centre on a hot and humid day in July, the Data Center Asia event was packed.
• The crowd included Chinese data center operators, colocation providers and suppliers of energy and liquid-cooling systems.
• But Southeast Asian companies were just as visible.

• We rank more than 350 Global equity funds using our proprietary Quality framework to identify the highest-quality portfolios, which we classify as Quality Leaders.
• Quality investing is driven more by stock selection than large country or sector bets, with broad ownership of Microsoft, Alphabet, TSMC and NVIDIA across Quality Leader portfolios.
• Quality comes at a price. Despite owning many of the world’s strongest businesses, Quality Leaders have been the weakest-performing group over the past five years.

• The Hong Kong market continues to show gains on the back of a strong July.  The standout sectors this month include materials and healthcare.
• Since the bottom of its bear market, Hong Kong has continued to outperform most Asian markets, even though its valuation remains well below that of others in the region.
• Sichuan Kelun-Biotech Biopharmaceutical (6990 HK) was rated a BUY by several analysts, including UBS and JPM, after 1H26 earnings announcement, benefiting from its partnership with Merck & Co (MRK US).

• Chinese monthly data for July were released earlier in the week, retail sales, industrial production, fixed asset investment and property investment numbers were all pretty soft. The retail sales number was running at 0.2% YoY, industrial production was at 4.5% while sitting around 5% to 5.5% for most of the year previously and fixed asset investment continued to contract.
• Japan released its GDP numbers for the second quarter which came in at 1.1%, half analysts’ expectations which were for an annualized increase of 2%. The story gets worse because if we dive into investment, which is the focus of our attention when it comes to the GDP numbers, gross fixed capital formation was down 1.2% year on year.
• I announced my retirement as Chief Economist at Aletheia Capital in a WeeBits note this week. The jacket will be hung up at the end of September. I would do some Substack work for anyone who might be interested in hearing about Asia in the future.

• Crude oil futures edged higher on Friday after a run of steady gains cemented a second weekly rise, as the tense standoff between the US and Iran showed no signs of easing.
• Oct26 ICE  Brent futures were 0.25% higher at $94.01/b (2023 BST), while Oct26 NYMEX WTI was at $86.80/b , essentially flat with Thursday’s settle, though both benchmarks had traded higher earlier in the day.
• US Treasury Secretary Scott Bessent told CNBC on Thursday that Washington will impose the “toughest sanctions in history” to “collapse” the Iranian government, calling on other nations, including China, to join the effort.

• Government bond yields in the US, Japan and UK have been rising due to inflation and fiscal policy conduct concerns. Japan’s problems are compounded by slow normalisation of monetary policy.
• The US Treasury’s recent foreign exchange intervention masks their concerns about rising long-term government bond yields, fearing Japan will have to liquidate their US bond holdings to support the yen.
• Treasury Secretary Bessent offered Japan access to US dollars via the Fed’s FIMA Repo Facility, a decision that has governance consequences and raised concerns about fiscal encroachment on Fed policy.

• Analysis: For Chinese EVs in Europe, Success Hinges on Holding Their Value Chinese automakers are storming Europe with relentless momentum.
• In 2025, exports of China-made battery and plug-in hybrid electric models to the EU surged, approaching 1 million vehicles, according to industry data.
• In Depth: How China’s Automakers Aim to Keep Up Momentum in Europe When XPeng Inc.

Highlights

• Indonesia May rubber exports hit a recent low of over 99,400 tons

• May returns at over US$206 million, supported by higher prices

• Area under rubber cultivation declines by about 17% in five years until 2026

• The market is moving into its seasonal demand recovery with supply still constrained, leaving South Korea, India and other alternative suppliers to cover more of the shortfall just as maintenance could reduce their ability to do so.

• The summer slowdown is giving way to a seasonal demand recovery just as spare supply remains thin, making every major export source more important.

• Supply is being redistributed rather than restored. South Korea, India and China have increased their importance as Middle East and other Asian flows weaken, but the shift leaves the market more exposed to disruption at any one of those suppliers.

• Traders are hunting hard for short opportunities in commodities right now.
• With the momentum carrying so many markets, that’s a thankless job: selling into a live trend costs you nerves and usually money.
• The grain market, though, could soon offer a cleaner setup – reason enough to take a dedicated look here.

• In the first quarter of 2026, Canada’s economy grew by 1.93% (QoQ).
• This growth was primarily driven by increases in both real private and government final consumption expenditures, which rose by 1.53% and 3.03% (QoQ), respectively.
• However, net exports negatively impacted GDP, contributing -0.64%. Additionally, real gross fixed capital formation slowed, increasing by 1.56%, down from 3.33% in the fourth quarter of 2025.