Macro

• Sailun revives Bridgestone’s idle TBR plant, breaks ground in Egypt  
•  Chinese pneumatic tire exports climb 4.6% in value in H1 2025  
• Jiangsu General ramps up projects in Thailand and Cambodia  

• Anglo American (AAL LN) – BHP Group Ltd (BHP AU) fails in May 2024; 17 months later, Anglo American (AAL LN) – Teck Resources (TECK US) merge.
• The Anglo Teck portfolio will have more than 1.2 million tonnes of annual copper production, anchored by six world-class copper assets with more than 70% copper exposure.
• The company will divest its non-core assets, including DeBeers, steelmaking coal, nickel, and other similar assets, and pivot to consolidating/growing its copper operations.

• Staying in the ECB’s “good place” encouraged a neutral bias around its unanimous decision for no change, while being appropriately open to tackling future shocks.
• Staff inflation forecasts still undershoot the target, with recent upside news seemingly postponing passthrough rather than trimming the extent into something like our view.
• President Lagarde sounded relaxed about France’s spread widening, and the ECB did not discuss the TPI. We still expect no ECB easing against this, or further rate cuts.

• Delivery /: China’s Regulator Ramps Up Push to Curb Food Delivery Subsidy War
• Environment /In Depth: Why ‘Green Tides’ Keep Rolling Into East China
• Drugmakers /In Depth: Disputed Sinovac Chairman Struggles to Retain Control Amid Multibillion-Dollar Dividend Payouts

• After years of drought, NEXT’s IPO on the Mexican Stock Exchange is welcome news, particularly given its growing portfolio in Industrial Real Estate —our preferred real estate segment—, and a focus on Logistics —our preferred segment within Industrial Real Estate—. To be developed in several stages, NEXT’s offer included 9 properties (and slightly over 500k sqm of GLA), yet we expect a meaningful increase to over 7.0mn sqm pending regulatory approval after the recent (Aug. 25) shareholder vote to integrate the Jupiter (from e-Group) and FUNO’s industrial real estate portfolios.
• We are thus accounting for a complete consolidation during 4Q25, with FY26 the first full year with NEXT’s real estate portfolio.
• We therefore see NEXT as solidly positioned to capture current market trends in industrial real estate. 

• The BoE’s annual Quantitative Tightening announcement in September should see it prune the targeted size, we expect by £20bn to £80bn, concentrated in the long-end.
• Fewer maturities in the year ahead would otherwise put too much pressure on active sales into a market that lacks appetite, especially with LDI demand disappearing.
• Pruning the size and duration delays costs crystallising by several billion a year, which the Chancellor will welcome, yet QT’s poor design remains an expensive fiscal disaster.

• The Hong Kong secular bull market continues to broaden and has broken all long term resistance levels. The HSCEI has beaten Asian and global peers over the last 18 months.
• Growth and Momentum factors have been the best performers in the HSCI year to date. The Materials and Healthcare sectors continue to show increasing strength in their relative returns.
• Cloud Village (9899 HK) had a breakout pattern from a continuation triangle after reporting a deal to stream Korean drama series to Chinese market. The company’s profits grew in 1H25.

• Spurred by 50bp of rate cuts in Feb-Apr’25, real GDP accelerated to 7.8%YoY in Q1FY26, with GFCF rebounding to 7.8%YoY growth. On the production side, services grew a stellar 9.3%YoY. 
• The additional 50bp cut in Jun’25 will boost growth in Q2FY26, while an effective 2ppYoY reduction in GST rates will spur consumption and sharply reduce H2FY26 CPI inflation to 1%.
• Over the Oct’25-Sep’26 period, the 100bp cut in repo rate and CRR, and 2ppYoY decline in GST, is likely to provide a 2pp kicker to RGDP, enabling 9% growth. 

• We expect inflation for the second half of August to come in at 0.07% bw, reflecting the absence of pressures in agricultural prices.
• On an annual basis, headline inflation would stand at 3.56% Typically, inflation for this period is 0.16% bw.
• Our lower estimate is explained by an expected stagnation in agricultural prices (0.01% bw). 

• Chile’s policy rate was held at 4.75%, surprising no consensus forecasts amid stable activity and FX markets.
• Core inflation is higher than June projections, signalling persistent price pressures on goods and services.
• Future moves hinge on additional data. Persistent wage-driven inflation may delay any rate cuts.

• eVTOL / In Depth: Motor-Makers Start Their Engines for Electric Aviation Take Off
• Autos /Price War Batters Chinese Automakers’ Profits
• Stocks /Analysis: Why Asia Stocks Have Rallied This Year
• Energy /: Sinopec and Saudi Aramco Launch $10 Billion Petrochemical Venture in Fujian

• Yuan /Cover Story: How the Yuan is Taking Over the Dollar’s Role in Global Trade
• Corruption /Exclusive: Ex-CSRC Chief Yi Huiman Faces Corruption Probe Likely Linked to ICBC
• Banks /: Citi Ends UnionPay Membership Amid China Consumer Banking Retreat

• President Trump’s current preference for rate cuts is not unconditional. Higher-order logic suggests this would not override fundamental resilience or fairly prove “TACO”.
• Political pressure is state-dependent, with the messenger mattering more than the objective truth beneath any message. Trump’s Chair will have a stronger hand.
• Brazil suffered President Lula’s pressure, but he still supported his “Golden Boy’s” turn from dovish dissent to forceful rate hikes. Fed pricing ignores the potential for change.

• US base oils demand could ease in face of downward price-pressure and healthy availability of supply.
• Buyers that built stocks as buffer against supply-disruptions during Atlantic hurricane season could start to tap those volumes before seeking additional supplies.
• Demand could face more downward pressure if buyers are wary about exposure to further drop in prices.

• Asia’s base oils prices hold relatively firm vs Singapore gasoil even as they edge lower.
• Light-grade margins slip even amid signs of healthy regional demand.
• Premium of ex-tank Singapore Group II N150 to FOB Asia cargo price also falls to lowest Q2 2024.

• Asia’s base oils demand could be more cautious amid expectations of healthy availability of supply within the region and in other markets.
• Signs of more manageable build-up of surplus supplies in July-Aug 2025 curb pressure on refiners to make sharp price adjustments to clear volumes.
• Signs of pick-up in availability of supplies in other markets could still put pressure on regional refiners to adjust prices to stay competitive.

• US base oils export-price premium to VGO falls close to lowest level this year.
• Price-premiums fall to bottom of relatively narrow range since late last year.
• Narrow price-range over extended period suggested that any pressure from surplus supply remained manageable during that period.

• FOB Asia Group II base oils prices hold unusually firm versus US export prices so far in Q3 2025.
• Asia’s firm prices make arbitrage to move surplus supplies to Americas hard to work.
• Closed arbitrage complicates removal of surplus supplies, raising prospect of build-up of supplies in Asia-Pacific market.

• Global base oils prices mostly fall versus feedstock/competing fuel prices.
• Price-differentials fall more steeply in Europe and US than in Asia, pointing to weaker supply-demand fundamentals in those markets.
• Even with lower differentials, global base oils margins hold at levels that incentivize refiners to maintain firm output.

• Despite the near certainty that the Bayrou government will fall on 8 September, investors are wary, rather than spooked, reckoning that they have seen all this before.
• They are likely correct to judge that compromises will then be found, allowing the 2026 budget to be passed by a new centrist government.
• However, this would again only be putting off the day when a real crisis point is reached.

• Global oil demand remains relatively healthy with little signs of a near term global recession
• Sanctions on Russia and Iran could impact oil supply, but buyers are finding ways to navigate around restrictions
• Non-OPEC supply is expected to outpace global demand, leading to a surplus and potentially pushing prices into the 60s by year end.

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• Meanwhile, the other commodity cohorts are now deeply “undervalued” when compared to the price of gold.
• Commodities excluding gold, relative to gold prices, have fallen to their lowest level since 2021, according to a graphic by Topdown Charts…
• In the latest UBS CTA-flow analysis, the investment bank says that it “expects more agricultural buybacks in the coming weeks.” 

• Despite concerns about loss of independence during a second Trump administration, the Fed will always be answerable to Congress in terms of the policy conduct towards achieving its dual mandate.
• The Fed has enjoyed independence from the Treasury since 1951, but it has achieved better inflation outcomes since being required to pursue a politically imposed dual mandate.
• Both the Bank of England and the Bank of Japan have been bestowed with greater independence, but both have struggled to achieve their respective inflation targets since the COVID-19 pandemic.

• Global growth has been revised upwards since June, with a persistent trend in positive economic data.
• The Fed is facing pressure to cut rates, with markets already pricing in a September easing.
• EM local markets are looking appealing, with credit suffering from valuation issues rather than fundamental problems.

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• June exports dipped 1.04% YoY but rose 11% month-on-month  
• Sri Lanka uses diplomacy to safeguard US$300 million US market  
• Domestic Reforms, EU market access next on agenda

• Steepening of the 530s treasury curve globally is at historically high levels, driven by different factors in the US, Europe, and the UK
• US curve steepness is reflective of repricing of additional Fed easing, while Europe’s steepening is technical and related to Dutch pension fund transitions
• Market hesitancy to fade the steepness due to ongoing technical flows in Europe and front-end driven steepening in the US, with uncertainty surrounding terminal rates in both regions

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• Critical Minerals Outside of China Will Command A Strategic Premium
• As risk appetite in the mining sector increases, the biggest gains will be in the junior miners and exploration companies
• We highlight eight companies as a basket of such miners which should benefit from these trends

• Inflation in the first half of August stood at -0.02% bw due to a positive surprise in core inflation.
• With this result, the annual rate rose slightly to 3.49%.
• For this fortnight, the market consensus was at 0.12% bw and our estimate at 0.08% bw. T

• Banco de México’s balance of payments data shows that in the first half of the year, Foreign Direct Investment inflows totaled USD 34.3 billion, 2.2% higher than in the same period of 2024.
• Of the total investments, USD 28.9 billion (84%) corresponds to reinvested earnings, USD 3.1 billion (9%) to new investments, and USD 2.2 billion (6%) to intercompany reinvestment.
• The performance of new investments stands out, registering an annual growth of 63% compared to the same period of the previous year, reaching levels not seen since 2023.

• This is a follow-up on our piece 10 days ago Rate Cut To Spur Copper Performance In The Short-Term to Over 10K USD/Ton. 
• Copper, trading above USD 9,800/ton, appears poised to breach USD 10,000/ton; prospective rate cuts and supply deficits support upside, partially offset by elevated exchange inventories.
• Southern Copper (SCCO US) and Antofagasta PLC (ANTO LN) are our favorite names. The restart of the Cobre Panama mine (although low probability) could boost First Quantum Minerals (FM CN).

• We are seeing fundamental headwinds in the form of elevated valuations and earnings uncertainty from tariffs, which won’t be visible until Q3 earnings season.
• On the other hand, the technical outlook appears relatively benign.
• Our base case calls for some choppiness ahead. We are near-term cautious, but not bearish.

• We are now set for a decline in the benchmark grade from 62% to 61% effective January 2nd, 2026, for Platts, aligning the benchmark with more commonly traded fines.  
• Alot of exchanges have begun to adopt this change, and we will update our FY26 numbers for it as well. Iron ore remains elevated at 105 USD/ton, climbing 2.3% WoW. 
• We continue to advocate strongly for Fenix Resources (FEX AU). Read Fenix Resources (FEX AU): Exciting Value-Adding Catalyst Can Triple Production Again for a detailed outline of our thesis. 

• Fed Governor Chris Waller is a leading candidate to be the next Fed Chair, and the issue of Fed independence is paramount.
• Our evaluation of his economic case for rate cuts should be whether the decisions are based on sound data, theory and solid judgment.
• He has shown solid thinking on employment, but his justification for rate cuts based on the Fed’s inflation mandate is weaker and shows signs of wishful thinking.

• India has undertaken a major reform of the GST regime, collapsing the 5 slabs to 3, and substantially cutting the GST-rate for almost all goods and services. Positive for PCE. 
• Since 27th Aug’25, India faces a 50% tariff on more than half of its goods exports to the US (its biggest export market), a significant setback to growth. 
• FY26 fiscal deficit will likely exceed government targets, but this stimulus will ensure 8%+ real GDP growth despite weaker goods exports. Services strength will keep CAD to 0.6% of GDP. 

• Another disappointing payroll release provides the fundamental cover needed for the Fed to end its pause with a rate cut on 17 September without being too political.
• The BoE is starting its own pause, and if it goes a quarter without cutting, historically, it’s not resumed the cycle. Its DMP survey confirmed inflation’s persistent problem.
• Another upside inflation surprise seems set to keep the ECB on hold amid record low unemployment. We also expect it to preserve its view that policy is in a good place.

• Asian gasoline market saw strengthening in mid August, with cracks rebounding to around $10 per barrel
• Demand for non oxygenated low sulphur blend stocks increasing, driven by policy changes in Australia and the Middle East
• Malaysia’s subsidy increase for 95 RON gasoline impacting interron spreads and market volatility, potential challenges in transitioning to Eurofi standard gasoline by 2027

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• Chinese mills eye production restart, boosting iron ore demand, but bloated construction steel inventories threaten to cap price gains.
• Managed money participants increased net long exposure to 134.9k lots last week, with overall futures and options open interest slipping by 11.2%.
• Bullish MA crossover drove prices above short-term averages. However, prices pressing the upper Bollinger band suggest overextension and heightened risk of a near-term pullback.

• Trump’s tariff threats against India have left the latter exposed vis-à-vis the world’s major powers. New Delhi’s geostrategic position is arguably the worst it has been in decades. 
• While it traditionally relied on hedging relationships between Washington, Moscow, and Beijing, ties with the two have become less reliable even as tensions with the third persist. 
• New Delhi’s influence in the South Asian subcontinent has also eroded, and neighbouring countries are increasingly tilting towards Beijing or adopting more neutral postures.

• SR demand in FY 2025 surges 9.3%, outpacing 6.1% rise in output  
• Imports rise nearly 17% YoY to 413,627 tons in FY 2024-25  
• Reclaimed Rubber consumption up 8.55% to 167,500 tons  

• We often talk of people wanting things to be Black and White and being disconcerted when they realise that they are in fact always Grey, but we would extend that metaphor to the full colour spectrum.
• We want things to be clear and bright and in vivid colour, but in fact everything is, well, basically a bit brown, the colour you get when all the other paints are mixed together and thus, to us at least, it represents the current and pervading sense of muddle and confusion.
• Politically, we see Red socialists embracing Green issues as their central policy, while Greens are pursuing Red Marxism (the author James Delingpole wrote a great book about this called ‘Watermelons’ as in Green on the outside, Red on the inside. But we would just merge the two colours and get brown.)

• AI /In Depth: Legal Professionals See a Case for AI, but It’s Not Ironclad
• Malaysia /: Trade Minister Touts Malaysia’s Advantages as a Chip Investment Destination
• Vietnam /: Chinese Firms Shift Gears in Vietnam — From Factory Floors to Storefronts

• Following the £2m fund raise on 4 July 2025 at 0.3p, it’s been a busy two months.
• The announcements in August include a paid contract extension with a global partner, an update on licensing opportunities, and a new Biomarker Discovery service launch.
• Aptamer is a life science Company developing customised affinity binders through its proprietary Optimer platform which enables clients to take new approaches in therapeutics, diagnostics, and research applications. 

• What is Happening: VanEck shifts GDX’s US$19.5bn benchmark to MVGDX on 19 Sept 2025, cutting constituents from ~62 to 44 with stricter purity and liquidity rules.
• Impact: Estimated US$10bn turnover; Zijin excluded, Pan American added, Amman included short-term but copper-driven revenue mix riks future exclusion under MVGDX’s ≥50% threshold.
• What to Do: Fade Zijin’s mechanical exclusion, stay cautious on Amman, and rotate into high-purity beneficiaries (Agnico Eagle, Pan American Silver, Shandong Gold) likely to gain weight.

• CFOs are telling the BoE that they plan to keep raising prices by more than 3% in 2026. The BoE should take notice, as this survey’s previous warnings have proven accurate.
• Expected increases reflect the passthrough of further wage increases beyond a pace consistent with the target. They exceed even our already hawkish forecasts.
• The BoE is unlikely to realise the sharp drop in wage growth it expects by year’s end, without a shock to break the current regime, bolstering our call for no more rate cuts.

• Hong Kong sentiment improving; closed short on property and turned more constructive amid signs of stabilisation.

• Initiated long on China equities, expecting profit recovery from 2026 after prolonged earnings recession.

• Regional PMIs broadly above 50, while U.S. remains weak; Fed likely to cut rates in September.

• The US equity markets continue to struggle as global markets continue to gain this year.  US dollar weakness has only amplified the US equity underperformance.
• On a risk-adjusted basis, US markets show even worse performance with Sharpe ratios substantially below global peers.  This underperformance holds both on a USD and local currency basis.
• Foreign investors have pulled back hard on USD asset purchases this year as seen in import and NIIP data.  We anticipate that pressure on US asset markets will continue.

• BNM holds its OPR at 2.75% as expected. Its data-dependent stance signals patience amid trade uncertainties & resilient domestic conditions.
• Benign inflation (1.4% headline, 1.9% core) provides policy flexibility, and a moderate outlook through 2026 supports an accommodative stance.
• Strong 4.4% H1 growth, driven by robust 7% Q2 domestic demand, leads analysts to expect rates on hold through 2025, with cuts if growth weakens.

• The BoE and Fed rarely resume cutting cycles after a pause, yet the Fed seems set to break its hold with a cut just as the BoE and ECB enter their own pauses.
• 2002-03 is the best historical parallel for the Fed, which signals potential cuts should be shallow and are likely to be reversed. Politics is no match for the fundamental need.
• Persistently excessive UK pressures should prevent the BoE from cutting in November or beyond, with a quarterly pause historically unlikely to resolve in another rate cut.

This Week’s Key Take Aways

• Volatility suggests markets are not concerned about…anything.
• Crude has a down month.
• Industrials have had a great 8 months, will it continue?
• Renewable investment growth continues, everywhere but the US.
• The market has pre-priced in cuts; will it subdue the economic impact?

• Livestreaming /In Depth: East Buy’s earnings fizzle with the exit of one livestreamer
• Mental /In Depth: Rural China suffers a teen mental health crisis
• Vietnam /: How Chinese manufacturing turned Bac Ninh into a Vietnamese boomtown

•  U.S. tariffs and low-cost Asian imports reshape Brazil’s tire industry  
• ADD on Chinese passenger tires renewed to shield local producers  
• Michelin to shut down its Guarulhos plant in Sao Paulo by Dec 2025  

• Dovish hopes for EA disinflation continue to be disappointed by resilient outcomes. The rise to 2.1% in August amid sticky core pressures is opposite to the dovish narrative.
• Euro appreciation’s disinflationary shock is being offset by domestic resilience, which was most surprising in Northern Europe. Our errors were relatively small and balanced.
• Ongoing upside surprises have defied recent consensus expectations of a drift down to 1.8%. The ECB faces broad upside news that should reassure it against cutting again.

• Vietnam /Cover Story: China’s factory exodus is turning Vietnam into the world’s assembler
• SCO /: China pledges billions for new bank to expand Eurasian bloc’s clout
• Renewables /: Saudi power giant ACWA bets big on China’s renewable energy market

• Global base oils prices hold firm versus feedstock/competing fuel prices.
• Margins hold firm at time of year when fundamentals are typically weaker.
• Firm margins incentivize refiners to maintain high base oils output.

• Asia’s base oils prices hold firm versus Singapore gasoil prices.
• Firm base oil margins so far in Q3 2025 point to fundamentals that remain sufficiently balanced and that curb need for lower output levels.
• Firm margins coincide with signs of relatively steady base oils output in early-Q3 2025 even after completion of most plant-maintenance work.

• Asia’s base oils demand could stay more cautious amid expectations of healthy availability of supply, concern about exposure to lower prices.
• Cautious buying would coincide with likely seasonal pick-up in lube consumption in coming weeks.
• Dynamic leaves blenders facing challenge of holding sufficient supplies to meet finished lube demand while maximising benefit of any further fall in base oils prices.

• US base oils prices stay relatively firm and in narrow range vs vacuum gasoil prices.
• Steady base oils price-premium sustains incentive for refiners to maintain high output.
• Supply could get further boost if Atlantic hurricane season remains quiet, leaving market with untapped buffer stocks.

• India’s imported Group II heavy-grade base oils cargo price-premium to FOB prices in US and Asia holds firm and in relatively narrow range in recent weeks.
• Price-spread stays in narrow range as CFR India cargo price tracks lower FOB Asia/US Gulf coast prices.
• CFR India cargo price falls amid pick-up in availability of supplies, boosting buyers’ choice.

• US base oils demand could stay muted as buyers eye existing stocks to cover requirements.
• US base oils/lube consumption fell in month of September from August in three of previous four years, before rising in month of October.
• Repeat of that trend this year would leave buyers with shrinking window to work down existing stocks before slowdown in consumption gathers pace during final two months of 2025.