Macro and Cross Asset Strategy

1. UK Backloads A Tax Trap

By Phil Rush, Heteronomics

• The UK’s fiscal hole was even smaller than we thought (£6bn), allowing the government to backload a fiscal tightening that is unsurprisingly focused on tax increases.
• Delaying prudence to an election year is implausible. There will be a substantial deficit in 2029-30, not the current budget surplus in the OBR forecasts based on existing policy.
• Labour is setting up a tax trap for Reform and the Conservatives to say how they’d avoid tax increases, similar to the backloaded spending cuts they myopically ignored in 2024.

2. UK Labour Party: Damned If They Do…

By Alastair Newton, Heteronomics

• Whatever Rachel Reeves comes up with in her 26 November budget, she is bound to run into criticism from within her own parliamentary party.
• Bond markets seem set to react badly to this, especially if it seems likely that her overall objectives will be undermined by internal resistance to proposed measures.
• She and the PM will probably survive this, but a market-unsettling change and slide to the left look increasingly likely by mid-2026, followed by defeat at the next election.

3. US Market: WALK TO THE EXIT NOW BEFORE EVERYONE STARTS RUNNING!

By David Mudd

• The US market is weakening again as an interday reversal after Nvidia results foreshadows continued selling in the AI theme.  Market breadth is weakening and stocks at 52-week lows surging.
• Volatility has reached levels last seen during the tariff tantrum in April. Insider sales of Nvidia have surged since June. Private credit and private equity markets are showing stress.
• US consumption has narrowed and is highly dependent on stock market gains. Household debt levels are at new highs, and consumer sentiment is lower than during the GFC in 2008/09.

4. Overview #42 – What a Difference a Day Makes!

By Rikki Malik

• A review of recent events and data impacting our investment themes and outlook
• US interest rate expectations continue to whip markets around, even as more cracks emerge in the AI trade.
• Japan goes for broke with its latest budget and debt issuance.

5. HEW: Slow Shovels

By Phil Rush, Heteronomics

• UK fiscal policy had an even smaller hole to fill than we expected, with the work to fill it in delayed until the election. There is no dovish pressure on the BoE from this.
• European data releases were relatively resilient again, with household lending and business sentiment broadly increasing. National inflation surprises were offsetting.
• Next week’s Euro area flash HICP is still tracking 2.1% in our forecast. Final PMI releases and the BoE’s decision maker panel survey results are our other release highlights.

6. 241: Europe’s Economic Comeback: What It Will Take for a Broad Resurgence

By The Bid, The Bid

• Europe is experiencing an air of optimism in 2025 due to more flexible fiscal policy and increased government spending on infrastructure and defense.
• European defense companies and banks have seen significant growth year to date, indicating potential for further investment opportunities.
• Challenges to Europe’s long-term competitiveness include an aging workforce and underdeveloped capital markets, but progress is being made in areas such as harmonizing tax rules and increasing efficiency in capital markets.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

7. The Heat Is On: News Flow and Sentiment in CHINA / HONG KONG (November 27)

By David Mudd

• Hong Kong market continues to consolidate during the early stage of its Secular Bull Market.  Strength and momentum indicators show further weakness ahead.
• Materials and healthcare sectors have lost momentum with other sectors trendless.  Analysts target 20% price gains in materials sector over the next year.
• China Taiping Insurance Hldgs (966 HK)  shares fell on Thursday on concerns over the insurer’s estimated HK$2.6B exposure to a HK residential project at the center of a deadly fire.

8. How to Trade the AI Panic

By Cam Hui, Pennock Idea Hub

• The recent market pullback may have been attributable to a combination of breadth deterioration and a highly bifurcated market.
• In the short term, technical price action and sentiment have become stretched to the downside that a bounce is more or less inevitable.
• We continue to believe stock prices will rally into year-end, but we are watching for signs of a bullish follow-through after the reflex rally for confirmation.

9. Japan Is at a Policy Crossroads, Yen Offers a Guide

By Pranay Yadav, Mint Finance

• BOJ minutes from the October meeting show 8 of 13 members backing near-term hikes, raising odds of tightening in December–January as wage negotiations strengthen.
• Japan’s JPY 21.3T fiscal package and rising JGB yields highlight a growing policy clash, pushing the yen toward the prior 160 intervention zone.
• Historical patterns of rapid yen reversals indicate that a BOJ hike alongside emerging Fed cut expectations materially increases the probability of a near-term yen appreciation.

10. Japan: CAN TAKAICHI SURVIVE THE COMING TSUNAMI?

By David Mudd

• Prime Minister Takaichi started a firestorm with her comments about attacking  China over the Taiwan issue. Japan’s missile deployment near Taiwan further inflamed the situation.
• President Xi called President Trump on the matter, and Trump followed up with a call to Takaichi soon after.   Takaichi’s miscalculation in provoking China may have led to U.S. concessions.
• PM Takaichi’s fiscally reckless budget is adding fuel to a fire as the yen, JGBs, and stock market are falling simultaneously.  Inflation, currently at 3% is rising again.

1. UK Disinflationary Kool-Aid

By Phil Rush, Heteronomics

• UK disinflation relied on smaller utility price hikes and only went as far as the 3.6% forecast before September’s dovish surprise. It does not mean a path to 2% lies ahead.
• A broad rebound in price increases took the annualised median impulse above 4% to average 2.5% over two months, or 3% on the year, as the underlying problem persists.
• The BoE’s December decision pivots around the Governor, who seemingly needs upside news to avoid delivering a cut, so this outcome preserves that riskily dovish course.

2. Japan Picks a Fight with China!! What Happens Now?

By David Mudd

• Japan has intentionally stepped into the middle of the geopolitical battle between the U.S. and China with Prime Minister Takaichi’s policy-changing Taiwan comments to Japan’s parliament.
• China’s retaliation has been swift and tactical, issuing travel warnings, high-level diplomatic reprimands, and conducting military exercises near the Senkaku Islands.  China has promised a continuing substantial and broad-based response.
• We expect China’s response to include rare earth export and Japanese trade restrictions and targeted boycotts of Japanese goods on the mainland.

3. HEW: Micro Risk Off

By Phil Rush, Heteronomics

• Risk assets have suffered, despite decent Nvidia results suggesting AI demand hasn’t turned yet, and the macro data remaining resilient. Fears are more theme-specific.
• US labour market activity entered the shutdown solidly, and low jobless claims suggest it survived fine. Meanwhile, UK inflation only lost a little excess, and our forecast rose.
• Next week’s UK Budget is the lowlight of our week, but it may struggle to live up to all the noisy hype. Sneaky backloaded tax hikes will close the latest forecast hole again.

4. EA: Unsatisfying disinflationary snack

By Phil Rush, Heteronomics

• Slower food price inflation nibbled the EA rate down to 2.1% in October, while services increased to their fastest pace since April. Labour costs are still rising too fast.
• Underlying inflation metrics are broadly a bit beyond target, risking a slight overshoot in the medium term, but the median impulse is reassuring, weighed down by France.
• Energy prices are set to bump inflation around the target in 2026, averaging above the consensus in our view. The ECB would need tightness elsewhere to shift rates, though.

5. The Dollar Is Smiling But It’s Not Happy 🙁

By David Mudd

• The dollar has strengthened in the face of weakening equity markets, however it is not the Dollar Smile theory supporting its move this time.
• A more hawkish Fed signals a break with past conditioning for a Fed Put to bail out the stock market.  Post-COVID inflation caused by Fed policies will constrain aggressive easing.
• Safe-Haven support for the dollar and Treasuries broke down during the April selloff, indicating a change in foreigners’ perception of holding USD assets and leading to significantly increased dollar hedging.

6. Japan: The New Takaichi Trade, SELL THE RIP!

By David Mudd

• Sentiment in Japan has reversed sharply showing strains in the JPY and JGB markets.  The Nikkei 225 has retraced all its gains since the election of Prime Minister Takaichi.
• The market is nervous about the size of Takaichi’s economic package, which will be ¥21.3 trillion; 27%. more than her predecessor pledged. It will increase bond issuance substantially.
• Tensions from Takaichi’s provocation of China show no sign of easing.  China has started economic and other measures to respond. The US has removed a missile launcher from Japan.

7. US: Resilient Into Shutdown

By Phil Rush, Heteronomics

• US payroll data revealed resilience going into the US government shutdown, with jobs growth the strongest since April and annualising to a pace capable of plateauing growth.
• Surging labour force participation drove unemployment up in the least disappointing way, with the employment to population ratio making a contradictory improvement.
• Jobless claims suggest stability into the shutdown’s end, besides noisy federal claims. The FOMC may not get the evidence it needs to cut again in December. It may not exist.

8. Asian Equities: A Correction, Not a Bear Market; Rates Still Falling and Earnings Are Catching Up

By Manishi Raychaudhuri, Emmer Capital Partners Limited

• Combination of concerns about Fed rate trajectory, AI capex monetization, Chinese growth slowdown and Japanese Yen carry trade unwinding brought the US and Asian markets 4-5% down since late October.
• Expensive valuations are now justifiably correcting. Notwithstanding worries about a December cut, the interest rate trajectory remains resolutely downwards. Asian disinflation offers several central banks further room for monetary easing. 
• AI capex monetization worries will wax and wane. But Asian AI enablers’ cash flows seem safe and valuations inexpensive. Corporate earnings environment is solid in US and recovering in Asia.

9. Asian Equities: Policy Focus Reflected in Sector-Wise IPO Revival in Leading Markets

By Manishi Raychaudhuri, Emmer Capital Partners Limited

• Asian IPOs’ spike in 2025 (21% higher till October) has been driven primarily by HK/China. Indian IPOs are almost at the same level as in a very strong 2024.
• Policy thrust for “New Productive Forces” are driving capital raising from industrials, materials, technology and utilities and shall continue to do so. Healthcare should also be a buoyant capital raiser.
• India’s policy focus on manufacturing and listing of PE-funded companies should drive IPOs from industrials, materials and consumer discretionary. Financials shall also remain a large issuer sector.

10. Walker’s Weekly: Dr. Jim’s Summary of Key Global Macro Developments – 21 Nov 2025

By Dr. Jim Walker, Aletheia Capital

• U.S. data releases are expected to clarify economic conditions while political pressure complicates monetary policy sentiment.

• Japan’s new leadership has escalated geopolitical tensions with China through unnecessary provocative statements.

• Asian growth remains mixed but resilient, led by strong performances in Vietnam, India, Taiwan, and Malaysia.

1. UK: Jobless Embolden Bailey’s Cut

By Phil Rush, Heteronomics

• Another disappointing rise in the unemployment rate should embolden Bailey’s bias to cut rates in December. Falling net underemployment contradicts, but is easily ignored.
• Another step down in payrolls, matched by employment this time, could be blamed on fears for the Budget. Redundancies also spiked, although vacancies are stable.
• Headline pay growth is slowing as expected, while the monthly impulse remains excessively strong, so the hawks are unlikely to see inflation persistence as broken.

2. UK: Return To Residual H2 Gloom

By Phil Rush, Heteronomics

• UK GDP disappointed in Q3 at 0.1% q-o-q after the ONS revised away August’s surprise resilience and led it into a slight September fall, setting up for a soft Q4 too.
• Residual seasonality in service sector growth has reasserted itself on the average post-pandemic path. So statistical stories seem more plausible than fundamental ones.
• Weakness in labour market activity is more relevant. The hawkish half of the MPC probably needs disinflationary news to support a cut, but the Governor seems swayed.

3. CHINA’S AI COMMODITIZATION: Can Global AI Valuations Survive?

By David Mudd

• Chinese AI model downloads have surpassed those of the U.S. putting at risk the valuations of the large hyperscalers in the U.S.
• Chinese open-source AI models offer a more secure, efficient, and lower cost alternative to Chat GPT -5 , Claude 4.5 Sonnet, and other U.S. LLMs.  
• We believe that there will be a turning point when investors will realize that the Chinese open-source AI models have undercut the premise of U.S. global dominance of AI.

4. 239: How Private Markets Could Reshape Portfolios and Investment Opportunities by 2030

By The Bid, The Bid

• Private markets are investments into non-listed companies or assets, providing diversification and potentially higher returns for portfolios
• There is a significant trend of companies staying private for longer, leading to increased opportunities for private market investors
• Individual investors are increasingly looking to allocate to private markets, with the total alternative assets under management expected to reach $32 trillion by 2030.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

5. NPS Could Raise Allocation of Korean Stocks = KOSPI to 5,000 Soon

By Douglas Kim, Douglas Research Advisory

• One of the biggest stories in the Korean stock market in the past several weeks has been the discussions about NPS potentially increasing the allocation of Korean stocks.
• If NPS announces a meaningful increase in the allocation of Korean stocks for its AUM, then there could certainly be an acceleration to KOSPI reaching 5,000. 
• Based on what we have gathered so far, there is a higher probability (70-80%) that NPS meaningfully increases the allocation of Korean stocks in the next several months. 

6. Technically Speaking Breakouts & Breakdowns – HONG KONG (November 10)

By David Mudd

• The Hong Kong market is consolidating with rotational buying into value and high dividend factor investments.  Mainland buying has slowed and diversified away from tech into low volatility names.
• After leading the market for nine months, growth and momentum factors turned down sharply in October.  The energy sector is showing increased strength and momentum, while tech and healthcare lag.
• Xinyi Solar Holdings (968 HK) had a technical breakout after forming a Golden Cross with a rebound off its 50 day-moving-average. The share price is benefiting from anti-involution policies.

7. Oil: Wisdom of (Mohammed bin) Salman

By Alastair Newton, Heteronomics

• Most analysis of Opec+’s 2 November decision is as overly simplistic as the cartel’s public justifications. Calling an unwinding ‘time out’ in 2026Q1 is by no means unwise.
• Most notably — and despite continuing economic and political uncertainty — it is very likely that the market will be awash with oil in any case for some months to come.
• In other words, the cartel may already have done enough to achieve its primary objective, i.e. clawing back market share at the expense of US shale producers.

8. Asian Equities: Earnings Estimate Upgrades Climbing, but Slowly and Selectively

By Manishi Raychaudhuri, Emmer Capital Partners Limited

• Midway through the 3Q25 result season, eighteen Asian market-sectors have reported consensus EPS estimate upgrades over past one, three and six months. A quarter ago, we identified 11 such sectors.
• Eleven of these sectors are from HK/China, Korea and Taiwan. Seven are from ASEAN markets, dominated by Thailand. India and Singapore are conspicuous by their absence.
• Among the notable sectors with EPS upgrades, Chinese base metals, HK/Chinese and Korean financials, Chinese pharmaceuticals, Korean and Taiwanese technology, Thai utilities and communication and Philippines transportation stand out.

9. HEW: Back To Business

By Phil Rush, Heteronomics

• The US government reopened after some of those seeking to expand the state inevitably broke ranks to reverse some shrinkage, although the fight could resume in January.
• UK activity data were broadly disappointing as unemployment rose and GDP fell at the end of Q3, after downwards revisions helped realign with the residual seasonality.
• Next week’s UK inflation data will be more insightful for the BoE’s hawks and us. The belated release of US macro data will probably be more substantive market news.

10. Walker’s Weekly: Dr. Jim’s Summary of Key Global Macro Developments – 14 Nov 2025

By Dr. Jim Walker, Aletheia Capital

1. UK CPI Trips Into The Fall

By Phil Rush, Heteronomics

• UK inflation’s march higher ended early as expectations tripped over a drop in airfares to slow slightly in September, ahead of slightly falling back through the Fall seasonal.
• Weakness elsewhere cut the annualised median rate below 2% for the first time since March. That is likely to be a small soft spot relative to the worrying cumulative upside.
• Our forecasts remain close to or below the consensus until June, after other forecasts rose in last month’s survey. We still see wages stoking an excessive underlying trend.

2. Credit Cockroaches Incubating

By Phil Rush, Heteronomics

• Write-downs at two regional banks follow the cockroaches of First Brands and Tricolor bankruptcies, and should not be dismissed as isolated idiosyncratic events.
• Overly accommodative monetary conditions are stimulating markets to incubate cockroach eggs that may spawn as private credit malinvestment in the next recession.
• It is too early for these eggs to hatch, aided by the warm support of further Fed rate cuts. So, risk assets will probably keep on rising in the void of economic data releases.

3. EMERGING THEMES: China’s Next 5 Year Plan

By David Mudd

• China will roll out its 2026 – 2030 five-year plan this month, which outline the economic and social roadmap until the end of the decade.  
• Historically the five-year plans have been a roadmap for investors to look for tailwinds for economic sector performance.  We believe the high-tech industries will remain the main focus for investment.
• Exporters of high-end equipment and machinery will continue to benefit with the consumption sector being a focus for international investors.

4. A Sharp Increase in Short Selling Balance in the Korean Stock Market Past Seven Months

By Douglas Kim, Douglas Research Advisory

• The net short selling balance in KOSPI reached 12.6 trillion won as of 20 October. This is the largest amount ever.
• The top 5 companies in KOSPI with highest short selling balance/market cap ratio include Kakaopay, L&F, Hanmi Semiconductor, Cosmax, and LG H&H. 
• Net short position In KOSDAQ as a percentage of total KOSDAQ market cap more than doubled from 0.5% as of 31 March to 1.1% as of 21 October 2025.

5. A Fragile Bull

By Cam Hui, Pennock Idea Hub

• The narrow U.S. market leadership presents fragility challenges for investors. 
• The economy is becoming increasingly dependent on the top 20% of consumers, and the market is dependent on Magnificent Seven and AI stocks to lead the market.
• While there are no signs that these trends are about to break, the market is overextended in the short run and can correct at any time.

6. The Heat Is On: News Flow and Sentiment in CHINA / HONG KONG (October 20)

By David Mudd

• The materials sector continues its outperformance in Hong Kong, however the recent sharp pullback showed a weakening in strength and momentum.
• Mainland investors continued to buy Hong Kong listed stocks heavily during the market pullback earlier this month.
• Zhejiang Sanhua Intelligent Controls (2050 HK) quashed market rumors about a large robotic order from Tesla (TSLA US); however, it continues discussions on cooperation opportunities.

7. Technically Speaking Breakouts & Breakdowns – HONG KONG (October 18)

By David Mudd

• Hong Kong has pulled back this month as the U.S. trade war intensifies, however it remains in a Secular Bull Market.
• Materials and Healthcare sectors continue to outperform YTD, with Technology coming in a distant 3rd place.
• Hengan International Group (1044 HK)  had multiple breakouts relative to MSCI Asian indexes and on an absolute basis.  Analysts’ recommendations are split as the shares trade at their target price.

8. The Art of the Trade War: THE END OF THE BEGINNING

By David Mudd

• The meeting next week between Presidents Trump and Xi will mark the beginning of  a resolution to trade and other issues between the two countries.
• The most difficult tech and rare earth elements issues will probably not be resolved.  Increased tariff rates will be delayed again.
• TikTok and Taiwan are key issues and will set the tone for the U.S.-China relationship during President Trump’s remaining term.  

9. EM Active Funds: What’s Driving Performance in 2025?

By Steven Holden, Copley Fund Research

• Active EM funds average +26.0% YTD, their strongest year since 2017, though still underperforming the benchmark by -1.8%. Fewer than 40% have outpaced the iShares MSCI EM ETF.
• Style and regional positioning drove dispersion. Value managers and South Korea exposure supported gains, while Aggressive Growth styles and India-heavy allocations weighed on returns. High Active Share strategies also trailed.
• Active EM outperformance remains consistent long-term. Active funds have beaten the benchmark in 14 of the past 22 years, with the ETF often ranking near the peer group median.

10. HEW: Heavy Hitters Pulling Punches

By Phil Rush, Heteronomics

• Sentiment stabilised this week as credit issues are realised to be more of a long-term problem than an imminent issue. Indonesia and Korea hawkishly held their policy rates.
• Inflation undershot final expectations in the UK and US, yet constitutes less excess rather than outright weakness, and merely aligns with slightly earlier forecasts.
• Next week’s release calendar has some heavy hitters, but pulling their punches. The Fed cut and ECB hold are widely expected, as is a marginal slowing in EA inflation.

1. UK: Mixed Messages On Labour Market

By Phil Rush, Heteronomics

• Most narratives can find some support in the latest labour market report, preserving uncertainty that should keep the BoE on hold at least until some clarity emerges.
• Unemployment has increased (LFS) or stabilised (payrolls), while pay is shockingly resurgent (inc-bonuses), slowing as expected (ex-bonus) or stagnating (private pay).
• Weakness isn’t as clear as the consensus and press sometimes make out, but concerns aren’t invalidated. We still expect resilience to preserve excess inflation hawkishly.

2. Walker’s Weekly: Dr. Jim’s Summary of Key Global Macro Developments – 17 October 2025

By Dr. Jim Walker, Aletheia Capital

• China: Monetary & Trade Indicators Strengthen: September data show broad-based monetary growth
• Korea: Early Signs of Trade Softness: The first 10 days of October show exports down 15% YoY, imports down 22.8%.
• India: Inflation Trends Favor Rate Cuts: Wholesale prices up just 0.1% YoY in September — a stark contrast to >10% in 2022 and flat in 2023.

3. UK: Unseasonably Resilient In Q3

By Phil Rush, Heteronomics

• Slight growth in August sustains an above trend level of activity and is tracking to a 0.2% q-o-q pace for Q3, matching our forecast and the consensus, but disappointing the BoE.
• The ongoing slowdown in service sector activity repeats residual seasonality that would leave a trough in two months, but there is slightly more resilience this year.
• Policymakers shouldn’t react to statistical noise, and are unlikely to amid ongoing excesses in underlying inflation that a stabilising labour market wouldn’t break.

4. The Art of the Trade War: PAIN THRESHOLD FOR THE TACO TRADE!!

By David Mudd

• Tensions between China and the U.S. have increased. Last week’s tit-for-tat exchanges culminated with President Trump threatening China with higher tariff rates and a cancellation of his meeting with Xi.
• Trump’s Friday post on social media immediately caused U.S. markets to swoon with the S&P breaking support levels.  In a TACO trade moment, Trump reversed his harsh rhetoric on Sunday.
• Anyone can speculate on what the next few weeks will look like for markets, but we believe the market may start pricing in more long-term risk.

5. HEW: Cockroaches Startle Pricing

By Phil Rush, Heteronomics

• Losses on bad and fraudulent US loans raise the risk that more cockroaches will emerge, nourished by monetary policy stimulating asset prices outside of recessionary regimes.
• Market rates fell on this, while macro data didn’t offer direction as UK Q3 GDP kept tracking 0.2%, EA inflation was confirmed, and UK labour market data were mixed.
• Next week’s UK inflation data should reveal a rise, with the CPI reaching 4%. Delayed US CPI data will provide a rare signal more relevant to the Fed’s likely decision to cut.

6. EA: Inflation Rises Briefly In The Fall

By Phil Rush, Heteronomics

• Inflation’s rise to a high 2.3% in September was confirmed in the final print, although some payback remains likely in October. We doubt it goes fully back to the target then.
• Underlying inflation metrics were broadly stable again at about 2.5%, with little progress in most statistical measures for over a year.
• There is little cause for alarm at this stage, so the ECB can keep waiting in a good place, but we still see a greater risk of hikes than cuts in 2026.

7. The Return of Tariff Man

By Cam Hui, Pennock Idea Hub

• We’ve been warning forweeks that the U.S. equity market advance was extended and it could pull back at any time.
• President Trump’s threat to impose high tariffs on China seems to be the bearish trigger.
• Our base case calls for a 5-10% pullback, and we regard any correction as a welcome pause and opportunity to add to equity positions at lower prices.

8. The AI Bubble Debate

By Cam Hui, Pennock Idea Hub

• Are we in an AI bubble? Probably, but much depends on what stage we are in the bubble.
• On one hand, headline M&A deals like the one concluded with AMD is supportive of further gains.
• On the other hand, the recent Oracle earnings report casts doubt about the profitability of AI cloud computing sustaining elevated valuations.

9. US Equities: Maintaining Elevated Leadership Valuations Will Require Upside Surprises

By Said Desaque, DeSaque Macro Research

• Hype surrounding the benefits of artificial intelligence (AI) has increased in 2025, despite a slowing economy. While new economy sectors have contributed to growth,  not all is AI-related.
• There are valid comparisons between the current environment and the late 1990s surrounding hype about the beneficial impact of technological innovation on corporate performance. S&P500 leadership is priced to perfection.
• Current US equity leadership valuations are exposed to threats over the next 9 months, including stress in credit markets due to high bond issuance by companies in AI-related activity.

10. Asia Cross Asset Podcast: Japan – The New LDP Leader: Implications for policy and markets

By At Any Rate, At Any Rate

• Ayako Takashi advocates for responsible expansionary fiscal policy, focusing on income distribution rather than aggressive fiscal expansion.
• Takashi’s comments on the relationship between the government and the Bank of Japan do not necessarily indicate clear intervention, but may put pressure on the central bank.
• The BOJ may need to deliver rate hikes every six months to combat elevated inflation, with market expectations of a terminal rate around 1%. Timing of rate hikes may be tricky, especially with fluctuating exchange rates.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

1. HONG KONG ALPHA PORTFOLIO: (September 2025)

By David Mudd

• Hong Kong Alpha portfolio gained 8.45% in September and 60.89% and 62.80% YTD and since launch one year ago.  The portfolio has outperformed Hong Kong indexes by more than 40%.
• The portfolio has a Sharpe ratio of 3.23 YTD and has generated more than 40% of its returns from stock-picking (alpha).  Its beta is low at only 1.17.
• At the end of September, we increased exposure to AI and robotics and sold positions in the consumer and finance sectors.

2. UK: Lending Looks Stimulated

By Phil Rush, Heteronomics

• Lending activity is sustaining beyond the levels prevailing before the stamp duty tax hike distortion. Only housing transaction volumes are down, but by less than before.
• New loan rates have fallen by 23bp since then, for a 110bp cumulative fall. New rates are close to the outstanding stock. Many borrowers are refinancing for similar deals.
• Past tightening has broadly passed through, but the strength in broad money growth signals that monetary conditions are settling at a slightly stimulative setting.

3. EA: Core Excess Revealed In Sep-25

By Phil Rush, Heteronomics

• Inflation’s break above target to 2.23%, within 1bp of our forecast, came as past energy price falls dropped out to reveal the more resilient underlying pressures.
• Small upside surprises in large countries, like Germany and Italy, were balanced in number and contribution by larger surprises in small ones, like Greece and Estonia.
• We expect less negative payback in October and January, preventing our profile from languishing below the target through 2026, like the consensus view does.

4. UK: Government Leads Imbalances

By Phil Rush, Heteronomics

• Household saving and inflation have eroded their debt burden while corporates remain prudent. A lack of imbalances to correct starves the UK of fuel for a recession fire.
• Persistent fiscal and current account deficits highlight where the UK’s primary risk lies. If the market regime focuses on fiscal issues, the corrective pressures could be fierce.
• We don’t expect that correction to occur, but the Chancellor should tread carefully, while doves need not worry about a recession arising from healthier other UK sectors.

5. Australian Equities: Where are we now, and what’s next?

By MAGELLAN – IN THE KNOW, Magellan Asset Management

• Australian economy remains sluggish, but some positives include recovery in small caps and resilience of Australian consumers
• Market volatility and narrow leadership driving unhappiness among active investors
• Resilience of Aussie consumer and strong retail results stood out in recent reporting season, with small caps and US housing exposure also notable themes

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

6. HEW: Watching What Didn’t Happen

By Phil Rush, Heteronomics

• The US government shutdown removes the potential for official statistics to damp dovish concern, raising the likelihood of October’s cut, especially with other weak data.
• EA unemployment’s rise reflected rounding rather than substance. UK national accounts revealed healthy balance sheets, aside from the government, and bullish lending stats.
• Next week’s calendar stays thin with US releases suspended and Europe’s cycle focusing on the following week. The RBNZ, BoT, BSP and Peru announce rates next week.

7. Gold Mania, Niobium Dreams, and Antimony Nightmares (Datt)

By Money of Mine, Money of Mine

• US monetary policy is accommodative and markets are buoyant, especially in commodities
• Investors need to be cautious about being overly bullish in current environment
• Similarities seen with 2006-2007 period, particularly in disruptions in copper supply and new technologies in metal recovery; investors should be wary of hype and potential risks involved

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

8. Get Ready to Buy the Dip, But Not Yet

By Cam Hui, Pennock Idea Hub

• We remain intermediate-term bullish on stocks, but the market is at risk of a correction.
• If last week’s weakness is the start of a pullback, short-term trading indicators point to further downside potential.
• Investors should be prepared to buy the dip, but not yet.

9. Indian Market: WANT TO BUY THE DIP, THINK AGAIN !!

By David Mudd

• India’s markets continue to underperform Asia since our insight last November recommending investors to “Fade the Market”.
• Foreign investors continue to exit the market this year with the largest net outflow since COVID.
• The Trump administration is pressuring India in trade negotiations with reciprocal tariffs (25%), additional tariffs for importing Russian oil (25%), pharma tariffs (100%), and new restrictions on H-1B visas.

10. EA: Rounding Jobs For Migrants

By Phil Rush, Heteronomics

• A surprise rise in EA unemployment reflects rounding rather than alarming weakness, with labour supply and demand still surging. Finland’s woes are more idiosyncratic.
• Supply has trended much faster post-pandemic, sustaining demand at its old trend without extreme capacity constraints. Migration has more than accounted for the rise.
• Ukrainians are dominating the flow and complicating the read through to disinflationary spare capacity. Wage growth is an even more critical signal when supply is uncertain.

1. Broadly Slower Services PMIs

By Phil Rush, Heteronomics

• PMIs broadly disappointed and declined relative to August, but absolute levels mostly remain robust or at least expansionary. We are not concerned by these noisy moves.
• Such broad slowing seems shocking relative to the past few months, but it is historically a regular occurrence. Five of the previous twelve were at least as broadly bad.
• The labour market remains tight in the euro area, softened in the UK, and steady in the US. Slower activity does not mean disinflationary slack. We stay relatively hawkish.

2. EM Fixed Income: (EM) Credit where credit’s due

By At Any Rate, At Any Rate

• Despite a mixed Fed meeting, EM markets continue to rally in FX and rates
• EM local markets still in a good place with upside potential in growth and improving flow picture
• Sovereign credit markets have had a strong performance year to date, with investors feeling optimistic but also acknowledging the need to be humble in assessing macro risks and valuations.

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3. HEW: Resilience Reminders Roil Doves

By Phil Rush, Heteronomics

• Bullish GDP revisions and jobless claims provided further reminders that the economy is much more resilient than market pricing has dovishly assumed, causing a hawkish shift.
• Nonetheless, the Riksbank surprised with a 25bp rate cut, but projected that as the terminal rate before hikes start reversing the stimulative setting in 2026.
• Next week’s US payrolls data dominates the calendar, given the potential to break market conviction in an October Fed cut. EA inflation should rise back above the target.

4. Asian Equity: Relative Valuations Have Mostly Converged; Korea the Only Large Rerating Candidate

By Manishi Raychaudhuri, Emmer Capital Partners Limited

• Most large Asian markets’ forward PE multiples are significantly higher than their long-term averages. But their valuations relative to Asia-ex-Japan are mostly at the averages, only Korea’s is significantly lower.
• HK/China’s relative PE is slightly lower than average, Taiwan’s is slightly higher. ASEAN markets’ relative PE are sharply lower than their averages, but we think most lack rerating catalysts.
• We think Korea and Philippines deserve to get rerated. India’s relative PE, though at its long-term average, could decline slightly further, to reach its recent bottoms.

5. Will AI save the US Economy?

By Alastair Newton, Heteronomics

• European policymakers and investors see Donald Trump’s economic policies harming Republican prospects in the 2026 midterms and the 2028 general election.
• The Trump Administration is placing a good deal of faith in AI as a panacea. But the US may not have the skilled labour or the power-generating capacity to fuel an AI boom.
• Nor is it clear whether the current Administration is preparing for the related socio-economic disruption from which the MAGA faithful would be far from immune.

6. Resilience Is Reinstating

By Phil Rush, Heteronomics

• Falling US jobless claims and bullish GDP revisions are reinstating evidence of ongoing resilience. Underlying GDP only slowed by about 0.1pp in H1, or 15% of 2024’s average.
• Risk management rate cuts to balance the higher costs of being wrong on the downside raise the probability that easing proves premature and swiftly ends.
• The ECB already sees the transmission of its past cuts trending loan growth higher. It may reach pressures consistent with hikes next year, and it already clashes with easing.

7. Asian Equities: Foreign Flows Come Roaring Back in September; India, ASEAN Still Getting Sold

By Manishi Raychaudhuri, Emmer Capital Partners Limited

• Fed’s “risk management cut” and a dovish outlook of 2 more cuts in 2025 are driving foreign flows back to Asia. US$11.5bn inflows in September till date underscores the sentiment.
• Korea (US$4.94bn) and Taiwan (US$7.5bn) grabbed the Asian flows entirely, driven by the rejuvenated AI capex theme. India (-US$904m) continues to be sold, though the selling pace has diminished.
• FIIs bought Indonesia (US$672m) in August and sold almost identical amount in Thailand. Philippines, despite being cheap and having a few sectors with upward earnings inflection, continues to be sold.

8. US Tariff Policy: A.K.A. WHACK A MOLE!

By David Mudd

• The U.S. continues to play “Whack-A-Mole” using tariffs to threaten and/or negotiate on many economic and geopolitical issues.
• The Trump tariff policy, which may be declared illegal by the Supreme Court next month, has caused manufacturers to hold off on hiring and expansion plans.
• Although tariff revenue for the U.S. government is at an all-time high, the U.S. will still record its highest trade deficit in history this year.

9. SLBs in 2025: Where Step-Ups Create Event-Driven Alpha

By Evan Campbell, CFA, Leaf & Ledger Limited

• Set-Up and scale: 245 SLBs face 2025 KPI tests; applying a 19% 2024 miss rate implies ~50 step-ups of ~25 bps, worth ~20–60 bps PV. >$80bn notional, heaviest in Q4.
• Trade design, credit and equity: Pre-position where slippage exists and no pre-test calls; run structure pairs; trade post-print drift; for equities, SLB misses flag delivery shortfalls and funding-cost creep.
• Why the market is inefficient: ESG KPIs hide in footnotes and annexes, overlooked by analysts. Verification lags and slow vendor updates delay repricing, so step-up structures stay mis-weighted and mispriced.

10. Indonesia : Sri Mulyani’s Exit Compounds Fiscal Risks

By Priyanka Kishore, Asia Decoded

• The exit of Indonesia’s veteran Finance Minister, Sri Mulyani Indrawati, marks a turning point in the country’s fiscal regime.
• With her out of the picture, it is only a matter of time before the government revises the 3% deficit ceiling higher to accommodate Prabowo’s large spending plans.
• This is a slippery slope and an indiscriminate push for spending, without concomitant tax reforms, could put debt on an unsustainable path.