Daily Brief Macro: Asia Cross Asset: Liberation Day 2.0 and Asia and more

• Not surprised by recent events in the equity market, as it aligns with forecasted growth trends in Asia
• Transitory factors such as front loading and transshipment contributing to expected decline in H2 growth
• Expectation for central banks in the region to potentially ease rates in response to current economic conditions

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• President Trump’s tariff policy seemingly follows a random walk with a drift towards deals. Path dependency raises risks and uncertainty around his volatile whims.
• Corporate avoidance measures have spared their customers from most of the pain, but Vietnam’s deal as a template could belatedly bring more of the pain to bear.
• We assume most countries stay at 10%. The impact of others rising to 20% may be smaller than the anti-avoidance hit, with the total now worth less than 0.4% to UK GDP.

• Plant closures signal Europe’s industrial competitiveness crisis  
• Regulatory burdens over Europe’s retreading sector future  
• Weak enforcement and oversight cloud UK ELT exports   

• We are introducing a new regular series called “Korea: Short Selling Data Analysis.” We will try to provide this insight on a quarterly basis.
• Net short balance ratio for top 20 stocks in KOSPI averaged about 1.7% three months ago, much lower than current levels (3%).
• The average short interest ratio of these top 20 stocks in KOSPI with the highest short balance ratio was 2.6x as of 10 July 2025. 

• Asian currencies bottomed out in early April. FII flows turned positive in May. Flows into Taiwan are recovering the fastest, followed by those into Korea. India’s recovery is relatively tepid. 
• Flows into ASEAN remain negative – the lack of recovery, we think, is due to lack of macroeconomic catalysts, declining EPS estimates and trade related worries. We remain underweight ASEAN.
• We are overweight Korea (recovering EPS, cheapest, flows accelerating). We like Taiwanese tech, key beneficiary of investors’ renewed AI enthusiasm. Overweight on India, despite its overvaluation, stems from bottom-up ideas.

• Discussion covers topics including dollar signals, $CNY fixes, tariffs, and observations on Swiss and sterling
• Dollar remains bearish despite some systematic signals turning less bearish or even bullish
• Client sentiment may be shifting tactically towards throwing in the towel on the bearish dollar trend due to technical patterns, but long-term view remains unchanged

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• Trump announced a 50% Section 232 base tariff on copper imports starting August 1st
• The details of the tariff, including which products it applies to and any exemptions, remain unknown
• The arbitrage between London LME prices and US Comex prices has widened following the tariff announcement, with implications for copper prices in both regions.

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

• While it may seem as a logical step to compare the current cash price with the forward futures contract, that’s unfortunately way too easy to justify such a statement.
• In fact, it is even miss-information.
• What makes more sense is to look at the input cost factors and the forecasts for these components that the USDA is providing. 

• In Japan, disastrous showing of the LDP party in the Tokyo local elections, was its political Kamikaze. The true test will come with this month’s Upper House elections. 
• Voter frustration is mounting over the high cost of living. Real wages are contracting and retail sales volumes weakening.
• The Bank of Japan has changed tack and Trading Post is following suit, now forecasting that the policy interest rate will stay on hold for the rest of 2025.

• Asia’s base oils demand shows signs of facing weaker-than-usual pressure from expected seasonal slowdown in consumption coming weeks.
• Firmer prices for light grades relative to heavy grades, for Group I SN 500, and for prices in India point to ongoing pockets of buying interest even with seasonal slowdown in demand.
• Prices for Group II heavy grades by contrast weaken vs light grades and vs Group I base oils.