Daily Brief Macro: Defining Global Quality and more

• 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.