In today’s briefing:
- HEM: Nov-25 Views & Challenges
- Making Sense of the Gold Price Retreat
- Prepare for the Year-End Rally!
- Asian Equities: Foreign Flows Wobbled in October; Taiwan Sold, Korea Moderated; India Bounced Back
- End of Quantitative Tightening Partly Eclipsed by Hawkish Pivot by Fed Chairman Powell
- Luxembourg Economy – September 12, 2025
- Third Quarter 2025 Letter to Investors
HEM: Nov-25 Views & Challenges
- Pushback by Powell and peers trimmed some excessively dovish pricing, but the BoE converged down on poor data.
- The BoE should also resist pressure as underlying issues are unbroken by relatively marginal recent payback.
- We now see markets overpricing easing most in the UK. More weakness is needed to signal a threatening trend.
Making Sense of the Gold Price Retreat
- We offer a plausible scenario that explains the recent surge and correction in gold.
- The market misinterpreted the “Liberation Day” USD decline as a “Sell America” trade instead of a “Hedge America” trade and panicked out of USD and rushed into gold.
- We expect a bottom in gold in Q4 or Q1 as the new Fed Chair pivots monetary policy in a more expansionary manner.
Prepare for the Year-End Rally!
- A review of our Trend Asset Allocation Model reveals a broadly based momentum-driven global bull.
- The S&P 500 is also entering a period of positive year-end seasonality.
- In light of the bullish support provided by the intermediate trend, investors should be positioning for a rally into year-end.
Asian Equities: Foreign Flows Wobbled in October; Taiwan Sold, Korea Moderated; India Bounced Back
- In October FIIs bought US$2.36bn of Asian equities, sharply lower than US$8.42bn in September. They sold Taiwan (-US$3.2bn), bought Korea (US$4.2bn) and India (US$1.66bn). ASEAN continued to be sold.
- FIIs’ dampened sentiment was triggered by Asia’s toppish valuations and a decline in probability of a Fed rate cut in December, which in turn led to a stronger US Dollar.
- Going forward we expect flows to recover in Taiwan and stay healthy in Korea, as sentiment on AI capex recovers, driven by strong growth and robust capex targets of hyperscalers.
End of Quantitative Tightening Partly Eclipsed by Hawkish Pivot by Fed Chairman Powell
- Although the Fed reduced its policy rate by 25 basis points last week, as expected, Chairman Powell disappointed markets with a hawkish pivot about further declines in 2025.
- The cessation of quantitative tightening , effective 1 December, was also announced due to the elimination of excess liquidity in the financial system and strains in repo funding markets.
- The elevated demand for repo funding due to high Treasury debt issuance means the Fed has effectively lost control of its balance sheet due to profligate fiscal policy conduct.
Luxembourg Economy – September 12, 2025
- Luxembourg’s Economy is projected to continue the positive growing trends in the next three years.
- According to IMF, the economy is expected to present growth rates of 1.03%, 1.58% and 2.21% in the years 2024-2026, rebounding from the slight contraction of 0.69% in 2023.
- Investments as percentage of GDP, are to stay between the 14-15% level, i.e. well below the 18% average of the last years.
Third Quarter 2025 Letter to Investors
- During the third quarter of 2025, the Massif Capital Real Assets Strategy returned 36.1% net of fees, bringing our YTD returns to 41.5% net of fees.
- Gross-of-fees gains from the long book were 35.9% and short book gains were 0.73%.
- The Real Assets strategy has now been running for 27 quarters, and this was our best quarter to date, bringing our since-inception annualized net-of-fees returns to 14.6%.
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Data and News
- ✓ Events & Webinars
