Macro and Cross Asset Strategy

Weekly Top Ten Macro and Cross Asset Strategy – Jun 23, 2024

This weekly newsletter pulls together summaries of the top ten most-read Insights across Macro and Cross Asset Strategy on Smartkarma.

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1. Korean Government Is Pushing for a Comprehensive Inheritance Reforms – Will They Pass or Fail?

By Douglas Kim, Douglas Research Advisory

  • In the past several days, the South Korean Presidential Office has announced that it is pushing for a comprehensive inheritance tax reforms.
  • Although the Presidential Office mentioned it is pushing to reduce highest inheritance tax rates from 60% to 30%, the more likely scenario is to reduce this rate to about 50%.
  • The lump sum personal deduction of 500 million won or inheritance tax which has been maintained for nearly 27 years could be doubled to about 1 billion won or more. 

2. Where Now for the Hong Kong Market?

By Rikki Malik

  • Minimum correction targets  have been hit for the Hang Seng Index
  • Some potential catalysts for the resumption of the bull market
  • We highlight some suggested sector allocations for the next phase 

3. EM Watch: Is the Chinese copper demand down 40%?

By Andreas Steno, Steno Research

  • Welcome to our weekly EM and Metals editorial.
  • It’s hard not to talk about China again this week, given the importance of the metals trade for global inflation expectations.
  • Our live assessment of the Chinese recovery continues to paint a stalling picture in Real Estate, exemplified by the physical copper demand being on the edge of a precipice, while the pollution based metrics hint of a continued surge in industrial production into June.

4. Steno Signals #104 – Get ready for a WAVE of liquidity in July!

By Andreas Steno, Steno Research

  • Happy Sunday from Copenhagen! Risk asset investing is typically seen as a winter-sport for good reasons, but July is often up there among the best return months.
  • It’s as if July heard winter bragging about its stock market prowess and decided to show up in flip-flops, a Hawaiian shirt, and a cocktail in hand, just to prove that even in the heat, it can keep up with the icy competition.
  • This year is unlikely to be an exception as we will see improving liquidity trends into July, while the bond market seasonality is typically also a lot more favorable due to more benign issuance trends (especially in Europe).

5. The Market Gods Present Patient Investors With Three Gifts

By Cam Hui, Pennock Idea Hub

  • Market conditions are setting up for buying opportunities in three markets. U.S. equities will probably weaken on disappointment over the timing of rate cuts.
  • European stocks corrected over political turmoil in France that’s likely to be temporary.
  • China’s announcement that its central bank had suspended gold buying looks like an entry point in the near future.

6. Positioning Watch – Increasing the BETA risk?

By Andreas Steno, Steno Research

  • Hello everyone, and welcome back to our weekly positioning watch.
  • Our newly invented high-frequency hedge fund positioning data was well received, and we’re working on expanding it to more assets on a running basis.
  • It’s worth revisiting the points we raised about concentration in broader equity indices.

7. CHINA: Do You Like AI? BUY Utilities!

By David Mudd

  • AI is poised to drive a large increase in power consumption on the mainland.  Data demand from generative AI necessitates more data centers and consequently more power.
  • China energy consumption is at the beginning of a super cycle as AI becomes integral to everyday corporate and eventually personal lives.
  • China’s clean energy names will benefit from the China’s energy strategy as its power needs from data centers surge.

8. Great Game – Why Tesla is winning the EU-China trade war

By Mikkel Rosenvold, Steno Research

  • Welcome to this weeks Great Game, in which we will cover 3 major stories right now – European EV tariffs, the upcoming election in France and the turmoil in Brazil.
  • EU Tariffs on Chinese Electric Vehicles Situation: The European Commission is expected to disclose this week the tariffs it plans to impose on Chinese electric vehicles (EVs) due to what it says are excessive subsidies.
  • This move follows Washington’s recent decision to quadruple duties for Chinese EVs to 100%, although Brussels is expected to set significantly lower tariffs.

9. Energy Cable: Short shipping companies?

By Ulrik Simmelholt, Steno Research

  • Hello from a sunny Copenhagen where the Euro 24 fever is upon us all.
  • This week we’ll do a chart heavy analysis on shipping and nat gas.
  • We were stopped out of our long position in shipping in February due to false reports on a deal with the Houthis that sent the market tanking.

10. China Debt Hangover and Policy Limits

By Alex Ng, Fortress Hill Advisors

  • China has seen a very large increase in total public and private non-financial sector debt/GDP since 2008, which is unlikely to be repeated in the coming decade.
  • This is curtailing Chinese policymakers’ actions on monetary, credit and fiscal policy to support the economy, and actions risk being less than recent promises.  
  • Thus we remain of the view that China will struggle to meet growth targets and we look for 4.5% growth in 2024.