Smartkarma Daily Briefs

• We’ve received loads of feedback from our clients regarding our Trump versus Biden basket.
• As a result, we will provide a detailed breakdown of both baskets and explain the rationale behind each.
• We are updating the baskets regularly based on the political proposals of the two candidates.

• We cover the Trump assassination attempt in other spaces, so in this we’ll focus on the political fallout and touch upon other relevant topics, including the Chinese Policy Plenary.
• Firstly some thought on Trump picking J.D. Vance as his running mate.
• As a staunch Trump supporter, Vance represents a more grassroots, anti-establishment figure compared to others like Nikki Haley.

• Recent changes in Canada’s M&A rules have restricted critical metal companies from selling to Chinese investors
• Chinese investors have played a key role in funding the exploration and development of copper porphyries, which are vital for global production
• The uncertainty caused by these rules may lead companies to relocate outside of Canada, potentially harming the country’s mining industry and economy

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

• In the short-term, meaningful policy reforms needed out of the Third Plenum
• Chinese data continues to be lacklustre as expected while markets tread water
• What can we expect from the Third Plenum to galvanise the next stage

• Greetings from Copenhagen! Alas, it seems like there are quite a few bears out there who have been infected with recession vibes, thus the doctor has ordered some medicine for the patients which we’ll gladly provide to the likes of Jan Hatzius et. al..
• Firstly, the Dallas Fed’s Weekly Economic Index is at its highest since early 2022 and far far away from anything that smells like recession.
• Real GDP y/y should stay above 2% and the WEI is currently hinting at 3% real GDP growth.

• Hello everyone, and welcome back to our weekly positioning watch.
• The debates about whether the US is heading for a recession are still touring the charts, as the labor market and other economic data soften back towards pre-pandemic levels.
• However, while some might be uncomfortable watching the US economy slow more than anticipated, the lack of ringing alarm bells and Powell’s recent victory lap on inflation have greenlighted markets to price in a soft landing as a 95-99% probability event by now when looking across positioning data.

• The final EA inflation print confirmed the flash at 2.52% in June, with services refusing to slow from 4.1%. Median inflation rates broadly rebounded, stabilising the 3mma.
• Divergences between member states’ underlying pressures are balancing slightly above a target-consistent pace. The ECB is unlikely to be concerned about that.
• Stability in the ECB’s medium-term forecast seems sufficient for it to cut again in September. Tight labour markets may yet renew pressures and pause cuts later.

• UK inflation was broadly unchanged and close to expectations in June, although resilient services price strength was offset by temporary weakness in goods again.
• Seasonal goods discounting is unsustainable disinflation. Underlying pressures remain too high, and their persistence keeps raising consensus forecasts.
• An August BoE rate cut remains most likely, albeit less than before. It can point to the headline rate matching its forecast and lean on its expectation that things will improve.

• Bank Indonesia kept its policy at 6.25%, aligning with market expectations to ensure inflation control and Rupiah stabilization amid ongoing global financial uncertainties.
• Future interest rate decisions will be influenced by persistent global financial market uncertainty, particularly the US monetary policy direction, and strong domestic economic growth driven by robust consumption and investment.
• Ensuring Rupiah stability and maintaining inflation within the 2.5 ± 1% target range remain central to Bank Indonesia’s strategy, supported by a mix of pro-market monetary operations, macroprudential policies, and digitalization efforts to foster economic resilience and growth.

• China’s National Bureau of Statistics on Monday said the country’s second-quarter GDP rose by 4.7%.
• That’s slower than the 5.3% year-on-year GDP increase in the first quarter, and misses the 5.1% expectation.
• Retail sales for June missed expectations, while industrial production figures beat.

• Following the iron ore rally at the start of the month, prices have corrected sharply lower owing to downbeat economic data and an inventory buildup.
• Option activity over the past week was notably skewed towards put options suggesting a negative sentiment. Weekly options volume was sharply lower WoW.
• Recent bearish sentiment has been accompanied by a decline in IV. Outcome from the plenary meeting is likely to reignite volatility in the coming weeks.

• China State Construction International and Sinopec Engineering have short term reversal patterns indicating profit taking from recent advances.
• China Resources Cement reverses downtrend with volume indicating some near term gains after reporting that 1st half profit was under pressure.
• Yum China continues to show downward pressure given the increasing competition in the retail food segment, while Nongfu Spring collapses on news about the safety of its products.

• Average active fund returns of 6.75% match the iShares Asia Ex-Japan benchmark, with 50.8% of funds outperforming.
• Technology Sector Again Drives Returns: Taiwan Technology contributes the most to absolute returns, aided by China & HK and India positions.
• Key Stock Overweights Pay Off: Overweights in SK Hynix, Tencent Holdings and HDFC Bank helped offset the drag from Cash holdings over the quarter.

• Average active fund returns of 3.91% fail to beat the iShares MSCI EM ETF return of 4.39%, with 54% of funds underperforming.
• Consensus overweights in Brazil, Mexico and Indonesia proved costly, though Materials underweights, Saudi underweights and strong stock selection in South Korea stemmed relative losses.
• Tencent and TSMC underweights costly: Both stocks are among the top underweights among active GEM investors. Strong performance this quarter contributed to underperformance.

• Korean stock market ranked #1 in net inflow of foreign funds among emerging Asian countries so far in 2024.
• There has been a net inflow of US$19.4 billion into Korea this year, more than the inflow into China (US$4.9 billion), Taiwan (US$3.6 billion), and India (US$2.0 billion) combined. 
• Three major factors impacting higher foreign capital inflow into Korean stock market this year included Corporate Value Up program, turnaround of DRAM/semiconductor sector, and political uncertainties in China and India. 

• Goods export growth of 4.6%YoY was outpaced by import growth of 7.8%YoY (Apr-Jun’24), widening the merchandise deficit by 13.5%YoY. This was partly offset by the Apr-May24 services surplus widening 16.5%YoY. 
• In Q4FY24 (Jan-Mar’24), India had a current account surplus (0.6% of GDP) as the merchandise deficit of USD50.3bn was offset by a USD42.7bn services surplus and USD13.9bn incomes surplus.
• With oil prices remaining subdued (USD75-90/bbl), goods exports and the services surplus expanding, India is likely to report a current account surplus of 0.5% of GDP in FY25. 

• The BoE’s gilt holdings and sales are creating fiscal costs that are unnecessarily large. Restoring the proper separation between the BoE, HMT, and DMO would help.
• Swapping the BoE’s gilt portfolio for T-Bills with the Debt Management Account would break undesirable linkages and avoid crystalising mark-to-market losses to the deficit.
• Borrowing would be about £10bn per year less, creating welcome fiscal space and the political victory of clearing up a costly Conservative mess of institutions Labour set up.

• Strong American harvest driving downward pressure on Wheat, likely to offset reductions in EU and Russia.
• Corn saw modest recovery, driven by muted ending stocks, below trade estimate, but the harvest is going to be the third largest ever.
• US soybean production remains muted, in line with the Acreage report, and led to moderate recovery in early trading on Friday, but bearish sentiment persists.

• This week we look at the changing dynamics behind Southeast Asia’s e-commerce landscape as TikTok effectively moves into second place but the dynamics can change rapidly as it restructures Tokopedia. 
• We also look at Vinfast as it delays its US factory launch until 2028 versus 2025 due to slower EV sales and we examine the Grab & Trans-cab situation. 
• CrossASEAN Ground Zero is a thematic weekly product that focuses on key Southeast Asian themes and technology trends with a core focus on Indonesia.