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In today’s briefing:
- Will the Hong Kong Stock Market Ever Return to Previous Height?
- Trading Trump 2.0
- Pickup in Gas Rigs Drive U.S. Oil & Gas Rig Count Higher
- The Week At Glance: A look at US Cycle indicators. You sure consensus is right?
- False Breakouts and Breakdowns – The Nikkei, Gold, Copper and the JPY
- China: Does the Invitation to Private Enterprises for Public Projects Represent Major Policy Shift?
- Trump Trades and the JAPAN Market Are Like Oil and Vinegar
- Malaysia Economics: Comeback with Strong 2Q24 GDP Growth
- Energy Cable: More pain to come in copper, while Nat Gas is a long trade?
- EM Fixed Income: Goldilocks and the US election
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Will the Hong Kong Stock Market Ever Return to Previous Height?
- Ever since the Hang Seng touches new high of 32,601 in February 2018, it has trended down to 17,417 on latest trading day.
- Whether it can touch new high again depending on the revision of Mainland authorities’ policy towards big private enterprises and China’s future growth rate
- Local drivers such as Hong Kong GDP growth also play surprisingly important role in the performance of Hang Seng Index.
Trading Trump 2.0
- Donald Trump’s running mate, JD Vance, discussed economic policy during his nomination speech.
- Further investigation provides some insight into what these policies might look like in practice.
- However, understanding the specifics of a potential ‘Trump Trade’ policy remains difficult.
Pickup in Gas Rigs Drive U.S. Oil & Gas Rig Count Higher
- US oil and gas rig count increased by two to 586 for the week ending 19/Jul, rising for the second time in the last three weeks.
- US oil rig count fell by 1 to 477, declining for the second straight week. Gas rigs rose by 3 to 103, after falling by one the week prior.
- The EIA has increased its US crude production forecasts in its latest STEO report, raising them by 0.8% YoY for 2024 and 0.4% YoY for 2025.
The Week At Glance: A look at US Cycle indicators. You sure consensus is right?
- Welcome to the “Week at a Glance,” where we examine the key releases and themes for the week ahead through the lens of macro trading.
- China has reduced the 7-day repo rate by 10 basis points, following up with a cut in the loan prime rate.
- This move mirrors the strategy from June 13, 2023.
False Breakouts and Breakdowns – The Nikkei, Gold, Copper and the JPY
- Gold has signalled a false breakout and is likely to tread water for a couple of months.
- More strength ahead for the Japanese Yen and weakness for the Japanese markets?
- Copper signals further lows to come unless it rallies soon
China: Does the Invitation to Private Enterprises for Public Projects Represent Major Policy Shift?
- The Third Plenum of the Chinese Communist Party ended last Thursday and emphasise supporting private enterprises to take the lead in participating in major national technology projects.
- The resolution emphasises on small-scale private enterprises and offer nothing for big tech enterprises except vague, questionable tax reform.
- Therefore, as the resolution confines only to small-scale private enterprises, big techs like Tencent and Alibaba are hardly benefited.
Trump Trades and the JAPAN Market Are Like Oil and Vinegar
- Japan’s markets have again failed to break to new highs creating a potential for a double-top pattern.
- Trump’s policies which target lower interest rates and a weaker dollar will put pressure on Japan’s markets as can be seen from the high correlation between the JPY and TPX.
- Sectors such as trading companies, autos and semiconductors could see the most pressure under a Trump presidency.
Malaysia Economics: Comeback with Strong 2Q24 GDP Growth
- Malaysia’s strong GDP growth in 2Q24 was driven by a broad-based recovery across major economic sectors, with manufacturing making a turnaround after a difficult 2023.
- The labour market, domestic demand, and external sector indicators also bode well for the country’s growth prospects for the remainder of the year.
- Pending the release of the confirmed GDP figures, we expect full-year growth of around 4.8%, up 25bps from our previous view.
Energy Cable: More pain to come in copper, while Nat Gas is a long trade?
- Take aways: China will flood markets with copper supply
- Copper har decoupled from macro fundamentals according to our PCA tool
- It’s a tuck or war between positioning and fundamentals in metals. Crude tumbling despite all time highs in global flight data and crowded congestion
EM Fixed Income: Goldilocks and the US election
- EM assets are being compared to other asset classes ahead of the US elections, with a general presumption that EM will be more negatively impacted by a Trump presidency.
- EM currencies have experienced some risk premium in the lead up to the elections, particularly in Latin America, but overall EM markets have not shown significant underperformance due to US election concerns.
- Valuation models that consider fundamental drivers do not indicate any significant risk premium being priced into EM assets for the US elections at this time.
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