Daily Brief Macro: Announcement of Value-Up Index in Korea on 24 September and more

• The Korea Exchange is expected to announce its long awaited KRX Korea Value-Up index on 24 September. However, the actual launch of this index will begin on 30 September.
• It is expected to produce two types of indices including a basic price index (PR) and a total return index (TR) under the name of KRX Korea Value-Up index.
• In this insight, we also provide a list of 20 small cap stocks that could be included in the Korea Value Up index.

• The 50bps cut in the Fed Funds rate to 4.75-5.00% will likely be followed with two 25bps cuts in November and December.
• For 2025, we now look for 125bps rather than 150bps, given our soft landing view and also the 50bps being delivered at the September meeting. 
• This would be a 3.00-3.25% Fed Funds rate and just above the revised long run estimate of 2.9%. 

• Good morning from Copenhagen.
• It’s make-or-break this week with Powell taking the stage on Wednesday to reveal whether the rumors from Nick Timiraos about the Fed considering a 50bps cut were actually true after all.
• Markets have been desperately hoping for the 50bps cut, as evidenced by the price action where Fixed Income is being bought regardless of the economic news.

• The Fed is expected to cut rates by 50 basis points on Wednesday, with additional cuts expected in November and December
• There is uncertainty in the markets with regards to the size of the rate cut, with equal probabilities for a 25 or 50 basis point cut
• Near term uncertainty is high, leading to bullishness on volatility in the markets

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• Take aways: Freight rates dropped for the first time since 2022, signaling a slowdown in factors driving rate increases.
• Trade tariffs may have minimal impact on the USD and inflation, with fiscal policies playing a larger role.
• A BRICS monetary union could create instability, while Trump’s policies may push the U.S. toward economic risks.

• Sentiment, positioning and valuation provide a similar setup to January 2024
• External macro events leading to a better fundamental environment for China
• Foreign Investors’ disappointment in minimal fiscal stimulus provides an asymmetric opportunity

• Headline UK inflation was broadly unchanged in August. However, core and services inflation rebounded, shrinking the undershoot relative to the BoE’s last forecast.
• Airfares spiked, partly offset by ongoing weakness in hotel prices. Both should unwind in September. The median inflationary impulse sustained the most weakness since 2021.
• Another round of inflation-busting wage increases sustains underlying pressures. Energy prices will also stoke above-target inflation in 2025 but not prevent a BoE cut in Nov-24.

• Malaysian glove industry to rake in RM12.4 billion in exports in 2024  
• Ivory Coast lags in imports to Malaysia after 9-month lead  
• Home Ministry lets 10,000 foreign workers in to meet labor shortage

• Euro area inflation’s headline slowing was broadly confirmed in the final release for August, along with the rise in services and sticky core inflation rates.
• Monthly median impulses are at or slightly above 2% again, as the previous lows look exaggerated. Other underlying measures are also settling excessively high.
• Falling petrol prices compound base effects to push September inflation down. The ECB is braced for a low outcome, so that need not bring forward a cut from December.

• Bank Indonesia unexpectedly reduced its policy rate by 25bps to 6.00% amid controlled inflation and the need to stimulate economic growth, particularly domestic demand.
• The central bank’s decision is also influenced by a more benign global financial environment, with declining inflation and monetary easing in advanced economies leading to increased foreign capital inflows.
• The stability of the Rupiah and healthy capital inflows provide room for further monetary easing, while macroprudential policies aim to support key sectors and boost economic growth.