In today’s briefing:
- China: Second Quarter 2024 GDP Growth
- [Iron Options Weekly 2024/28] Supply/Demand Outlook for Iron Ore Outweighs Stimulus Hopes
- Technically Speaking: Breakouts & Breakdowns: HONG KONG (July 17)
- Active Asia Ex-Japan Q2 Performance Review: Taiwan Tech Drives Returns, but Indonesia Costly
- Active GEM Fund Q2 Performance Update. Mexico & Indonesia Overweights Cost Investors
- Korean Stock Market Ranks #1 in Net Inflow of Foreign Funds Among Emerging Asian Countries in 2024
- India: External Sector in Robust Health with Current Account Surplus Likely in FY25
- Fixing QT Costs
- Latest WASDE Paints Agri Bearishness; Wheat Harvest Dominates While Corn & Beans Find Thin Support
- CrossASEAN Ground Zero – Changing Dynamic in E-Commerce, Vinfast Holding Back, and Grab & Trans-Cab
China: Second Quarter 2024 GDP 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.
[Iron Options Weekly 2024/28] Supply/Demand Outlook for Iron Ore Outweighs Stimulus Hopes
- 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.
Technically Speaking: Breakouts & Breakdowns: HONG KONG (July 17)
- 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.
Active Asia Ex-Japan Q2 Performance Review: Taiwan Tech Drives Returns, but Indonesia Costly
- 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.
Active GEM Fund Q2 Performance Update. Mexico & Indonesia Overweights Cost Investors
- 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 Ranks #1 in Net Inflow of Foreign Funds Among Emerging Asian Countries in 2024
- 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.
India: External Sector in Robust Health with Current Account Surplus Likely in FY25
- 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.
Fixing QT Costs
- 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.
Latest WASDE Paints Agri Bearishness; Wheat Harvest Dominates While Corn & Beans Find Thin Support
- 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.
CrossASEAN Ground Zero – Changing Dynamic in E-Commerce, Vinfast Holding Back, and Grab & Trans-Cab
- 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.
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