In today’s briefing:
- Emerging Market Funds: Top-Down Positioning and Fund Flows Update
- Steno Signals #58 – The One on Banana Republics, Yield Curve Controls and the Yuge EUR Consensus
- Money Watch – Is money growth BACK?
- EA: HICP Slowing Slightly in Summer-23
- The Week That Was in ASEAN@Smartkarma – Astra’s Omnipresence, Grab’s Taxi Win, and AKRA
- AFC Vietnam Fund July 2023 Report
- Hong Kong’s Economic Bind
- Stocks Vs. Commodities Ratio // China Wants to Boost Its Property Sector (But How)
- Credit Watch: If you SLOOS you lose – the 5 best charts from the SLOOS survey
- Macro Regime Indicator: PMIs to drive price action together with headline inflation
Emerging Market Funds: Top-Down Positioning and Fund Flows Update
- Asia underweight funds LATAM overweight. Asia’s ‘big 4’, account for 64.4% of the average fund. MENA region suffers from a lack of ownership, with Saudi Arabia held underweight by -2.92%.
- Tech moves to the top sector holding after capturing strong inflows, displacing Financials which saw heavy outflows and negative rotation.
- TSMC, Samsung, Tencent and Alibaba are the consensus holding. All 4 are owned by at least 70% of funds and form the backbone of most active GEM equity funds.
Steno Signals #58 – The One on Banana Republics, Yield Curve Controls and the Yuge EUR Consensus
- The outlook for the economy, rates, fx and other assets apparently never fails to surprise!
- We have thankfully made very decent returns through a tough trading week as some of our cyclical rotations had a tremendous start to the week before taking a minor hit when the change of the yield curve regime in Japan was announced.
- First things first. The decision to move the cap in the 10yr point of the Japanese Government Bond (JGB) curve from 0.5% to 1.0% was a big surprise to many timing-wise.
Money Watch – Is money growth BACK?
- With the central bank tightening and continuing globally with Fed and ECB hiking rates 25bps and BoJ moving the YCC cap, we have a look at global money trends again today to see if correlations hold and what to expect next in global markets.
- Main take-aways: M1 growth looks outright horrible in the West, while Asian money trends looks very bullishM2 sub-components are still pointing towards more money flowing into more illiquid time-depositsReal M2 is starting to turn positive.
- Could reignite inflation and fuel further economic growth.
EA: HICP Slowing Slightly in Summer-23
- EA inflation slowed as expected by 21bp to 5.31% in the Jul-23 flash. Downside news in some member states did not extend to the EA, unlike the trend since Nov-22.
- Energy prices offset upside news in core inflation again, which is a hawkish mix. It probably isn’t enough to trigger another rate hike in September.
- A similar slight slowing remains likely in August before September steps down more broadly. HICP inflation should reach a welcome 2-handle in the Autumn.
The Week That Was in ASEAN@Smartkarma – Astra’s Omnipresence, Grab’s Taxi Win, and AKRA
- The Week That Was in ASEAN@Smartkarma is filled with an eclectic mix of differentiated, substantive, and actionable insights, macro and equity bottom-up, from across South East Asia.
- The past week saw insights on Astra International (ASII IJ), BFI Finance Indonesia (BFIN IJ),AKR Corporindo (AKRA IJ), Grab Holdings (GRAB US), and The Keepers Holdings (KEEPR PM)
- There were also insights on Multi Bintang Indonesia (MLBI IJ), Sido Muncul, and Pertamina Geothermal Energy PT (PGEO IJ) plus an insight on Thai Banks and LQ45 rebalance.
AFC Vietnam Fund July 2023 Report
- In July, the Vietnamese stock market received robust backing from local retail investors who were enthused by the positive macro-economic indicators, leading to an upswing in investment sentiment.
- As a result, the VN-Index surged by an impressive 9.11%, reaching 1,222.9 points and surpassing the critical 1,200 level.
- This marked a significant milestone for the market.
Hong Kong’s Economic Bind
- We can observe a similar situation of temporarily tight liquidity when we compare Overnight or 1-week HIBOR to 1-month HIBOR, which tends to be more volatile.
- However, it is worth noting that the curve remains flat from 1 week to three months.
- In December, yields peaked, and the curve remained steep, possibly due to year-end demand.
Stocks Vs. Commodities Ratio // China Wants to Boost Its Property Sector (But How)
The Chinese Communist Party’s Politburo, one of the country’s top decision-making bodies, on Monday, released a statement outlining plans to boost the country’s ailing property sector.
But it didn’t give much detail or signal any major measures as some commodity traders had hoped.
This uncertainty was also perfectly displayed in the price action of copper.
Credit Watch: If you SLOOS you lose – the 5 best charts from the SLOOS survey
- The ECB survey on credit conditions in the Euro area was out last week, and it revealed a small rebound in both the ease of getting credit and the demand for getting credit.
- The trends are interestingly slightly weaker in the US SLOOS survey, which is the first hint of a US Economy, which may surprise negatively 2-3 quarters ahead relatively to Europe.
- Yes, I see a rate of change move from a very negative number to a slightly less negative number as a positive, as markets care about the rate of change and not nominal levels, even if it means that demand is still subdued.
Macro Regime Indicator: PMIs to drive price action together with headline inflation
- Every month, we assess the risk/reward in asset allocation via our Macro Regime Indicator framework, where we use our asset allocation model to provide input for our thought process and positioning ahead of the new month’s trading.
- In early July we wrote that: “We remain a bit split on whether we will see a pronounced change of the Macro Regime from “down, down, down” (in liquidity, inflation and growth) to Goldilocks without QE with inflation down, liquidity down and growth slightly up.
- Our portfolio will hence combine the best of the two regimes for the month of July.
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