In today’s briefing:
- Korean Government Is Pushing for a Comprehensive Inheritance Reforms – Will They Pass or Fail?
- EU: The Centre Holds… For Now
- Persistent Weakness in Chinese Real Estate Will Drag Iron Ore Prices Down
- The Week That Was in ASEAN@Smartkarma – Prodia Ready, AEM, and Vinfast
- Steno Signals #104 – Get ready for a WAVE of liquidity in July!
- Be Careful Precious Metals Bulls & Tailrisk Secular Inflation
- China Debt Hangover and Policy Limits
- The week at a glance: UK CPI report is taking the headlines together with Le Pen
- Actinver – Macro Daily: Inflation 2h-May
Korean Government Is Pushing for a Comprehensive Inheritance Reforms – Will They Pass or Fail?
- In the past several days, the South Korean Presidential Office has announced that it is pushing for a comprehensive inheritance tax reforms.
- Although the Presidential Office mentioned it is pushing to reduce highest inheritance tax rates from 60% to 30%, the more likely scenario is to reduce this rate to about 50%.
- The lump sum personal deduction of 500 million won or inheritance tax which has been maintained for nearly 27 years could be doubled to about 1 billion won or more.
EU: The Centre Holds… For Now
- The centre’s position in the European Parliament is generally maintained, but the increased presence of right-wing/hard-right members threatens Ursula von der Leyen’s potential second term.
- This political shift could further complicate the creation of policies related to green initiatives and migration.
- The potential establishment of a nationalist government in France could exacerbate these complications.
Persistent Weakness in Chinese Real Estate Will Drag Iron Ore Prices Down
- Chinese real estate investments fell 10.1% in the first five months of 2024 YoY. New home prices fell at the fastest pace in more than 9.5 years in May.
- Fresh bank lending in China rebounded well expectations in May. Chinese banks issued 950B yuan (v/s 1.36T yuan issued last May) in new loans last month.
- China’s consumer inflation held flat in May amid feeble domestic demand, uneven economic recovery, and consumer confidence weakness.
The Week That Was in ASEAN@Smartkarma – Prodia Ready, AEM, and Vinfast
- The past week saw insights on Prodia (PRDA IJ) after a management call and AEM (AEM SP) post-management changes, with some economic commentary on Thailand.
- There was also an insight on Global Credit Growth from Daniel Tabbush and the CrossASEAN Ground Zero Insight looking at Vinfast (VFS US), digital payments, and social commerce player Evermos.
- 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 Southeast Asia.
Steno Signals #104 – Get ready for a WAVE of liquidity in July!
- Happy Sunday from Copenhagen! Risk asset investing is typically seen as a winter-sport for good reasons, but July is often up there among the best return months.
- It’s as if July heard winter bragging about its stock market prowess and decided to show up in flip-flops, a Hawaiian shirt, and a cocktail in hand, just to prove that even in the heat, it can keep up with the icy competition.
- This year is unlikely to be an exception as we will see improving liquidity trends into July, while the bond market seasonality is typically also a lot more favorable due to more benign issuance trends (especially in Europe).
Be Careful Precious Metals Bulls & Tailrisk Secular Inflation
- Be Careful Precious Metals Bulls Another friendly reminder that positioning in copper remains super speculative bullish – aka, there is much room for speculators to reduce their bullish bets again.
- The same can be said for gold and copper, but not for crude oil.
- Once again, there seems to be less demand than people realize – especially from China.
China Debt Hangover and Policy Limits
- China has seen a very large increase in total public and private non-financial sector debt/GDP since 2008, which is unlikely to be repeated in the coming decade.
- This is curtailing Chinese policymakers’ actions on monetary, credit and fiscal policy to support the economy, and actions risk being less than recent promises.
- Thus we remain of the view that China will struggle to meet growth targets and we look for 4.5% growth in 2024.
The week at a glance: UK CPI report is taking the headlines together with Le Pen
- Welcome to our weekly “The week at a glance” report released every Monday morning (and replacing our Something for your Espresso every Monday).
- We look at the most important releases of the week ahead and address how we are positioned for them.
- We have a relatively light week ahead of us in terms of key figure releases but both the RBA and the SNB will set policy rates, while the major key figure release is the UK inflation report ahead of the BoE meeting.
Actinver – Macro Daily: Inflation 2h-May
- Big surprise in headline inflation with a -0.20% contraction during the second half of May.
- As we expected, the drop was partly due to an atypical price decline in non-core inflation of -0.72% bw.
- However, core inflation surprised with a -0.02% bw drop, possibly associated with the effect of the Hot Sale.
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