Daily Brief Macro: Portfolio Watch: Are you paying attention to China? and more

• The Chinese equity trends have really been eye-catching over the past weeks and despite US efforts to flare-up the trade war via new tariffs, the trend has just continued.
• The new Chinese efforts to prop up the sentiment in the Real Estate space have so far been successful and it seems like an attempt that is a LOT more serious and sizy than what we have seen so far.
• We are no longer talking about trial balloons or minor twists.

• Let me start by dwelling on the fact that Macro generalists such as myself and Thorsten Slok of Apollo suddenly spend countless hours watching Copper trends.
• It is probably a red flag in itself, but it just seems like these developments are so INCREDIBLY important for global macro- and geopolitics these months.
• We have been all over the Chinese copper story in recent months and also traded it with good luck, but we have admittedly been wrong in our call for a weaker CNY (so far).

• EMEA Momentum: EMEA is experiencing positive momentum across multiple countries, with record investments in the MENA region, strong momentum in Greece, Turkey reversing long-term declines, and Poland nearing new ownership highs.
• Asian Stall: Significant underweight in India suggests caution among investors, China weights remain depressed, Indonesia maintains a strong consensus overweight.  Select ASEAN nations show signs of potential comeback.
• LATAM Overweights: Investor sentiment in LATAM remains bullish, with Brazil and Mexico seeing most funds positioned overweight. Argentina hits new highs in fund ownership driven by strong conviction in MercadoLibre.

• The past week saw insights on Sea Ltd (SE US), Grab (GRAB US), Malaysia Airports Holdings (MAHB MK), Bangkok Dusit Medical Services (BDMS TB), and Great Eastern Holdings (GE SP).
• There were also macro insights on Indonesia, following the country’s recent 1Q2024 GDP from Manu Bhaskaran plus some macro commentary on the Philippines.
• 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.

• Welcome to the weekly “The week at a glance” publication where we look at the key figures during the week ahead and how to trade them.
• The Fed will release their meeting minutes Wednesday, and it will be interesting to see whether they address the unfolding re-inflationary commodity bull run.
• The Fed is seemingly too honed in on arguments to cut rates, and have so-far more or less ignored the reflation-story.

• Following our initiation on Mount Gibson Iron (MGX AU) and Kumba Iron Ore (KIO SJ), recently we initiate coverage on Champion Iron (CIA AU), a pure play with Canadian assets.
• Although it is more richly priced than the other two names, it offers a 50% volume expansion opportunity in FY25/26, subject to financing availability. 
• Trading at 8.6x FY25 (March-end) PE, 4.6x EV-EBITDA, and a 6% dividend yield (subject to capex), this is not our favorite name at the current price due to production uncertainty. 

• Fund Managers are Long Commodities and Hate Real Estate Fund managers positioning in commodities and energy was virtually unchanged compared to last month, according to the latest BofA survey.
• Compared to the longer term z-score fund managers remain quite long commodities and slightly short energy.
• While the amount of fund managers that are overweight commodities has risen, it’s still nothing compared to April 2022 – right after Russia invaded Ukraine.

• Patriot raising funds with ASX investors involved
• US ban on Russian enriched uranium imports effective by 2028
• Ten X threatens to cancel existing orders if US utilities don’t secure waivers within 60 days

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• A soft CPI report was just what Commodities needed to take the next leg higher
• Inflation expectations fat tailed. Commodities on the move, but we still need oil. China to export inflation to Europe?
• Despite last week’s dovish inflation print, we are not sure that it is disinflation that we need to be worried about, both in the short- and long term.
• Let’s discuss three reasons for that.

• The UK election campaign, which is expected to be lengthy, has informally begun.
• Labour has initiated this campaign by launching six ‘pledges’.
• The success of these pledges is contingent on an economic growth boost, necessitating immediate action from the incoming government.