Asian Macro Initial Thoughts: Data light in Asia; Japanese Trade Data better than expected. US FOMC in focus as Middle East tensions rise. Remember US closed Thursday; adding to the caution

NZX 50 dipped 20 points initially but then rebounded into the green and now trading around flat -3pts at 12,636.

Overview.

After market US Brent is up 4.4%, Gold futures are up 0.03% reflecting the off risk sentiment that currently overhangs the markets.

The Group of Seven summit concluded in Canada on Tuesday, with no joint communique expected at the end of the gathering. But agreed six joint statements on subjects such as critical minerals, artificial intelligence and wildfires, host nation Canada said on Tuesday. The other topics they agreed statements on were quantum computing, migrant smuggling and transnational repression. Prime Minister Mark Carney is due to issue a separate chair's statement later.

Trump left the meeting a day early saying it was because of the situation in the Middle East, the White House said on Monday. With rumours that Trump is considering joining Israel as he demands Iran make an unconditional surrender; raising the tension.

That accompanies disappointment by many world leaders who were invited to join the G7 meeting for the opportunity to meet with Trump on the sidelines of the meeting, only to see him leave early. I don’t think he is making the tariff issue any easier or himself popular with those who have historically been his allies.

Meanwhile President Xi has indicated he would be willing for China to step in, in a peacemaker role. But without details of what they could do; they do have links with Iran and Russia which could be helpful but little international experience and a current conflict with the US over trade. China is a big importer of oil from the Middle East so they do have a vested interest.

Bank of America’s latest fund manager survey showed investors expect equities outside the United States will prove the best-performing asset class over the next five years.

Global central banks anticipated an increase in the proportion of gold in their reserves over the next five years, while the proportion of US dollar reserves was expected to decrease, a survey by the World Gold Council (WGC) suggested. The survey, conducted from February 25 to May 20, showed that 76% of the 73 central banks surveyed expected their gold holdings to increase within five years, compared to 69% last year. Nearly three-quarters of central banks predicted a decline in US dollar reserves five years from now, versus 62% last year.

In Hong Kong more than 200 passengers were left stranded overnight at Hong Kong International Airport after an Air India flight bound for New Delhi was forced to return due to a technical issue. The Boeing 787 Dreamliner flight, AI-315, which departed Hong Kong on Monday afternoon, turned back after a fuel tank issue was detected.

According to a local media report, passengers said they smelled fuel shortly after takeoff, causing panic onboard; -VE for sentiment on Boeing and Air India.

Interesting in New York the FT reports 'New York City’s top finance official and mayoral candidate Brad Lander was detained by law enforcement agents on Tuesday while trying to escort a defendant out of immigration court, according to his spokesperson. A video posted on Lander’s X account shows the comptroller, who is running in the Democratic primary for mayor, being handcuffed and escorted away. He can be heard saying: “You don’t have the authority to arrest US citizens.” The arrest of Lander, a progressive contender in next week’s primary, underscores the rising political temperature in response to President Donald Trump’s deportation push as protests and skirmishes with authorities break out around the country. ‘

Today the Asia focus will be on Japanese trade data and Machinery orders along with the Indonesia interest rate decision, the UK inflation & Retail sales data and then tonight the FOMC announcement.

Earnings this week include
Wednesday AO World FY, GMS Q4, Korn Ferry Q4, Speedy Hire FY
Thursday Cordiant Digital Infrastructure FY, NCC HY, Syncona FY, Urban Logistics Reit FY, Whitbread Q1 trading update, XPS Pensions FY
Friday Accenture Q3, Berkeley FY, CarMax Q1, Darden Restaurants Q4, Kroger Q1

Holdiays this week
Wednesday Cambodia closed for the Queen Mothers Birthday
Thursday US closed Juneteenth National Independence Day

Other Events
Saturday is the Summer solstice commemorations, in which crowds gather at sites such as Stonehenge in the British county of Wiltshire to witness sunrise and London Climate Action Week kicks off

Housekeeping

On Monday I was on RTHK’s Money Talk with host Chloe Feng and Mark Michelson, Chairman, Asia CEO Forum, IMA Asia, talking about Israel/Iran, G7 prospect, tariffs and the China data dump Click the link below if you want to raise a topic or to listen to the programme.

https://www.rthk.hk/radio/radio3/programme/money_talk

Last Thursday afternoon I was on RTHK’s The Close, with Nitin Dialdas and Tariq Dennison of GFM Asset Management Interestingly he mentioned he looks at US, Europe then China and finally if he has time the UK, but feels the economy since Brexit is overvalued. If you want to listen to the show you can via the link below. Also if you have a topic or question for this week’s episode you can leave me a comment or leave it via the link.

https://www.rthk.hk/radio/radio3/programme/the_close

Looking for good Independent Research, Showcase Events, Introductions & Marketplace, Reports, blogs, trials, podcasts then click the link

https://www.eri-c.com/

It is MiFID II compliant, you can try Before You Buy, there is Research Evalution. and information can be shared across team or firm. It has Different Views at the Best Price. Buyers transact at offered prices or with vendor permission, by agreement. ERIC's industry low commission rates - charged only to sellers - allow both buyers and sellers to realise better net pricing simulataneously. The differentiated price discovery mechanism entertains private bids and negotiation (on or offline) to broaden demand capture and liquidity.

If you have any problems connecting, call or message me and I will sort your issue out.

For Example last recently Russell Napier was in conversation with Andy Rothman on the topic of Will Trump make China great again. Russell has covered Asia for year and Andy has a unique perspective on China, having lived and worked there for more than 20 years as an American diplomat and a sell-side macro strategist. Andy first went to China as a student in 1980, returned as Foreign Service Officer in 1984, joined CLSA in Shanghai in 2000, and then went to the buy side with Matthews Asia in 2014. This year, Andy founded Sinology LLC, advising institutional investors and corporate directors on the risks and opportunities in the Chinese economy, and on navigating the rising tensions in US-China relations. This follows on from Andy’s recent webinar after a recent visit to China in early April you can still go to the website to listen to that recording if you didn’t hear it live.

Mark Tinker recently posted the Latest thoughts from Market Thinker - 'The Ratchet and the Sausage Machine’. 'Trump the deal maker has learned the hard way that, to use arch Politician Tony Blair’s favourite phrase, “ Politics is the art of the possible”. Anyone who has seen the television series House of Cards will recognise the compromises and political wrangling needed to pass a Bill in the House. Trump’s Big Beautiful Bill (BBB) was primarily about preventing the sunsetting of the tax cuts that he passed in his previous term and thus was not so much about cutting taxes as preventing them rising.’

Musk’s DOGE campaign was about highlighting the ‘fat’ in the existing administration and hence make the case for Trumps Big Beautiful Bill. Which additionally Trump considers to benefit his enemies.

The result is a radical and possible stimulatory policy, with an unproven outcome but the covid experience suggests that giving more cash to US individuals results in them spending. He also touches on the implications of Section 899 which allows the US to tax foreigners if Trump feels their governments do things he doesn’t like.

You can find the whole article here

Market opening indications and data
New Zealand
NZX 50 dipped 20 points initially but then rebounded into the green and now trading around flat -3pts at 12,636
Data out after the open
Consumer Confidence Q2 91.2 vs 89.2 Q1 (F/cast was 91.5)
Current Account Q1 NZ$-2.32B vs NZ$-7.037B (F/cast was NZ$-6B)

Australia
ASX to open lower with futures -17pts -0.2% at 8,513, with weak sentiment as Middle East tensions rise, Miners weak but energy stocks firm.
Data Due after the open
Leading Index May MoM vs 0% Apr (F/cast is 0.2%

Japan
Market to open higher
Nikkei 225 Futures indicate -300pts -0.78% at 38,210
Chicago Futures -105pts -0.27% at 38,255
Yen closed 145.3 in the US. Opening in Asia at 145.37
Data out
Tankan Index Jun 6 vs 8 May (F/cast was 7)
Data out 10 minutes Pre market
Balance of Trade May ¥-637.6B vs ¥-115.8B Apr (F/cast is ¥-870B)
Exports May -1.7% YoY vs 2% Apr (F/cast is -4%)
Imports May -9.1% YoY vs -2.2% Apr (F/cast is -6.2%)
Machinery Orders May 6.6% MoM vs 13% Apr (F/cast is -9% )
Machinery Orders May -7.7% YoY vs 8.4% Apr (F/cast is 3.8%)

S Korea - No Data Due
Market to open lower as Middles East tensions dominate but also caution ahead of the FOMC statement.

Taiwan - No Data Due
Market to open lower following the weakness in Tech overnight and also the impact on Middle East tensions on shipping.

China - No Data due
Market to open lower
Golden Dragon Index closed -131pts -1.77% at 7,252 the day low
Spot USD/CNY opening unchanged at 7.1918

Hong Kong - No Data Due
HSI to open lower after the ADR’s closed -183pts -0.77% at 23,878 with all stocks in the red.
HK Futures are indicating -137pts -0.6% at 23,844
Turnover on Tuesday HK$202.144 b vs HK$229.241b Monday
Data due after market
Unemployment Rate May 3.5% vs 3.4% Apr (F/cast is 3.2%)

Macau - No Data Due
The Macau SAR Government Gazette published an executive order yesterday granting visa-free entry and pre-entry permission to citizens of Saudi Arabia, Qatar, Kuwait, Bahrain, and Oman into Macau, effective 30 days after the announcement, according to the Macao Daily News. A Macau tourism industry representative stated that the Middle East is an emerging market for global tourism in recent years. The visa-free entry for these five Middle Eastern countries aims to attract international visitors from the region, with hope that all sectors of society will work together to provide the essential facilitation.

Singapore - No Data Due

Indonesia - Data Due
Interest Decision 5.5% No Change expected
Deposit Facility Rate 4.75% No Change expected
Lending Facility Rate 6.25% No Change expected
Loan Growth May YoY vs 8.88% Apr (F/cast is 8,8%)

Malaysia - No Data Due
Philippines - No Data Due
Thailand - No Data Due
Myanmar - No Data Scheduled this week - Market Closed Queen Mother’s Birthday
Cambodia - No Data Scheduled this week
Vietnam - No Date Scheduled this week
India - No Data Due

Europe
Eurozone Current Account, Core Inflation Rate Final, CPI Final, Inflation Rate Final
Germany 30-Year Bund Auction
France OAT Auction, Index Linked OAT Auction, OATi Auction
United Kingdom Core Inflation Rate, Inflation Rate, Retail Price Index

United States
Futures opened Dow pts -0.2%, S&P -0.27% and NDX -0.3% but easing from initial opening weakness.
After Market
API Crude Oil Stock Change 13 Jun -10.133m vs -0.37m prior (Consensus was -0.6m)
Data Due MBA Data (30 yr Mortgage Rate, Applications, Market Index, Refinance Index, Purchase Index), Building Permits, Housing Starts, EIA Crude Oil Report, 17, 4 and 8 Week Bill Auction, 15 & 30 year Mortgage Rate, EIA Natural Gas Stocks Change, FOMC Interest Rate Decision, FOMC Economic Projections, Interest Rate Dot Plot, Fed Press Conference, Net Long-tem TIC Flows, Foeign Bond Investment, Overall Net Capital Flows

HEADLINES & NEWS

AUSTRALIA

Future Fund chair Greg Combet says even if Trump administration policies are reversed, we’re unlikely to see a return to “business as usual” with volatility and uncertainty rife in financial markets.

NSW could start getting a better deal on power prices, but not in time to stop July 1 pain. Victorians have copped less electricity price pain than people in other states. There’s now a plan to take those lessons to other states.

Democratic world is vulnerable, Chalmers warns Jim Chalmers admits the economy and budget bottom line still need to be wrangled into shape as the government sharpens focus on improving lives of “working people”.

World’s best airline named as Qantas climbs back from low point. Qantas has regained some ground in the annual ranking, while Virgin Australia’s new partner won the top award.

Aged care reform delays could save people thousands – if they act soon. The Albanese government has delayed its aged care reform until November, which is good news for seniors.

JAPAN

President Trump on Tuesday said Japan was being "tough" in trade talks and the European Union had not yet offered what he considered a fair deal, as a team led by Treasury Secretary Scott Bessent stayed at the G7 meeting in Canada to keep working on trade issues after Trump's abrupt early departure. Trump told reporters aboard Air Force One that the EU would need to offer Washington "a good deal" or face higher tariffs.

Mitsubishi Motors (7211.T) said on Tuesday it was hiking prices of U.S. vehicles by 2.1% on average, the latest automaker to pass along cost increases to consumers as their expenses rise from the Trump administration's tariffs President Trump in April imposed 25% tariffs on car imports from Japan and nearly all other countries, prompting Mitsubishi to suspend deliveries from ports to U.S. dealers. The Japanese automobile manufacturer said it resumed those deliveries last week.

Japan suspended imports of fertile eggs and day-old chicks coming from the Brazilian states of Goias and Mato Grosso after bird flu cases in subsistence farms had been reported in both states, the Brazilian Agriculture Ministry said on Tuesday. In a statement, the ministry added that Japan also suspended all poultry meat imports from the cities where the cases were reported, Santo Antonio da Barra in Goias and Campinapolis in Mato Grosso.

Honda (7267.T) succeeded in a launch and landing test of its prototype reusable rocket on Tuesday, the Japanese company said in a surprise announcement, marking a milestone towards its 2029 goal of achieving a suborbital spaceflight. Honda R&D, the research arm of Japan's second-biggest carmaker, successfully landed its 6.3-metre (20.6-foot) experimental reusable launch vehicle after reaching an altitude of 271 metres (889 feet) at its test facility in northern Japan's space town Taiki according to the company.

The Japanese embassy in Iran said on Tuesday it was considering evacuating Japanese nationals by transporting them by bus to a neighbouring country, as the Israel-Iran air war raged for a fifth straight day. "This could be carried out as early as Thursday, June 19," the embassy said on the foreign ministry's website.

The Bank of Japan kept interest rates steady on Tuesday and decided to decelerate the pace of its balance sheet drawdown next year, signalling its preference to move cautiously in removing remnants of its massive, decade-long stimulus. In a widely expected move, the BOJ maintained short-term interest rates at 0.5% by a unanimous vote at its two-day policy meeting that ended on Tuesday.

SOUTH KOREA

South Korean President Lee Jae Myung told Japanese Prime Minister Shigeru Ishiba on the sidelines of the G7 summit in Canada that the two nations need to cooperate in a future-oriented manner amid difficulties in the international trade environment, the Yonhap news agency reported.

The Foreign Ministry on Tuesday raised its travel advisory for Iran and Israel, urging its nationals to leave the countries immediately in response to ongoing missile strikes between Israel and Iran. Effective from 1 p.m. Wednesday, Seoul time, the updated travel alert expands the existing Level 3 advisory — which recommends departure — to cover the entire country.

KG Mobility announced Tuesday that it is positioning hybrid electric vehicles as a key pillar of its future growth strategy, signaling enhanced participation in the segments gaining global traction as an alternative to battery EVs. The announcement was made during the company’s presentation of its mid- to long-term strategy at its headquarters in Pyeongtaek, Gyeonggi Province. Presenting its hybrid concept as “an electric vehicle without the need for charging,” the company said it aims to offer a quiet and smooth driving experience similar to that of EVs, while addressing concerns about charging infrastructure and safety.

The American Chamber of Commerce in Korea said Tuesday it successfully concluded its 2025 Washington Doorknock from June 9 to 12, marking a major private-sector engagement with the US under Korea’s new administration. Led by Chairman and CEO James Kim, the AmCham delegation held nearly 40 meetings with government officials, lawmakers and policy experts. Key discussions took place with officials from the Departments of the Treasury, Commerce, State, Energy and Defense; the US Trade Representative, the National Security Council and the Office of the Vice President. Bipartisan congressional outreach included meetings with four US senators and seven House representatives.

Eximbank, South Korea’s policy lender will provide $225 million in project financing for a solar power plant in Saudi Arabia, the largest overseas solar project undertaken by a Korean company, the Export-Import Bank of Korea announced on Tuesday. In November, a consortium led by the United Arab Emirates' global renewables company Masdar, secured the project to build a solar power plant in the Sadawi desert area, 523 kilometers north of Riyadh. The state-run Korea Electric Power Corp. and GD Power of China were members of the consortium. Covering an area of 39.6 square kilometers, the plant will feature around 3.7 million solar modules, producing a total capacity of 2,000 megawatts.

The Korea Bio, in collaboration with KOTRA, has showcased the largest national pavilion at this year’s BIO International Convention, occupying an expansive 1,800-square-meter space. Featuring booths for 51 companies and organizations, the Korea Pavilion was bustling with company officials engaging with visitors, hosting investor relations sessions and showcasing their innovations on the first day. “Korea securing the largest exhibition space among all national pavilions is a clear signal that the global market recognizes the potential of Korean biotech,” said Lee Seung-kyu, vice chairman of Korea Bio, during a press briefing at the pavilion on Monday.

Korea Zinc said Tuesday that it plans to acquire a 5 percent stake in The Metals Company, a Canadian mineral resource development firm, in a strategic move to reduce reliance on Chinese for sourcing critical minerals. Under the $85 million agreement, the company secured the right to purchase additional shares at a predetermined price, contingent upon TMC’s future market value and growth potential. Korea Zinc looks to counter the impact of the US decoupling from the Chinese supply chain for critical minerals with TMC by refining the resources extracted by TMC in South Korea and global markets. TMC is gearing up to mine polymetallic nodules — round, hard deposits found on the ocean floor’s abyssal plains, containing metals such as manganese, iron, nickel, cobalt and copper.

TAIWAN

Taiwan has risen two spots to sixth place out of 69 major economies in the latest World Competitiveness Ranking report published by the Switzerland-based International Institute for Management Development (IMD). Taiwan also retained its position as the world’s most competitive economy among economies with populations of more than 20 million for the fifth consecutive year, the annual report released yesterday showed.

The index is based on four factors: economic performance, government efficiency, business efficiency and infrastructure — each of which include five subfactors based on different criteria.

Starting on Oct. 1, foreign nationals visiting Taiwan have to fill out an online arrival card three days before entering the nation’s borders, as paper forms are being phased out, the National Immigration Agency announced yesterday. The policy would expedite foreigners’ passage through immigration while reducing waste, the agency said. Introduced on May 5, the online arrival card, whose format aligns with international trends, has been well-received, it said.

The Hai Kun, the nation’s first indigenous defense submarine, yesterday began sea trials, sailing out of the Port of Kaohsiung, a military source said. Also known as the “Narwhal,” the vessel departed from CSBC Corp, Taiwan’s shipyard at about 8am, where it had been docked. More than 10 technicians and military personnel were on deck, with several others standing atop the sail.

Materials Analysis Technology Inc (MA-tek) yesterday said it is experiencing strong demand for its advanced burn-in testing services from leading global artificial intelligence (AI) chip developers, including Nvidia Corp. MA-tek, which specializes in materials analysis and failure and reliability testing for semiconductor firms and equipment manufacturers, has secured more than 10 projects for high-end chip testing, company chairwoman Hsieh Yong-fen said. The company is expanding its client roster for ultra-high-power burn-in testing to include Advanced Micro Devices Inc (AMD), Intel Corp, Amazon.com Inc, Google and Meta Platforms Inc, Hsieh said. To meet rising demand, the company has invested NT$100 million (US$3.39 million) in new equipment, which has been installed at its lab in Hsinchu, she said. The new projects are expected to begin contributing to revenue by the end of this year at the earliest, she said, adding that they would help boost the company’s revenue in the second half to surpass the first half. MA-tek reported revenue of NT$2.11 billion for the first five months of the year, an annual growth of 3.4 percent.

Electronic payment terminal maker Castles Technology Co yesterday said that the launch of new products this quarter is expected to boost revenue growth in the second half of the year. Many of its clients — primarily financial institutions and payment service providers — are expected to upgrade to new Android-based smart payment terminals offering enhanced security and greater operational flexibility, the company said in its annual report. The company’s products mainly comprise mobile point-of-sale devices, electronic funds transfer at point-of-sale terminals and PIN pad terminals, according to its Web site.

Taiwan’s property market is entering a freeze, with mortgage activity across the nation’s six largest cities plummeting in the first quarter, H&B Realty said yesterday, citing mounting pressure on housing demand amid tighter lending rules and regulatory curbs. Mortgage applications in Taipei, New Taipei City, Taoyuan, Taichung, Tainan and Kaohsiung totaled 28,078 from January to March, a sharp 36.3 percent decline from 44,082 in the same period last year, the nation’s largest real-estate brokerage by franchise said, citing data from the Joint Credit Information Center (JCIC). “The simultaneous decline across all six cities reflects just how drastically the market has cooled since the central bank tightened credit controls in September last year,” H&B chief researcher Jessica Hsu said, referring to the 50 percent loan-to-value cap on second-home mortgages nationwide.

Genius Electronic Optical Co (GSEO), a supplier of handset camera lenses for Apple Inc’s iPhones, yesterday said it expects order momentum to gain steam in the second half of this year due to the launch of new smartphones and growing adoption of high-margin periscope lenses. As the third quarter is traditionally the peak season for the smartphone industry, and as customers have already begun placing orders, the company’s business performance is expected to improve from this month, company chairman Jones Chen told reporters in Taichung following the company’s annual shareholders’ conference. “The amount of orders in the second half of this year is expected to be higher than the same period last year. However, the company’s business is still facing pressure from tariffs and currency exchange rates, which might weigh on our subsequent sales and order intake,” Chen was quoted as saying.

CHINA

China's oil demand will peak earlier than anticipated, reinforcing the view that global oil demand will peak before 2030 and exacerbate supply surplus concerns, the International Energy Agency (IEA) said. Due to exceptionally strong EV sales in China, the IEA lowered its forecasts for China's daily oil consumption before 2030 by about 1 million barrels. It estimated that China's oil demand will peak in 2027 at 16.9 million barrels per day, approx. two years earlier than previously predicted, and global oil consumption will also reach its peak after 2027.

The National Esports Development Research Institute of the China Media Group (CMG), in collaboration with Tencent E-sports, released the '2024 Global Esports Industry Development Report’. The report shows that, among the top 10 global e-sports cities in terms of influence, China's Shanghai, US' Los Angeles and South Korea's Seoul ranked top three, followed by Beijing, China, on the basis of their long-term investment and business format agglomeration advantage. Riyadh of Saudi Arabia, Rio de Janeiro of Brazil, Singapore, Shenzhen, Chengdu of China and Manila of the Philippines ranked 5th to 10th. Among the top ten, four are occupied by China. In addition, the report said that the expanding scale of female users is providing new support for the development of the global esports industry. The proportion of female esports users in the UK was significantly higher than that of males, while the gender ratio of esports users in Singapore, Iceland, Japan and Saudi Arabia were relatively balanced.

Battery makers sweat as antimony shortage hits after China's export curbs. For the world's makers of lead-acid batteries, China's restrictions on critical mineral antimony that were put in place late last year have become a major headache - one that their customers also now have as sky-high procurement costs are passed on. "We consider it a national emergency," said Steve Christensen, executive director at the U.S.-based Responsible Battery Coalition, whose members include battery maker Clarios, Honda and FedEx. He noted the key role batteries play in industry and civilian life, how antimony is used in military equipment, as well as the surge in spot prices. Antimony now costs more than $60,000 per metric ton, having more than quadrupled over the past year. "There are no quick solutions... We were completely caught off guard collectively, as an industry," he said. China likely produced 60% of all antimony supply in 2024, according to the United States Geological Survey. Much of antimony mined in other countries is also sent to China for processing. Beijing added the mineral to its export control list last September, requiring companies to gain licences for each overseas antimony deal. It then followed up in December with an outright ban on shipments to the U.S. - an action seen as retaliatory after Washington further restricted exports of advanced semiconductors to Chinese companies.

China President Xi Jinping signed a treaty to elevate ties with Central Asian nations on Tuesday, as Beijing looks to further deepen cooperation on trade, energy and infrastructure with the resource-rich region. Since Russia's invasion of Ukraine, Beijing has been stepping up efforts to boost economic links with Central Asian nations traditionally within Russia's sphere of influence, drawn by their strategic location and energy resources. At a regional summit in the Kazakh capital of Astana on Tuesday, Xi, lauding a milestone, signed a treaty of "permanent good-neighbourliness and friendly cooperation" with leaders of Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan, China's official Xinhua news agency reported. The summit this week is the second such gathering, following the pomp-filled, inaugural gathering in northwest China in 2023. Both occasions have coincided with meetings of G7 leaders. "At present, the world is undergoing accelerating changes unseen in a century, entering a new period of turbulence and transformation," Xinhua quoted Xi as saying in a speech at the summit.

Demand for new homes in China is likely to remain substantially below the market's 2017 peak over the next few years, Goldman Sachs said late on Monday in a projection suggesting that the world's second-biggest economy faces a long property slump. China's property sector, which accounted for roughly a quarter of economic activity at its peak, entered a prolonged slump in 2021, with market sentiment hammered by the struggles of debt-laden developers trying to deliver homes for which buyers had already paid. Demand for new homes is likely to be less than 5 million units per year, significantly below the 2017 peak of 20 million units, the investment bank said. New home prices fell in May, extending a two-year stagnation, official data showed on Monday, highlighting sectoral challenges despite several rounds of economic policy support measures. "Our earlier estimates did not account for the fact that investment demand in China could turn negative as owners sell vacant apartments, and that the 2015-18 government-led shanty town redevelopment should result in fewer demolitions in subsequent years," Goldman Sachs said.

Chinese farmers and small firms have increasingly bought market-ready pigs from larger breeders and fattened them in a bet on higher prices, but the government is cracking down on the speculative practice to slim down hogs and stabilise the market. For small breeders, "refattening" or buying adult hogs from big producers and feeding them for an extra few months until they put on an extra 40-50kg is a way to gamble on pork prices rising. But analysts say regulators are concerned the bets fuel big price swings and squander feed, in the latter case clashing with a national push to cut grain use in livestock, especially as the trade war with the U.S. underscores a long-standing goal to reduce dependence on food imports. "It can lead to short-term shortages followed by a glut, driving big price swings and unsettling the market," said Pan Chenjun, senior animal protein analyst at Rabobank. "The government seems intent on stabilising pork prices, which remain weak, while protecting small farmers from losses and curbing speculative behaviour," Pan added.

An explosion at a fireworks factory in central China has killed nine people and injured 26 others, state media said Tuesday. A huge plume of smoke could be seen rising into the sky after the Monday morning blast in a video posted online by state media. The Shanzhou Fireworks Co. factory is in a mountainous part of Linli county, north of the city of Changde in Hunan province. The risk of further explosions and the lack of a major water source complicated the firefighting and the search for victims, state broadcaster CCTV said in an online report around midday Tuesday. Firefighters set up remote-controlled water cannons and brought in 28 water tankers and two trucks with high-powered pumps. The Ministry of Emergency Management sent a working team to the site. The cause of the explosion was under investigation.

HONG KONG

Economy

The Complaints Against the Police Office reported on Tuesday that 882 reportable complaints were received in the past five months, marking a 33 percent increase from 661 complaints in the same period last year. Speaking at the Independent Police Complaints Council meeting, police officials indicated that the major complaint types were "neglect of duty" and "misconduct, improper manner, and offensive language," which accounted for 95 percent of the complaints. Complaints regarding "neglect of duty" increased by 45 percent, totaling 543 complaints, while those related to "misconduct, improper manner, and offensive language" saw a 27 percent rise, reaching 294 cases compared to the previous year. Additionally, a total of 29 complaints related to assault were reported this year, representing a 6 percent decrease from 31 last year. Allegations of unnecessary use of authority also saw a significant 69 percent decrease, dropping from 13 last year to just four this year.

Buybacks - None Announced

HSI Short Selling Tuesday 16.1% vs 15.6% Monday
Top shorts CM Bank (3968) 47%, SHKP (16) 46%, Chow Tai Fook (1929) 40%, Xinyi Solar (968) 39%, Hang Seng Bank (11) 38%, China Res Beer (291) 36%, Xinyi Glass (868) 36%, OOIL (316) 35%, BYD (1211) 34%, China Shenhua (1088) 33%, Nongfu Spring (9633) 32%, Bud APAC (1876) 31%, MTRC (66) 30%, China Overseas (688) 30%, Sinopec (386) 28%, Li Ning (2331) 28%, Hengan (1044) 26%, Bidu (9888) 26%, ZTO Express (2057) 25%, Zijin Mining (2899) 25%, Henderson Land 25%.

WATCH

After POP MART (09992.HK) made IP products like LABUBU popular, its independent accessories brand, Popop, has opened its second global store in Beijing on 14 June. POP MART's three major 'ace' IPs, naming LABUBU, Hirono and MOLLY, are popular again, with some products already out of stock, especially the LABUBU bracelet, which is nearly sold out, according to Chinese media. The packaging boxes were once restocked on tight inventory.

BABA-W (09988.HK) (BABA.US)s Amap officially launched taxi hailing service in Macau, which is expected to provide residents and tourists with more convenient and efficient digital travel options through cooperation with local professional enterprises, according to Amap's announcement. At present, Amap has accessed the first batch of taxi service providers in Macau. Starting from now, users can use the “taxi hailing in one click” function in Amap's APP when they are in Macau or in mainland China, which supports a variety of electronic payment methods such as MPay and Alipay.

Augmented Reality (AR) technology company Rokid announced the launch of its latest AR smart glasses, Rokid Glasses, in strategic collaboration with Alipay. This partnership integrates Alipay's digital payment technology with a multidimensional risk control solution for AR glasses. Users can connect their Alipay account and complete voice verification, then issue voice commands while wearing Rokid Glasses. By scanning the merchant's Alipay QR code with the glasses, payments can be completed in seconds without the need to operate a smartphone. This significantly enhances efficiency compared to the traditional method of scanning with a smartphone, which takes 20-30 seconds. Zhang Aijuan, Vice President of Ant Group and Rotating President of the Digital Payment Business Unit, stated that Rokid Glasses deliver a brand-new user experience, adding that Alipay will fully support the growth of emerging industries. In the coming years, this technology could enable people to complete transactions simply by looking at or gesturing toward a product, removing friction from both physical and digital shopping.

Tuesday closings in EUROPE & US
DAX -1.12%, CAC 0.76%, FTSE 0.46%
European markets opened lower and initially dipped. FTSE then traded sideways in the red in a tight range, benefitting from the UK and US signing a tariff deal. CAC was similar but in a wider range. DAX opened much low and worked better in the morning but drifted lower in the PM session.

European wind and solar stocks are trading lower after the U.S. Senate accelerated the withdrawal of subsidies to the industry in the amended version of the “One Big Beautiful Bill.” Germany’s solar component maker SMA Solar Technology , wind turbine makers Nordex and Vestas Wind Systems, and renewable energy farm operators Oersted and EDP Renovaveis are among the stocks impacted by the proposed legislation. Prior to being amended by the Senate, the Bill proposed to withdraw tax credits for wind energy projects starting from 2028. However, the Senate’s version has brought forward the curtailment by one year. Current law subsidizes projects up to 2031.

DOW -0.7%, NDX -0.91%, S&P -0.84%, Russel 2K -1.04%
US markets opened lower and traded in a tight range in the morning session but turned lower over lunch and then worked slightly better in the last hour in choppy trading. Weak data; Retail sales; Export & Import prices, Industrial production, Business inventories, NAHB which suggests that Trumps tariff may be having an impact. That was combined with rising tension in the Middle East as Israeli military strikes continued and ahead of tonights FOMC rate decision.

Banks JPMorgan Chase -0.31%, Citigroup -0.91% Wells Fargo -0.89%, Amex -0.48%
Ecommerce Meta -0.7%, Apple -1.4%, Amazon -0.59%, Netflix -0.38%, Disney -1.13%, Zoom Comms 0.04%, Alphabet -0.4% and Microsoft -0.23%,
Tech NXP Semi -2.16%, Nvidia -0.39%, Micron 0.42%, AMD 0.56%, Skyworks -0.63%
Industrial/Discretionary Boeing -0.71%, Caterpillar -1.31%, Simon Property -0.46%, Kohl’s -5.15%, Gap -0.8%, United Airlines -6.18%, Carnival -2.35%, Wynn Resorts -1.49%,
Auto Ford -1.88%, GM -2.01%, Tesla -3.88%,
Energy Chevron 1.93%, Exxon Mobil 1.35%,
Consumer Staples Campbell Soup -1.36% General Mills -0.84%, JM Smucker -0.9%

DAILY DATA
USD stronger, Bitcoin -3.81% at 104,505.60, VIX 13.03% at 21.6,
US T10 fell 6 bpts to 4.387% and T2 -2 bpts at 3.946%
OIL Brent 4.4%, WTI 4.28% as Middle Eastern tensions rise
Gold 0.12%, Silver 0.12%, Copper -0.4% Platinum -0.48%, Palladium -0.18%.