Asian Macro Initial Thoughts: US bombs Iran's nuclear facilities the world awaits Tehran's response.

NZX opened lower dipping to test the 12,450 level before seeing a bounce currently trading sideways -48 pts -0.38% at 12,522 level

Overview.
Futures turning negative as they open and oil initially rallying around 4% in early trades before easing currently up around 2%. Gold, the USD and Bitcoin strengthing. US futures opening lower

The Iranian parliament has decided to close the Strait Hormuz, which will impact shipping lines and the transport of oil

The US bombed Iranian nuclear facilities and says it caused ‘severe damage’ but it didn’t destroy them, now we wait to see the reaction from Tehran, which could be the reaction of a wounded animal. It will also be interesting to the reaction from the people of Iran. Interesting that the former Shah’s exiled son is hoping that there will be an uprising and he can be head of a transition of an interim government. We also wait to see the reaction from the MEGA base in America, who are likely to be divided on Trump’s actions. Many are talking about how Trump’s policies seems to be closely linked to Israels.

More importantly once again the Trump has failed to follow set procedure, he didn’t brief the Democrates and he didn’t tell congress so that they could authorise the event. That is likely to trigger a vote against Trump in Congress.

The U.N. Security Council met on Sunday to discuss U.S. strikes on Iran's nuclear sites as Russia, China and Pakistan proposed the 15-member body adopt a resolution calling for an immediate and unconditional ceasefire in the Middle East. "The bombing of Iranian nuclear facilities by the United States marks a perilous turn," U.N. Secretary-General Antonio Guterres told the Security Council on Sunday. "We must act – immediately and decisively – to halt the fighting and return to serious, sustained negotiations on the Iran nuclear programme.” The world awaited Iran's response on Sunday after President Donald Trump said the U.S. had "obliterated" Tehran's key nuclear sites, joining Israel in the biggest Western military action against the Islamic Republic since its 1979 revolution. Russia and China condemned the U.S. strikes. U.S. Secretary of State Marco Rubio called on China to encourage Iran to not shut down the Strait of Hormuz after Washington carried out strikes on Iranian nuclear sites.

Markets in Asia will be the first to react, oil is likely rally, airlines are likely to be weak as BA and Singapore Airlines cancel Dubai flight and investors will try to appraise the new global stage.

China’s 14th NPC Standing Committee (NPCSC) starts on Tuesday , China’s senior legislative body, convenes for its 16th session, running until Friday. The NATO Summit starts Tuesday. On Wednesday it is the 75th anniversary of North Korea invading South Korea. Also the FT Live’s two-day Energy Transition Summit Asia begins at the Langham Hilton in Jakarta and online and Glastonbury starts. Thursday is the 80th anniversary of the first 50 countries signing the Charter of the United Nations and the European Summit starts.

Ahead this week we get Powell’s testimony and the Fed’s PCE data. We also get a lot of Flash PMI data. Earnings are winding down but this week we get Nike and retailer H&M. There is also news that Tesla will attempt to send a vehicle from the company’s factory in Austin, Texas to a customer’s home, according to a post by the company’s CEO Elon Musk on X on 10 June. The milestone coincides with Musk’s 54th birthday. Friday the Fed realises the results from its latest stress tests. In the UK outside the market we get the Glastonbury concert. On Saturday the British & Irish Loins kick off their Australia rugby tour. It is also UK Armed Forces Day.

Monday KB Home Q2, Metcash FY, Naspers FY, Prosus FY
Tuesday BlackBerry Q1, Bunzl pre-close trading statement, Carnival Q2, FedEx Q4, SThree HY trading update, TD SYNNEX Q2
Wednesday Babcock FY, General Mills Q4, Halfords FY, HB Fuller Q2, Liontrust Asset Management FY, Micron Technology Q3, MillerKnoll Q4/FY, PayChex Q4, ProCook FY, Steelcase Q1, Winnebago Industries Q3, Worthington Enterprises Q4
Thursday Acuity Q3, Inchcape interim trading update, James Latham FY, H&M HY, McCormick & Co Q2, Moonpig FY, Nike Q4, Serco pre-close trading statement, Volex FY, Walgreens Boots Alliance Q3
Friday Apogee Enterprises Q1

Housekeeping
This morning I will be on RTHK’s Money Talk with host Chloe Feng and Kerry Craig Global Market Strategist at JP Morgan Asset Management. 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

Thursday afternoon I was on RTHK’s The Close, with Nitin Dialdas and Stephen Innes MD and SPI Asset Management. We discussed US interest rates, the impact on the USD, tariffs and opportunities for investors.

If you want to listen to the show you can via the link below.

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 No Data Due - Market re-opens after long weekend
NZX opened lower dipping to test the 12,450 level before seeing a bounce currently trading sideways -48 pts -0.38% at 12,522 level

Australia
ASX to open lower, futures indicate -20pts -0.2% at 8,469 with support from energy stocks which were higher in Europe. Miners mixed with Spot Gold lower and Iron Ore higher. But concerns about the response from Iran after US bombed its nuclear facilities is unclear
Data Due
Flash PMI’s
Manufacturing Jun vs 51 May (F/cast was 50.5)
Services Jun vs 50.6 May (F/cast was 50.1)
Composite Jun vs 50.5 May (F/cast was 50.2)

Japan - No Data Due
Market to open lower
Nikkei 225 Futures indicate -155pts -0.4% at 38,205
Chicago Futures -110pts -0.29% at 38,295
Singapore Nikkei Futures -175pts -0.46% at 38,195
Yen trading 146.07 at the close in US on Friday
A Magnitude 6 earthquake struck off coast of Hokkaido, Japan on Sunday. The quake was at a depth of 10 km (6.21 miles), GFZ said.

S Korea
Market to open higher, Kospi futures indicate up 29pts 1.48% on Friday.
On Friday the Kospi hit a 42-month high, crossing 3,000 level for the first time since Jan 2022 and hit a total market capitalization record of 2,472 trillion won, the Kosdaq was also higher. Retail investors led early gains with net buying, while foreigners and institutions sold into strength, keeping the benchmark tightly anchored below the key level. That restraint vanished once the Kospi cracked 3,000 around 10:45 a.m. Momentum took over, lifting the index past 3,010 by 11:20 a.m. The market stayed buoyant throughout the afternoon, hovering near 3,010, before accelerating again in the final minutes of trading. Gains were broad based, driven by hopes f more capital market reforms.
Data Due
5-Year KTB Auction vs 2.48% prior

Taiwan
Market to open lower, futures on Friday closed down -0.9%
Data Due after market
Unemployment Rate May vs 3.36% Apr (F/cast is 3.4%)
Data Out after Market Friday
Export Orders May 18.5% YoY vs 19.8% Apr (F/cast is 11%)

China - No Data Due
Market to open lower
Golden Dragon Index closed -66pts -0.92% at 7,127 before the US bombing of Iran
FTSE China A50 Futures closed up 65pts 0.49% at 13,367 in Singapore Friday
MSCI A50 CN Futures -1.8pts -0.09% at 2,072
Spot USD/CNY hiked 45 bps to close at 7.1837 Friday (20th). As of 4:39 pm, USD/CNY in the night session lifted 52 bps. USD/CNH gained 16 bps to 7.1835, 2 bps above USD/CNY.
Data Out after market Friday
FDI (YTD) May -13.2% YoY vs -10.9% Air (F/cast is -9.5%)

Hong Kong
HSI to open lower
ADR’s closed -118pts -0.5% at 23,592 with only CLP, SHKP and Bank of China HK in the green.
HK Futures are indicating -68pts -0.3% at 23,170
Turnover on Friday HK$222.423b vs HK$220.099b Thursday; Chinese banks rallied as China left its LPR unchanged.
Data Due After Market
Current Account Q1 HK$125.2B vs HK$96.3B Q4 (F/cast is HK$110B)
Inflation Rate May -0.3% MoM vs -0.1% Apr (F/cast is 0.1%)
Inflation Rate May 1.9% YoY vs 2% Apr (F/cast is 2%)

Macau - Data Due After Market
Inflation Rate May -0.05% MoM vs 0.16% Apr (F/cast is 0.2%)
Inflation Rate May 0.19% YoY vs 0.23% Apr (F/cast is 0.4%)
Tourist Arrivals May 25.3% YoY vs 18.9% Apr

Singapore - Data Due after the open
Unemployment Rate Final Q1 vs 1.9 Q4 (f/cast is 2.1%)
At noon
Core Inflation May YoY vs 0.7% Jun (F/cast is 0.7%)
Inflation Rate May MoM vs -0.3% Jun (F/cast is 0.6%)
Inflation Rate May YoY vs 0.9% Jun (F/cast is 0.7%)
A spokesperson for the Ministry of Foreign Affairs of China announced that, Singapore Prime Minister Lawrence Wong will make an official visit to China from June 22 to 26, at the invitation of Chinese Premier Li Qiang.
Indonesia - Data Due at Noon
M2 Money Supply May YoY vs 5.2% Apr

Malaysia - No Data Due
Philippines - No Data Due
Thailand - No Data Due
Myanmar - No Data Scheduled this week - Market re-opens
Cambodia - No Data Scheduled this week
Vietnam - No Date Scheduled this week

India - Data Due shortly after the open
Flash PMI’s
Composite Jun vs 59.3 May (F/cast is 59.6)
Manufacturing Jun vs 57.6 May (F/cast is 57.7)
Services Jun vs 58.8 May (F/cast is 59)

Europe
Eurozone Flash PMI’s Manufacturing, Services & Composite,
Germany Flash PMI’s Manufacturing, Services & Composite, 3 & 9-Month Bubill Auction
France Flash PMI’s Manufacturing, Services & Composite, 12, 3 & 6 month BTF
Auction
United Kingdom Flash PMI’s Manufacturing, Services & Composite

United States
Futures opened Dow -131pts 0.31%, S&P -0.34% and NDX -0.45%
Data Due Flash PMI’s Manufacturing, Services & Composite, Existing Home Sales, 3 & 6 Month Bill Auction

HEADLINES & NEWS

AUSTRALIA & NEW ZEALAND
Dark clouds gather over Australia’s red earth riches China’s voracious appetite for iron ore has kept the Australian economy prosperous for decades. But demand is starting to cool.

The AUKUS programme being talked about again with concerns about Trump’s commitment to the project and honouring US previously signed commitments. His lack of commitment no doubt is pleasing to China but worrying for many Asian nations.

JAPAN
Japan and South Korea marked the 60th anniversary of the normalization of their diplomatic relations Sunday. The two Asian powers, rivals and neighbors, have often had little to celebrate, much of their rancor linked to Japan’s brutal colonial rule of Korea in the early 20th century. Things have gotten better in recent years, but both nations — each a strong ally of the United States — now face political uncertainty and a growing unease about the future of their ties.

The Japanese and Indian governments are arranging for Indian PM Modi to visit Japan in late August for talks with PM Ishiba, diplomatic sources said Saturday. The two leaders are expected to agree on India's adoption of a next-generation shinkansen bullet train being developed by East Japan Railway Co. for a high-speed rail project underway in western India, the sources said. They may also agree to revise the 2008 Joint Declaration on Security Cooperation to expand their security partnership amid China's increasing maritime prowess, they said. The visit would be Modi's first since May 2023, when he attended the Group of Seven summit in Hiroshima, western Japan. Modi and Ishiba also aim to strengthen communication ahead of a four-way summit with the United States and Australia under the Quad framework, which New Delhi is set to host in the fall. The high-speed rail line will connect the western Indian cities of Ahmedabad and Mumbai, covering about 500 kilometers in roughly two hours. The project is considered a symbol of Japan-India cooperation, as it will use Japan's renowned shinkansen technology.

From the Weekend
Japan has canceled a regular high-level meeting with its key ally the United States after the Trump administration demanded it spend more on defense, the Financial Times reported on Friday. Secretary of State Marco Rubio and Defense Secretary Pete Hegseth had been expected to meet Foreign Minister Takeshi Iwaya and Defense Minister Gen Nakatani in Washington on July 1 for the annual 2+2 security talks. But Tokyo scrapped the meeting after the U.S. asked Japan to boost defense spending to 3.5% of gross domestic product, higher than an earlier request of 3%, the newspaper said, citing unnamed sources familiar with the matter. Japan's Nikkei newspaper reported on Saturday that President Donald Trump's government was demanding that its Asian allies, including Japan, spend 5% of GDP on defense. A U.S. official who asked not to be identified told Reuters that Japan had "postponed" the talks in a decision made several weeks ago. The official did not cite a reason. A non-government source familiar with the issue said he had also heard Japan had pulled out of the meeting but not the reason for it doing so. In March, Prime Minister Shigeru Ishiba said that other nations do not decide Japan's defense budget after Colby, in his nomination hearing to be under secretary of defense for policy, called for Tokyo to spend more to counter China.

Japan's move on the 2+2 comes ahead of a meeting of the U.S.-led NATO alliance in Europe next week, at which Trump is expected to press his demand that European allies boost their defense spending to 5% of GDP.

The government plans to cut scheduled sales of super-long bonds more than initially planned in a revision to its bond issuance programme for the current fiscal year, a document released by the finance ministry showed. The revision to the annual issuance plan, coupled with the Bank of Japan's decision this week to slow its tapering of bond purchase from next fiscal year, reflects policymakers' all-out efforts to soothe market concerns after the surge in super-long yields to record highs last month. The revised issuance plan was presented to primary dealers, or financial institutions that act as market makers, for discussion at a meeting on Friday. A finance ministry official told reporters after the meeting that the ministry is not in the process right now of implementing buybacks of super-long JGBs issued in the past at low interest rates. The government will not rule out the future possibility of considering buybacks, but demand and the feasibility for such operations have to be discussed if such a step is taken, the official said. In the revised issuance plan, the government will reduce 20-year Japanese government bond (JGB) sales by 1.8 trillion yen ($12.38 billion) to 10.2 trillion yen for the year ending in March, while 30-year JGB sales will be cut by 900 billion yen, and 40-year JGB sales by 500 billion yen, according to the document. This means starting next month, sales of 20-year JGBs will be cut by 200 billion yen at every auction, larger than a reduction of 100 billion yen shown in the draft document seen by Reuters on Thursday. The planned cut for 20-year JGBs was larger to reflect opinions of market participants, the ministry official said. Total JGB sales for the year through next March are set to fall by 500 billion yen to 171.8 trillion yen, as the reductions in the super-long sector would be partly offset by increased issuance of shorter-term notes. The potential buyback of older bonds will enhance liquidity in those bonds, allowing bond dealers to trade their securities more easily and helping free up their balance sheets, which in turn help smooth issuance of new bonds. While buybacks of inflation-indexed bonds have been conducted regularly, the last time the finance ministry executed buyback operations for fixed-coupon JGBs was in fiscal year 2002 through 2008, when the government smoothed out the pace of massive redemptions scheduled for 2008. The step, similar to the buyback operations that the U.S. Treasury Department resumed last year, may take a while to be implemented as it may need a budget compilation for funding depending on the size of buybacks, as well as adjustments to the trading system.

Toyota Motor Corp (7203.T) will raise prices of some vehicles it sells in the U.S. by more than $200 from July, Bloomberg News reported on Friday. Some Toyota- and Lexus-branded models will have their prices increased by an average of $270 and $208, respectively, the report said, citing Nobu Sunaga, a spokesman for the company.

JERA, and Australia's Woodside Energy have signed a deal for Woodside to supply JERA with liquefied natural gas only during the winter months, the companies said on Friday. The Heads of Agreement was signed at the LNG Producer-Consumer Conference, co-hosted by Japan's industry ministry and the International Energy Agency in Tokyo. Under the deal, Woodside will supply about 200,000 metric tons of LNG annually during the December to February period, starting in fiscal year 2027, a JERA spokesperson said, adding that the deal is for five years. The agreement is unusual in that it covers only three months of the year instead of the whole year, which a regular term contract would cover, Yuya Hasegawa, a director at the Ministry of Economy, Trade and Industry said at a press conference. He also said the deal would provide flexibility, allowing JERA not to take supplies when there is no need due to warmer-than-usual winter conditions. Hasegawa said the ministry hoped Japanese companies would consider similar deals with other suppliers. "If it spreads to other sources, it may lead to a reinforcing of Japan's stable procurement," he said.

An executive from Malaysian state energy firm Petroliam Nasional said on Friday that the first cargo from its portion of supply from the LNG Canada project will be delivered to its customer, Japanese city gas provider Toho Gas, in July. Speaking at an energy conference in Tokyo, Shamsairi Ibrahim, Petronas' vice president of LNG marketing and trading, also said that the company's third floating LNG project is set to commence production in 2027.

SOUTH KOREA
The presidential office ordered ministries to prioritize the protection of South Korean nationals and to minimize potential security and economic fallout from the US military strikes on Iranian nuclear facilities. The ministries have since taken emergency measures in response. South Korean National Security Adviser Wi Sung-lac convened an emergency meeting at noon Sunday, hours after the US military bombed three nuclear facilities in Iran, presidential spokesperson Kang Yu-jung said during a televised briefing. “At today’s meeting, discussions focused on the impact of the US strikes on Iranian nuclear facilities — which follows the Israel-Iran conflict — on our security and economy, while also accurately assessing the current situation,” Kang said. “(National Security Office) Director Wi Sung-lac emphasized that, above all, it is important to protect the lives and safety of our nationals and to ensure the stable continuity of daily life," she added. According to Kang, Wi also “called on relevant ministries to maintain close communication and cooperation to minimize the impact that the recent series of developments in the Middle East may have on the security and economic situation of the Korean Peninsula."

South Korea's economy has enjoyed a boost since the inauguration of President Lee Jae Myung, but now finds itself bracing for the impact of the US attacks on three of Iran’s core nuclear sites — Fordow, Natanz and Isfahan. On Sunday, US President Donald Trump said in an address at the White House that Tehran’s “key nuclear enrichment facilities” had been “completely and totally obliterated” by US forces. “There will be either peace, or there will be tragedy for Iran, far greater than we have witnessed over the last eight days,” noted Trump, adding that the US will go after other targets if Iran does not agree to peace. Industry insiders here are concerned that this escalation of the conflict in the Middle East may increase oil prices in Korea, which imports approximately 70 percent of its crude oil from the region. Even before the direct intervention of the US, Korea’s oil price had soared after an uptick in global crude oil prices, primarily driven by the ongoing Israel-Iran conflict that started June 13.

The 30th Economic Development Cooperation Fund Workshop, hosted by the Export-Import Bank of Korea and the Ministry of Economy and Finance, commenced Tuesday, welcoming a total of 18 government officials from 10 African countries, according to the policy lender on Sunday. The EDCF is an aid loan funded by the Korean government, which offers long-term loans at a low interest rate to developing countries under an official development assistance initiative. Eximbank is in charge of running the fund. Through its annual workshop, the state-run lender invites public officials from the recipient countries, strengthening partnerships for the smooth operation of the financing aid. This year’s workshop is a follow-up event to the first Korea-Africa summit held in Seoul last June, under the theme "The Future We Make Together: Shared Growth, Sustainability, and Solidarity."

South Korea’s top trade envoy departed for the US on Sunday for the first bilateral trade talks since President Lee Jae Myung took office, vowing to pursue “pragmatic and mutually beneficial negotiations centered on national interest" in resolving pending issues. South Korea’s Trade Minister Yeo Han-koo will be in Washington from Sunday to Friday for talks with US Trade Representative Jamieson Greer, Commerce Secretary Howard Lutnick and other senior officials, to discuss trade issues including tariffs and non-tariff measures. The two countries are also set to hold a third round of technical discussions on related issues this week in Washington. Speaking to reporters at Incheon Airport before leaving for the US capital, Yeo said the visit would focus on laying out the new administration’s economic philosophy and accelerating discussions on tariffs.

LG Electronics Inc. said Sunday it will install large light-emitting diode digital displays at Roig Arena, a new indoor multipurpose facility in Spain, as part of its effort to expand its global sports entertainment business. The company plans to install a massive exterior LED screen, dubbed "The Eye," as well as a central scoreboard, a 76-meter-long main display and an LED ribbon screen encircling the interior of the stadium. Roig Arena, designed to host a variety of events, including sports and entertainment, is currently under construction and is expected to open in September. It will serve as the new home for the Valencia Basket team. LG Electronics has been expanding its footprint in the global commercial display market by supplying large digital signage to sports venues worldwide, particularly in the United States and Europe.

Household loans extended by five major banks in South Korea rose at the fastest pace in 10 months, industry data showed Sunday, amid signs of overheating in the housing market and a recent rally in the local stock market. Outstanding household loans extended by the five major commercials banks here, including KB Kookmin Bank and Shinhan Bank, stood at 752.1 trillion won ($547.6 billion) as of Thursday, up 3.99 trillion won from the end of May, according to the data. This translates to a daily increase of 210.2 billion won over the 19-day period in June, the fastest pace since last August, when loans grew by a daily 310.5 billion won. If this trend continues through the end of the month, household loans are expected to increase by 6.3 trillion won in June, marking the largest monthly gain since August last year, when they jumped 9.63 trillion won. By category, outstanding home-backed loans reached 596.6 trillion won as of Thursday, up 2.99 trillion won from the end of May. Unsecured loans also climbed to 104.4 trillion won, increasing by 1.09 trillion won over the same period. Market watchers attributed the recent rise in household loans to strong demand for investment in both the real estate and financial markets.

From the weekend
Trade minister Yeo Han-koo will visit the United States from June 22 to 27, the trade ministry said on Saturday. The visit will include discussions with US Trade Representative Jamieson Greer and the third round of bilateral technical discussions, a ministry official told Reuters. Further details about the meetings were not disclosed. "Since a South Korea-US summit has yet to take place and key ministers have not been appointed under the new administration, negotiations are likely to focus on areas that the trade ministry can manage -- excluding major issues such as defense cost -- sharing and exchange rates," said Heo Yoon, an economics professor at Sogang University. "Given these circumstances, reaching a comprehensive agreement on key negotiation frameworks and agendas is expected to be challenging.”

The US Department of Commerce is considering revoking authorizations granted in recent years to global chipmakers Samsung, SK Hynix and TSMC, making it more difficult for them to receive US goods and technology at their plants in China, according to people familiar with the matter. The chances of the United States withdrawing the authorizations are unclear. But with such a move, it would be harder for foreign chipmakers to operate in China, where they produce semiconductors used in a wide range of industries. A White House official said the US was "just laying the groundwork" in case the truce reached between the two countries fell apart. But the official expressed confidence that the trade agreement would go forward and that rare earths would flow from China, as agreed. "There is currently no intention of deploying this tactic," the official said. "It's another tool we want in our toolbox in case either this agreement falls through or any other catalyst throws a wrench in bilateral relations.” Shares of US chip equipment makers that supply plants in China fell when the Wall Street Journal first reported the news earlier on Friday. KLA Corp -2.4%, Lam Research f-1.9% and Applied Materials -2%

Celltrion showcased its expanded vision as a next-generation drug developer at Bio USA this week, using the global stage in Boston to deepen ties with international partners and explore cutting-edge biotech collaborations. According to Celltrion on Thursday, the company held more than 150 meetings over the four-day event, engaging in discussions with global pharmaceutical and biotech firms on a wide range of potential collaborations. Over 1,800 visitors stopped by Celltrion's booth during the convention, as announced by the company. Focusing on its core mission of "new drug development" this year, the company concentrated on exploring partnership opportunities to strengthen its pipeline in areas such as antibody-drug conjugates, multispecific antibodies, novel antibody drugs and peptides.The company also held extensive discussions on open innovation initiatives aimed at identifying

Hanwha Life CEO and Vice Chair Yeo Seung-joo is stepping down to return to the parent group, Hanwha Group, where he will lead its management support division in a broader group-level role. Hanwha Group announced Friday that Yeo has been tapped as the head of its management division, with his official transition expected in early July, according to industry sources. Yeo has led Hanwha Life since 2019 and was promoted to vice chairman in 2023.

HD Hyundai said Friday that its joint venture with Shell will enter the high-performance, high-added-value lube base oil market, bolstering its lineup of premium products. HD Hyundai Shell Base Oil, a 60:40 joint venture between HD Hyundai Oilbank and Shell, will invest in expanding its Daesan plant in Seosan, South Chungcheong Province, with a goal to begin full-scale commercial production of Group III LBO in 2027. Lube base oil, or LBO, is the primary component for various types of lubricants such as engine oil and industrial lubricants. It is categorized into three groups based on manufacturing processes and quality traits. Due to its high viscosity index, low amount of sulfur, great oxidation stability, Group III lube base oil is considered an eco-friendly, high-performance product and is seeing a growth in its global demand.

TAIWAN
President William Lai discussed the meaning of “nation” during a speech in New Taipei City last night, emphasizing that Taiwan is a country as he condemned China’s misinterpretation of UN Resolution 2758.

The speech was the first in a series of 10 that Lai is scheduled to give across Taiwan. It is the responsibility of Taiwanese citizens to stand united to defend their national sovereignty, democracy, liberty, way of life and the future of the next generation, Lai said. This is the most important legacy the people of this era could pass on to future generations, he said. Lai went on to discuss the definition of a country, saying it must have four elements: citizens, land, government and sovereignty.

The people of Taiwan exercise public authority, engage in foreign diplomacy and maintain national defense capabilities, he said. “Taiwan is of course a country,” as the 23 million people living here form a political community, Lai said. Taiwan has democratically elected a president once every four years since 1996, Lai said.

From any perspective, the international community can see that Taiwan is indeed a country, he said. Although China claims sovereignty over Taiwan under UN Resolution 2758, the resolution only deals with the issue of UN representation and does not mention Taiwan, Lai said. The resolution was about restoring the rights of the People’s Republic of China as the representative of China in the UN by expelling the representatives of Chiang Kai-shek he said. The four elements required to form a country do not include participation in the UN, so China cannot use this resolution to claim sovereignty over Taiwan, Lai said. The US Department of State this year said that China has distorted the resolution and that it does not determine Taiwan’s sovereignty, he said. Legislative bodies around the world, including those of the US, Australia, the Netherlands, Canada, the UK and European countries, have all passed Taiwan-related resolutions, declaring that UN Resolution 2758 does not pertain to Taiwan’s sovereignty, he added.

The national security team has promptly assessed the situation in the Middle East following the US bombing of Iran, Presidential Office spokesperson Karen Kuo said yesterday. Kuo made the remark following US President Donald Trump’s announcement yesterday that US forces had attacked three nuclear sites in Iran via aerial bombing. The national security team has briefed President William Lai on the latest developments, and Lai has instructed the team and executive branches to monitor potential developments and take appropriate action, Kuo said. The government would continue to maintain close communication with allies around the world to ensure overall stability and national security, she said. Executive branches would also closely monitor the impact of the Middle East conflict on global politics and economic markets and address related issues accordingly, she added. Meanwhile, an official familiar with cross-strait affairs said that Taiwan should closely observe China’s actions, as Iran might seek global retaliation for the US’ involvement in the Israel-Iran conflict, while China continues to escalate threats against Taiwan through military force. Chinese warplanes disappeared from the Taiwan Strait for several days, likely due to a typhoon in China, which impacted the 17th Straits Forum in Xiamen, China. However, Chinese warplanes reappeared on Thursday last week and resumed “gray zone” incursions to intimidate Taiwan, the official said. China, Russia and Iran are strategically cooperating, and potential attacks on democratic nations should be treated with utmost caution, they said. While Iran could seek revenge for the US attacking it, possibly leading to a global conflict, China has not yet militarily supported Iran, and is not as closely aligned with Iran in military cooperation as Iran is with Russia, they added. At present, China is unlikely to become involved in the Israel-Iran conflict, they said.

Improving the competitive edge of Taiwanese exporters in the global market has offset the adverse impact of a stronger New Taiwan dollar against the US dollar, the central bank said in a report on Thursday. Many Taiwanese firms, particularly in the semiconductor industry, have invested significantly in advanced processes to meet global demand for emerging technologies, making them more competitive, the central bank said. Despite the NT dollar’s sharp appreciation last month, strong demand for artificial intelligence (AI) applications and rush orders from foreign buyers to avoid tariffs by US President Donald Trump’s administration pushed up exports by 32.3 percent. This year, the NT dollar has risen against the US dollar by more than 11 percent. Last month, the local currency soared NT$2.088, or nearly 7 percent, against the greenback. The central bank said it jumped into the market to shore up the US dollar and prevent the NT dollar from rising further, but denied the US had pressured Taiwan for a stronger local currency while Taipei and Washington were in talks about tariffs. The appreciation of the NT dollar continued this month, as conflict in the Middle East escalates. Earlier last week, the local currency hit NT$29.460 at one point, the highest in more than three years. A rising NT dollar cuts both ways: The appreciation is expected to result in foreign exchange losses for exporters, but it would lower costs for companies that need to buy equipment or raw materials overseas, the central bank said.

After a survey on how local enterprises reduce foreign exchange losses, the central bank found that many companies engaged in hedging practices, including “natural hedging.” A common natural hedging method is to match revenues and expenses or invoices in the local currency, it said.

Gasoline and diesel prices at fuel stations are this week to rise NT$0.1 per liter, as tensions in the Middle East pushed crude oil prices higher last week, CPC Corp, Taiwan and Formosa Petrochemical Corp said yesterday. International crude oil prices last week rose for the third consecutive week due to an escalating conflict between Israel and Iran, as the market is concerned that the situation in the Middle East might affect crude oil supply, CPC and Formosa said in separate statements. Front-month Brent crude oil futures — the international oil benchmark — rose 3.75 percent to settle at US$77.01 per barrel on the Intercontinental Exchange, while West Texas Intermediate crude oil futures — the US oil gauge — gained 2.67 percent to US$74.93 per barrel on the New York Mercantile Exchange. Effective today, gasoline prices at CPC and Formosa stations are to increase to NT$26.7, NT$28.2 and NT$30.2 per liter for 92, 95 and 98-octane unleaded gasoline respectively, while premium diesel is to cost NT$25.5 per liter at CPC stations and NT$25.3 at Formosa pumps, the companies said.

Taiwanese companies that build clean room systems are seeing a surge in orders, as global semiconductor makers, including TSMC ramp up production abroad. Clean rooms are an essential part of chip production, and are designed to eliminate dust, airborne particles and other contaminants that could damage sensitive components. TSMC supplier United Integrated Services Co (UIS) is one of the biggest beneficiaries of this trend. Data obtained by Central News Agency showed that UIS secured NT$83.68 billion (US$2.83 billion) in clean room-related contracts from January to last month. That marked a record for the company, with the increase largely driven by TSMC’s US$65 billion investment in three advanced chip fabrication plants in Arizona. TSMC’s first fab in Arizona began mass production this year and the second is nearly complete. UIS, which now holds a backlog of NT$132.27 billion in orders, is expected to receive more large orders in the second half of this year, leading analysts to forecast record-high sales for the company. L&K Engineering, another major clean room system provider, has also seen strong growth, reporting NT$95.76 billion in new orders in the first five months of this year, many of which came from Taiwanese clients expanding into Southeast Asia. L&K’s total backlog has reached NT$208.49 billion, bolstered by projects for United Microelectronics Corp, which recently opened the first phase of its new fab in Singapore. Mass production there is expected to start next year, with a second phase in development. L&K also worked for Vanguard International Semiconductor Corp, which is partnering with NXP Semiconductors NV to build a 12-inch fab in Singapore, set to begin production in 2027. Meanwhile, Acter Group Corp and Yankey Engineering are reporting steady demand from local clients. Acter has more than NT$46 billion in orders, up from NT$38 billion at the end of last year, thanks in part to business from Siliconware Precision Industries Co, a major chip packaging and testing firm. Yankey Engineering has NT$40.67 billion in orders, partly supported by ASML Holding NV’s expansion in Taiwan.

From the weekend
Export orders expanded 18.5% YoY last month to US$57.93 billion, driven by robust demand for artificial intelligence (AI)-related applications such as servers and emerging technologies, the Ministry of Economic Affairs said yesterday. Last month’s export orders exceeded the ministry’s original estimate of between US$55 billion and US$57 billion, marking the fourth consecutive increase and hitting the highest level for May. On a monthly basis, export orders increased 2.7% the ministry said in a report.The stronger-than-expected performance last month was driven by sustained demand for AI servers, semiconductors and high-performance computing services, Department of Statistics Deputy Director-General Huang Wei-jie told a news conference in Taipei.“Although some manufacturers reported a slowdown in front-loading, demand for AI server applications remains strong and supported growth last month,” Huang said. During the first five months of the year, export orders grew 15 percent year-on-year to US$263.8 billion, ministry data showed. Looking ahead, export orders this month are expected to decline month-on-month by between 5.1 and 8.5 percent to US$53 billion to US$55 billion. On an annual basis, export orders are forecast to increase by 16.3 to 20.7 percent, the ministry said.

Consumer confidence improved this month, signaling a tentative return of optimism across economic expectations, equity market sentiment and spending intentions, even as concerns about slowing growth and lingering inflation persist, a survey released yesterday by Cathay Financial Holding Co showed. The proportion of respondents expecting the domestic economy to grow over the next six months rose to 19.3 percent, up from the previous month, following the National Development Council’s latest business signal flashing “yellow-red” — typically interpreted as a sign of expansion, the survey said. However, uncertainty remains high. More than half of the survey’s 12,718 respondents — polled online from June 1 to June 7 — said that they believe conditions could deteriorate amid continued global volatility, including US tariff adjustments and geopolitical risks.

SoftBank (9984.JP) founder Masayoshi Son is in pursuit of a partnership with TSMC to build an industrial park in Arizona, the US, with an investment of USD1 trillion, primed at manufacturing robots and artificial intelligence, foreign media reported. SoftBank has already discussed potential tax incentives for the industrial park with federal and state government officials in the US. SoftBank intends to involve TSMC in the project, but it is unclear whether TSMC is interested.

China Steel Corp is slashing steel prices for domestic deliveries next month and lowering prices for most products for deliveries next quarter as the global steel industry is entering a short-term correction due to precarious US tariff policies and the slack season effect. The Kaohsiung-based company in a statement released on Thursday said that it is cutting prices of domestic deliveries by NT$600 per tonne next month. In the third quarter, price cuts would be applicable for a wide range of products with prices going down between NT$500 and NT$800 per tonne. However, the prices of two types of regular steel plate would be unchanged, the statement said.

The Financial Supervisory Commission (FSC) has approved an application filed by SinoPac Financial Holdings to acquire King’s Town Bank, the financial regulator said on Thursday. The FSC said the acquisition is expected to provide Bank SinoPac, the banking arm of the financial holding firm, with the second-highest number of branches in the nation, behind only Taiwan Cooperative Bank. Following a two-and-a-half-month review after the application was submitted in early April following approval by shareholders of the two financial institutions in March, Banking Bureau Deputy Director Wang Yun-chung said the FSC expects the deal to create synergies for SinoPac Financial as their businesses are complimentary.

The Ministry of Agriculture’s Fisheries Research Institute (FRI) has made a global breakthrough in its development of a captive breeding technique that can cultivate juvenile crimson sea bream to at least 5cm in length, institute researchers said on Thursday. The institute has been developing captive breeding techniques for important coastal fish species for years to enrich offshore fishery resources, institute Director-General Chang Chin-yi said, adding that it had made strides in breeding blackmouth croaker, spanish mackerel, common dolphinfish and rosy seabass from 2022 to last year. It added another success with the breakthrough in breeding crimson sea bream and cultivating its juveniles, although the research is not the first of its kind, he said.

CHINA
From the Weekend
Huawei held a developer conference Friday (20th), during which it officially unveiled the HarmonyOS Agent Framework. The first batch of over 50 HarmonyOS agents is set to go live soon, and they will cover various applications across multiple scenarios, including JD.com and Sina, as well as multiple fields such as education, healthcare, entertainment, finance, wealth management, shopping, and biological services.

The Shenzhen Housing and Construction Bureau has officially released the "Regulations on the Allocation of Affordable Housing in Urban Renewal Units Involving Demolition and Reconstruction in Shenzhen", which aims to increase the supply of affordable housing through multiple channels. In various urban renewal projects that include commercial housing after redevelopment, a certain proportion of the residential building area must be allocated for affordable housing. In addition, the handover and construction model is clearly divided into two types: converting the affordable housing area into an independent land parcel for affordable housing (in principle, not less than 3,000 square meters) and transferring it to the government for development free of charge, or having the developer construct the main body together with the commercial housing, and then handing it over to the government or designated agencies free of charge after completion.

Central and southern China were on high alert for more flash floods on Friday as the annual East Asia monsoon gathered pace and extreme rainfall threatened disruption in the world's second-largest economy. Red alerts, the first for this year, were issued late on Thursday covering the provinces of Anhui, Henan, Hubei, Hunan, Guizhou, and Guangxi region, state news agency Xinhua reported, citing the water resources ministry and national weather forecaster. Extreme rainfall and severe flooding, which meteorologists link to climate change, increasingly pose major challenges for policymakers as they threaten to overwhelm ageing flood defences, displace millions, and wreak havoc on China's $2.8 trillion agricultural sector.

China's rainy season, which arrived earlier than usual this year in early June, is usually followed by intense heat that scorches any crops that survive waterlogged soil, depletes reservoirs, and warps roads and other infrastructure. Economic losses from natural disasters exceeded $10 billion last July, when the rainfall typically peaks. Damage was triple that amount in 2020 when China endured one of its longest rainy seasons in decades, lashed by rain for more than 60 days, or about three weeks longer than usual.

On Thursday, heavy rain in southern Hunan triggered the largest floods since 1998 in the upper and lower reaches of the Lishui River after its water levels breached the safety mark by more than two metres. In the hilly metropolis of southwestern Chongqing, apartment blocks were submerged in muddy waters and some vehicles were swept away as floods gushed down streets, according to state media on Thursday. In some cases, the waters almost reached the top of power lines. Nearly 300 people were evacuated from towns and villages in a mountainous county in Chongqing, where cumulative daily rainfall had reached 304 mm (12 inches), with at least one local river swelling by 19 metres due to converging precipitation from the mountains, state broadcaster CCTV reported. On Wednesday, power supply was disrupted in the city of Zhaoqing in southern Guangdong province as flood waters rose more than five metres above warning levels, breaking historical records, local media reported.

The leaders of China and New Zealand discussed on Friday the role of trade in boosting ties, while New Zealand also pressed its interests for peace and security in the Pacific, government statements showed.

President Xi Jinping and Prime Minister Christopher Luxon met in the capital's Great Hall of the People as China's influence grows in the Pacific, challenging the traditionally stronger security foothold many Western nations have had there. On his first visit to China since taking office in November 2023, Luxon discussed the need for stability, less tension in the Indo-Pacific and New Zealand's "enduring support for Pacific-led priorities", his government said in a statement. Luxon's meeting with the leader of New Zealand's biggest trade partner was "constructive", he said in a post on X. "We discussed the depth of the New Zealand-China relationship - from trade and people-to-people ties to our shared global responsibilities," he said. "In a complex world, open dialogue is more important than ever.” The remarks came after New Zealand aired concerns this year when Cook Islands, with which it has constitutional ties, signed pacts with China without first consulting it, including one for cooperation on the economy, infrastructure and seabed mining. Luxon also backed up the role of the Pacific Islands Forum, an inter-government body seeking to foster cooperation among Oceanic countries and territories. Without making specific reference to any issue, Xi called for both countries to seek common ground and view differences "accurately", state news agency Xinhua said. "There are no historical grudges or conflicts of interest between China and New Zealand, so we should respect each other, seek common ground," Xi told Luxon, it said, adding that both must accurately look at and tackle disagreements. During his four-day visit to the commercial hub of Shanghai and the capital, Beijing, Luxon has championed an agenda of boosting business, travel and education for New Zealand. Xi also talked about deepening trade and investment ties, as well as scope to work on science and technology, climate change response and infrastructure along with education exchanges - echoing most of Luxon's goals. Luxon documented his meetings on Instagram, posting video messages to fellow citizens reinforcing his mission of getting "money into your back pocket”. He clinched travel-related pacts and pushed New Zealand's tertiary education as well as its exports of meat, a key item of trade with China after dairy.

The world's largest car-carrying ship - with the equivalent of 20 football fields of vehicles - completed its maiden journey late last month to dock in Brazil's Itajai port But not everyone is cheering its arrival. BYD (002594.SZ) China's top producer of electric and plug-in hybrid vehicles, is offering Brazilian car shoppers relatively low-priced options in a market where the green-car movement is still in its infancy. Brazilian auto-industry officials and labor leaders worry that the vast influx of cars from BYD and other Chinese automakers will set back domestic auto production and hurt jobs. BYD has deployed a growing fleet of cargo ships to accelerate its expansion overseas, with Brazil becoming its top target, according to Reuters analysis of shipping data and company statements. The late-May shipment was the fourth of the Chinese carmaker’s ships to dock in Brazil this year, totaling around 22,000 vehicles, according to Reuters calculations. BYD, the world’s top producer of electric and plug-in hybrid cars, is the largest among several Chinese brands targeting Brazil for growth. China-built vehicle imports are expected to grow nearly 40% this year, to about 200,000, according to Brazil’s main auto association. That would account for roughly 8% of total light-vehicle registrations. Industry and labor groups say China is taking advantage of Brazil's temporarily low tariff barriers to ramp up its exports rather than investing to build Brazilian factories and create jobs. They are lobbying Brazil's government to accelerate by a year a plan to increase Brazil's tariff on all EV imports to 35% from 10%, rather than gradually phasing in higher levies.

"Countries around the world started closing their doors to the Chinese, but Brazil didn't," said Aroaldo da Silva, a Mercedes-Benz production worker and president of IndustriALL Brasil, a confederation of unions across six industrial sectors. "China made use of that.” Brazil has emerged as a flashpoint in the China auto industry's torrid global expansion. A growing surplus of new cars being pumped out of Chinese factories has led to an export boom over the past five years, helping China pass Japan in 2023 to become the world’s top vehicle exporter. Much of this excess is being shipped overseas, to markets like Europe, Southeast Asia and Latin America.

The European Union will bar Chinese companies from participating in EU public tenders for medical devices worth 60 billion euros or more ($68.9 billion) per year after concluding that EU companies are not given fair access in China. The measure announced by the European Commission on Friday is the first under the EU's International Procurement Instrument, which entered into force in 2022 and is designed to ensure reciprocal market access. The new restrictions are likely to increase tensions with Beijing inflamed by EU tariffs on China-built electric vehicles, Chinese measures against EU brandy and curbs on exports of rare earths that the EU wants resolved by an EU-China summit in July. The Commission said on Friday that it would exclude Chinese companies from EU government purchases above five million euros. An EU official said, guided by figures of Medtech Europe, the EU medical technology market was worth some 150 billion euros in 2023, with public procurement accounting for a 70% share. Contracts of over 5 million euros were only 4% of tenders, but made up some 60% by value, the official said. Successful bids will have to ensure they include no more than 50% of medical devices from China. If there are no alternative suppliers, the exclusion will not apply.

EU members backed the plan earlier this month. The Commission has previously said it found "clear evidence" that China favoured Chinese devices for hospitals and its tender conditions led to abnormally low bids that profit-oriented companies could not offer. A Commission official said the ban would cover medical equipment including imaging equipment, artificial body parts and medical clothing. China's commerce ministry has previously described the proposed EU measures as "protectionist", urging the EU to be fair and transparent and for both sides to resolve differences through cooperation and dialogue. The Commission said China had not proposed any corrective action to remedy the situation, but an agreement was still possible.

HONG KONG

Exchange
USD/ HKD once fell to 7.85 Friday (20th), the first time since 2023, as lower financing costs in Hong Kong triggered carry trades, Bloomberg quoted traders as saying. Thursday (19th), the Hong Kong Monetary Authority (HKMA) said that, if the carry trades continue, it may cause the HKD exchange rate to weaken further, and may even trigger the “weak-side Convertibility Undertaking (CU)”, in which case the HKMA will buy HKD and sell USD in accordance with the Linked Exchange Rate System (LERS). The total balance of the banking system will fall accordingly, while the HKD interbank rates will gradually rise.
USD/ HKD, which strengthened in May, peaked at 7.75, hitting the strong-side CU, causing the HKMA to inject large amounts of liquidity into the market, and further leading to a rapid appreciation of the HKD. However, at the same time, the HKMA reduced borrowing costs, and widened Hong Kong's interest spread with the US to a record level. USD/ HKD now hovered around the edge of the weak-side CU at 7.8498.

Economy
UBS released its latest Global Wealth Report, revealing that the average wealth of adult residents in Hong Kong reached nearly USD601,200 (nearly HKD4.72 million), ranking third in the world, behind only Switzerland (around USD687,200) and the US (about USD620,700). The median wealth per adult in Hong Kong was around USD222,000 (HKD1.7428 million) in 2024, placing fourth globally.

IPO
TransThera-B(02617.HK), which will be listed Monday, opened up 21.8% to $16.02 on gray market. Peaking/ bottoming at $32/13.15, it closed at $22.25, up 69.2% or $9.10 from the listing price, on volume of 1.75 million shares and turnover of $39.01 million, according to Futu data. Excluding handling fee, the book gain was $4,550 per board lot size of 500 shares. On the PhillipMart platform it opened down 1.1% to $13 on gray market. Peaking/ bottoming at $26.65/13, it closed at $22.2, up 68.8% or $9.05 from the listing price, on volume of 1.43 million shares and turnover of $31.4 million. Excluding handling fee, the book gain was $4,525 per board lot size of 500 shares.

Bayzed Health(02609.HK), which will be listed Monday opened up 30.3% to $5.5 on gray market. Peaking/ bottoming at $5.92/4.5, it closed at $5.3, up 25.6% or $1.08 from the listing price, on volume of 4.76 million shares and turnover of $25.4 million, according to PhillipMart data. Excluding handling fee, the book gain was $648 per board lot size of 600 shares. On the Futu platform it opened up 13.7% to $4.8 on gray market. Peaking/ bottoming at $5.75/4.22, it closed at $5.37, up 27.3% or $1.15 from the listing price, on volume of 3.4 million shares and turnover of $18.07 million. Excluding handling fee, the book gain was $690 per board lot size of 600 shares.

Sanhua(02050.HK), which will be listed Monday, opened down 0.1% to $22.5 on gray market. Peaking/ bottoming at $23.6/19, it closed at $21.85, down 3% or $0.68 from the listing price, on volume of 13.6 million shares and turnover of $294 million, according to PhillipMart data. Excluding handling fee, the book loss was $68 per board lot size of 100 shares. On the Futu platform it opened up 1.9% to $22.95 on gray market. Peaking/ bottoming at $23/15, it closed at $21.65, down 3.9% or $0.88 from the listing price, on volume of 12.64 million shares and turnover of $269.7 million. Excluding handling fee, the book loss was $88 per board lot size of 100 shares.

Buybacks
TENCENT (00700.HK) repurchased 997,000 shares on the Stock Exchange Friday (20th) at a price per share ranging from $496.2 to $504.5, involving a total of approx. $500 million. Since the repurchase resolution was passed, the Group has repurchased a total of 24.542 million shares, accounting for approx. 0.26708% of its issued shares.

AIA (01299.HK) announced that it had repurchased 3.2586 million shares Friday (20th) at a price per share of between $67 and $68.1, involving approx. $220 million, according to AIA's announcement. Since the approval of the repurchase mandate resolution, the Group has repurchased a total of 72.4856 million shares, representing approx. 0.6777% of its shares in issue.

HSI Short Selling Friday 20.2% vs 18.4% Thursday
Top shorts OOIL (316) 53%, ZTO Express (2057) 48%, Bud APAC (1876) 46%, China Shenhua (1088) 40%, Shenzhou (2313) 38%, Chow Tai Fook (1929) 37%, BYD (1211) 36%, Midea Group (300) 35%, Xinyi Solar (968) 34%, China Res Beer (291) 33%, Hansoh Pharma (3692) 33%, Sinopharm (1099) 33%, WH Group (288) 32%, Wuxi Bio (2269) 31%, China Overseas (688) 31%, MTRC (66) 30%, JD-SW (9618) 30%, Tingyi (322) 29%, Zhong Sheng (881) 29%, Ping An (2318) 28%, Anta Sports (2020) 28%, Wharf REIC (1997) 28%, Sino Biopharm (1177) 27%, Baba (9988) 27%, CM Bank (3968) 27%, Li Ning (2331) 27%, China Hong Qiao (1378) 27%, New Oriental (9901) 26%, China Res Mixc (1209) 26%, Haidilao (6862) 26%, Henderson Land (12) 25%, Sunny Optical (2382) 25%, Zijin Mining (2899) 25%, Lenovo (992) 25%.

WATCH
From the Weekend
CATHAY PAC AIR (00293.HK) announced that Cathay Pacific carried 36.1% more passengers in May 2025 compared with May 2024, while Available Seat Kilometres (ASKs) increased by 31.2%. In the first five months of 2025, the number of passengers carried increased by 28.4% compared with the same period for 2024. Cathay Cargo carried 12.2% more cargo in May 2025 than in May 2024. Available Freight Tonne Kilometres (AFTKs) increased by 8% while load factor increased by 0.1 percentage point year on year. In the first five months of 2025, the total tonnage increased by 12.3% compared with the same period for 2024.

Since the launch of the “Clear and Bright - Rectification of AI Technology Misuse” special action in April 2025, the Cyberspace Administration of China (CAC) has aggregately handled over 3,500 violating AI products, such as mini-programs, applications, and intelligent agents, cleaning up over 960,000 pieces of illegal information, and handling over 3,700 accounts, achieving positive progress in various tasks, according to the WeChat public account “Cyberspace China”. Regarding key website platforms, in handling violating AI products, TENCENT (00700.HK) has standardized application management, raised entry thresholds, optimized inspection mechanisms, and rejected or handled over 570 violating mini-programs and applications, sources divulged. In cleaning up tutorials and products of violating AI, WB-SW (09898.HK) has used strategy identification, user reports, and other multi-channel reviews to cumulatively handle over 4,800 pieces of incompliant content. In strengthening security management measures, Douyin has established a “red-blue confrontation” mechanism, simulating attack scenarios, fixing potential security loopholes, and optimizing the model's ability to identify false information. Moreover, in implementing content identification requirements, key platforms such as BABA-W (09988.HK)(BABA.US) and KUAISHOU-W (01024.HK) have actively promoted the implementation of metadata implicit identification.

YUM CHINA (09987.HK) held its first AI Day in Shanghai, during which it unveiled its first AI agent "Q-Smart" targeted at restaurant operations. The company also announced the establishment of an RMB100 million "Frontline Employee Innovation Fund", aiming to transform frontline employees' innovative ideas based on actual operational needs into practical applications through comprehensive support in funding, technology, and resources. Integrating leading technologies such as generative AI, IoT, and big data, the "Q-Smart" intelligent system can achieve comprehensive coverage of "people, goods, and venues" in restaurant operations for the first time, which marks the company's official entry into the "AI + Dining" human-machine collaborative intelligent operation model. Currently, the functionalities of the "Q-Smart" have already covered management tasks like shift scheduling and inventory check-ups, as well as over 20 operational scenarios including automatic replenishment, intelligent security, production management, and inspections, providing comprehensive support for restaurant managers.

Six institutions each from Mainland China and Hong Kong are participating the initial launch of the Payment Connect. HKMA Chief Fintech Officer Nelson Chow stated that more than 10 local Hong Kong banks are now interested in joining. Regarding payment scenarios, Chow mentioned that Payment Connect can be used by Hong Kong residents spending in the mainland, whereas Hong Kong already sees small and micro merchants used it. When asked about potential tax evasion issues, he noted that merchant payments also involve cash and believed that tax reporting is a civic responsibility. Additionally, the daily limit for Hong Kong residents remitting funds northbound through the Payment Connect is HKD10,000, with an annual limit of HKD200,000.
HSBC and ICBC (Asia) announced that they will be among the first batch of participating banks. To celebrate the launch of the "Payment Connect", HSBC will reward eligible customers with HKD10 each time they receive at least HKD1,000 or RMB1,000 via the "Payment Connect". Rewards will be distributed on a first-come, first-served basis for a period until September 30, 2025.There are six institutions participating in the "Payment Connect" on each side. In Hong Kong: BOC HONG KONG (02388.HK), HSBC, HANG SENG BANK (00011.HK), ICBC (Asia), BANK OF E ASIA (00023.HK) and CCB (Asia).
On the Mainland: ABC (01288.HK), BANK OF CHINA (03988.HK) (601988.SH), BANKCOMM (03328.HK )(601328.SH), CCB (00939.HK) (601939.SH), CM BANK (03968.HK) (600036.SH) and ICBC (01398.HK) (601398.SH).

The number of commerce advertising customers increased by nearly 60% YoY, and the revenue from commerce advertising grew by 41% YoY, BILIBILI-W (09626.HK) released the data for 2025 618 event as saying. Of which, the commerce advertising revenue of digital home appliance industry increased by 111% YoY, and the commerce advertising revenue of home furnishing industry also hiked by 59%.

Among the world's top 10 foundries for the first time this year, TSMC with its absolute advantages in advanced process import speed and yield control, stayed at the top spot with 67.6% market share, according to the report made by market research firm TrendForce. However, SMIC (00981.HK)'s market share has climbed to 6% and continued to grow, rapidly catching up with Samsung Electronics (005930.KS), whose market share fell to 7.7%. SMIC's growth was due to its response to the US tariffs and its strategy of utilizing domestic policies to build up inventory in advance, which enabled the company to achieve growth against the backdrop of the overall market slowdown, according to industry insiders interviewed by Chinese media. In contrast, Samsung's foundry market share declined instead of increasing, possibly due to loss of customers and orders as a result of delivery problems.

Friday closings in EUROPE & US
DAX 1.27%, CAC 0.48%, FTSE -0.2%
European markets opened higher, FTSE traded sideways initially but sold down in the afternoon to close in the red. DAX rallied through the morning but drifted slightly lower in the last couple of hours. CAC opened higher and traded sideways in the morning, rallied late at lunch but drift lower in the afternoon. Concerns about the Iran/ Israel conflict overhang the markets, especially if Iran launches attacks against the US or restricts access to the Straits of Hormos

UK Retail sales saw an unexpectedly large decline in May; sales volumes -2.7% vs -0.5% F/cast. April was up 1.3%. The biggest drop since Dec 2023. Blamed on higher inflation, energy bill increases and the tighter UK labor market, plus retailers are grappling with recent tax hikes.

UK public borrowing hit £17.7 billion ($23.8 billion) in May, £700 higher than the previous year. The budget deficit (defined as borrowing to fund day-to-day public sector activities) which the new UK government has pledged to slash to zero; came in at £12.8 billion, down £1.7 billion on May 2024. Public sector net debt excluding banks was provisionally estimated at 96.4% of gross domestic product, 0.5 percentage points higher YoY. But weak UK growth, higher borrowing costs and spending policies could results in higher taxes ahead.

US asset manager Apollo is set to provide a £4.5 billion ($6 billion) loan to plug a shortfall facing UK nuclear project Hinkley Point. The deal was first reported by the Financial Times on Friday and supported by two other sources. Eutelsat 31% after it announced a 1.35 billion euro ($1.55 billion) capital raise backed by the French state and other investors.

DOW 0.08%, NDX -0.51%, S&P -0.22%, Russel 2K -0.18%
US markets opened higher as Fed’s Waller (a candidate to replace Powell and well known dove) said the FOMC could cut rates as early as July but that was just his view and not the committee’s. I agree they could but only if they had strong data showing the economy was slowing significantly but I doubt we will get such data, this week we get Powell testifying and PCE data which will be much more insightful than Waller’s opinion.

Markets then drifted lower through the day but closed off the day lows. The third day of losses for the S&P. Tech weak after the The Wall Street Journal said that the U.S. may revoke waivers for some semiconductor manufacturers. Nvidia -1%, TSMC -2%, the VanEck Semiconductor ETF (SMH) -1%. Sentiment weak as Trump says he’ll decide about US involvement in the Iran/Israel war within the next two weeks but he has called for Iran’s complete surrender.

Tesla 0.03% having initially rallied ahead of the launch of its robotaxi services on Sunday June 22 but sold down through the day.

Philadelphia Federal Reserve manufacturing business outlook June -4, vs -2 forecast . Prices paid index -18 pts to 41.4, the lowest since February. The indicator for current general activity remained ’slightly negative’ unchanged MoM but the employment index turned negative to its lowest since May 2020. Overall a slight -VE.

Worth noting that Molson Coors and Constellation Brands hit 52 week lows which could be refection of retail contraction and follows data this week that showed American’s were spending less on eating out.

The Federal Reserve’s annual stress test this year should be “less strenuous” compared to 2024, according to Morgan Stanley; resulting in lower drawdowns. I would have thought that with the economy so precariously balanced the Feds stress tests are likely to be more rigorous.

Circle up 11% continued it 34% gain on Thursday after the Senate approval of its proposed stablecoin legislation, the GENIUS Act and Ether ETFs saw increased activity after many had worried they might become zombie funds.

CarMax 6.6% off initial +10% in the premarket Friday after its first-quarter results topped Wall Street’s expectations.

Building stocks rallied on a reported bidding war for GMS 23.8% off earlier highs. Late Wednesday, QXO 5.7% announced an all-cash offer of $95.20 per share for GMS On Friday, the Wall Street Journal reported that Home Depot -0.75% has also made an offer of an undisclosed amount. Bluelinx Holdings 3.8% off earlier +9%, while Installed Building Products 4.1% and Topbuild Corp 6.1%

Banks JPMorgan Chase 0.38%, Citigroup 0.13% Wells Fargo 0.88%, Amex 0.73%
Ecommerce Meta -1.93%, Apple 2.25%, Amazon -1.33%, Netflix 0.75%, Disney -0.2%, Zoom Comms 0.66%, Alphabet -3.59% and Microsoft -0.59%,
Tech NXP Semi -1.16%, Nvidia -1.12%, Micron 1.46%, AMD 1.14%, Skyworks 0.71%
Industrial/Discretionary Boeing 0.54%, Caterpillar 0.2%, Simon Property 0.11%, Kohl’s -1.08%, Gap 2.3%, United Airlines -0.04%, Carnival 0.68%, Wynn Resorts 1.82%,
Auto Ford 1.53%, GM 0.23%, Tesla 0.03%,
Energy Chevron 0.92%, Exxon Mobil 1.33%,
Consumer Staples Campbell Soup -0.03% General Mills 0.06%, JM Smucker 1.01%

DAILY DATA
USD strengthening Monday morning. Bitcoin 1.35% at 100,919.61 (Monday morning), Spot Gold rallying Monday mornign VIX -6.99% at 20.62
Friday closing data in the US
US T10 -1 bpts to 4.377% and T2 -3 bpts at 3.908%, T30 down less than 1 bpts at 4.89%
OIL Brent -2.33%, WTI -1.73% as Trump delays decision on attacking Iran
Gold -0.7%, Silver -2.61%, Copper -0.39% Platinum -3.93%, Palladium -0.64%.