1. Trade. The United States accounts for 13% of global imports, down from 20% two decades ago. The European Union (EU) and China account for 20%. While Liberation Day had a dramatic impact on equity markets globally, we believe the optimal response for the largest trading nations is to increase trade with each other as opposed to picking a fight with the United States, which is pursuing unorthodox economic policies.

2. Chinese banks raising capital. Four of China’s biggest banks raised RMB 520 billion in fresh capital from the Ministry of Finance to boost common equity tier 1 ratios, which will rise an average of one percentage point. The goal is to boost capital buffers to enable loan growth to continue for “focus” areas including technology, green energy, inclusive lending, retirement and digital. There will be low double-digit earnings dilution, but we expect dividends to remain secure.

3. South Korea. One of our equity portfolio managers in Asia visited South Korea, one of the key countries for our portfolios. One key takeaway – which was contrary to our expectations – was that, among investors, there was little angst over tariffs. This could be the beauty of employing a longer-term, bottom-up approach. In our view, there is no clear outlook on South Korean automobile exports. The weaker macro backdrop has led to some caution on a weaker model cycle. Despite this, the automobile makers that our portfolio manager met were very confident about maintaining their profit margins Our portfolio manager also met prominent memory chip makers during the trip. The competition between the two larger companies in high bandwidth memory (HBM) segment continues. One company is lagging the other, with their fifth-generation HBM chips yet to be qualified by a key customer. The company has just pledged to shift its portfolio to increase sales of HBM.

‹ Previous2025-04-24Next ›