Investors continue to watch closely for disinflationary indicators and the Fed's response. Despite macro uncertainties, the narrowing credit spread likely indicates the ongoing high investors' risk appetite. The strong earnings from AI-driven tech companies further supported investors' confidence, albeit after a slight June pullback. In Asia, the negative PPI in China reflects Chinese consumers becoming more price-sensitive and cutting back on non-essential spending. Sectors like electric vehicles ("EVs") and food delivery companies have slashed prices to stay competitive. The government launched an "anti-involution" campaign to combat the deepening price wars, and the initiatives such as pricing oversight have shown early signs of effectiveness. Despite this, the Chinese and Hong Kong equity markets have gained, with AI-linked firms and industrial-tech stocks driving market performance.

Looking ahead, we remain cautiously optimistic. Despite continued geopolitical tensions and macro uncertainties weighing on sentiment, resilient corporate earnings and tightening credit spreads would likely continue to support the global equity markets, notably in the AI and tech sectors. Meanwhile, we believe the Fed will remain cautious, closely watching sticky inflationary indicators; if inflation continues to ease, gradual rate cuts are likely. In spite of trade reroutes and structural market challenges leading to overcapacity, Asian equity markets performed better than expected, supported by a strengthened macro backdrop. Against this landscape, we maintain a disciplined and balanced approach, grounded in bottom-up fundamental analysis in our portfolio construction.