Global Markets and Geopolitical Developments: Key Highlights

1

Former President Barack Obama delivered a speech on the second night of the Democratic National Convention, boosting Vice President Kamala Harris's campaign momentum. Obama drew parallels between his successful 2008 campaign and Harris‘s current efforts, emphasizing the importance of building a broad coalition of support. Despite Democratic enthusiasm, there is acknowledgment that the competition with Trump remains fierce. Harris’s campaign team is drawing on Obamas strategies, aiming to engage younger voters and inject new energy into the political landscape.

Analysis:

• Impact on FX:Limited direct impact.

• FX Pair:N/A

• Impact on Shares:Potential positive impact on companies associated with the Democratic campaign.

• Companies:N/A

2

Walmart Inc. (WMT) plans to raise up to $3.74 billion by selling its shares in Chinese e-commerce giant JD.com Inc. (JD), ending an eight-year partnership that began in 2016. Walmart intends to sell 144.5 million shares at a price range of $24.85 to $25.85 per share, representing a discount of up to 11.8% from Tuesday's closing price. 

Analysis:

• Impact on FX:Potential weakening of the Chinese yuan.

• FX Pair:USD/CNY

• Impact on Shares:Negative for JD.com shares in the short term.

• Companies:Walmart Inc. (WMT), JD.com Inc. (JD)

3

Bond traders are significantly increasing their risk bets, anticipating the Federal Reserve's first rate cut in four years. Leveraged positions in U.S. Treasury futures have reached record highs, especially in anticipation of the Jackson Hole meeting. As expectations for aggressive rate cuts grow, investors are heavily increasing long positions. However, this aggressive betting could lead to market volatility, particularly if borrowing conditions tighten.

Analysis:

• Impact on FX:Potential weakening of the USD.

• FX Pair:USD/JPY, USD/EUR

• Impact on Shares:Positive for bonds and rate-sensitive sectors.

• Companies:U.S. Treasury securities

4

China's central bank set the yuan's mid-point rate close to market expectations for the first time in over a year, indicating a slight easing of its control over the currency. The rate was set at 7.1307 per dollar, just 7 basis points above market estimates. This move suggests the central bank is cautious about allowing the yuan to appreciate too much. Despite recent gains due to a weaker dollar, economic slowdown and export pressures keep the bank cautious.

Analysis:

• Impact on FX:Stabilizing effect on the yuan.

• FX Pair:USD/CNY

• Impact on Shares:Limited immediate impact on shares.

• Companies:N/A

5

Japanese retail investors are cautiously returning to high-yield currencies like the Mexican peso (MXN) and Turkish lira (TRY), as signs emerge that the yens appreciation may have paused. Data from Tokyo Financial Exchange's Click 365 platform shows net short positions against these currencies returning to early August levels. Despite cautious re-entry into the market, investors are using lower leverage and tighter risk controls.

Analysis:

• Impact on FX:Weakening yen as carry trade resumes.

• FX Pair:JPY/MXN, JPY/TRY

• Impact on Shares:Positive for Japanese companies with significant export revenue.

• Companies:Export-focused Japanese companies

6

The demand for physical gold among wealthy individuals is driving a boom in high-security storage facilities in locations like Singapore. The newly opened “The Reserve” storage facility, which can hold 500 tons of gold and 10,000 tons of silver, reflects this strong demand, particularly amid rising geopolitical risks. Despite the high cost and zero yield of physical gold, its immunity to counterparty risk makes it a preferred asset for high-net-worth individuals seeking safety outside the traditional banking system.

Analysis:

• Impact on FX:Limited direct impact.

• FX Pair:N/A

• Impact on Shares:Positive for companies involved in gold storage and security.

• Companies:N/A

7

Arch Resources Inc. (ARCH) is nearing a merger agreement with Consol Energy Inc. (CEIX), which would create a coal company valued at approximately $5 billion. The deal is expected to be announced as early as this week, though it is not yet final and could still fall through. If successful, this merger would add to a busy summer of M&A activity, with global deals announced surpassing $725 billion, a 20% increase from the same period in 2023.

Analysis:

• Impact on FX:Limited direct impact.

• FX Pair:N/A

• Impact on Shares:Positive for Arch Resources Inc. (ARCH) and Consol Energy Inc. (CEIX).

• Companies:Arch Resources Inc. (ARCH), Consol Energy Inc. (CEIX)

8

The latest U.S. jobs data may reveal that job growth from March of this year to the same period last year was significantly lower than previous estimates, potentially raising concerns that the Federal Reserve is behind on its rate-cutting schedule. Preliminary benchmark revisions are expected to show job growth was at least 600,000 jobs lower than current estimates, and possibly up to 1 million jobs fewer. This could indicate that the labor market cooled earlier and more significantly than initially thought.

Analysis:

• Impact on FX:Potential weakening of the USD.

• FX Pair:USD/EUR, USD/JPY

• Impact on Shares:Negative for growth-sensitive sectors.

• Companies:N/A

9

U.S. Secretary of State Antony Blinken left the Middle East without securing a ceasefire between Hamas and Israel, indicating ongoing divisions between the parties. Although Israeli Prime Minister Netanyahu accepted a U.S. “bridge” proposal designed to create space for a ceasefire, Hamas has yet to agree to the terms. Hamas seeks a permanent end to the conflict, while Israel wants to retain the option to restart hostilities to dismantle Hamass military capabilities.

Analysis:

• Impact on FX:Potential weakening of the Israeli shekel.

• FX Pair:USD/ILS

• Impact on Shares:Negative for Israeli companies amid ongoing conflict.

• Companies:N/A

10

The U.S. Defense Intelligence Agency (DIA) has assessed that both Ukraine and Russia lack sufficient military resources to launch large-scale offensives, indicating a potential stalemate. Despite new U.S. military aid unlocked in April, Ukraine still lacks enough ammunition to match Russias estimated 10,000 artillery shells fired daily. While Ukraine's defense remains intact, it is unlikely to launch a large counteroffensive for at least the next six months.

Analysis:

• Impact on FX:Potential weakening of the Ukrainian hryvnia (UAH) and Russian ruble (RUB).

• FX Pair:USD/UAH, USD/RUB

• Impact on Shares:Limited immediate impact on shares.

• Companies:N/A

11

Pure Fitness, a popular fitness chain frequented by Hong Kong bankers, is facing a lawsuit from its landlords for unpaid rent. Court documents show that Pure Fitness owes HKD 12.7 million in rent and management fees for its facilities in the ICBC Tower and Champion Tower, excluding interest. The company has not responded to requests for comment. Founded in Hong Kong in 2002, Pure Fitness operates 42 facilities worldwide, targeting urban professionals.

Analysis:

• Impact on FX:Limited direct impact.

• FX Pair:N/A

• Impact on Shares:Negative for Pure Fitness if the lawsuit affects its operations.

• Companies:N/A

12

The French government is preparing a stable budget for next year, aiming to reduce the deficit to less than 3% of economic output by 2027. Officials revealed that the 2025 spending budget will be maintained at EUR 492 billion, the same as last year, while aiming to offset a 2% inflation rate by saving EUR 10 billion. Despite the unstable political situation, the government plans to submit the budget draft to parliament by October 1.

Analysis:

• Impact on FX:Limited impact on the euro.

• FX Pair:EUR/USD

• Impact on Shares:Neutral to positive for French government bonds.

• Companies:N/A

13

South Koreas latest trade data shows strong export momentum this month, driven by robust demand for semiconductors worldwide. Data from the first 20 days of August shows a year-on-year export increase of 18.5%, with semiconductor exports surging 42.5%, accounting for 20.3% of total exports. The growth is primarily fueled by the demand for high-end semiconductors, especially for AI development, with exports to the U.S. and other developed countries increasing.

Analysis:

• Impact on FX:Strengthening of the South Korean won.

• FX Pair:USD/KRW

• Impact on Shares:Positive for South Korean semiconductor companies.

• Companies:Samsung Electronics Co., Ltd. (005930.KS), SK Hynix Inc. (000660.KS)

14

Japan‘s July export growth accelerated, driven by the yen’s depreciation to a 38-year low. Exports rose 10.3% year-on-year, with semiconductor parts and automobile exports leading the way. Despite the increase in export value, export volume fell by 5.2%. Imports also grew by 16.6%, widening the trade deficit to JPY 621.8 billion (approximately USD 4.3 billion). The weaker yen, while boosting exports, has also increased import costs, exacerbating the trade deficit.

Analysis:

• Impact on FX:Continued depreciation of the yen.

• FX Pair:USD/JPY

• Impact on Shares:Positive for Japanese exporters, especially in the automotive and semiconductor sectors.

• Companies:Toyota Motor Corporation (7203.T), Sony Group Corporation (6758.T)