Hua Er Jie Jian Wen·2025-07-12 08:34Core Viewpoint - HSBC's report highlights a significant increase in Asian exports, particularly from China and South Korea, while US inventory growth remains modest, indicating complexities in trade front-loading effects [1][2][4]. Group 1: Asian Exports - Recent data shows that export volumes from China and emerging Asia (excluding China) have reached historical highs, with South Korea's exports in Q2 experiencing a notable quarter-on-quarter increase [2]. - The report suggests that if US importers are indeed stockpiling goods to avoid higher tariffs, US inventories should have surged significantly, but the actual data does not reflect such a dramatic increase [1][4]. Group 2: US Inventory Dynamics - Although US retail inventories (excluding automobiles) have risen, the increase is relatively modest, only slightly surpassing the peak levels of September 2022, and is significantly lower than the inventory spikes seen during the pandemic [9]. - The US retail inventory-to-sales ratio has remained nearly unchanged in recent months, indicating that retailers are maintaining relatively lean inventory levels [9]. Group 3: Possible Explanations for Inventory Trends - HSBC provides three potential explanations for the observed inventory trends: data lag, bonded warehouse storage, or unexpectedly strong US end-demand [13]. - Data lag suggests that the increase in imports in April may have been followed by a significant drop in May, possibly in response to tariff announcements [13]. - Bonded warehouse storage allows US importers to store goods without paying tariffs for up to five years, which may explain the increase in imports without a corresponding rise in retail inventory [13]. - The report indicates that while there is evidence of front-loading, overall US inventory has not excessively inflated, suggesting stronger-than-expected end-demand [17]. Group 4: Future Implications - HSBC warns that high tariffs will ultimately have a significant impact on Asian exports, despite the current resilience in demand and inventory levels [1][17].