Fiscal Policy & Economic Growth - The analysis suggests tariffs are running at an annual rate between $400 billion and $500 billion, potentially improving the deficit, but real GDP growth is considered the key to significantly reducing the deficit as a percentage of GDP [1] - The report anticipates real GDP growth will surprise on the high side of expectations later in the year and into 2026, driven by innovation platforms like robotics, energy storage, AI, multiomic sequencing, and blockchain technology, all catalyzed by AI [1] - The analysis highlights deregulation, particularly in crypto, AI, and nuclear energy, as a significant factor for economic growth, with tax changes encouraging manufacturing and innovation through accelerated depreciation schedules and full expensing of equipment, R&D, and software [1] Inflation & Monetary Policy - The report indicates that while inflation may seem stuck in the 2% to 3% range, innovation-driven productivity gains could lead to deflation in the coming years [2] - The analysis points out that M2 money supply growth has significantly dropped compared to the COVID boom, and the velocity of money is declining, potentially diffusing inflationary pressures [2] - The yield curve, measured by the two-year Treasury yield relative to the three-month Treasury yield, indicates tight monetary policy, which is expected to have disinflationary or deflationary effects [3] - True inflation CPI is reported at 19%, even with tariffs factored in, and consumer inflation expectations are expected to decline [3] Market Indicators & Investment Strategy - The analysis notes that manufacturing has been contracting for the last three years, and services are not in great shape, signaling potential economic concerns [4] - The report highlights that AI-powered capital spending is increasing, supported by new tax rules, while the trade deficit is being addressed [5] - The analysis observes that pending home sales are deteriorating, and new home inventory is high, potentially leading to price cuts and impacting the CPI [5] - The report suggests that the return on investment in the US is expected to increase due to innovation, tax laws, and deregulation, potentially strengthening the dollar [5] - The analysis notes that corporate profits are healthy, but quality of earnings and harnessing new technologies will be crucial for future growth [5] - The report observes that commodity prices are going nowhere, and gold is breaking out to all-time highs relative to metals, possibly signaling deflationary concerns [5]

Summary of India-China Trade and Investment Relationship Industry Overview - The report focuses on the bilateral trade and investment relationship between India and China, highlighting its evolution and future prospects [3][4]. Key Points Trade Dynamics - India's trade deficit with China is the largest among its trade partners, amounting to **US$118 billion** [10][49]. - China's trade surplus with India is the largest among Asian economies, totaling **US$121 billion** [10]. - Bilateral trade between India and China has nearly doubled from **US$89 billion** in December 2015 to **US$161 billion** in July 2025 [10]. - China is India's largest bilateral trade partner [10]. Foreign Direct Investment (FDI) - FDI flows from China to India have significantly decreased from **US$1.4 billion** (3.6% of total inflows) in 2015 to **US$0.09 billion** (0.2% of total inflows) in 2024 [10]. - India needs to align its manufacturing production structure with global demand to attract more FDI [7]. Manufacturing and Supply Chain - India is looking to integrate into the global manufacturing value chain, with China playing a pivotal role by providing FDI, technological know-how, and critical inputs [4][27]. - China accounts for **41%** of global manufacturing output, making it a crucial supplier for India [37][39]. - The share of global value chain-related trade rose to **50%** of global trade in 2022, indicating a shift towards more complex supply chains [9]. Sectoral Insights - Key sectors for trade include transport equipment and capital goods, which have seen increases in global export shares [9]. - India's imports from China are heavily weighted towards capital goods, which accounted for **56%** of its imports in 2024 [53]. Economic Imperatives - The report emphasizes the need for India to boost its manufacturing capabilities to address unemployment challenges and to leverage China's technological expertise [77]. - The geopolitical landscape poses risks to the growth of the trade relationship, with potential slowdowns due to political tensions [4][77]. Future Outlook - The bilateral trade relationship is expected to grow significantly, driven by India's need for manufacturing inputs and China's need for new markets amid declining exports to the US [56][77]. - India represents a significant growth opportunity for Chinese companies, with only **3.5%** of China's exports currently going to India [56]. Additional Insights - The report draws parallels with Vietnam's trade relationship with China, suggesting that India could similarly benefit from increased trade and investment [67]. - The shift in India's import mix towards capital goods indicates a growing reliance on China for manufacturing inputs [48][52]. This comprehensive analysis highlights the critical interdependencies between India and China, emphasizing the potential for growth in their trade and investment relationship while acknowledging the geopolitical risks involved.

Foreign Direct Investment (FDI) - Saudi Arabia significantly increased its 2024 FDI forecast based on new data [1] - Saudi Arabia attracted a near-record amount of FDI from overseas investors [1]

#数据 中国商务部：2025年1-7月，全国新设立外商投资企业36133家，同比增长14.1%；实际使用外资金额4673.4亿元人民币，同比下降13.4%。 ...

路透：中企涌入印尼规避美国关税，掘金当地商机中国公司急切希望在印尼扩张或建立业务，试图避免被美国征收高额进口关税。印尼面临的美国对等关税税率为19%，与马来西亚、菲律宾和泰国相同，略低于越南的20%，也低于目前中国面临的30%。但是，作为东南亚最大的经济体和世界第四大人口大国，印尼比邻国更有优势——拥有巨大的消费市场潜力。从玩具制造商、纺织品公司到电动汽车制造商，各种公司都在四处寻找厂房，尤其是在印尼人口最多的西爪哇省。此外，印尼的消费群体也在不断壮大，家庭支出占GDP的一半以上。 ...

What is our understanding at a time, of course, when negotiations between the US and China continue. We have that 90 day extension in terms of what this agreement could look like if investments in the US and China are not part of that. There is so many touchpoints, there are so many touch points, as you say, when it comes to that relationship.And if you can't talk about actual investment, which has been a consistent concern, not just with China, but you mentioned Japan as well, the Nippon Steel Deal has rea ...

Core Viewpoint - The U.S. has imposed a 50% tariff on Indian goods and threatened secondary sanctions over India's oil trade with Russia, leading to a mixed response in India's stock market and political landscape [1][2][3]. Economic Impact - The potential impact on India's GDP from the U.S. tariffs is estimated at 60 basis points, approximately $23 billion [5]. - Allowing U.S. dairy exports into India could cost the country ₹1.8 lakh crore ($20 billion), with over half of this burden affecting farmers directly [6]. - The gem and jewelry sector may face catastrophic consequences, while seafood exporters could lose nearly $3 billion annually due to the tariffs [8]. - India's textile industry anticipates a loss of $5 billion in business due to the tariffs [8]. - High U.S. duties may hinder India's ability to attract foreign direct investment (FDI), although domestic consumption accounts for over 60% of India's GDP [9]. Trade Data - In 2024, India's exports to the U.S. included electronics ($11.1 billion), gems and jewelry ($9.9 billion), pharmaceuticals ($8.1 billion), nuclear reactors and machinery ($6.2 billion), and refined petroleum products ($5.8 billion) [7]. - Total bilateral trade with the U.S. in 2024 was $212.3 billion, with goods trade at $129 billion and services trade at $83.4 billion [11]. Political Response - Indian Prime Minister Modi has gained support from the opposition to resist U.S. demands, emphasizing that India will not compromise on the interests of farmers [2][4]. - Modi's government has already taken steps to reduce duties on various U.S. imports and has increased oil purchases from the U.S. by 120% in the last six months [16][17]. Diplomatic Efforts - Modi is planning a visit to China and has sent India's National Security Advisor to Russia to pursue diplomatic solutions [13]. - India's foreign ministry has criticized U.S. hypocrisy regarding its own trade with Russia, while also highlighting that most of India's oil trade with Russia is settled in dirhams [14][15]. Future Considerations - The Indian government is exploring legal options and strategies in response to U.S. actions, emphasizing the importance of collaboration with other affected trading partners [20]. - A potential breakthrough in talks between the U.S., Russia, and Ukraine could alleviate India's concerns regarding oil purchases from Russia [21].

Investment & Macroeconomic Climate - Kenyan Investment Authority plans a conference in 2026 [1] - The conference aims to highlight Kenya's favorable macroeconomic climate [1] - The goal is to boost foreign direct investment (FDI) in Kenya [1]

Saudi Arabia saw its strongest start to a year for foreign direct investment since 2022, signaling the kingdom is gaining some traction in its push to attract overseas capital https://t.co/WE6ZQgiXuq ...

Investment Rating - The report does not explicitly provide an investment rating for the industry or economies discussed Core Insights - Shifting away from China for Asia ex China (AXC) economies to avoid US tariffs is deemed nearly impossible due to China's integral role as a key market, critical supplier, and significant source of FDI inflows [1][5][13] - Implementing trade restrictions on China would likely lead to reciprocal measures from China, resulting in significant negative impacts on trade, capital expenditure, and growth outlook for AXC economies [5][8][13] Summary by Sections Trade Relations and Economic Impact - The US may seek to have AXC economies limit their economic involvement with China, but the report argues that such restrictions are impractical given China's central role in the region's production network [5][8] - China is a major source of end demand, critical inputs, and FDI, especially for ASEAN economies, making any trade restrictions potentially damaging [5][10][12] Economies at Risk - Economies like Vietnam, Thailand, and India, which have trade surpluses with the US and deficits with China, may be pressured to impose tariffs on China, but the report suggests they would struggle to do so [8][10] - Japan, Korea, and Taiwan, which also have significant trade surpluses with the US, run trade surpluses with China, making tariffs on Chinese imports unlikely [8][10] Trade Dynamics - Exports to the US account for 17.5% of AXC economies' total exports, while exports to China account for 16.6%, highlighting the importance of both markets [10][24] - China accounts for 41% of global value chain-related output in manufacturing, emphasizing its critical role in the region's supply chains [12][21] Potential Measures and Challenges - The report evaluates three potential measures the US could ask AXC economies to adopt: stricter rules of origin, tariffs on China, and limiting investment from China, all of which present significant challenges [15][16] - Imposing tariffs on Chinese imports could lead to inflationary pressures and disruptions in domestic manufacturing sectors, with potential retaliatory actions from China [18][31] Investment Flows - China's FDI inflows account for 11% of total FDI in ASEAN economies, with significant reliance on Chinese investments, particularly in Singapore, which acts as a conduit for FDI into ASEAN [37][39] - Other Asian economies like Japan, Korea, and Taiwan have lower reliance on Chinese FDI, which has been declining, thus limiting exposure to retaliatory measures [38][39] Transshipment and Domestic Production - The report notes limited evidence of transshipment activities in Vietnam, Thailand, and India, suggesting that their trade deficits with China reflect reliance on Chinese inputs for domestic production rather than trade rerouting [51][52]