Economic Performance Overview - Major economies have shown varied performance in Q2, with the U.S. tariff policy impacting trade differently across countries [1][4] - China's GDP grew by 5.3% year-on-year in H1, with Q2 growth at 5.2% year-on-year and 1.1% quarter-on-quarter, driven by strong exports and macroeconomic policies [2] - The U.S. GDP increased by 3% on an annualized basis in Q2, recovering from a 0.5% contraction in Q1, influenced by a significant drop in imports and increased consumer spending [2] - The Eurozone's economy grew by only 0.1% quarter-on-quarter in Q2, the lowest since early 2024, with Germany and Italy experiencing a 0.1% contraction [2] Regional Economic Insights - South Korea's economy rebounded with a 0.6% quarter-on-quarter growth in Q2, supported by increased exports and domestic demand [3] - Vietnam's GDP grew by 7.52% year-on-year in H1, with Q2 growth at 7.96%, attributed to accelerated procurement by foreign buyers ahead of potential U.S. tariffs [3] Tariff Policy Implications - Experts warn of the structural changes in supply and demand relationships due to U.S. tariff policies, predicting significant pressure on global economic growth in Q4 and 2024 [4] - Short-term behaviors, such as companies stockpiling goods to avoid tariff impacts, may lead to trade cycle disruptions, which are not sustainable for long-term growth [4] Global Economic Outlook - The IMF has revised global economic growth forecasts for the next two years to 3% and 3.1%, influenced by factors such as preemptive stockpiling by importers and improved financial conditions [5] - Despite the positive adjustments, the IMF cautions that global economic activities remain distorted due to heightened tariff expectations and geopolitical tensions [5] Cooperation and Trade Framework - The IMF emphasizes the importance of pragmatic cooperation among economies to reduce trade barriers, suggesting that a predictable trade framework could enhance global economic growth [6]

Global Economic Outlook - The economic momentum in the US and non-US regions is expected to converge, primarily driven by a slowdown in the US economy [2][3] - Non-US regions benefit from a more accommodative monetary policy environment, with GDP output gaps still not positive according to IMF estimates [2][3] - The European market is viewed positively due to the convergence of economic growth momentum with the US, despite facing uncertainties [3][12] Industry Preferences - Analyst preferences for industries in the second half of the year are ranked as follows: Technology (Telecom, Software, Advertising > Electronics > Content), Industrial (Power Equipment > Automation), and Financials [1][2] - Caution is advised for consumer and consumer-related manufacturing sectors (home appliances, automobiles) and bulk raw materials [1] European Market Insights - The European market is expected to perform relatively well, supported by fiscal policy and defense spending, which may boost investor and consumer confidence [3][12] - The impact of tariffs on the European GDP is estimated to be a direct effect of 0.2% to 0.4%, with indirect effects around 0.2% [12][13] - The labor market remains strong, and energy prices are declining, providing additional support for the European economy [13] Emerging Markets - Emerging markets show marginal upward potential, but overall absolute performance may be limited, requiring regional selection [4][22] - Factors favoring emerging markets include continued policy rate declines and the worst trade news potentially being priced in [4][22] - Challenges include limited improvement in risk appetite due to policy uncertainties and high US Treasury yields [4] Japan's Economic Outlook - Japan's economy is expected to experience moderate recovery in the second half of 2025, with inflation remaining high [15][16] - The Bank of Japan may consider raising interest rates in response to economic conditions, with a potential increase to 0.75% [15][17] - Japanese stocks are likely to be influenced by global market trends, particularly the US market [18] Southeast Asia Economic Trends - Southeast Asian economies are projected to experience growth, with GDP growth rates for countries like Vietnam and the Philippines expected at 6.5% and 5.3% respectively [22] - The region may face pressures from inventory cycles and trade negotiations, impacting growth in the latter half of the year [22][23] - Local currencies are showing signs of recovery against the US dollar, with notable increases in the Singapore dollar and Philippine peso [23] Industrial Sector Insights - The industrial sector is expected to benefit from energy transition, infrastructure projects, and data center investments, despite a slowdown in capital expenditure growth [52][54] - The automation sector is nearing the end of inventory destocking, with a positive outlook for recovery [54] - Power equipment demand is anticipated to remain strong, with limited tariff impacts due to localized production strategies [56][58] Consumer Goods and Automotive Sector - The consumer goods sector is facing challenges from tariffs, but large appliances are less affected due to domestic production [63][64] - The automotive market is still grappling with tariff uncertainties, but the overall impact is expected to diminish [66][68] - Electric vehicle sales may be impacted by the potential removal of tax credits in the US, while European automakers are negotiating to alleviate tariff pressures [68]

Group 1: Shipping Freight Index - The shipping index includes SCFI comprehensive index, SCFIS European route, and container index (European route) futures, which reflect the pricing of freight futures and the impact of tariffs [1][9][10] - The SCFI comprehensive index has shown a rebound since May 9, increasing by 9% compared to the end of March, influenced by export rush and transshipment [10][13] - The China Container Freight Index (CCFI) has fluctuated this year, hitting a low on April 3 and then rebounding, with the CCFI comprehensive index increasing by 0.2% from its low as of May 16 [13][15] Group 2: Port Cargo Throughput - Domestic port cargo throughput has shown resilience, with container throughput reaching a record high on April 27, 2023, despite a brief decline earlier in the month [2][20][23] - The Port of Los Angeles, the busiest port in the U.S., saw its import container throughput drop to the lowest level since June 2024 by May 10, indicating negative impacts from tariffs on U.S. imports and exports [2][22][24] Group 3: Domestic Production Activity - The high-frequency economic activity index from the First Financial Research Institute has been declining since the end of March but remains above 1, indicating stronger economic activity compared to the previous year [3][27][29] - The manufacturing PMI new export orders index fell from 49% to 44.7%, while the EPMI production index dropped from 67.7% in March to 51.6% [29][30] Group 4: Trade Outlook - South Korea's Export Situation - South Korea's export data showed stronger-than-seasonal growth in early April, with fluctuations in mid-April likely related to trade negotiations with the U.S. [4][30][32] - By May, South Korea's exports were weaker than seasonal expectations, indicating ongoing volatility ahead of the conclusion of U.S.-Korea trade talks [4][32][34]

Core Viewpoint - The European Central Bank (ECB) members are increasingly inclined to believe that trade shocks may lead to inflationary pressures beyond the short term [1] Group 1 - ECB members discussed the potential long-term impacts of trade shocks on inflation, indicating a shift in their perspective [1] - The meeting highlighted concerns regarding the sustainability of inflation rates in the context of ongoing trade tensions [1] - There is a growing consensus among ECB members that external trade factors could have lasting effects on the Eurozone economy [1]

Economic Outlook - Global economic growth is projected to decline from 3.2% to 2.7% in 2025 if new tariffs are implemented by the US [1][7] - The US economy is expected to slow down to 2.4% growth in 2025 from 2.8% in the previous year [1][7] - The Eurozone is forecasted to achieve only 1% growth in 2025, with Germany facing stagnation or a slight recession [1][7] Trade and Tariffs - New tariffs proposed by the US could significantly impact global trade, with potential tariffs of 60% on Chinese imports and 10-25% on imports from other countries [13][15] - The tariffs are expected to reduce global GDP by approximately 0.3% to 0.5% by 2026, with a notable decrease in global imports and exports by around 4% [18] - Germany, as an export-oriented economy, could see its GDP reduced by 0.4% in 2025 due to these trade restrictions [18] Monetary Policy - Central banks are facing challenges, with the Federal Reserve expected to maintain interest rates around 4% while the European Central Bank plans further cuts [2][7] - Diverging financial policies are affecting exchange rates, leading to a stronger US dollar against the euro and yen [2][7] Investment Environment - High interest rates are suppressing investment levels, particularly in construction and equipment, despite a recovery in consumer demand [2][3] - Emerging markets, especially in Asia, are showing stronger industrial production growth compared to regions like Africa and the Middle East [2][3] Consumer Behavior - In the US, consumer confidence remains low despite rising wages, with spending not increasing as expected due to inflationary pressures [3][4] - In Europe, countries like France and Italy are facing fiscal challenges that could hinder economic growth [3][4] Structural Challenges - The global economy is experiencing a complex recovery, with governments needing to balance economic stimulus and debt control [4] - Political uncertainties, particularly in the US and Europe, are complicating long-term economic planning for businesses [3][4]

Group 1: US Treasury Bonds - In March, foreign holdings of US Treasury bonds surged to a record high of $9.05 trillion, an increase of over $233 billion from February's $8.81 trillion, marking a nearly 12% year-over-year growth [2] - China reduced its holdings of US Treasury bonds in March to $765.4 billion, down from $784.3 billion in February, while Japan increased its holdings to $1.13 trillion, a growth of approximately 0.4% [3][4] - The trend of declining US Treasury bond holdings by Chinese investors has been ongoing since 2018, with the UK surpassing China to become the second-largest foreign holder of US debt for the first time in over 20 years [4] Group 2: Economic and Trade Developments - Analysts suggest that the demand for US Treasury bonds may change in April due to a significant trade shock initiated by the Trump administration, which led to a surge in effective tariff rates and a subsequent sell-off of US bonds [2] - Following Trump's announcement to pause tariff increases for 90 days, the Treasury bond market stabilized, although foreign investors may remain cautious about US assets [2] Group 3: Corporate Responses and Economic Commentary - Walmart has warned of price increases due to tariffs and economic turmoil, with CFO John David Rainey indicating that price hikes will become more apparent starting in May [7] - Trump criticized Walmart for attributing price increases to tariffs, suggesting that the company should absorb the costs instead of passing them onto consumers [7] - Trump expressed a consensus that the Federal Reserve should lower interest rates sooner rather than later, criticizing Fed Chair Jerome Powell for being slow to act [8]

Core Viewpoint - The Federal Reserve's Barr indicates that trade shocks may have particularly severe impacts on small businesses, potentially leading to price increases in the event of supply chain disruptions or business closures [1] Group 1 - Trade shocks are expected to disproportionately affect small enterprises [1] - Supply chain disruptions could trigger price hikes [1] - Business closures may result from the adverse effects of trade shocks [1]