9 October 2025 THIS CONTENT MAY NOT BE DISTRIBUTED TO MAINLAND CHINA HSBC Global Macro Strategist Multi-Asset Global US growth divide, fiscal fragilities, EM in ascendancy In this regular report, we bring together top themes and our best ideas across asset classes and geographies. HSBC Global Macro Strategist also complements our multi- asset efforts on asset allocation with actionable trades; to subscribe please click here Theme 1: US growth divide: This theme has recently emerged in our client conversatio ...

Summary of Key Takeaways from Brazilian Corporates Conference Call Industry Overview - **Investor Trip**: BofA's 12th Brazil investor trip highlighted a stark sectoral divide and a defensive corporate posture among Brazilian corporates, with a focus on deleveraging and liquidity preservation in a challenging environment [1][2][3] - **Corporate Bond Performance**: Brazilian corporate bonds (EBRZ index) have underperformed with a total return of +3.5% YTD compared to LatAm (+8.9%) and EM (+7.5%) [1] Core Themes - **Deleveraging Strategy**: Companies are prioritizing deleveraging due to increased leverage and high local interest rates (15%), leading to postponed investments and accelerated asset sales [3][4] - **Sectoral Divide**: Sectors like Oil & Gas services, protein, and logistics are performing well, while industrial sectors such as steel and petrochemicals face margin compression due to low-cost imports, particularly from China [4][11] Credit Events and Market Sentiment - **Contagion Fears**: Recent credit events at Ambipar and Braskem have heightened investor scrutiny on balance sheets, potentially leading to a broader repricing of risk [2][4] - **Investor Preferences**: There is a growing emphasis on transparent governance and conservative financial policies among investors [2] Sector-Specific Insights - **Pulp & Paper**: The sector is navigating a downturn in pulp prices, with Suzano taking a leadership role through capacity cuts and diversification into consumer tissue [10] - **Metals & Mining**: The steel market is under pressure from Chinese oversupply, impacting CSN and Gerdau, while Vale remains focused on shareholder returns [11] - **Banking**: A bifurcation in credit quality is evident, with Itaú managing risks effectively while Banco do Brasil faces challenges in its agribusiness portfolio [12][51] - **Oil & Gas**: Petrobras is balancing investments with shareholder returns amid volatile Brent prices, while companies like Acelen are experiencing operational momentum [13][26] - **Agribusiness**: Adecoagro is facing significant margin squeezes despite high production volumes, with a focus on strategic acquisitions [19][37] Financial Health and Projections - **Banco do Brasil**: NPLs in agribusiness have reached 3.5%, prompting increased provisions to R$56 billion, with government intervention expected to stabilize the situation [51][52] - **Braskem**: The company is in crisis management mode, facing a prolonged downturn and cash burn estimated at $1 billion for 2025 [55][57] - **Acelen**: The refinery reported a significant reduction in operating costs from over $12/bbl in 2022 to $7.8/bbl in 1H25, with a positive outlook for diesel prices [26][27][33] Strategic Initiatives - **Acelen Renewables**: Plans for a $3 billion refinery project to produce sustainable aviation fuel and hydrotreated vegetable oil are underway [36] - **Adecoagro's Acquisition**: The acquisition of a stake in Profertil is seen as strategically beneficial despite potential near-term credit pressures [39][40] Conclusion - The Brazilian corporate landscape is characterized by a defensive posture, aggressive deleveraging strategies, and a clear sectoral divide influenced by both domestic and global economic factors. Investors are increasingly cautious, focusing on governance and financial health as key determinants for future investments.

Core Insights - The article discusses the challenges of carrying credit card debt and highlights that approximately 103 million Americans experience credit card debt at some point during the year, with 82% of adults holding at least one credit card and 47% of those cardholders carrying a balance annually [1] Group 1: Financial Impact of Credit Card Debt - Carrying credit card debt can significantly strain finances, especially when high annual percentage rates (APRs) lead to substantial interest charges, making it difficult to reduce the principal balance [3][4] - The average APR for existing accounts with balances is around 21.5% to 24%, which can contribute to a cycle of debt [4] Group 2: Benefits of Balance Transfer Cards - Balance transfer cards can reduce interest payments by allowing users to move their debt to a card with a low or zero APR, enabling more funds to be allocated toward the principal [4][6] - Consolidating multiple credit card debts into one balance transfer card simplifies management and reduces the risk of late fees, ultimately leading to lower overall interest payments [5][6] Group 3: Managing Large Purchases - Balance transfer cards can also assist in managing large, unexpected expenses by allowing payments to be made without incurring excessive interest fees, thus making it easier to handle financial emergencies [7][8]

I think it comes back to the vision that we had on that ten years ago, which was very basic, it said. In the future there will be a digital financial assistant. It will analyse your spending, let's say a mortgage, and it will say like, That's too much.I found a better offer for you. The only thing you need to do is say yes, and I'll do all that, all the paperwork and get it all done for you and save you the cost. Right.So to us, this was basically where we believed retail banking was heading. And a little b ...

Stock market: Dalal Street witnessed strong momentum last week as the combined market capitalisation of eight of India's top 10 most-valued companies rose by Rs 1.94 lakh crore, reflecting renewed investor optimism.Tata Consultancy Services (TCS) emerged as the biggest gainer, while Hindustan Unilever and Life Insurance Corporation of India (LIC) saw declines in their valuations, PTI reported.The benchmark BSE Sensex rose 1,293.65 points, or 1.59%, last week, mirroring the overall positive momentum in equit ...

Core Insights - The combined market valuation of eight of the top-10 most valued firms increased by Rs 1,94,148.73 crore last week, driven by a positive trend in the stock market [7] - TCS emerged as the biggest gainer, adding Rs 45,678.35 crore to its market valuation, which reached Rs 10,95,701.62 crore [7] - The BSE benchmark index surged by 1,293.65 points or 1.59% during the same period [7] Company Valuations - HDFC Bank's market valuation surged by Rs 25,135.62 crore, reaching Rs 15,07,025.19 crore [7] - Infosys saw an increase of Rs 28,125.29 crore in its valuation, bringing it to Rs 6,29,080.22 crore [2][7] - Bharti Airtel's market valuation jumped by Rs 25,089.27 crore to Rs 11,05,980.35 crore [4][7] - Reliance Industries' market capitalisation climbed by Rs 25,035.08 crore to Rs 18,70,120.06 crore [5][7] - Bajaj Finance's market capitalisation rallied by Rs 21,187.56 crore to Rs 6,36,995.74 crore [7] - State Bank of India's valuation increased by Rs 12,645.94 crore to Rs 8,12,986.64 crore [7] - ICICI Bank's valuation rose by Rs 11,251.62 crore to Rs 9,86,367.47 crore [6][7] Declines in Valuation - The market capitalisation of LIC decreased by Rs 4,648.88 crore, resulting in a valuation of Rs 5,67,858.29 crore [6][7] - Hindustan Unilever's valuation declined by Rs 3,571.37 crore to Rs 5,94,235.13 crore [6][7]

Market Sentiment - The hedge fund Peconic Partners, managed by Bill Harnisch, has seen a 580% increase since 2020, outperforming the S&P 500 this year by tripling its returns [1][2] - Harnisch expresses concern over market volatility and potential negative impacts from external factors, indicating a sense of unease among investors [2][4] Economic Risks - President Trump's unexpected tariff threats against China have negatively impacted high-valuation assets, leading to significant market declines [3][4][7] - The ongoing US government shutdown is obscuring economic health and could further hinder growth by affecting federal employees' paychecks [4][10] Investment Trends - There are growing concerns regarding the sustainability of investments in artificial intelligence, with skepticism about whether current valuations can be justified [5][8][9] - Gold prices have surged, reaching over $4,000 per ounce, as investors seek safe-haven assets amid declining confidence in the US dollar [6] Market Corrections - The International Monetary Fund has compared the current market conditions to the dot-com era, warning of potential sharp corrections due to stretched valuations [9] - Recent performance of companies like Oracle Corp. highlights the risks associated with high expectations in the AI sector, as their stock experienced a significant drop following disappointing profit margin reports [9] Fund Strategies - Peconic Partners has maintained a conservative leverage strategy, focusing on long-term holdings in resilient sectors while betting against consumer-related stocks [15] - Harnisch emphasizes the importance of companies that generate free cash flow, indicating a preference for stability in uncertain economic conditions [16]

Economic and Market Overview - The moves in the US economy have shaken confidence, weakened the dollar, and contributed to a significant rally in gold [1] - Concerns about political and fiscal stability in the US are growing, with Trump's tax and spending bill projected to increase the deficit and ongoing government shutdown since October [2] - The S&P 500's performance is lagging behind other global equity indexes, ranking 57th in local-currency terms and not appearing in the Top 10 or even Top 25 of best-performing equity indexes this year [4][6] Investor Sentiment and Behavior - Investor confidence in the US market is eroding due to the deteriorating fiscal situation and increasing policy uncertainty, prompting a shift towards non-US markets [7] - Foreign investors are becoming more selective, focusing on big tech rather than broad-based indexes, and are currently net underweight in US stocks [3][18] - Global investors are showing a preference for European and emerging markets, with a net 15% overweight in euro-zone peers and 27% overweight in emerging markets [18] Performance Comparisons - Despite an 11% rally in the S&P 500 this year, it still trails behind developed market benchmarks like Germany's DAX and Japan's Nikkei 225, as well as other countries like South Korea and Ghana [5][9] - The S&P 500's valuation is at a premium of 46% compared to the rest of the world, leading to concerns about overexposure to American equities [16] - The Hang Seng Tech Index in China has outperformed the Nasdaq 100, with a year-to-date advance of 40% [15] Sector and Regional Highlights - European markets are benefiting from lower interest rates and cheaper financing, with companies trading at valuations about 35% lower than in the US [10] - South Korea's Kospi index has risen 50% this year, driven by expectations of shareholder-friendly policies and advancements in the chipmaking sector [12] - Japan's stock market has reached all-time highs, fueled by expectations of pro-stimulus policies and significant gains in companies like SoftBank Group [14]

>> COMING TOWN SHOW. WE EXPLORE HOW A. I.COULD RESHAPE DEAL MAKING, TRANSFORM COMPETITION AND REDEFINE WHO WINS IN THE FINANCIAL SECTOR. WHAT’LL IT ALL MEAN FOR JOBS IN BANKING. WE EXPLORE HOW A.I. IS REWIRING HOW BANKS HIRE. THE ROLES THAT COULD BE EMPOWERED AND THOSE THAT RISK EXTENSION.AND FIN TECH GIANT KLARNA’S CEO TELLS ME WHY HE SEES LEGACY BANKS FALLING BEHIND AS A. I. CHANGES THE RULES.>> I WOULD ARGUE THE ODDS ARE PRETTY GOOD AT WINNING. THE A BIG MARKET SHARE. NOW THEY ARE WAKING UP TO FINISH TEC ...

Group 1 - The report utilizes a sectoral balance framework to evaluate the impact of fiscal and monetary dynamics on risk asset performance, highlighting the effects of cooling inflation, rising unemployment, and a potential policy shift by the Federal Reserve [1] - The analysis incorporates trading strategies in real estate, equity, and bond markets, leveraging fiscal flow analysis, functional finance, demographics, and the real estate cycle [1] - Key economic indicators are identified as G (Federal spending), P (Non-Federal Spending), X (Net Exports), and C (Credit), which can be used to derive accounting identities relevant to GDP and aggregate demand [1] Group 2 - The report suggests that an increase in the federal deficit leads to a rise in private surplus, which in turn positively influences risk asset markets [1]