Date Issued – 29th April 2025
Preview
Asian equities rose on tariff easing optimism, while gold fell on a stronger dollar. Boeing climbed out of CreditWatch negative as S&P cited improving production and cash flow, despite lingering risks tied to trade tensions. Microsoft highlighted Asia’s leadership in AI adoption, driven by innovation and cost-efficient models like China’s DeepSeek, while LG announced an additional $1.7 billion investment in Indonesia’s EV battery sector, signaling the region’s growing role in supply chains. Meanwhile, HSBC reported a $1.6 billion potential loss from its reduced stake in China’s BOCOM but reassured investors with a $3 billion buyback. Elevated trade and economic risks persist across markets.
Stocks Rise on Tariff Easing, Gold Falls Amid Stronger Dollar
Asian equities reached a one-month high as optimism grew following news of a potential reprieve on US auto tariffs, signaling a possible de-escalation in trade tensions. A regional index climbed 0.3%, led by gains in South Korean automakers like Hyundai, while US equity futures edged up 0.1%. The dollar strengthened 0.2%, pressuring gold prices, which fell as much as 1.1%. Market participants remain cautious, with the week ahead featuring key US economic data and high-profile earnings, as investors navigate mixed signals on global trade and inflation.
Investment Insight: While easing tariff concerns offer a temporary boost for equities, heightened volatility underscores the need for a balanced portfolio. Investors should monitor US economic data and earnings for clarity on growth trends, while considering exposure to domestically-driven markets like India, which may be better insulated from global trade disruptions.
S&P Lifts Boeing From CreditWatch Negative on Recovery Prospects
S&P Global Ratings has removed Boeing from CreditWatch negative, citing improvements in aircraft production and reduced cash burn following last year’s strike-related disruptions. The planemaker’s first-quarter free cash flow usage improved to negative $2.3 billion, beating expectations of negative $3.6 billion. Boeing aims to double monthly 737 MAX production to 38 units by year-end, bolstering confidence in its recovery. However, S&P maintained a negative outlook, reflecting risks tied to production delays and global trade tensions, which could hinder cash flow and credit metrics improvement.
Investment Insight: Boeing’s improving production and cash flow signal early recovery progress, but the retained negative outlook highlights lingering uncertainties. Investors should weigh near-term opportunities against potential disruptions in global trade and supply chains, while monitoring the company’s progress toward sustainable production targets.
Market price: Boeing Co (BA): USD 182.30
Microsoft Says Asia Is Becoming a Leader in AI Adoption
Asia’s transition from “Made in” to “Created in” is driving its leadership in AI adoption, according to Microsoft Asia President Rodrigo Kede Lima. The region accounts for 70% of global patents, hosts two-thirds of the world’s developers, and leads GPU consumption, underscoring its role as a hub for design and technological innovation. Microsoft’s latest Work Trend Index reveals that over 60% of Asia-Pacific leaders aim to boost productivity through AI, though 85% cite time constraints as a barrier. Lima sees smaller, cost-efficient AI models like those pioneered by China’s DeepSeek reshaping the competitive landscape, fostering broader adoption and domain-specific applications.
Investment Insight: Asia’s growing dominance in AI signals long-term opportunities in sectors tied to innovation and productivity enhancement. Investors should focus on companies enabling AI infrastructure and adoption in the region, while monitoring emerging players like DeepSeek, whose disruptive models could challenge Big Tech’s traditional advantage.
LG Commits Additional $1.7 Billion to Indonesian Battery Factory
South Korea’s LG Group will expand its investment in an Indonesian battery cell factory by $1.7 billion, bringing the total project value to $2.8 billion, according to Indonesia’s investment minister Rosan Roeslani. The factory, a joint venture between LG Energy Solution (LGES) and Hyundai Motor Group known as HLI Green Power, recently launched Indonesia’s first battery cell production plant with a 10 GWh annual capacity and is now entering its second investment phase. This commitment follows LGES’s withdrawal from a separate $8.46 billion EV battery supply chain project, citing market and investment challenges. China’s Zhejiang Huayou Cobalt will step in to replace LGES in the latter initiative.
Investment Insight: LG’s expanded investment underscores Indonesia’s growing role in the global EV battery supply chain, driven by its abundant nickel resources. Investors should monitor Indonesia’s partnerships with key global players like LG and Huayou Cobalt, as well as the broader push for battery production scalability and regional EV market growth.
Market price: LG Corp (KRX: 003550): KRW 65,500
HSBC Faces China Stake Loss, Launches $3 Billion Buyback Amid Trade War Concerns
HSBC announced a potential pre-tax loss of up to $1.6 billion as its stake in China’s Bank of Communications (BOCOM) will drop from 19.03% to 16% following BOCOM’s $16.9 billion private placement to recapitalize state banks. Despite the loss, HSBC emphasized the move will not impact its capital ratios or dividend capacity. Meanwhile, the bank reported a 25% drop in Q1 profit to $9.5 billion, citing one-time charges from divestitures in Canada and Argentina.
Economic uncertainty stemming from U.S. President Donald Trump’s sweeping trade tariffs has raised credit risk and dampened loan demand. To reassure investors, HSBC launched a $3 billion share buyback, which analysts described as a “positive surprise.” The bank’s Asia-focused wealth operations posted strong growth, with Hong Kong wealth management gaining 29% in new customers quarter-on-quarter. However, the macroeconomic environment remains volatile, with HSBC warning it could face an additional $500 million in credit losses if tariffs further slow global growth.
Investment Insight: HSBC’s strategic pivot highlights the balancing act between mitigating short-term challenges—such as trade tensions and rising credit risks—and pursuing long-term growth in Asia’s wealth and institutional banking sectors. Investors should monitor the bank’s cost-cutting measures, its focus on high-growth Asian markets, and the broader implications of China’s state bank recapitalization on HSBC’s regional footprint.
Market price: HSBC Holdings plc (HKG: 0005): HKD 88.50
Conclusion
Global markets are navigating a mix of optimism and caution as easing tariffs lift equities, while trade tensions and economic uncertainty weigh on sectors like banking and manufacturing. Asia’s rise as a leader in innovation and AI adoption is reshaping industries, with significant investments like LG’s battery expansion in Indonesia highlighting regional growth opportunities. Meanwhile, corporate responses to challenges, such as Boeing’s production recovery and HSBC’s strategic buyback, signal resilience amid volatility. Investors face a complex landscape, balancing short-term risks with long-term opportunities in innovation, supply chains, and emerging markets poised for transformation.
Upcoming Dates to Watch
- April 29th, 2025: EU Consumer Confidence, South Korea industrial production
- April 30th, 2025: EU GDP, US GDP
Find below some of our Buy/Sell Recommendations. Balfour Capital Group is a distinguished global boutique investment management firm with $350 million AUM and over 1000 Clients.
Disclaimer: This post provides financial insights for informational purposes only. It does not constitute financial advice or recommendations for investment decisions.
