Macro and Markets Review – August 2025
The global economy entered late summer with mixed but supportive risk assets. Consumer spending remained firm in the US, despite higher borrowing costs. Inflation in services remained sticky, but softer job creation and housing data led to a positive month for equities and credit globally. The theme of “better growth, lower inflation” fueled a positive month.
Asia’s manufacturing surveys remain below expansionary territory, with China’s manufacturing surveys showing weakness. Investors seek targeted stimulus from Beijing. India’s GDP growth remains strong, driven by services and infrastructure spending. Equity markets struggle due to disappointing earnings and US tariff measures. Southeast Asia maintains a middle course, with resilient domestic consumption in Indonesia and the Philippines.
Emerging markets saw modest gains in August, with Latin America benefiting from softer inflation and stronger currencies, while Asia was uneven due to China’s recovery and India’s underperformance. A softer US dollar provided a tailwind to many EM currencies.
At the Shanghai Cooperation Organisation summit, Presidents Xi and Modi discussed a tentative reset in relations, with a focus on managed interdependence. The likely outcome is sectoral cooperation, with India requiring cost-effective inputs for its clean-energy transition and China granting India greater access in areas like pharmaceuticals, agrifood, and select services. The opening between Modi and Xi faces risks due to unresolved border disputes, Beijing’s ties to Pakistan, and India’s ban on Chinese telecoms equipment. US tariffs and technology controls complicate the situation. However, the symbolism of finding common ground matters, especially with G20, BRICS+ summit, and COP30. Incremental cooperation in energy, agriculture, and healthcare could ease volatility.
Performance & Attribution — August 2025
The portfolio increased by 2.94% in August, with Brazil, China, Taiwan, Malaysia, and Indonesia leading gains. However, India and South Korea experienced weakness. The broadening improved across consumers, industrials, and Taiwan tech supply chain, while India’s financials and parts of Korea’s defense complex paused.
Brazil was a significant contributor, with consumer and industrial names like Magazine Luiza, Sendas, Marcopolo, and Cogna contributing significantly to the country’s advance. Education spending strengthened, and energy and materials were steady, ensuring a positive contribution.
China’s tech stack and travel complex experienced a dip in the month, with Inspur Digital losing ground amid AI server profit-taking and Travelsky softening as air-traffic momentum cooled. Platform and brand leaders like Tencent, Yadea, and Chicmax contributed to the growth, while logistics and consumer niches remained weak.
Taiwan’s supply chain, including Zhen Ding in advanced PCBs, Hon Hai, Tripod, Elite Material, and Taiwan Union Tech, remained positive despite a pause in TSMC, highlighting the benefits of being exposed to multiple rungs of the stack rather than relying on a single flagship name.
India and parts of Korea experienced a pullback in financials and healthcare, with PNB Housing, HDFC Bank, REC, Federal Bank, Narayana Hrudayalaya, and Sun Pharma trading heavy due to earnings drift and tighter liquidity. Defense/industrial companies like LIG Nex1 and Doosan Enerbility consolidated, while select tech names like Park Systems paused. However, HD-Hyundai Marine Engine and Suheung advanced, and smaller software/hardware names helped cushion the downside.
The company is focusing on compounders in Brazil and Taiwan, with improved revisions, and selectively targeting profitable platforms, consumer franchises, and logistics in China. They are also refocusing in India on lenders with stronger funding profiles and pricing power, while tilting in Korea towards industrials/defense names with better backlog visibility and cash conversion.
