JPM JPM International Markets

20 SECONDS: Nobody puts KOSPI in a corner! US CPI Scenarios. Debate on CNY, China non-purchasing power and China Tech earnings calendar

• AI capex theme and Asia Tech staged a solid rebound. CRWV & SMIC results + spike in odds of Anthropic IPO before YE + NVDA $500 AI financing plans helped. • A100’s economic life is now 6 years and could be extending toward a decade. This pushes back on the bearish depreciation thesis and helps the notion that compute can be seen (and financed) like an investable asset. For chip firms, capital is likely going to be a critical piece of the value proposition. • Korea is moving higher for a third day. Realized and implied vol continue to normalize while the interesting gap to Taiwan memory is trying to close. JPM thinks the bull case on Memory is still there and includes valuations. • The calendar for China tech earnings is below. These are going to be a key test of rotation into Internet names. Meanwhile, HSTECH considers expanding to 50 constituents and including more AI, robotics names

• US CPI the main risk event this week. Positioning for Equities is cleaner (vs Bonds) but rates appear sensitive to inflation spikes and the Equity-10Y Yield correlation is quite negative – symptomatic of supply side risks dominating. That’s why a hawkish print would have a larger impact in Drew’s scenario analysis. Gold could extend on a soft release.

• Tit-for-tat headlines continued, Brent is now near $90 – but could have been at least $30/bbl higher if it weren’t for China non-purchasing power (Chart below) - and fewer ships have been transiting in recent days. Military realities + declining Oil Inventories point at declining appetite for serious escalation so a deal remains the base case. That said, Tehran could see an advantage in keeping Trump entangled in the war ahead of the midterms.

• JPM Econ Aziz looks at to the commonly cited view that the CNY is 20-30% undervalued.

KOSPI2 – Vol is trying to normalize