$ USD Suffers
My View
By the midpoint of 2025, the U.S. dollar had dropped about 10.8% on the U.S. Dollar Index, marking its weakest first-half performance since 1973. The decline reflects investor concern over Donald Trump’s trade policies, mounting U.S. national debt, and expectations that the Federal Reserve will begin cutting interest rates.
“The US dollar had its worst start to the year since 1973, as Donald Trump’s trade and economic policies prompt global investors to rethink their exposure ”
– FT
This shift signals that the dollar’s safe-haven status is being questioned. We’re seeing a macro environment where fiscal risks, trade instability and expectations for easing monetary policy are outweighing traditional strengths of the U.S. currency. For investors, this means being more cautious about dollar exposure (hedging looks more attractive) and watching international investments more closely. At the business/firm level, companies with revenues abroad may benefit from translation gains, but those relying on imports will see cost pressures. Management should stress testing operations for weaker dollar scenarios, factoring currency risk into planning, and ensuring that debt or financing exposure isn’t overly U.S.-centric or vulnerable to further declines
Leaving China Behind
My View
In the first half of 2025, Hong Kong’s Hang Seng index has surged about 20-21%, while mainland Chinese equities (A-shares) are flat. The rally in Hong Kong has been driven largely by record capital inflows from mainland investors ($90 billion), attractive valuations of Hong Kong-listed Chinese tech names (like Alibaba, Tencent), and growing interest in dividends. Meanwhile, onshore China is struggling with weak economic recovery, deflationary pressure, slow consumption, weak property sector, and cautious stimulus .
“ Equities in mainland China are flat so far this year, compared with a 20 per cent gain for Hong Kong’s Hang Seng index … Hong Kong’s bull run has been driven by record investment flows from mainland China amid post-DeepSeek enthusiasm for technology companies… ”
– FT
The divergence between Hong Kong and mainland China markets reflects investor preference for transparency, liquidity, and valuation over proximity. Hong Kong is benefiting as a proxy for exposure to Chinese tech and global growth, while mainland markets suffer from greater economic headwinds and policy uncertainty. For investors, this suggests that playing China via Hong Kong-listed stocks may currently offer lower risk and higher return potential. For businesses, especially those dual-listed, there’s an opportunity: those with strong fundamentals and earnings in Hong Kong might be rewarded more. Management teams should monitor valuation gaps, maintain strong disclosure, and consider listing strategy and investor base as essential parts of their capital markets decisions.
NATO
My View
At the 2025 NATO Summit in The Hague, member states pledged to increase defense spending to 5% of GDP by 2035, with 3.5% allocated to military expenditures and 1.5% to defense-related activities. While this commitment strengthens NATO’s collective defense posture, it underscores the alliance’s focus on long-term strategic goals. In contrast, Ukraine’s immediate needs on the battlefield remain pressing. Without additional military aid, Kyiv’s situation could deteriorate rapidly, as NATO leaders express concerns about potential challenges on the frontlines.
“ Some NATO leaders fear that the situation on [Ukraine’s] frontline could deteriorate seriously by this autumn ”
– FT
The NATO summit’s emphasis on future defense spending, while significant, highlights a growing divergence between strategic planning and immediate crisis response. Ukraine’s urgent military requirements demand swift and decisive action, yet the alliance’s focus on long-term goals may delay necessary support. This gap raises questions about NATO’s ability to balance future preparedness with current obligations, potentially impacting its credibility and effectiveness in addressing immediate threats
Buying TikTok
My View
President Donald Trump announced in a Fox News interview that he has secured a buyer for TikTok’s U.S. operations, comprising a group of “very wealthy people” whose identities he plans to reveal in about two weeks. The deal is contingent on approval from China, which Trump anticipates from President Xi Jinping. This announcement comes after Trump extended the deadline for ByteDance, TikTok’s Chinese parent company, to divest its U.S. assets, citing the platform’s popularity among young voters as a factor in his 2024 re-election. The U.S. law mandating the divestment is set to take effect unless significant progress is made by January 19, 2026
“ We have a group of very big companies that want to buy it,” Trump said, ahead of an extended December 16 deadline to sell or shut down the short video app in the U.S ”
– FT
This development underscores a strategic pivot in U.S. policy towards TikTok, balancing national security concerns with political considerations. The involvement of high-profile investors indicates a concerted effort to maintain the app’s operations in the U.S. while addressing legislative mandates. However, the necessity for Chinese approval introduces a layer of geopolitical complexity, potentially influencing the timeline and structure of the deal. The forthcoming revelation of the investor group will be pivotal in assessing the deal’s viability and alignment with U.S. interests
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