Global economic indicators show mixed trends in May. US manufacturing activity reached a four-year high, with the ISM manufacturing PMI at 54.0, driven by businesses front-loading orders. Conversely, the US services sector expanded at a slower pace, with the ISM Services PMI falling to 54.5. In China, local governments issued nearly 1.5 trillion yuan in special bonds for construction, and industrial activity improved in Q2, though weaknesses persist. BYD's sales grew 0.3% in May, ending an eight-month decline, while Li Auto saw deliveries fall 18%. Japan's services activity remained flat, the weakest pace since early 2025, and its FX intervention likely boosted US Treasury yields. Asian currencies consolidated as traders weighed Middle East risks.

Citic Securities plans a $2.4 billion H-share placement to bolster China's global investment banking ambitions, while Chinese chip stocks surged on index reshuffle news expected to draw billions in passive investment. In the AI sector, Huawei's Ascend 910C chips advanced AI model training, furthering China's self-reliance goals amid US sanctions. Meanwhile, Hong Kong's financial landscape sees activity with AI startup MiniMax exploring a Shanghai listing after a successful Hong Kong IPO, and Jollibee Foods Corp. considering a Hong Kong listing for a business spinoff. The Hong Kong Monetary Authority is also working with industry experts to streamline rules for tokenized bonds to encourage broader adoption.

South Korea's exports surged 53.2% in May, reaching a record $87.75 billion, primarily due to a substantial 169.4% increase in semiconductor sales. This performance contributed to an all-time high trade surplus of $26.95 billion, while consumer inflation rose 3.1%. In other economic news, Australia's trade surplus rebounded in April to A$1.8 billion, driven by resource exports. Southeast Asia's manufacturing sector also improved in May, supported by domestic demand, and Singapore's retail sales growth accelerated to 5.4% in April. Meanwhile, South Korea and China agreed to expand flight rights for the first time in seven years, increasing weekly passenger and cargo flights. In the crypto space, Stellar (XLM) has surpassed XRP in trading volume on South Korea's Upbit exchange.

Electric vehicle sales in China saw a 7.5% decrease in May, yet EVs captured a record 63% market share, indicating a shift in consumer preference despite market challenges. NIO reported a significant 62.3% year-over-year increase in deliveries to 37,705 vehicles, with its ONVO and FIREFLY brands contributing substantially. Tesla also experienced a strong rebound, with its Shanghai plant delivering 85,982 vehicles, a 39.4% year-over-year rise. Meanwhile, GAC announced a 140% surge in proprietary brand exports, reaching 28,386 units. These figures highlight a dynamic Chinese auto market grappling with overcapacity and intense competition, even as individual players show robust growth.

China has implemented new regulations to tighten control over outbound investments, effective July 1, requiring authorization for exports of restricted goods, technologies, services, or data, and providing a legal basis to unwind completed overseas transactions. These updated rules also extend to individuals and aim to strengthen oversight of overseas capital flows, impacting foreign direct investment and M&A strategies. Concurrently, China is broadening trade secret regulations to encompass data and algorithms to prevent technology leaks and is increasing oversight of its 23 trillion yuan private fund industry to mitigate financial risks and direct capital towards technological innovation.

Indonesian authorities have arrested three former officials, including the ex-chief of the National Nutrition Agency, over alleged corruption in President Prabowo Subianto's flagship free meals program. The arrests are tied to self-enrichment and inflated procurement costs, as the program faces scrutiny for food poisoning incidents and its significant fiscal impact. In response to budget cuts and these issues, the program will be refocused on recipients in remote areas, with a reduced budget of 268 trillion rupiah. This comes as the Indonesian rupiah falls past 18,000 against the US dollar and stocks hit near six-year lows, raising concerns about policy uncertainty and investor confidence, though the finance minister defends the economy.

South Korea has surpassed India to become the world's sixth-largest equity market, fueled by surging demand for AI chips. This surge is largely attributed to the strong performance of semiconductor companies in the region. Meanwhile, Australian data center provider AirTrunk plans a significant $30 billion investment in India by 2030 to expand data center capacity. Investors are also showing renewed interest in AI-linked shares, which have been a dominant market theme driving performance throughout the year.

Asian stock markets showed mixed performance, with Japan's Nikkei 225 index retreating from a record high above 68,000, which it had previously achieved. The Nikkei's earlier surge was fueled by AI and semiconductor stocks. Meanwhile, Thailand's SET Index reached a one-year high, and South Korea's KOSPI also pulled back from its record. Geopolitical tensions in the Middle East, including halted indirect negotiations between Iran and the U.S. and a partial ceasefire announcement between Hezbollah and Israel, contributed to market anxieties. Separately, Japan is facing a potential banana shortage due to disruptions in supply chains stemming from the Middle East conflict.

Tata Consultancy Services (TCS) shares experienced a significant downturn, falling over 9% on Wednesday, its worst single-day performance since March 2020. This drop erased recent gains and occurred despite a generally positive outlook from brokerages. The decline follows a three-day rally in Indian IT stocks, which had surged over 3% earlier in the week amid hopes of AI integration. However, concerns over AI advancements and weak growth have led to a sharp sell-off, with technical analysts warning of further declines if TCS stock falls below Rs 2,200.

India's economy expanded by 7.8% in the January-March quarter, surpassing expectations with strong performance in manufacturing, construction, and agriculture. This growth contributes to an estimated 7.7% expansion for the full fiscal year. Meanwhile, Serbia's GDP saw a 3.2% increase in Q1 2026, accelerating from the previous quarter due to household consumption and government spending. In contrast, Guyana's economy, already the world's fastest-growing, is poised for further acceleration driven by its significant oil reserves amid rising global oil prices. Projections for India's Q1 growth had previously suggested a potential easing to 7.2% due to weaker external demand.

Japan is bolstering defenses on its northern territories amid heightened concerns over Russian military activity, reflecting anxieties about a potential two-front conflict. This strategic shift coincides with Japanese regional banks reducing their China operations to focus on growth in Southeast Asia and India. Meanwhile, economic indicators from China and India, including inflation data, are set to be released this week, alongside developments in Taiwan-China trade relations. Separately, a Chinese archaeologist has pleaded guilty to corruption charges, and businesses are reportedly relocating from Singapore due to rising costs.

China is undertaking a massive, multi-year investment initiative to transform its western regions, including Xinjiang and Tibet, into strategic hubs for industry, energy, tourism, and trade. This plan, encompassing nearly a third of China's landmass, aims to integrate these areas economically, strengthen border security, and enhance Eurasian connectivity. While the initiative is expected to significantly reshape the landscape, it also raises concerns regarding human rights and cultural assimilation. Separately, China's commercial aerospace sector is experiencing rapid growth, driven by policy and investment.

India's stock market is seeing a surge in companies exploring Initial Public Offerings (IPOs), with several major players preparing for public listings. Oyo's parent company has received approval from the Securities and Exchange Board of India (Sebi) for a Rs 6,650 crore IPO, its third attempt to go public. Meanwhile, Coca-Cola is considering a 2027 IPO for its Indian bottling unit, Hindustan Coca-Cola Holdings, potentially valuing it at $10 billion. Additionally, Sagar Defence Engineering is evaluating an IPO that could raise Rs 2,000-3,000 crore. This activity is part of a broader trend where foreign firms are listing Indian units to repatriate profits, driven by high valuations.

India is navigating a complex geopolitical environment marked by US-China tech rivalry and Middle East conflicts, adopting a multi-alignment strategy to maintain sovereign decision-making and attract investment. This approach includes formalizing tech cooperation with the US through the iCET initiative and leveraging the 'China Plus One' strategy. However, overseas investors' net equity investments in India have reached a near decade low, totaling Rs 7.3 lakh crore as of June 1, influenced by rising oil prices and global economic concerns. Meanwhile, India and the US are nearing a trade deal, with the first tranche expected by mid-July, though the US has raised concerns about forced labor impacting Indian imports. European CEOs also show increasing optimism towards India's business prospects compared to China.

China has become Australia's largest car supplier, overtaking Japan, fueled by a significant increase in electric vehicle imports, particularly from BYD Co. This shift reflects growing demand for EVs in Australia. Meanwhile, domestic Chinese EV brands are experiencing a resurgence, boosted by technological advancements and government incentives, which saw foreign automakers' market share decrease in April. In related news, BYD's shares saw a notable increase in Hong Kong trading, and Tata Motors is reportedly exploring a potential platform-sharing deal with Chinese automaker Chery for its Avinya EV range.

Alibaba's stock experienced a significant surge, driven by the launch of its advanced AI model, Qwen3.7-Plus, and a new partnership with UEFA. The company secured a six-year deal to serve as UEFA's exclusive AI and cloud partner beginning in 2027. This development follows increased investor interest, with institutions like Northwestern Mutual reportedly increasing their stakes. Meanwhile, China's Communist Party mouthpiece, People's Daily, framed artificial intelligence as a potential area for US-China cooperation, suggesting a desire to avoid an 'AI Iron Curtain' amidst discussions between Presidents Trump and Xi.

The Indonesian rupiah has fallen below 18,000 against the U.S. dollar, reaching a critical threshold, while the country's stock market has hit a six-year low. This economic downturn is attributed to policy uncertainty and broader macroeconomic challenges. In an effort to stabilize the currency and bolster foreign exchange reserves, the Indonesian government has announced a tax exemption for natural resource exporters who keep their earnings in domestic banks. This measure follows new foreign exchange regulations introduced in June.

China is strengthening its global dominance in rare earths through a strategic educational push, with universities launching bachelor's degree programs and over 500 students enrolling annually in specialized rare earths studies across more than 40 labs. This academic-industry integration facilitates China's control over 90% of processed rare earths and magnets. Meanwhile, the Quad alliance, comprising India and the US, has launched a critical minerals pact pooling up to $20 billion to counter China's influence, though a separate port project in Fiji faces internal doubts.

The Philippines and Vietnam have elevated their bilateral ties to an enhanced strategic partnership, emphasizing the critical importance of peace, stability, and freedom of navigation in the South China Sea. This agreement deepens cooperation across political, defense, and people-to-people exchanges. Meanwhile, Lao President Thongloun Sisoulith arrived in Hangzhou for a five-day state visit from June 2 to June 6, signaling diplomatic engagement with China. Separately, U.S. President Donald Trump downplayed the threat posed by Iranian sea mines in the Strait of Hormuz to commercial shipping, diverging from other U.S. officials' warnings.

Taiwan's main opposition leader, Cheng Li-wun of the Kuomintang party, is visiting the U.S. to advocate for U.S.-China cooperation and avoiding war. Her visit follows a meeting with Chinese President Xi Jinping and comes amid reports that former President Trump has canceled a call with Taiwan's President. U.S. Senator Marco Rubio stated that the U.S. objective is to maintain the current situation in Taiwan.