Insights – Airo – Digital Investment Manager

Highlights:

#1
December was a flat month for the S&P 500 at 0.05%, as the A.I. sector appeared to have peaked since the end of October 2025. More broadly, the MSCI ACWI closed higher by 0.94%, driven in particular by strong outperformance in emerging markets and Europe.

#2
The Airo-BOCA Composite declined by 1.51% in December, primarily due to hedging positions in the U.S. technology sector. These losses remain unrealized, as the hedging positions are still maintained. The Airo-Shariah Composite was broadly flat at 0.04%, as no hedging mechanisms are employed within the Shariah portfolios.

#3
Global markets began the year amid mounting uncertainties, consistent with what I highlighted in the previous CIO letter–that global macro conditions have entered a period of shifting sands. First, fiscal dominance has emerged as a central theme among the world’s largest economies, namely the U.S., China, and Japan. How these pent-up government expenditures will influence the forward inflation trajectory remains to be seen.

#4
Secondly, Trump’s foreign policy has given rise to a new wave of geopolitical uncertainty, as the U.S. has reportedly invaded Venezuela and seized its crude oil assets. This development alone has created significant repercussions for crude oil trade flows involving China and Russia. In addition, there are growing rumors that the U.S. may be on the brink of military action against Iran amid ongoing civil unrest in the country.

#5
Lastly, A.I.-driven technology companies continue to ramp up A.I.-related capital expenditures. While this presents a positive growth narrative on the surface, relentless spending without due regard for returns on investment is a growing red flag, particularly given current valuations within the A.I. space.

#6
From a strategy perspective, we remain cautious as we head into February and continue to hold the view that volatility remains elevated. Stay nimble, stay safe!

– – –

Dear Valued Investors,

December was a flat month for the U.S. equities, with the S&P 500 flat at 0.05%, driven primarily by a pause in the A.I. sector, which has peaked since the end of October 2025. More broadly, the MSCI ACWI closed up 0.94%, supported by strong outperformance in emerging markets and Europe.

Chart 1: Magnificent 7 peaked in October 2025 and failed to hit new high as a group

Source: CP Global Fintech Solutions, Bloomberg

The Airo-BOCA Composite declined by 1.51% in December, primarily due to hedging positions in the U.S. technology sector. These losses remain unrealized, as the hedging positions are still maintained due to relative underperformance in the technology sector. The Airo-Shariah Composite was broadly flat at 0.04%, as there no hedging mechanisms are employed within the Shariah portfolios.

Table 1: Airo-BOCA Composite Performance (Dec 2025)

Source: CP Global Fintech Solutions, InteractiveBrokers

Table 2: Airo-Shariah Composite Performance (Dec 2025)

Global markets began the year amid mounting uncertainties, consistent with what I highlighted in the previous CIO letter–that global macro conditions have entered a period of shifting sands. First, fiscal dominance has emerged as a central theme among the world’s largest economies, namely the U.S., China, and Japan. As these major countries are increasing government expenditures without a similar increase in tax revenue, how these pent-up government expenditures will influence the forward inflation trajectory remains to be seen. In addition to these fiscal stimulus measures that require funding, the U.S. has approximately USD 9 trillion in Treasury bills and bonds maturing in 2026. This combination of unchecked spending and looming debt maturities is putting upward pressure on global long-end yields at the current juncture.

Secondly, Trump’s foreign policy has given rise to a new wave of geopolitical uncertainty, as the U.S. has reportedly invaded Venezuela and seized its crude oil assets. This development alone has created significant repercussions for crude oil trade flows involving China and Russia. Given Venezuela’s vast crude oil reserves and China’s significant investments in the country, the U.S. has clearly angered China as a result. In addition, ongoing civil unrest in Iran is presenting the U.S. with a potential opportunity for further intervention.

Lastly, A.I.-driven technology companies continue to ramp up A.I.-related capital expenditures. While this presents a positive growth narrative on the surface, relentless spending without due regard for returns on investment is a red flag, particularly given current valuations in the A.I. space. From a historically precedence, equity valuation tended to peak well ahead of the capex. cycle. As such, from a market timing & sector picking perspective, we would need to be extra diligent on the exposure into the A.I. driven technology sector.

Chart 2: Incremental A.I capacity to be added will grow 3.5x from 2025 to 2030

From a strategy perspective, we remain cautious as we head into February and continue to hold the view that volatility remains elevated. Stay nimble, stay safe!

Jan 29th, 2026
William Yii
CIO, CP Global Fintech Solutions

– – –

Disclaimer: Airo is a brand of CP Global Fintech Solutions Sdn Bhd (“CPFS”), licensed by the Securities Commission of Malaysia as a Digital Investment Management company. CPFS is authorised to carry out the business of fund management incorporating innovative technologies into automated discretionary portfolio management services offered to clients under a license issued pursuant to Schedule 2 of the Capital Markets Services Act 2007.

All investing involves risk, including the possible loss of money you invest, and past performance does not guarantee future performance. Historical returns, expected returns, and probability projections are provided for informational and illustrative purposes, and may not reflect actual future performance. CPFS assumes no responsibility for liability for your trading and investment results. It should not be assumed that the methods, techniques, or indicators presented in these products will be profitable, or that they will not result in losses. Past results of any trading system published by CPFS, are not indicative of future returns by that system, and are not indicative of future returns which will be realised by you.

Highlights:

#1
November was a negative month for Airo-BOCA, primarily due to the early reinstatement of our hedging strategy ahead of market movements. However, this is set to change, as the Nasdaq-100 has peaked since October and is currently undergoing a correction, with more downside bias expected.

#2
The Airo-BOCA Composite lost -4.42% in November, mainly due to hedging positions in the U.S. technology sector. However, this was an unrealized loss, as we are carrying the short positions forward into December. The Airo-Shariah Composite lost -0.60%, as there is no hedging mechanism for the Shariah portfolios. By comparison, the MSCI ACWI and Nasdaq-100 indices were down -0.11% and -1.64%, respectively, in November.

#3
The U.S. equity market is running on a dissipating A.I. growth narrative, where competition is heating up fiercely within the sector and is potentially turning this positive growth driver into a more neutral to negative commoditization narrative.

#4
Given the micro backdrop of current equity valuations, a shifting narrative can and will incite a serious reckoning in the forward expected return trajectory. In other words, when the going get tough, markets will likely demand a higher risk premium by dampening equity prices.

#5
Macro-wise, global bond markets are facing rising yields at the long end of the yield curve. In layman’s terms, this means bond markets are fearing that inflation may move higher rather than lower in the coming months. Coupled with the potential for further interest rate cuts, the implications do not appear conducive for risky assets in general.

#6
Strategy-wise, we remain cautious for the rest of December and opine that more corrections may be forthcoming as we head into 2026. Stay nimble, stay safe!

– – –

Dear Valued Investors,

November was a negative month for Airo-BOCA, primarily due to the early reinstatement of our hedging strategy ahead of market movements. However, this is set to change, as the Nasdaq-100 has peaked since October and is currently undergoing a correction, with more downside bias expected. Despite the U.S. Fed’s recent -0.25% interest rate cut, we have not seen and do not foresee any meaningful rally in the global equity markets. Instead, cross-asset price actions are setting the stage for another round of correction.

The Airo-BOCA Composite lost -4.42% in November, mainly due to new hedging positions in the U.S. technology sector. However, this was an unrealized loss, as we are carrying the short positions forward into December. The Airo-Shariah Composite lost -0.60%, as there is no hedging mechanism for the Shariah portfolios. By comparison, the MSCI ACWI and Nasdaq-100 indices were down -0.11% and -1.64%, respectively, in November.

Table 1: Airo-BOCA Composite Performance (Nov 2025)

Nvidia, as the poster child of the A.I. sector, saw its share price peaked in October following the announcement of its 3Q FY2025 results. What happened next? Since Google publicly announced its in-house TPU chips to external clients to compete directly with Nvidia’s GPUs, Nvidia’s share price has continued to slide–from its peak of USD 210 to USD 177, representing a -16% correction in a short span of 1 ½ months. The long-held claim that Nvidia has no real competitors is no longer entirely true. In China, Huawei and Baidu are also rolling out their own chip solutions to meet domestic demand. Although the Trump administration recently relaxed export curbs on Nvidia’s H100 chips, China does not appear particularly enthusiastic, suggesting that it may no longer be reliant on Nvidia’s offerings. In short, recent developments indicate that the market may be shifting the A.I. growth narrative toward an A.I. commoditization narrative sooner rather than later. With rising competition and potential price wars, margin compression could set in quickly, further weighing on already slowing year-on-year earnings growth.

Chart 1: Nvidia share price peaked right before Google TPU’s public released

Given the micro backdrop of current equity valuations, a shifting narrative from growth to a more neutral stance can and will incite a serious reckoning in the forward expected return trajectory. At present, the S&P 500 is trading at 2026E forward P/E of 23x, which is at +2 sigma of its 10-year trailing P/E band. In other words, when the going gets tough, markets will likely demand a higher risk premium by dampening equity prices that are already very expensive by historical standards.

Chart 2: S&P500 trading at the top-band of its 10-year trailing PE ranges

Moreover, from a historical perspective, whenever the S&P 500 was trading at above 20x forward P/E, the subsequent 10-year forward-looking annualized returns have always been negative. For context, the market is currently trading at a 2026E forward P/E of 23x.

Chart 3: From a historical perspective, the 10-year annualized forward return has always been negative when S&P500 was trading at > 20x PE.

Macro-wise, global bond markets are facing rising yields at the long end of the yield curve. In layman’s terms, this means bond markets are increasingly concerned that inflation may move higher rather than lower in the coming months. Coupled with a new round of fiscal expansion in the U.S and the potential for further interest rate cuts amid sticky inflation, the implications do not appear conducive for risky assets in general, from a central bank policy error perspective. Indeed, a continued rise in long-end yields driven by inflation concerns would trigger a higher risk premium, as investors demand a higher required rate of return.

Chart 4: U.S Treasury 30-year yield is about to breakout to its upside!?

Strategy-wise, given both the micro backdrop and macro risk factors described above, we remain cautious for the rest of December and opine that further corrections may be forthcoming as we head into 2026. Stay nimble, stay safe!

Dec 24th, 2025
William Yii
CIO, CP Global Fintech Solutions

– – –

As we approach the end of 2025, global markets remain firmly supported by a combination of strong earnings and the ongoing acceleration of AI-driven investments. Major equity indices continue to ride this momentum, with analysts projecting robust earnings growth into 2026 as companies ramp up AI infrastructure spending, automation initiatives and efficiency upgrades. While mega-cap tech remains the main engine of performance following a stellar year-to-date performance, the market is grappling with broader rally momentum loss. Furthermore, investors’ year-end profit-taking is expected to drive higher volatility.

Monetary policy expectations are also playing a major role. Markets broadly expect central banks to deliver additional rate cuts throughout 2026, driven by moderating inflation and cooling labour markets. These expectations have helped stabilise bond yields and improved risk appetite, particularly for credit and equity markets. However, the outlook is not without uncertainty. Sticky inflation, geopolitical tensions and global trade disruptions, especially involving major economies continue to present downside risks. Valuation concerns are also mounting, especially in AI-heavy segments where rapid price appreciation may face the music if earnings fail to keep up.

Investors looking ahead to 2026 should therefore consider this period as an opportunity to reassess risk concentration and reposition their portfolios for a more balanced environment. One practical step is to trim overweight positions in high-flying tech and redeploy into defensive sectors that have lagged but are poised to benefit from an easing policy backdrop, such as healthcare. Geographic diversification is likewise increasingly critical, with non-US equities particularly in emerging markets exposed to AI adoption and improving credit conditions, showing potential for catch-up performance.

Overall, the path into 2026 presents a mix of optimism and caution. The global economy is supported by structural trends like AI and productivity expansion, but the market’s current strength calls for thoughtful rebalancing rather than blind momentum chasing. A diversified, risk-aware approach blending growth opportunities with defensive buffers will help investors navigate potential volatility while positioning for long-term resilience.

Highlights:

#1
On the back of overall strong corporate earnings releases, October saw global equity markets continue to churn higher, with the S&P 500 Index and MSCI ACWI Index closing up +2.27% and +2.18% respectively.

#2
The Airo-BOCA Composite gained +0.47% in October, mainly driven by the U.S. technology sector, although our intra-month hedging attempt did not yield positive results. The Airo-Shariah Composite gained +2.68% in October, supported by its concentrated exposure to the U.S. technology sector.

#3
On macro front, the U.S. labour market continued to show signs of weakening, which has been the key driver behind the interest rate market pricing in increasingly dovish rate-cut expectations in recent months.

#4
However, as U.S. inflation remains sticky–with both Headline and Core CPI still above 3.0% year-on-year–Powell’s hawkish cut during the October FOMC shifted the market’s expectation for the forward path of interest rate cuts.

#5
The correction in the U.S. equities began promptly after the October FOMC meeting. Likewise, Bitcoin–often viewed as a proxy for the most speculative asset class–has broken below an important long-term price support channel.

#6
We began hedging our portfolio again by taking profits in the technology sector and initiating short positions in the same space. In the interim, we expect the current correction to be a sizable one.

– – –

Dear Valued Investors,

On the back of overall strong corporate earnings releases, October saw global equity markets continue to churn higher, with the S&P 500 Index and MSCI ACWI Index closing up +2.27% and +2.18% respectively.

The Airo-BOCA Composite gained +0.47% in October, mainly driven by the U.S. technology sector, although our intra-month hedging attempt did not yield positive results. The Airo-Shariah Composite gained +2.68% in October, supported by its concentrated exposure to the U.S. technology sector.

On the macro front, the U.S. labour market continued to show signs of weakening, which has been the key driver behind the interest rate market pricing in increasingly dovish rate-cut expectations in recent months. Both Private Payrolls (ADP) and Nonfarm Payrolls (NFP) have deteriorated markedly in recent months, giving the market a growth scare. Ironically, this same weakness had been the key factor driving expectations of interest rate cuts in earlier months.

Chart 1: Monthly’s payrolls had deteriorated markedly in the past months

However, as U.S. inflation remains sticky–with both Headline and Core CPI still above 3.0% year-on-year–Powell’s hawkish cut during the October FOMC shifted the market’s expectations for the path of future rate cuts. As of now, the market is no longer expecting a rate cut in December 2025. In addition, the cumulative rate cut expectations for 2026 have been revised down to just three cuts.

Chart 2: U.S Headline & Core CPI remain sticky at above 3.0% year-on-year

The correction in U.S. equities began promptly after the October FOMC meeting. The S&P 500 Index has broken a significant technical level, and market breadth continues to deteriorate. Likewise, Bitcoin–often viewed as a proxy for the most speculative asset class–has broken below an important long-term price support channel. With a broad-based risk-off environment developing across multiple asset classes, we maintain a cautious stance as we head into the final month of the year.

Chart 3: S&P500 has broken a major technical level

Chart 4: S&P500’s breadth is turning more negative

Chart 5: Bitcoin saw a major breakdown on its big ending diagonal since 2021

We began hedging our portfolio again by taking profits in the technology sector and initiating short positions in the same space. In the interim, we expect the current correction to be a sizable one.

Nov 18th, 2025
William Yii
CIO, CP Global Fintech Solutions

– – –

Highlights:

#1
September was another strong month, with global equity markets continuing to rally. The S&P500 index and MSCW ACWI Index closed up +3.53% and +3.49%, respectively.

#2
The Airo-BOCA Composite gained +2.59% in September, driven mainly by profit-taking in gold miners and increased exposure to the U.S. and China technology sectors. The decision to close the short position in the technology sector while increasing long exposure proved to be correct. The Airo-Shariah Composite gained +4.77% in August, with performance supported broadly by both the U.S. and global equity markets.

#3
The U.S. government shutdown is ongoing, and it has affected the release of major economic data, namely labor market and inflation reports. This remains one of the key macro risk factors to watch, as it could translate into significant layoffs in the U.S. labor market.

#4
The U.S.–China tariff tension has been a major headline, somewhat affecting global equity sentiment. Although Trump recently softened his tone on tariffs, a potential escalation of the trade war between the two giants could serve as a timely trigger for a short-term correction in global equity markets.

#5
Lastly, the consensus still expects double-digit earnings growth from the Magnificent7 compared with the rest of the S&P 500 constituents. Looking ahead, we may begin to hedge our existing equity positions while continuing to monitor macroeconomic growth, inflation, and other risk factors that could undermine underlying market conditions.

– – –

Dear Valued Investors,

September was another strong month, with global equity markets continuing to rally. The S&P 500 Index and MSCW ACWI Index both up +3.53% and +3.49%, respectively.

The Airo-BOCA Composite gained +2.59% in September, driven mainly by profit-taking in gold miners and increased exposure to the U.S. and China technology sectors. The decision to close the short position in the technology sector while increasing long exposure proved to be correct. The Airo-Shariah Composite gained +4.77% in August, with performance supported broadly by both the U.S. and global equity markets.

Table 1: Airo-BOCA Composite (Sep 2025) Performance in USD Term

Table 2: Airo-Shariah Composite (Sep 2025) Performance in USD Term

The U.S. government shutdown is ongoing, and it has affected the release of major economic data, namely labor market and inflation reports. This remains one of the key macro risk factors to watch, as it could translate into significant layoffs in the U.S. labor market. In addition, a prolonged shut-down may weigh on the consumption sentiment in the U.S. market.

The U.S.–China tariff tension has been a major headline, somewhat affecting global equity sentiment. Although Trump recently softened his tone on tariffs, a potential escalation of the trade war between the two giants could serve as a timely trigger for a short-term correction in global equity markets.

Chart 1: S&P500’s 10-year historical valuation band remains overstretched

Lastly, the consensus still expects double-digit earnings growth from the Magnificent7 compared with the rest of the S&P 500 constituents. Looking ahead, we may begin to hedge our existing equity positions while continuing to monitor macroeconomic growth, inflation, and other risk factors that could undermine underlying market conditions.

Chart 2: Magnificent7 are still expected to contribute double-digit earnings growth

Source: CP Global Fintech Solutions, Factset

Oct 20th, 2025
William Yii
CIO, CP Global Fintech Solutions

– – –

Highlights:

#1
The U.S. interest rate cut expectation continued to drive the global equity rally in August 2025. The S&P500 and ACWI Index ended July with gains of +1.91% and +2.36% respectively.

#2
The Airo-BOCA Composite gained +2.81% in August, driven mainly by exposure to gold miners and the solar energy sector, from which we subsequently took profit in September. We also closed our short position in the technology sector and shifted the allocation into the same sector. The Airo-Shariah Composite gained +2.13% in August, with performance supported by the U.S. equity market and exposure to the healthcare sector.

#3
In the near term, positive sentiment may persist, driven mainly by expectations of U.S. interest rate cuts amid a weaker labour market. At the September FOMC meeting, the U.S. Fed. resumed its rate-cutting cycle with a 0.25% cut and signaled two additional 0.25% cuts by year-end.

#4
China’s A-share equity market also rose strongly in August (+11.4% in USD terms), fueled largely by cash-rich investors seeking better returns in equities over bonds as China’s interest rates continue to drift lower. On the macro front, the Chinese government remains supportive with various stimulus policies aimed primarily at boosting domestic consumption.

#5
Looking ahead, while global equities may continue to climb, we will closely monitor macro growth and inflation risks that could alter underlying market conditions.

—

Dear Valued Investors,

Expectations of U.S. interest rate cuts remained a key driver of the global equity rally in August 2025. The S&P 500 and ACWI Index closed July with gains of +1.91% and +2.36% respectively.

Chart 1: S&P500 is currently trading at 10Y average trailing PE band of 28x.

The Airo-BOCA Composite gained +2.81% in August, with strong returns mainly contributed by exposure to gold miners and the solar energy sector, from which we subsequently took profit in September. We also closed our short position in the technology sector and shifted the allocation into the same sector. The Airo-Shariah Composite gained +2.13% in August, supported by the U.S. equity market and exposure to the healthcare sector.

Table 1: Airo-BOCA Composite (Aug 2025) Performance in USD Term

Table 2: Airo-Shariah Composite (Aug 2025) Performance in USD Term

In the near term, positive sentiment may persist, driven primarily by expectations of U.S. interest rate cuts amid a weaker labor market. At the September FOMC meeting, the U.S Fed. resumed its rate-cutting cycle with a 0.25% cut and signaled two additional rate cuts of 0.25% by year-end. From a macro perspective, the rate-cutting cycle will remain a key driver of the equity market.

Chart 2: Fed’s September dot plot showed another two cuts of 0.25% are expected by the end of 2025

China’s A-share equity market also rose strongly in August (+11.4% in USD terms), largely fueled by cash-rich investors seeking better returns in equities over bonds as China’s interest rates continue to drift lower. On the macro front, the Chinese government remains supportive with various stimulus policies aimed primarily at boosting domestic consumption.

Chart 3: China A-share rose +11.4% in August driven mainly by high-net-worth clients

Chart 4: A green shoot of shifting from household’s savings into China equity market

Looking ahead, while global equities may continue to edge higher, we will closely monitor macro growth and inflation risks that could alter underlying market conditions.

September 19th, 2025
William Yii
CIO, CP Global Fintech Solutions

– – –

Highlights:

#1
Riding on the positive sentiment in the global equity market, the S&P 500 and ACWI continued their rally and closed the month for July with gains of +2.17% and +1.06% respectively.

#2
The Airo-BOCA Composite declined by -0.90%, primarily due to an existing hedging position. On the other hand, the Airo-Shariah Composite gained +1.75%, driven by sustained exposure to U.S. equity ETFs and technology stocks.

#3
From a valuation perspective, the Nasdaq-100 is trading near the upper end of its P/E band over the past two years, continuing to signal frothy valuations in the technology sector–one of the key drivers of the U.S. equity market rally.

#4
The Global Dow Index continued to show broad-base negative divergence between price and momentum, signaling that a potential correction may be on the horizon.

#5
At the macro level, the impact of U.S. tariffs appears to be delayed, as pass-through effects have yet to show up in consumer prices. Notably, the latest Producer Price Index (PPI) posted a significant jump, suggesting that companies have thus far been absorbing the increased input costs from tariffs.

#6
While the U.S. equity market continues its upward melt-up, we remain cautious given the macro backdrop–particularly the potential delayed impact of U.S. tariffs that has yet to fully materialize.

– – –

Dear Valued Investors,

Riding on the positive sentiment in the global equity market, the S&P 500 and ACWI continued their rally and closed the month for July with gains of +2.17% and +1.06% respectively. In comparison, the Airo-BOCA Composite declined by -0.90%, primarily due to an existing hedging position. On the other hand, the Airo-Shariah Composite gained +1.75%, driven by sustained exposure to U.S. equities and technology stocks.

While S&P 500’s Q2 earnings growth remained intact, the gains were mainly concentrated in the ‘Magnificent7’–primarily AI-related stocks. Excluding these, the S&P 500’s EPS growth was limited to low single digits.

Chart 1: Excluding the Magnificent7, S&P 500’s earnings growth would be a low single digit

Indeed, from a valuation perspective, the Nasdaq-100 is currently trading near the top end of its P/E band over the past two years–continuing to signal frothy valuations in the technology sector that has fueled the U.S. equity market rally.

Chart 2: Nasdaq100 is trading at its top end of valuation

At the same time, the Global Dow Index continued to exhibit a broad-based negative divergence between price and waning momentum–likewise signaling that a potential correction may be incoming.

Chart 3: Global Dow index’s negative momentum divergence remains intact

At the macro level, the impact of U.S. tariffs appears to be delayed, as the pass-through to consumer prices has yet to materialize. Notably, the latest Producer Price Index (PPI) recorded a significant jump–supporting the view that companies have been absorbing the increased input costs stemming from tariffs.

Chart 4: PPI saw a big jump that showed companies have been absorbing the tariff input costs

Lastly, the U.S. equity market has likely priced in the upcoming interest rate cut cycle expected to re-start in September 2025. However, given the recent rally, we remain cautious amid the macro backdrop–particularly the delayed impact of U.S tariffs.

Chart 5: Market is pricing-in two interest rate cuts of -0.25% each by the end of 2025

August 20th, 2025
William Yii
CIO, CP Global Fintech Solutions

– – –

Highlights:

#1
Despite persistent macro risks associated with Trump’s policy uncertainties, global equities continued bubbling up in June, with the S&P 500 and ACWI posting returns of 4.96% and 4.00%, respectively.

#2
The Airo-BOCA Composite declined by -0.42%, primarily due to an existing hedging position. On the other hand, the Airo-Shariah Composite gained +4.33%, driven by sustained exposure to U.S. equity ETFs and technology stocks.

#3
Global fund managers exhibited the highest level of risk-taking since 2002, largely explaining the recent surge in equity chasing.

#4
The Global Dow Index is currently trading near the upper end of its 10-year historical P/E range. Additionally, a broad-base negative divergence in price momentum signals a potential warning.

#5
The A.I. bubble, based on 12-month forward P/E ratios, is now trading at its highest levels since the 1990s.

#6
From a macro perspective, the USD remains at a critical juncture, where the long-term de-dollarisation thesis could spell trouble in the quarters ahead.

– – –

Dear Valued Investors,

Despite ongoing macro risks associated with Trump’s policy uncertainties, global equities continued bubbling up in June, with the S&P 500 and ACWI returning 4.96% and 4.00%, respectively. Currently, the S&P 500 is trading at approximately 1.8 standard deviations above its 10-year historical average P/E range.

Chart 1: S&P500 is trading at 1.8x above its historical 10-year average PE band.

The Airo-BOCA Composite declined by -0.42%, once again weighed down by an existing hedging position. On the other hand, the Airo-Shariah Composite gained +4.33%, supported by continued exposure to U.S. equity ETFs and technology stocks.

Table 1: Airo-BOCA Composite Performance (June 2025)

Table 2: Airo-Shariah Composite Performance (June 2025)

Global fund managers have exhibited the highest level of risk-taking since 2002, which largely explains the recent exuberance in equity chasing. Despite persistent tariff-related uncertainties, equity markets have largely shrugged off macro risks, driving global indices higher and seemingly pricing-in a blue-sky scenario for forward growth.

Chart 2: Global fund managers’ risk-taking at the highest level since 2002

From a global equity valuation standpoint, the Global Dow Index is currently trading near the upper end of its 10-year historical P/E range. This reinforces the view that global equities are advancing in tandem with U.S. equities toward stretched valuation levels.

Chart 3: Global Dow is trading at its upper end of the 10-Year historical PE band

In addition, the Global Dow is exhibiting a broad-base negative divergence–a warning signal from a price momentum perspective. In other words, prices are climbing on weakening momentum, a pattern that often precedes a market correction.

Chart 4: Global Dow’s momentum divergence is sending a warning shot

Zooming into the technology sector, the so-called A.I. bubble is trading at historically high levels based on 12-month forward P/E ratios–the highest since the 1990s. Sustaining such elevated valuations would require equally robust forward earnings growth, which has yet to be seen.

Chart 5: A.I bubble is currently surpassing the level during the dot com’s bubble.

Lastly, the long-term de-dollarisation thesis appears increasingly relevant given the recent trajectory of the USD. While the DXY Index is currently testing its critical uptrend support established since 2010–which thus far remains intact–longer-term structural forces may weigh on the dollar. A shifting global trade rebalancing narrative, coupled with an A.I.-driven deflationary environment, could continue to put downward pressure on the USD. As a result, USD-based assets could be facing an imminent selling pressure in the long-term even if this may not be an apparent risk factor in the current market condition.

Chart 6: USD’s long-term disposition looks bearish despite a near-term rebound

While near-term equity exuberance may persist, Airo continues to maintain a cautious stance at the current juncture.

July 18th, 2025
William Yii
CIO, CP Global Fintech Solutions

– – –

Highlights:

#1
U.S equities staged a strong rally in May, with the S&P 500 rising +6.15% and outperforming most of the other markets. In comparison, the MSCI ACWI gained +5.69%, while China’s H-Share Index and A-Share Index returned +3.27% and +2.87% respectively.

#2
Despite the broader market rally, the Airo-BOCA Composite declined by -1.77%, primarily due to an existing hedging position in place. On the other hand, the Airo-Shariah Composite rose by +4.6%, driven mainly by exposure to U.S. equity ETFs and technology stocks.

#3
Following the strong global equity performance in May, markets may be approaching a moment of reckoning amid persistent uncertainty over tariff negotiations, the risk of escalating tensions with Iran, and the ‘big, beautiful fiscal bill’ that is due to be passed in the U.S. Senate.

#4
On the macro front, U.S. growth continued to show signs of slowing, with contractions observed across both soft and hard data indicators, including ISM Manufacturing and Services PMI, Durable Goods Orders, Industrial Production, and Retail Sales.

#5
Airo continues to see a disconnect between equity valuations and the array of macro risks that have yet to fully materialise. As such, we will maintain a nimble and adaptive positioning strategy.

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Dear Valued Investors,

Global equities rallied strongly in May, led by U.S. markets, with the S&P 500 gaining +6.15% and outperforming most of the other markets. In comparison, the MSCI ACWI returned +5.69%, while China’s H-Share Index and A-Share Index returned +3.27% and +2.87%, respectively. The rally was largely driven by an interim de-escalation in trade tensions between the U.S. and China, as both sides moved to ease certain export restrictions.

Chart 1: S&P500 is trading at +1x-sigma above its 10Y historical PE bands

Due to an existing hedging position against technology stocks, the Airo-BOCA Composite declined by -1.77% despite the broader market rally. On the other hand, the Airo-Shariah Composite gained +4.6%, largely supported by exposure to U.S. equity ETFs and technology stocks.

Table 1: Airo-BOCA Composite Performance (May 2025)

Table 2: Airo-Shariah Composite Performance (May 2025)

Following the stellar global equity performance in May, markets may be approaching a moment of reckoning amid ongoing uncertainty surrounding: (i) tariff negotiations, (ii) a potential Iran war escalation, and (iii) the ‘big, beautiful fiscal bill’ that is due to be passed in the U.S. Senate.

The interim tariff de-escalation between the U.S. and China was intended to pave the way for further negotiations aimed at reaching an eventual trade agreement between the two nations. Meantime, the global market is also closely watching the U.S. as it seeks to finalise trade deals with other countries before the 90-day tariff pause expires on July 9.

Trump recently signaled that a decision on whether the U.S. will directly engage in the conflict with Iran could be made within the next two weeks. This escalating geopolitical risk looms large and is expected to fuel increased volatility across asset classes in the near term.

The ‘big, beautiful fiscal bill’ is set to be passed by the U.S. Senate by July 4. In our view, U.S. equities have largely priced-in the optimism surrounding its potential approval. As such, any deviation from this expectation could trigger a wave of profit-taking and act as a near-term selling catalyst for the U.S. equity market. Additionally, if the bill is passed, it may unsettle the bond market due to concerns over rising budget deficits in the years ahead.

On the macro front, U.S. growth data continue to show signs of slowing, with contractions seen across both soft and hard data indicators. ISM Manufacturing has remained in contractionary territory for three consecutive months since March, while ISM Services PMI slipped into contraction for the first time in May. Durable goods orders plunged -6.3% month-on-month (MoM) in April, partly driven by heightened tariff rhetoric from Trump. Industrial production also cooled, recording just +0.60% year-on-year (YoY) growth. Meanwhile, retail sales declined again in May, falling -0.9% MoM.

Chart 2: ISM Manufacturing PMI contracted for the third consecutive month

Chart 3: ISM Services PMI just slipped into a contraction in May

Chart 4: Durable goods orders saw a big plunge in April at -6.3% MoM

Chart 5: Car sales’ drop is a big contributor in the durable goods orders

Chart 6: Industrial production growth turned cooler at only +0.6% YoY

Chart 7: Retail sales saw a second consecutive month of contraction at -0.9% MoM

Airo continues to see a disconnect between equity valuations and the array of macro risks that have yet to fully materialise. As such, we will maintain a nimble and adaptive positioning strategy.

June 20th, 2025
William Yii
CIO, CP Global Fintech Solutions.

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Highlights:

#1
April’s sharp correction was swiftly followed by a striking rebound, with U.S. equities seemingly brushing off Trump’s tariff rhetoric as if nothing happened! As a result, the S&P 500 ended the month with only a modest decline of -0.76%, while the MSCI ACWI posted a gain of +0.52%.

#2
In comparison, the Airo-BOCA Composite declined by -2.7%, weighed down primarily by its hedging positions. The Airo-Shariah Composite also fell by -1.84%, driven largely by weakness in consumer and pharmaceutical stocks.

#3
The pressing question remains: what has fundamentally changed over the past month? The short answer–not much. Although the U.S. and China have resumed dialogue, the current de-escalated tariff rate on Chinese goods still stands at 30%, which is expected to weigh on U.S. GDP growth in the near term.

#4
From China’s perspective, exports to the U.S. amount to approximately $0.5 trillion. To put this into context, China is responsible for manufacturing one-third of global goods, while U.S. households consume about one-third of global output. In other words, the livelihood of millions of Chinese factory workers is directly tied to this trade relationship.

#5
Japan continues to grapple with persistent inflationary pressures, as core inflation stays firmly above 3.0% year-on-year. This has placed mounting pressure on the Bank of Japan (BOJ), particularly in light of its decision to leave interest rates unchanged at the May policy meeting.

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Dear Valued Investors,

The sharp correction in April was followed by an equally dramatic rebound, as U.S. equities appeared to shrug off Trump’s tariff rhetoric entirely. Despite an initial drawdown of around -15% following Trump’s ‘Liberation Day’ announcement, the S&P 500 managed to rally +16% from its April low, ultimately ending the month with a modest decline of just -0.76%. April 2025 will be remembered as one of the most volatile months in global equity market history.

Chart 1: S&P500 whipsaw +15% in both direction and closed down -0.75% in April 2025

In comparison, the Airo-BOCA Composite was down -2.7% as it was negatively impacted by the hedging positions. Meanwhile, the Airo-Shariah Composite also declined by -1.84% largely attributed to underperformance in consumer and pharmaceutical stocks.

Table 1: Airo-BOCA Composite Performance (April 2025)

Table 2: Airo-Shariah Composite Performance (April 2025)

The pressing question is: what has fundamentally changed over the past month? The short answer–not much. Although the U.S. and China have resumed dialogue, the de-escalated tariff on Chinese goods remains at 30%. Since tariffs on Chinese imports effectively act as a tax on U.S. consumers, this is expected to weigh on U.S. GDP growth in the near term.

From China’s perspective, exports to the U.S. total approximately $0.5 trillion. For context, China manufactures one-third of global goods, while U.S. households consume about one-third of global output. This interdependence underscores the stakes: the livelihoods of China’s 120 million factory workers–out of a total labor force of 740 million–are closely tied to the strength of this trade relationship.

Table 3: China manufactures 1/3 of total global output

Table 4: U.S household consumes 1/3 of total global consumption

Japan continues to face persistent inflationary pressure, with core inflation remaining firmly above 3.0% year-on-year. As a result, the Bank of Japan (BOJ) is under mounting pressure, particularly following its decision to hold rates steady at the May policy meeting. Assuming inflation shows no signs of easing in the coming months, we expect the BOJ to resume its path of interest rate hikes.

Chart 2: Japan’s Core CPI is at 3.5% as of April 2025, i.e. 150 basis points above the 2% target!

May 23rd, 2025
William Yii
CIO, CP Global Fintech Solutions.

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