Month: September 2025

It used to be so simple.

Asia made it. The West bought it. Everyone was happy.

China kept margins slim, logistics humming, and Walmart aisles overflowing with low-cost goods. Southeast Asia played the cost-arbitrage understudy. Japan and Korea brought the tech. And in the background, central banks celebrated low inflation like it was their doing.

But that script is changing. Fast.

Exiting a Deflationary Asia, Entering a Price-Setter Asia

Today, the story is more complex. China is no longer the margin martyr it once was. Wages have risen. Demographics have shifted. And with rising geopolitical tensions, the world’s biggest exporter is turning inward.

Rather than a race to the bottom, China is climbing the value chain focusing on electric vehicles, AI, semiconductors, and green tech.

China has twice the growth of the U.S. and yet only represent a meager 3% of MSCI World Index

As Beijing becomes more selective in what it exports and prioritizes domestic strategic sectors, the deflationary spillovers the world once enjoyed are starting to fade.

Emerging Asia is stepping up to absorb parts of the global manufacturing shift. Factory investments are rising in Vietnam, Indonesia, and India. But don’t expect the same playbook.

These countries are no longer just chasing cost advantage. They’re developing better infrastructure, reforming regulatory frameworks, and improving market readiness. According to the World Bank’s B-READY 2024 index, several low- and middle-income Asian economies now score in the top performance bands in key business metrics like taxation, market competition, and trade facilitation.

Emerging Asia Is Not Just Cheaper—It’s Getting Smarter

Note: Columns represent the 12 key topics that B-Ready evaluates and Y-axis represents the performance bands (quintiles) across each topic with Rank 1 = Top Performance and Rank 14= Bottom Performance

The sample comprises 50 economies. The income classification data are as of June 2024 to ensure alignment with the latest data collection period.
Source: World Bank Group, B-READY 2024

 

That said, costs are rising too. Labor markets are tightening. Energy and logistics infrastructure are in flux. And unlike the China of the early 2000s, these countries face a world less committed to frictionless globalization. The result? Higher costs, more regional variation, and increased pricing pressure throughout the supply chain.

Indonesia’s Quiet Pricing Evolution

At our home turf, we’re seeing early signs of a structural pivot. Indonesia’s inflation isn’t just about cost pressures. It’s about a changing economic foundation.

A young, increasingly urbanized population is fueling domestic demand. And through its ambitious industrial downstreaming policy, particularly in nickel and battery materials,  the country is shifting from an exporter of raw commodities to a value-added processor.

According to recent research, Indonesia now accounts for over 60% of global nickel production, up from 30% a decade ago.

This shift gives select firms the leverage to shape global prices,  especially where strategic resources are concerned. Think of it as the OPEC moment, but for battery metals.

Asia’s Ecosystem Advantage: Scarcity Meets Stickiness

If scarcity grants the power to raise prices, ecosystems create the conditions to make it stick.

Asia’s tech and consumer giants are not just selling products — they’re engineering platforms, communities, and behavioral defaults.

In China, WeChat and Alipay pioneered the superapp model, integrating messaging, payments, shopping, and services into one seamless experience. They’re not just apps; they’re operating systems for daily life.

Southeast Asia followed with Grab and Gojek, evolving from ride-hailing platforms into fintech, delivery, and logistics hubs. They don’t just deliver food or rides; they deliver habits. The more you use them, the harder it is to leave. Add loyalty points, embedded wallets, and gamified experiences, and you’ve got not just a user base, but a captive audience.

Shopee applies the same logic in e-commerce. The better they target you, the more you buy. The more you buy, the more they know. Over time, this creates not just pricing power, but behavioral momentum.

What’s unique about Asia is that much of this growth is happening in mobile-first environments. In places like Indonesia, the Philippines, and Vietnam, users leapfrog traditional infrastructure and go straight to digital. That means companies can shape habits before they’re fully formed.

Meanwhile, China isn’t just building superapps. It’s building global champions. Xiaomi and BYD now compete across smartphones, EVs, and smart home devices. It’s not mission creep — it’s ecosystem control. These firms integrate hardware, software, and supply chains, locking in users and cost advantages alike.

And investors are starting to notice.

In H1 2025, Hong Kong IPOs surged nearly 8x to $17 billion, led by Chinese consumer and tech firms like CATL, Mixue, and Xiaomi. This isn’t just liquidity hunting — it’s global signaling. These are companies with pricing power at home, now going global with capital to back it.

Renewed surge of interest in investment banking in Hong Kong

It’s no coincidence that capital markets are rewarding ecosystem builders. They don’t just have users. They have pricing leverage.

From Cost Center to Price-Maker

The takeaway?

Asia is no longer just a passive cog in the global supply machine. In multiple ways through industrial strategy, ecosystem-building, demographic shifts, and resource control, it is becoming an active shaper of global pricing dynamics.

Investors who still think of the region as just the “cheap factory floor” may be missing the plot. Asia’s strategic pivot toward value-added manufacturing, digital ecosystems, domestic demand, and pricing resilience is changing how prices get set, and who gets to set them.

For years, the West asked: “What happens if China stops exporting deflation?”

Now we’re beginning to see the answer take shape.

And it’s setting a very different price.

 

Tara Mulia

Admin heyokha

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AI is supposed to be deflationary, right?

It writes emails. It codes websites. It makes pictures of Elon Musk dressed like Napoleon. All with zero marginal cost.

Here at Heyokha, we always love to experiment. Our current obsession right now is combining photos of our office dogs with the mundane with Google’s newest Nano Banana tool

And yet… Nvidia’s chips are backordered for months, power grids are groaning under GPU farms, and AI talent is demanding FAANG-level salaries just to show up on Zoom.

So what gives?

If AI is supposed to make everything cheaper, why does everything feel more expensive instead?

Meet the Productivity Paradox — AI Edition

We’ve been here before.

In the early days of the personal computer, productivity growth stalled. It wasn’t because the tech didn’t work, it was because it took years to reorganize businesses, retrain workers, and figure out what this “email” thing was actually for.

Now we’re watching the same movie — just with better graphics.

AI promises a world of abundance. But until we get there, we’re stuck in the messy, costly middle: a world where AI is generating capital expenditure, not cost savings.

Source: Artificial Intelligence Index Report 2025

AI’s Inflationary Phase — The Unspoken Curve

Here’s the part most headlines miss:

The front-loaded costs of AI are enormous — and highly inflationary.

Let’s break it down:

• Talent scarcity: Top AI researchers are now more expensive than most C-suites.
• Compute demand: Data centers are hoarding GPUs like they’re gold bars.
• Energy prices: The AI boom is reviving power demand across grids — just ask Texas.
• Supply chains: The arms race for chips, memory, and servers is creating a new kind of bottleneck.
• Geopolitics: The U.S. is restricting chip exports. China is stockpiling semiconductors. Everyone is racing to build AI sovereignty.

Drafting AI engineers like NBA players

Alleged major compensation packages reportedly offered by Meta to attract top AI talent from competitors

And on top of all that, governments are footing the bill, not just with vague promises, but with real budget lines, funds, and strategic infrastructure programs.

• In Europe, the InvestAI initiative (launched in early 2025) aims to mobilize €200 billion for AI investment, including a €20 billion fund toward AI gigafactories.
• In China, total AI investment is projected to reach US$98 billion in 2025, with the government expected to contribute US$56 billion of that.
• Alibaba itself is committing RMB 380B (~US$53B) over the next three years toward cloud and AI hardware infrastructure.
• Meanwhile, China set up a ¥60B (~US$8.2B) National AI Fund this year to fast‑track strategic infrastructure and emerging tech.
• Even state operators like China Unicom are scaling up: it’s increasing CAPEX for computing infrastructure by ~28% in 2025.

These are not marginal grants. These are infrastructure plays — compute, data centres, hardware — the heavy lifting behind the AI boom.

We wrote about this energy hunger in The Price of Intelligence — how your friendly chatbot has a bigger carbon footprint than your fridge. And that was before the AI race turned into a global compute arms race. Since then, demand for data center power, cooling infrastructure, and rare-earth-heavy hardware has only escalated.

Turns out, thinking really hard burns a lot more than midnight oil, it guzzles actual electricity.

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Free at the Margins, Expensive at the Core

Sure, ChatGPT might be free.

But building GPT? Not so much.

Estimates suggest that training a frontier model costs hundreds of millions of dollars — and that’s just the beginning. Once trained, you need:

• Power-hungry inference clusters
• Global latency optimization
• Cooling infrastructure
• Secure data hosting
• Legal compliance teams (unless your AI is into copyright theft)

It’s the classic tech bait-and-switch: free to use, terrifyingly expensive to build.

And this is exactly why AI is not yet deflationary. At least not in net terms. Right now, it’s a capex supercycle, and a brutally expensive one at that.

No matter the company or model, costs are in double to triple digits of millions and millions of dollars

Open Questions (Still Unanswered)

Like any structural shift, the final destination is unclear. The real question isn’t “is AI deflationary?” It’s when, and for whom.

A few questions we’re watching closely:

• When will productivity gains actually show up in the data?
• Will AI deepen inequality before it improves margins?
• Can companies pass through AI-related costs to customers — or will it compress margins first?
• Will geopolitics distort the rollout — favoring national champions over global efficiency?

These questions are not just academic. They impact where capital flows, how companies scale, and which business models survive the AI transition without bleeding out.

So What Does This Mean for Investors?

In the inflationary middle zone, AI doesn’t replace humans — it joins them on the payroll.

And that means:

• Margins get pressured, especially in industries where pricing power is weak.
• Input costs rise — energy, chips, infrastructure, talent.
• Investors misled by “AI will make everything cheaper” could end up paying more — and owning less.

But here’s the interesting part:

The companies that build, control, or monetize AI infrastructure. These would look like the chipmakers, hyperscalers, and strategic software platforms who are showing early signs of pricing power.

Nvidia isn’t selling GPUs. It’s auctioning pickaxes in a gold rush.

TSMC isn’t just printing wafers. It’s bottlenecking global ambition.

Microsoft isn’t just bundling Copilot, it’s rewriting enterprise workflow one token at a time.

Final Thought: Don’t Confuse “Tech” with “Deflation”

The 2010s trained us to believe that all tech was disinflationary. It made things faster, cheaper, and scalable.

But the 2020s tech stack is different.

It’s geopolitical. It’s energy-intensive. It’s capital-heavy. And..for now… it’s inflationary.

AI may eventually make the world cheaper. But building that world? That’s one expensive bet.

 

Tara Mulia

Admin heyokha

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“Why is going to the mall so expensive now?”

That’s what a coworker asked me over lunch last week.

He wasn’t talking about a luxury shopping spree. Just a casual weekend outing — lunch, coffee, maybe a bit of browsing. But somehow, it still felt like his wallet had been mugged by a smiling barista and a parking meter.

“It’s not like prices exploded,” he said. “But I always leave feeling poorer than I expected.”

That stuck with me. Because he’s right — something has changed. Not always in ways you can quantify on a receipt, but in how everyday life feels more expensive.

And it’s not just him.

From toothpaste to concert tickets to a bowl of ramen that used to be a daily lunch feature is now a weekend treat instead — the vibes are off. We all feel it. But what’s causing it?

Welcome to the Post-Goldilocks Economy

For 40 years, investors had it good.

• Interest rates kept falling.
• Globalization kept costs low.
• Central banks looked like geniuses.
• Profit margins expanded.
• And your passive 60/40 portfolio? Worked like magic.

This “Great Disinflation” wasn’t divine intervention — it was engineered on five key pillars:

1. Cheap labor (thank you, China WTO 2001)
2. Frictionless trade (hello, supply chains)
3. Central bank credibility (remember when we trusted policy?)
4. Demographic tailwinds (young, productive populations)
5. Tech productivity (more output, same costs)

Goodbye to the Old Normal of low rates, we are now entering the New Reality of sticky inflation

Together, these forces created a world where companies didn’t need pricing power. Margins went up even as prices stayed flat. It was the investor’s version of having your cake and eating it too — delivered via drone, of course.

But then the cake caught fire.

Scarcity Strikes Back

COVID didn’t just break supply chains. It broke the illusion.

• Just-in-time became just-too-fragile.
• Energy nationalism replaced energy abundance.
• Geopolitics re-entered the chat.

Now, inflation isn’t “transitory.” It’s structural.

The U.S. Federal Reserve finds itself in a chokehold: raising rates risks detonating the debt bomb, but cutting rates lets inflation rage on. In fact, by 2025, the U.S. is spending 93% of its tax income on just two things: entitlements and interest payments. That leaves… almost nothing for anything else.

Currently, the U.S. fed fund rate is at 4.5%. If borrowing costs hit even 6% which isn’t that far off, interest alone eats up 40% of tax revenue. And at 9%? The math turns apocalyptic: interest payments could consume more than 100% of revenue under a recession scenario. That’s not fiscal policy — that’s an unsustainable feedback loop.

Paying off just the interest on U.S. debt will quickly deplete U.S. tax revenue. Over 100% of tax revenue will go towards paying back only interest if the U.S. enters a recession!

CPI Is a Mirage — And We’ve Been Here Before

Sound familiar?

We explored this in our earlier blog, The Invisible Inflation We Live With — where inflation wasn’t roaring through your Bloomberg terminal, but sneaking in through smaller chocolate bars, earlier  hotel check out times, and subscription plans with less of everything.

That was the consumer-facing version of inflation.

This is the investor-facing one.

Because the same silent shrinkage is happening inside portfolios.

Your bond allocation? Still there on paper — but its real value is slipping, while its role as a diversifier is being squeezed by rising inflation and yields.

Your passive equity exposure? Margin pressure is coming.

That 60/40 mattress? It may need a serious re-stuffing. To be clear: the 60/40 portfolio isn’t dead. But it was built for a world of falling rates, stable currencies, and declining inflation.

That world is now in the rear-view mirror. In its place, we face higher volatility, persistent price pressures, and the return of macro risks we forgot to hedge for.

In this new world, passive portfolios that track the past may not protect the future.

Are longer term bonds really “risk free”? These 30-year ones seem to be struggling to regain investor confidence

So Where Do You Hide?

Well, you don’t hide.

You own the companies that can name their price.

While the average company is getting squeezed between rising input costs and price-sensitive consumers, Pricing Power Equities (PPEs) are doing the opposite:

✅ Raising prices
✅ Keeping volumes steady
✅ Defending (or even expanding) margins

These businesses are not just inflation survivors. They are inflation beneficiaries.

In short, they don’t take prices — they make them.

Pricing Power: The Anti-Inflation Trend?

Here’s what makes this strategy weirdly contrarian: it goes against almost everything we’ve been taught.

“Buy what’s cheap.”
✅ No. Buy what’s irreplaceable.

“Avoid monopolies.”
✅ Not anymore. Embrace natural monopolies, especially ones powered by scale, brand, or ecosystem lock-in.

“Inflation hurts everyone.”
✅ Not the companies who pass it on without losing loyalty, volume, or market share.

Of course, pricing power isn’t the only hero in the inflation story. Hard assets like gold, supply-constrained commodities, and substitution plays all shine in this regime. But pricing power is a rising co-star — elegant, scalable, and increasingly central to how we think about structural resilience. In the 2010s, winners were defined by how lean they could get — the kings of efficiency.

In the 2020s, winners are defined by how much they can charge — and still be loved.

In this new playbook, you’re not looking for cost cutters. You’re looking for:

• Companies that own their supply chains.
• Brands that make people feel something.
• Platforms with user ecosystems so sticky you need social rehab to leave.
• Businesses riding the tailwind of government-made scarcity — like quotas, export bans, or downstream mandates

Final Thought: Scarcity Is the New Alpha

The world of cheap capital, cheap labor, and cheap oil is gone.

We’re now in the age of expensive everything — except, perhaps, your Netflix subscription (for now). In this world, only one thing protects your capital:

Owning the companies that make the rules — not follow them.

Tara Mulia

Admin heyokha

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The Silver Awakening

The quiet metal that might just outshine gold

For centuries, silver has been gold’s quieter sibling — less glamorous, less hoarded, and often left out of the spotlight. But sometimes, little brothers grow up. And if recent market signals are any clue, silver might be entering its glow-up era.

We’re not talking about speculative hype. We’re talking about a confluence of technical breakouts, fundamental tailwinds, and structural regime shifts — all pointing to one underpriced conclusion: Silver is waking up.

And it might not go back to sleep anytime soon.

Gold has fans. Silver has torque.

It’s no secret that investors have been piling into gold. It’s become a familiar safe-haven story: fiscal dominance, geopolitical risk, and an increasingly unstable USD have made the yellow metal a preferred portfolio hedge. Gold even hit a new all-time high of $3,578 just this week!

Silver is exposed to the same macro risks as gold whether that be fiscal erosion, currency distrust, inflation, but with less acknowledgment and far less institutional love. It’s the vulnerability we ignore. Until we can’t.

If recent trends are anything to go by, we may be seeing the early signs of silver following gold’s monetary comeback.

• According to its Q2 2025 13F filing, the Saudi Central Bank opened new positions in iShares Silver Trust (SLV) and Global X Silver Miners ETF (SIL).
  • While small (1.25% and 0.4% of their U.S. portfolio, respectively), this marks the first-ever silver allocation from a central bank whose gold repatriation has accelerated since 2022.
• Meanwhile, Russia’s Ministry of Finance announced it would allocate $520 million through 2027 to precious metals — including silver.

Think about that for a second.

If central banks — traditionally allergic to silver — are beginning to experiment with it again, perhaps the market is underestimating the next leg of the monetary metals story.

A Metal Out of Time: Supply Can’t Keep Up with the Silver Rush

The market often treats silver as a humble sidekick to gold — the Robin to its Batman, the Luigi to its Mario, the… you get it. But while gold basks in the limelight of central bank vaults and global headlines, silver has been quietly building a case as the most underappreciated protagonist in the precious metals saga. In a crisis, sidekicks often can save the day.

Let’s start with the basics: Silver supply is structurally broken.

According to Metals Focus, mine production peaked in 2016 and has flatlined since. Meanwhile, demand has been ramping up across industrial, investment, and even monetary fronts — leading to five consecutive years of deficits, as the Silver Institute tracks. In 2025 alone, the silver market is expected to see another deficit of 117.6 million ounces, continuing a now-familiar shortfall pattern.

Source: The Silver Institute

There is more demand than supply is able to keep up with for 5 years now

To put that into perspective, 2025’s expected demand is 1,148.3 million ounces, while total supply clocks in at just 1,030.6 million ounces. That’s not a gap — that’s a canyon. And it’s one we’ve been dancing around for most of the past decade.

Adding salt to the shortage wound: silver production is not only stagnant, but concentrated and vulnerable. Just five countries — Mexico, Peru, China, Chile, and Bolivia — are responsible for 62% of global mine supply. And guess what? Production from these top five is expected to fall by 19 million ounces by 2029, led by a 13% drop in Mexico alone, as key mines like San Julián, Fresnillo, and La Encantada approach closure due to reserve depletion.

In other words, the supply picture is looking more like an aging rock band on its farewell tour — tired, stretched, and nowhere near replacing its biggest hits.

Source: Metals Focus

Mine supply outlook is looking bleak and exploration expenditure remains stagnant

 

Meanwhile, demand is living its best life.

On the industrial side, solar photovoltaic demand has grown from 5.6% of total demand in 2015 to 17% in 2024, with projections that 332 million ounces of silver will be needed annually by 2050 just to support new solar buildouts. And remember, that’s just one sliver (pun intended) of silver’s industrial use cases.

On the investment side, silver is no longer just the speculative playground of Reddit-fueled squeezes. According to the Silver Institute, silver-backed exchange-traded products (ETPs) attracted 95 million ounces in net inflows in the first half of 2025 alone, already surpassing the total for all of 2024. Holdings now sit at 1.13 billion ounces, nearing their pandemic-era highs.

Institutional futures traders are piling in too — net long positions on CME silver futures are up 163% YTD, reaching their highest levels since the first half of 2021.

But perhaps the biggest “hello, something’s changed” moment is in the gold-to-silver ratio.

After peaking above 100 earlier this year — meaning one ounce of gold bought you more than 100 ounces of silver — the ratio has compressed into the 80s–90s range. The 10-year average is around 81. Historically, this ratio tends to overshoot before silver plays catch-up — and when it does, it doesn’t just keep pace; it flies. In previous cycles, silver rallies have been twice as large as gold’s.

In 2025, gold is already up around 38%.

If silver’s rally is only just beginning — well, you can do the math.

And yet… most portfolios still treat silver as an afterthought.

In an environment where everyone’s chasing the AI trade, this sets up a perfect contrarian setup — because silver is fundamentally leveraged gold. When gold rises 10%, silver has historically moved 20–30%. If gold is fear, silver is panic.

And panic, dear reader, can be a great trade.

In the shadows of empires

There’s a philosophical angle here, too.

Throughout history, silver has played the role of monetary glue in collapsing empires and uncertain regimes. In ancient China, it was the foundation of dynastic trade. In the Americas, silver funded colonization. And in 19th century Asia, the Mexican silver dollar became the region’s de facto currency — circulating freely across Indonesia, the Philippines, and China.

Why? Because silver isn’t just valuable — it’s usable. Divisible. Ubiquitous. It’s the money of the people, not just the money of kings.

“Pieces of Eight, Pieces of Eight!” squaked by Long John Silver’s parrot, Captain Flint in the beloved novel ‘Treasure Island’ refers to the Spanish silver dollar!

The silver coin was the actual form of currency during the Spanish Empire and worth eight reales (former unit of currency in Spain). It can notably be cut into eight smaller pieces or “bits to to make smaller change

And in a world where monetary trust is fraying — where sanctions freeze reserves, fiat erodes in silence, and crypto volatility terrifies grandmothers — silver might offer a familiar fallback. A metallic middle ground between central bank distrust and digital confusion.

Silver’s story, in many ways, is about resilience. It doesn’t chase headlines. It doesn’t get invited to Davos. But when trust breaks down, silver shows up.

So what? Why Silver? Why, Now?

At Heyokha, we’ve written extensively about the end of disinflation, the rise of gold, and the need for real assets in a world of monetary erosion. But silver’s time may have come — not instead of gold, but alongside it.

In our view, silver fits squarely into the de-dollarization and deglobalization thesis — a hard asset in an increasingly soft world. It’s small enough to move fast, but big enough to matter.

We live in an era of geopolitical currency distrust, capital flow bifurcation, and monetary weaponization.

• The U.S. is running a fiscal deficit close to 6.5% of GDP.
• The dollar’s role as neutral reserve is eroding — slowly, but clearly.
• Nations like Saudi Arabia are pivoting to hard assets for strategic security.

If gold is the anchor, silver is the accelerant.

Final thought: The Underdog Metal

Silver is rarely the first to run. But when it does, it sprints.

Right now, gold has the narrative — but silver may have the upside.

In a world seeking store-of-value assets beyond central bank reach and dollar dominance, silver’s next chapter could be much louder than its last.

Most investors are still watching gold. But in our view, the real sleeper trade for the next inflation cycle may not just be gold.

It might just be the gray metal that still has some shine.

Maybe we need a staircase for silver too

 

Tara Mulia

Admin heyokha

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