France and Japan: Debt Fuelled Growth Problem

May 16, 2024 10:30 AM UTC

Most of the surge in debt/GDP in Japan and 40% in France is due to higher government debt and this should not be a binding constraint provided that large scale QT is avoided – we see the ECB slowing QT in 2025 and are skeptical about BOJ QT in the next few years.  The adverse impact of higher deb

China: Too Much Debt In Some Sectors

May 15, 2024 9:55 AM UTC

While part of corporate debt is quasi government (SOE and LGFV’s) and China creditors can be pursued to rollover by the authorities for larger borrowers, households and part of the private sector are focused on the previous buildup of debt.  With China authorities reluctant to aggressive ease fis

India Inflation Review: Sticky Prices to Keep RBI Cautious

May 14, 2024 3:54 AM UTC

India’s consumer price inflation eased amrginally to 4.83% yr/yr in April, reflecting lower fuel and light prices. The government cut prices of LPG cylinders in India ahead of the elections. However, food price pressures persist despite various supply side measures, underscoring the sticky nature

China RRR and Rate Cuts

May 13, 2024 7:54 AM UTC

The latest China money supply and lending figures show that private household and business lending is very subdued.  More need to be done to boost credit demand as well as credit supply.  However, the authorities desires to avoid too much Yuan weakness will likely mean that the next move is a 25bp

Watts at Stake: India's Looming Power Shortage

May 13, 2024 6:58 AM UTC

India's power sector faces rising demand and power shortages, sparking fears of the most significant power shortfall in a decade. With coal imports continuing to rise and hydropower generation declining, India's aim to become a manufacturing hub could become challenging. Energy transition is likely

Asset Allocation 2024: Tricky Seven Months Remaining

May 10, 2024 1:06 PM UTC

Fed easing expectations for 2025 and 2026 can shift from a terminal 4% Fed Funds rate towards 3%, as the U.S. economy slows due to lagged tightening effects.  Combined with Fed easing starting in September this should mean a consistent decline in 2yr yields.  However, 10yr U.S. Treasury yields wil

Benign Inflation Allows BNM to Hold Rate

May 10, 2024 9:24 AM UTC

In its latest decision, the Monetary Policy Committee (MPC) of Bank Negara Malaysia (BNM) opted to keep the overnight policy rate (OPR) steady at 3.0%, marking the seventh consecutive meeting without a change. This decision aligns with market projections and underscores BNM's commitment to support g

China Equities: A Tactical Play

May 8, 2024 2:20 PM UTC

China equities can see a tactical bounce of 5-10% in the coming months.  Cheap valuations and  underweight global fund positions means that the scale of pessimism only has to get less bad on the economy and China authorities attitude towards businesses.  While we see a tactical opportunity, we do

Indonesia Q4 GDP Review: Robust Start to 2024

May 7, 2024 1:22 PM UTC

Bottom line: Indonesia's Q1 GDP — released on May 6 — saw growth rebound to 5.1% yr/yr from 4.90% yr/yr in Q4 2023. While private consumption continued its ascent, government expenditure emerged as the key driver of Indonesia's growth narrative. Private consumption was supported by festive deman

Indonesia CPI Review: Inflation Inches Down but BI on Alert

May 3, 2024 10:33 AM UTC

Indonesia’s consumer price inflation eased marginally to 3% yr/yr in April on the back of declining food prices. Despite the easing, food price remain the key inflationary factor. Additionally, imported inflation as the IDR comes under pressure could keep inflation elevated in the near term. Bank

China Politburo: Help for Housing, But No Game changers

May 2, 2024 10:50 AM UTC

Politburo statement in late April suggests extra support for residential property.  However, we see this as being incremental rather than any game changers and we still see residential investment remaining a negative drag on 2024 GDP growth.

Indonesia CPI Preview: Food Prices to Push Up CPI in April

April 29, 2024 1:25 PM UTC

Indonesia’s consumer price inflation in expected to continue to trend upward in April. Food prices, alongside higher transportation price growth will drive up inflation. Furthermore, increased demand during Ramadan will also weigh on headline inflation. 

Indonesia: MPC Review: Bank Indonesia Surprises With A Rate Hike

April 29, 2024 11:26 AM UTC

In a pre-emptive move to both curb inflationary pressures and safeguard the Indonesia Rupiah (IDR) against furhter depreciation, Bank Indonesia, in a surprise move, increased its main policy rate by 25 bps to 6.25%. However, further rate hikes are not expected as the central bank remains wary of hur

BoJ Review: No change with upward revision in CPI Forecasts

April 26, 2024 7:38 AM UTC

BoJ has kept interest rate at 0-0.1%.
2024 CPI has been revised higher and GDP lower

BoJ's Intervention and its impact

April 25, 2024 6:24 AM UTC

In the period of time when JPY significantly weakens or strengthens, BoJ will intervene in the FX market either through verbal or actual intervention. As JPY weakened significantly in the past months, once again we found ourselves in the proximity of FX intervention with unknowns for anonymity is ke

China: Surging Government Debt and Does It Matter?

April 24, 2024 9:30 AM UTC

Total non-financial sector debt, plus the IMF estimates of government debt/GDP, do seem to matter for the action of China authorities, as fiscal policy stimulus is targeted rather aggressive as in 2009 or 2015.  The overall debt picture also matters for the growth outlook, as the excess debt/GDP le

Indonesia: MPC Preview: Bank Indonesia to Hold Rate Despite Currency Volatility

April 23, 2024 11:12 AM UTC

With inflation within target range and the need to defend the currency amid global uncertainties and US dollar strength, Bank Indonesia (BI) is likely to extend its pause on rate adjustments in the upcoming monetary policy meeting on April 24. BI remains committed to stabilising the Indonesian rupia

Indonesian Court Delivers Verdict: Prabowo prevails

April 22, 2024 3:18 PM UTC

The Constitutional Court dismissed cases against Vice President Gibran Rakabuming Raka and President Joko Widodo. In Gibran's case, the court didn't disqualify him from running for president but sanctioned the election committee for not amending regulations following a previous ruling. This ruling l

RBI Holds Rates Firm, Citing Room for Economic Growth

April 11, 2024 5:44 AM UTC

In line with our expectations, the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) chose to maintain the policy repo rate at 6.5% in its latest meeting. The decision reflects their aim to gradually scale back stimulus measures while still supporting economic growth. It also unders

RBNZ Review: Keep Rates Restrictive

April 10, 2024 5:48 AM UTC

RBNZ kept rates unchanged at 5.5% and suggest OCR to stay restrictive for a sustained period of time

RBI to stand pat in April

April 4, 2024 7:25 AM UTC

The Reserve Bank of India (RBI) is gearing up to announce its first monetary policy decision for FY25 (April-March) on April 5. For the upcoming meeting, we anticipate that the RBI will likely keep the repo rate unchanged at 6.5%, given the optimistic outlook for economic growth and still elevated i

Indonesia CPI Review: Ramadan Demand Drives Up Inflation

April 1, 2024 1:33 PM UTC

Indonesia's latest Consumer Price Index (CPI) data has revealed a notable acceleration in inflation, surpassing expectations and marking the highest rate since August 2023. The surge, driven primarily by heightened demand during the fasting month of Ramadan, highlights significant price pressures ac

Japan: 10yr JGB Yields To Exceed 1% in 2024?

March 27, 2024 10:00 AM UTC

Though BOJ soothed markets with last Tuesday’s rate hike and scrapping of yield curve control, we see scope for 10yr JGB yields to rise through 1% by summer/autumn.  The current pace of net JGB purchases is a lot lower than H1 2023, while Ueda noted that this pace could be slowed in the future. 

Equities Outlook: Cyclical Recovery Versus Structural Headwinds

March 25, 2024 9:00 AM UTC

 ·        In the U.S., a tug of war between momentum and U.S. exceptionalism on the one side versus valuations and any deviations from the U.S. goldilocks scenario now means volatility and a risk of a correction.  We feel that the U.S. equity market recovery can push onto 5250 for the S&P5

Asia/Pacific (ex-China/Japan) Outlook: Election Spending to Drive Growth

March 22, 2024 12:18 PM UTC

·       In 2024, growth trends across emerging Asia will exhibit a mixed pattern. Encouragingly, there will be a resurgence in demand for global electronics following a period of stagnation in 2022‑23, which will provide a boost to regional trade. Moreover, the initiation of monetary policy

China Outlook: The Struggle to Hit 5% Growth

March 20, 2024 11:00 AM UTC

China’s 5% growth target will likely be tough to meet with residential property investment likely to knock 1.0-1.5% off GDP and net exports a small negative. With sluggish private investment, this means some of the old engines of growth are not firing.  Some additional fiscal stimulus will likely

BoJ Review: Zero

March 19, 2024 6:14 AM UTC

BoJ has moved interest rate to 0% and officially removed YCC. However, forward guidance suggest the BoJ is in no hurry to further tighten

Bank Indonesia to Retain Policy Rate

March 18, 2024 5:40 AM UTC

Bank Indonesia (BI) will likely maintain the key 7-day reverse repo rate unchanged in March at 6%, in line with recent trends. The stability of the rupiah remains a crucial consideration for BI, alongside CPI inflation, which has moderated within the new target band of 2.5+/-1%. 

BoJ Preview: 50-50

March 13, 2024 3:17 AM UTC

Our central forecast is for the BoJ to change forward guidance in March, indicating trend inflation will be achieving target and ultra-ease monetary policy is no longer necessary and hike interest rate to 0% in April as wage growth has accelerated and the latest wage negotiation is likely to ensure

India's Q3 GDP: Strong But Uneven Growth

March 8, 2024 2:30 PM UTC

India's economic landscape witnessed a remarkable upswing in Q3-FY24, with a real GDP growth rate of 8.4%,  surpassing both street estimates and the Reserve Bank of India's (RBI) projections. This surge not only solidifies India's position as the fastest-growing major economy globally but also unde

Bank Indonesia to Look Beyond Recent Uptick in Consumer Price Index

March 7, 2024 4:06 AM UTC

Indonesia's Consumer Price Index (CPI) data released by the Central Statistics Agency (BPS) indicates a notable uptick in inflation, reaching 2.75% y/y in February compared to 2.57% y/y in January. The three-month high inflation rate was primarily propelled by surging food prices, aligning with expe

Indonesia Preview: CPI to remain broadly stable

February 28, 2024 3:29 PM UTC

Indonesia’s February inflation is likely to remain broadly stable. Food prices will maintain upward pressures but a tight monetary stance will keep headline inflation in check. Increased demand ahead of Ramadan could see prices spike in March. 

RBNZ Review: No Hikes in Sight

February 28, 2024 4:59 AM UTC

RBNZ kept rate unchanged but revised inflation forecast higher
ANZ and TD proven wrong

Farmers March to Delhi as Government Proposal Rejected Amid Election Tensions

February 26, 2024 7:35 AM UTC

In India, widespread farmer protests persist, demanding Minimum Support Prices (MSP) for all commodities, pensions and debt forgiveness. Despite multiple negotiations, the recent central government proposal to purchase specific crops at MSP for five years was vehemently rejected by protesters, promp

RBI Minutes Reveal a Cautious Committee

February 23, 2024 10:42 AM UTC

The Reserve Bank of India's (RBI) latest monetary policy decision, as reflected in the minutes of the February Monetary Policy Committee (MPC) meeting, presents a nuanced landscape of optimism about India's growth prospects, juxtaposed with concerns over inflation risks. The views of various MPC mem

Indonesia's Elections: Prabowo Subianto Emerges as Front-Runner

February 22, 2024 11:30 AM UTC

Prabowo Subianto emerges as the front-runner in Indonesia's recent national elections, securing a substantial lead of approximately 60% in preliminary sample counts, potentially avoiding a runoff and reducing political uncertainty. While his decisive victory provides him with political capital, conc

China: Yuan Outflow Fears Versus Net Exports

February 21, 2024 11:00 AM UTC

Despite a still overvalued Yuan, China authorities are reluctant to accept too much Yuan weakness for fear of causing domestic capital outflows and discontent with China’s government. At some stage, if GDP growth surprises on the downside, China authorities could decide that a controlled Yuan decl

China: 5yr LPR Cut But Not 1yr LPR

February 20, 2024 9:17 AM UTC

A larger than expected 25bps cut in the 5yr Loan Prime Rate (LPR) has been delivered, but the 1yr LPR rate was unchanged given that PBOC reluctance to cut the 1yr Medium-Term Facility rate (MTF) this month.  The 5yr LPR rate is not a game changer for residential property, as bigger policy moves are

BJP's Political Confidence Shines Through in India's FY25 Interim Budget

February 13, 2024 10:44 AM UTC

India's interim budget for FY25 presented ahead of the upcoming general election, reflects the government's commitment to economic growth, infrastructure development, and fiscal responsibility. Finance Minister Nirmala Sitharaman highlighted key aspects of the budget, emphasizing a multi-pronged app

Reserve Bank of India Review: No Rate Cut On The Horizon

February 12, 2024 6:25 AM UTC

The Reserve Bank of India's Monetary Policy Committee, led by Governor Shaktikanta Das, chose to keep the repo rate unchanged at 6.5% for the sixth consecutive time, aiming to support ongoing economic recovery while ensuring a sustained decline in inflation. Despite signs of inflation moderation and