Articles
15 August 2019

ASEAN Morning Bytes

General market tone: Risk-off.

The relief rally from President Trump pushing back next round of tariffs on Chinese goods to December was short-lived as disappointing data from China and Germany and fears of the US economy facing a recession pushed investors for risk-aversion again.

EM Space: Global recession fears to knock down risk sentiment on Thursday

  • General Asia: Emerging markets look set to pullback today as global recession fears mount following dismal China’s industrial production and Germany’s GDP data, while the risk of the US slipping into recession becomes more prominant with latest Treasury yield curve inversion.
  • Malaysia: In yet another downside surprise, CPI inflation slowed to 1.4% YoY in July from 1.5% in the previous month on lower utility and transport components. At only 0.3% year-to-July we don’t see inflation becoming an issue for the economy anytime soon. We have cut our full-year inflation forecast to 0.8% from 1.0%. With persistently subdued inflation we don’t think the central bank (BNM) will be left behind in its easing cycle as a global headwind to the economy continues to be on the upswing. We now anticipate two more 25bp BNM rate cuts taking the overnight policy rate down to 2.50% by end-2019.
  • Thailand: A Bloomberg story quoted Labor Minister Chatumongol Sonakul warning against the adverse impact of the US-China trade tensions on the Thai economy and the hurdle this poses for another planned hike in minimum wages, currently about THB 330 (US$ 10.7). Indeed, the economy needs more stimulus and a wage hike could have been a part of it. The uncertainty about fiscal stimulus means the central bank (BoT) will have to do all the heavy-lifting to boost growth. The BoT started its easing cycle with a 25bp policy rate cut earlier this month. We expect one more rate cut before the yearend.
  • Philippines: Car sales perked up in July with a surprisingly strong performance in the passenger car segment where sales jumped by 34.7% YoY and commercial vehicle sales chugged along with a 6.4% increase. However, favorable base effects may have had a lot to do with the strong year-on-year gains. We expect easier economic policies, especially continued downward grind in the BSP policy rate to sustain the strength further.

What to look out for: US retail sales

  • Indonesia trade (15 August)
  • Philippines remittances (15 August)
  • US retail sales (15 August)
  • Singapore trade (16 August)
  • Malaysia GDP (16 August)
  • Hong Kong GDP (16 August)
  • US consumer sentiment (16 August)

Disclaimer

"THINK Outside" is a collection of specially commissioned content from third-party sources, such as economic think-tanks and academic institutions, that ING deems reliable and from non-research departments within ING. ING Bank N.V. ("ING") uses these sources to expand the range of opinions you can find on the THINK website. Some of these sources are not the property of or managed by ING, and therefore ING cannot always guarantee the correctness, completeness, actuality and quality of such sources, nor the availability at any given time of the data and information provided, and ING cannot accept any liability in this respect, insofar as this is permissible pursuant to the applicable laws and regulations.

This publication does not necessarily reflect the ING house view. This publication has been prepared solely for information purposes without regard to any particular user's investment objectives, financial situation, or means. The information in the publication is not an investment recommendation and it is not investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Reasonable care has been taken to ensure that this publication is not untrue or misleading when published, but ING does not represent that it is accurate or complete. ING does not accept any liability for any direct, indirect or consequential loss arising from any use of this publication. Unless otherwise stated, any views, forecasts, or estimates are solely those of the author(s), as of the date of the publication and are subject to change without notice.

The distribution of this publication may be restricted by law or regulation in different jurisdictions and persons into whose possession this publication comes should inform themselves about, and observe, such restrictions.

Copyright and database rights protection exists in this report and it may not be reproduced, distributed or published by any person for any purpose without the prior express consent of ING. All rights are reserved.

ING Bank N.V. is authorised by the Dutch Central Bank and supervised by the European Central Bank (ECB), the Dutch Central Bank (DNB) and the Dutch Authority for the Financial Markets (AFM). ING Bank N.V. is incorporated in the Netherlands (Trade Register no. 33031431 Amsterdam).