ASEAN Morning Bytes
Investors await China data dump for trading cues on Thursday
EM Space: China economic data to shape sentiment
- General Asia: China reports data on GDP, retail sales and industrial production later on Thursday with investors likely to take their cue from these reports. Meanwhile, US president Trump pulled back on additional sanctions for Chinese officials, opting not to stoke additional tension between the two countries at least for now. Investors will also keep an eye on Covid-19 developments on Thursday with still elevated new infection reports in southern US states clashing with optimism over vaccine development.
- Singapore: June non-oil domestic export data is due tomorrow morning (17 July). Despite weak global demand due to Covid-19, NODX has been firm this year with a 4.2% YoY rise in the first five months of the year. But this strength is very lopsided, driven by a surge in pharmaceutical demand during the pandemic. There was some tapering of pharma exports in May, dragging the headline NODX down by 4.5% YoY in that month. This might have been one-off. We see NODX growth turning positive in June, though not as much as the consensus forecast of an 8% rise (ING +1.5%).
- Thailand: Politics is coming back to take a toll on markets. Local media reports that that government’s economic team, led by Deputy Prime Minister Somkid Jatusripitak (and comprising Finance Minister Uttama Savanayana, Energy Minister Sontirat Sontijirawong, Education Minister Suvit Maesincee, and Prime Minister’s Deputy Secretary-General Kobsak Pootrakool) is resigning today to make way for a cabinet reshuffle. Some of them have already resigned from the ruling Palang Pracharath Party. Having outperformed in May and June, the THB has shifted to be an emerging market underperformer this month with a 1.9% loss against the USD month-to-date, beating our end-year forecast of 31.50 (spot 31.57).
- Philippines: President Duterte extended partial lockdown measures in the capital region until the end of the month as daily Covid-19 infections remain elevated with the president warning of a return to more stringent measures should the current trend continue. Economic managers have been lobbying for a gradual reopening of the economy despite the recent rise in cases to help jump-start the economy. The threat of a return to more stringent lockdowns in the capital region would likely delay the economic recovery and we continue to price in a drawn-out recession with GDP likely remaining in contraction for the balance of the year.
- Indonesia: Bank Indonesia (BI) will hold a policy meeting on Thursday with market analysts expecting the central bank to cut policy rates to give the economy a boost. President Jokowi predicts that GDP will contract by 4.3% in 2Q with economic activity slowed considerably by partial-lockdown measures and restrictions on travel imposed from April to June. Despite the projections for weaker growth, ING expects BI will keep policy rates unchanged as IDR comes under increased pressure in July, down 2.1% for the month. IDR stability was tagged by Governor Warjiyo as a decision point for additional rate cuts and BI will likely pause at today’s policy meeting to wait for more stability before easing policy rates further.
What to look out for: China data and US retail sales plus Covid-19 developments
- China GDP, industrial production and retail sales (16 July)
- Bank Indonesia policy meeting (16 July)
- US initial jobless claims and retail sales (16 July)
- Fed’s Bailey speaks (16 July)
- Singapore non-oil domestic exports (17 July)
- US housing starts and consumer sentiment (17 July)
- Fed’s Williams and Evans speak (17 July)
Download
Download article
16 July 2020
Good MornING Asia - 16 July 2020 This bundle contains 3 articles"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).