ASEAN Morning Bytes
Asian markets to move sideways, digesting recent economic data from the US and China
EM Space: Market searches for direction
- General Asia: Mixed economic data reports out from China and the United States should keep investors in a holding pattern on Friday with market players looking for fresh cues. China’s 2Q GDP beat forecasts but retail sales fell below expectations while US jobless claims came slightly off from consensus. Southern US states continue to struggle with the recent surge in cases with more state governors dialling back their reopenings to deal with the crisis. Investors will likely keep their eyes on Covid-19 developments as well as on US-China relations for further direction to close out the week.
- Singapore: In a substantial upside surprise, non-oil domestic exports surged 16.1% YoY in June, double the consensus estimate of 8.0%. For the month. A 0.5% MoM SA rise followed two consecutive months of declines. After a contracting year-on-year in May, pharmaceuticals rose 31% YoY in June, though that mainly owed to base effects and pharma was down for a second month. Electronics exports continued to hold firm above SGD3bn in monthly exports for the third consecutive month (SGD3.128bn in June, SGD3.318bn in May and SGD3.106bn in April). By destination, strong gains in shipments to Europe and Japan helped to offset anaemic demand in China and the US.
- Don’t get too carried away with thoughts of a strong recovery following this data. In a media briefing yesterday, the MAS’s head Ravi Menon warned about the dire economic situation and slow and uneven recovery ahead, with a potential rise in job losses and corporate bankruptcies as well as higher household and corporate debt levels undermining the recovery. But he also ruled out any changes to the MAS monetary policy or the property cooling measures in place in currently.
- Thailand: Prime Minister Prayuth Chan-Ocha is preparing for a cabinet reshuffle after resignations yesterday by key economic ministers. This reshuffle will happen by August. The Bank of Thailand’s senior director, Don Nakornthab said they were prepared for more rate cuts in the event that a second-wave of Covid-19 hits the economy. All this should sustain the THB under weakening pressure after the currency fell to a six-week low of 31.667 against the USD yesterday.
- Indonesia: Bank Indonesia (BI) cut policy rates by 25 bps with the central bank looking to bolster economic activity as government officials forecast a deep contraction in 2Q GDP. BI governor Warjiyo opted to focus on stimulus over IDR stability and we expect the currency to come under additional pressure after the recent rate cut. Warjiyo vowed to step up intervention to stabilize IDR but we expect renewed bouts of weakness during episodes of risk-off tone with IDR down more than 2% in July.
What to look out for: Covid-19 developments
- US housing starts and consumer sentiment (17 July)
- Fed’s Williams and Evans speak (17 July)
Download
Download article
17 July 2020
Good MornING Asia - 17 July 2020 This bundle contains {bundle_entries}{/bundle_entries} 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).