Articles
19 September 2019

ASEAN Morning Bytes

A raft of global and Asian central bank policy decisions and activity data from around the region today are likely to sustain the market volatility amid persistent geopolitical noise.

5.25%

Consensus on Bank Indonesia policy rate

A 25bp rate cut today

EM Space: Asian trio meets

  • General Asia: Fed policy announcement is out of the way with widely expected 25bp rate cut but a split vote on rate cut and equally confusing future policy guidance carrying a little impact on the markets. A raft of global and Asian central bank policy decisions and activity data from around the region today are likely to sustain the market volatility amid persistent geopolitical noise. The Asian trio to announce policy decisions today is the Bank of Japan, Bank Indonesia, and Taiwan’s Central Bank of the Republic of China. Will the Fed tip them for easing? Maybe not.
  • Indonesia: Bank Indonesia’s policy decision is expected around 2 pm Jakarta time. There is a solid consensus behind a 25bp rate cut decision putting the policy rate at 5.25%, despite heightened currency volatility amid an escalation of geopolitical crisis in the gulf region. The IDR has been the second-worst performing currency this week with about 1% depreciation against the USD. And with a greater prominence of currency stability in BI policy, the consensus is at risk of a hawkish surprise today.
  • Malaysia: Issued yesterday, the Bank Negara Malaysia’s a press statement on Financial Stability Review of the first half of 2019 noted that despite a surge in volatility during the period the domestic financial system was resilient to severe macroeconomic and financial strains, thanks to strong capital and liquidity support and sustained profitability. All eyes are on the FTSE Russell’s decision on keeping the Malaysian government bonds in its global bond index. Why drop them when they are performing?
  • Philippines: August overall balance of payments (BoP) is expected to post a $580 million deficit as against a surplus of $248 million in July. Despite this, a significant positive turnaround in the payments position this year (to a surplus of $5 billion in the first seven months from $3.7 billion deficit in the same period of 2018) underpins the PHP’s year-to-date outperformance among Asian currencies. We see the positive BoP trends to remain supportive of the currency in the rest of the year even as the BSP unwinds some of last year’s tightening in support growth.
  • Thailand: Is political risk brewing in the background? The Constitutional Court rejected a petition from 110 lawmakers invalidating premiership of former army general Prayuth Chan-ocha, while the opposition grilled him over his oath blunder yesterday. With opposition controlling nearly half of the lower house, the risk of the economy getting pushed into the background under the Prayuth government remains elevated.

What to look out for: BoE, BoJ and other central bank meetings

  • Australia labor report (19 Sep)
  • Bank Indonesia meeting (19 Sep)
  • Bank of Japan meeting (19 Sep)
  • Philippines BoP (19 Sep)
  • US Leading indicator (19 Sep)
  • EU Consumer confidence (20 Sep)
  • Japan CPI (20 Sep)
  • Thailand trade (20 Sep)

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).