ASEAN Morning Bytes
General market tone: Wait and see.
Investors will tread lightly to close out 1Q19 amid lingering US-China trade tensions and softer US activity data.
EM Space: US growth revised lower with investors looking to trade talks for direction
- General Asia: Market players are waiting for more developments on the US-China trade front as economic data continues to validate softer global growth and the change in the Fed dot plots. The upcoming data on US sentiment indicators tonight and retail sales on Monday will shed more light on the slowdown trend.
- Thailand: Yet another BoT official, Senior Director Don Nakornthab, was on tape yesterday downplaying the inflation headwind to policy rate hikes this year. He described low inflation as a structural issue that’s not an obstacle to a rate hike, adding that a rate cut was unlikely absent a key negative shock to the economy. We consider the BoT’s 3.9% GDP growth forecast for this year subject to more downside than upside risk, and with that, the prospects of an unchanged BoT policy rate, or maybe a rate cut, remains more dominant than that of a hike.
- Malaysia: The BNM has downgraded its GDP growth forecast for 2019 to a range of 4.3-4.8% from 4.9% announced in the federal budget in November last year. According to Governor Shamsiah Yunus, intensified downside risk from trade tensions and global growth could drive Malaysia’s GDP growth to the lower end of the new forecast range. Growth forecast downgrade underpins our forecast of a 25bp BNM policy rate cut to 3.0% at the next meeting in May (read more here).
- Indonesia: Bank Indonesia looked to calm jittery nerves, indicating that they see no spillover effects from the recent developments with select EM currencies struggling due to concerns over global growth. The central bank indicated its constant presence in both the bond and spot currency markets to help cap downside in the IDR. Governor Warjiyo ascribed the recent weakness to “profit taking by investors concerned by slowing growth” but he also noted Indonesia's “good economic resilience”.
- Philippines: The Bangko Sentral ng Pilipinas (BSP) may be considering easing its monetary policy stance in the near term as one of its most hawkish officials, Deputy Governor Guinigundo, has indicated that declining inflation would “provide some flexibility for easing”. Furthermore, Guinigundo indicated that the “Philippine economy continues to be resilient with growth proceeding above trend”.
What to look out for: US China trade talks in Beijing
- Thailand trade (29 March)
- US core PCE and consumer sentiment (29 March)
- China PMI (31 March)
Download
Download article
29 March 2019
Good MornING Asia - 29 March 2019 This bundle contains 2 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).