ASEAN Morning Bytes
Investors waiting on more direction, likely to monitor US stimulus and monitoring US-China deal for trading cues
EM Space: US and China scheduled to revisit phase 1 deal
- General Asia: US-China relations will be in focus with both sides announcing a possible meeting by mid-month to discuss the phase 1 trade deal. Investors will also be monitoring progress with the proposed US fiscal stimulus with lawmakers hoping to deliver an agreement by the end of the week. Covid-19 new daily cases have come off from the recent peak in the US but remain elevated, while select European nations have reported a renewed pick-up in Covid-19 infections. Regional data (Philippine trade, Indonesia GDP, Thailand inflation and Singapore retail sales) could give additional cues for trading on Wednesday while investors continue to monitor Covid-19 developments and the US-China trade deal.
- Thailand: The Bank of Thailand policy decision should be out around 2 pm local time (3 pm SGT). A near-unanimous consensus of no change to the policy rate, currently at a record low of 0.50%, suggests it will pass as a non-event. While the argument for further monetary easing remains strong, there is not much easing space left for the central bank, which is why we consider the BoT is done with easing in this cycle (read more here). The THB should continue to be an Asian underperformer through the end of the year.
- Singapore: June retail sales data is due. The reopening of the economy in June from the Covid-19 circuit-breaker should have lifted demand, though not enough of a lift to swing the year-on-year sales growth back into positive territory. We are looking for a 32% YoY fall, shallower than May’s 52% fall. As in prior months, we think supermarket sales continued to outperform non-essential consumer spending. Automobiles remained a weak spot as seen from a 77% YoY fall in new registrations in June. Private consumption will remain the main expenditure-side drag on GDP in the remainder of the year.
- Indonesia: Indonesia 2Q GDP will be released today with analysts expecting a contraction of 4.7% with partial lockdown measures weighing on overall economic momentum. We expect a more severe drop off in activity with GDP falling to -5.1% as trends in manufacturing activity and downbeat consumer confidence reflect a much deeper downturn. Covid-19 cases remain elevated with authorities unable to fully relax partial lockdown restrictions, which have been extended until 13 August. We expect the virus to weigh on GDP momentum for the balance of the year with a likely contraction in GDP also recorded in 3Q.
- Philippines: Inflation and trade data will be reported on Wednesday with price pressures expected to be modest while overall trade activity is projected to remain subdued due to the pandemic. Inflation will likely settle at 2.6% in July, still well within the central bank’s 2-4% target band although we do not expect a change in monetary stance any time soon. Meanwhile, both exports and imports will probably both record double-digit declines as weaker global demand and slowing domestic economic activity cause trade activity to shrink. A substantial drop in imports will likely keep PHP supported and we expect this trend to continue for the next few months.
What to look out for: Covid-19 developments
- Philippine inflation and trade data (5 August)
- Indonesia GDP (5 August)
- Thailand inflation and BoT meeting (5 August)
- Singapore retail sales (5 August)
- US trade balance and ISM PMI non-manufacturing (5 August)
- Philippines GDP (6 August)
- Taiwan inflation (6 August)
- US initial jobless claims (6 August)
- Malaysia industrial production (7 August)
- US non-farm payrolls (7 August)
Download
Download article
5 August 2020
Good MornING Asia - 5 August 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).