ASEAN Morning Bytes
Optimism over the potential economic recovery may return on Monday as investors react to last Friday’s US jobs report.
EM Space: Surprise US NFP report may rekindle risk rally on Monday
- General Asia: Better-than-expected jobs figures out from the US last Friday may rekindle the risk rally on Monday with investor sentiment fueled by hopes for the economic recovery. Trade data out from China could help set the tone trading on Monday while the data calendar for the week features regional trade data (Taiwan and Philippines) inflation reports out from major markets and the FOMC meeting. For Monday, sentiment will continue to be driven by hope for a quick recovery with risks such as a potential US-China trade war, still lingering in the background.
- Malaysia: On Friday, Prime Minister Muhyiddin Yassin announced a fourth stimulus package worth MYR 35 billion, including MYR 10 billion of direct fiscal thrust via wage subsidies and skills development programmes, and the rest in the form of tax exemptions. While this brings the total stimulus so far up to 20% of GDP, we estimate a real thrust (excluding easy credit, loan moratoriums, bank guarantees, etc. form the total package) of only 5.6%. This is poised to boost the fiscal deficit to a record high level, though the official view of the deficit doubling to 6% of GDP this year appears to be optimistic. Our deficit forecast before the latest package was 6.3% of GDP (3.4% in 2019). Local markets are on holiday today for the King’s birthday.
- Indonesia: Bank Indonesia (BI) Governor Warjiyo believes that IDR is undervalued as he expects the currency to strengthen further on stalling CPI inflation and a tightening of the country’s current account deficit. IDR has staged a comeback after touching the 16,500 level in March, appreciating sharply as foreign investors returned after sentiment improved considerably. IDR will have limited room to appreciate as we expect BI to cut policy rates at the near term to help support sagging economic growth now that IDR has found its footing.
What to look out for: Trade data and Covid-19 developments
- Taiwan trade (8 June)
- US wholesale inventories (9 June)
- Philippines trade (10 June)
- China inflation (10 June)
- US inflation (10 June)
- FOMC meeting (11 June)
- US PPI and initial jobless claims (11 June)
- Hong Kong industrial production (12 June)
- US consumer sentiment (12 June)
Download
Download article
8 June 2020
Good MornING Asia - 8 June 2020 This bundle contains 6 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).