ASEAN Morning Bytes
The intensification of the trade war between the US and China sustain the negative spell on markets with Asian risk assets poised for another bad day today. Adding to the emerging market woes are political jitters in Turkey, South Africa, and Thailand
| 1.75% |
The Bank of Thailand's policy rateNo change expected today |
EM Space: The trade war and political risks weigh on investor sentiment
- General Asia: The escalation of US-China trade tensions with China considering retaliatory tariffs on US products dampens hopes of a trade deal even as Vice Premier Liu He continues negotiations this week. Asian central banks remain in the headlines. Australia’s central bank left the policy on hold yesterday and those of New Zealand and Thailand are expected to follow suit today.
- Indonesia: Keeping up its verbal intervention amid ongoing market rout, a senior Bank Indonesia official warned about the central bank’s intervention in both bonds and foreign exchange markets to ensure currency stability. BI also unveiled new regulations governing money and foreign exchange markets towards greater efficiency and transparency.
- Malaysia: As expected, the Bank Negara Malaysia cut the overnight policy rate by 25bp to 3.00%, citing increased external headwinds to growth. The cut still leaves BNM with a sufficient interest rate buffer if economic conditions deteriorate further. That may not be required though, as growth is likely to stay firmly within BNM's baseline of 4.3 - 4.8% for the year. That said, we revise our year-end USD/MYR forecast from 4.05 to 4.12.
- Philippines: April CPI inflation came in below consensus at 3.0% YoY. The slowdown from 3.3% in March was pretty much across the board but for the transport component. The trade data for March is due today and it’s expected to show continued electronics-led export weakness. As for most Asian counterparts, we believe the central bank (BSP) will judge the current economic conditions warranting greater policy accommodation. Hence our forecast of a 25bp BSP policy rate cut tomorrow.
- Thailand: The Bank of Thailand is widely expected to stay pat today. The political uncertainty about the formation of the new government will continue to overshadow the economy. The Thaksin-linked Pheu Thai Party and military-backed Palang Pracharat Party emerged as main parties in the election held on 24 March, though both lacked a single-party majority to form the government. And the controversial electoral system is adding to the difficulty of coalition formation by either party. Yet, the balance of power remains tilted toward the PM Prayuth’s Palang Pracharat party.
What to look out for: Developments on US-China trade deal and central bank policies
- China exports (8 May)
- Philippines trade (8 May)
- The Bank of Thailand meeting (8 May)
- China CPI (9 May)
- Philippines 1Q19 GDP and BSP policy meeting (9 May)
- US trade balance and PPI (9 May)
- UK 1Q19 GDP (10 May)
- US CPI (10 May)
Download
Download article
8 May 2019
Good MornING Asia - 8 May 2019 This bundle contains 4 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).