ASEAN morning bytes
General market tone: Slight risk-on.
Market players continued to place their hopes on the ongoing US-China trade for some positive breakthrough, while some clarity about the US government operations is awaited at President Trump's national address
International theme: All eyes remain on US-China trade talks
- Bargain hunting lifted stocks further overnight with risk sentiment improving given hopes for a US-China trade deal. Meanwhile, oil prices continue to trudge higher, seemingly unnoticed with benchmark Brent crude oil up 9.14% for the year at $58.72/barrel.
EM Space: World Bank trims EM growth outlook due to trade tensions
- General Asia: Risk sentiment remains on the mend despite the downward revision by the World Bank of its global growth forecast (2.9% from 3.0%) for 2019 just as US President tweeting about the current trade talks in Beijing as “going very well”.
- Malaysia: The Moody’s sees Malaysia’s GDP growth slowing to 4.7% in 2019 and further to 4.5% in 2020, below the 2015-18 average rate of 5%, but no threat to the country’s A3/Stable sovereign rating. The agency noted ‘large and diversified economy with healthy medium-term growth prospects, and relatively high government debt partially offset by a favorable debt structure and large domestic savings’ as supportive of sovereign credit profile. The renewed uptrend in crude price comes as a boost to the economy and this has driven the Malaysian ringgit to a 4-month high of 4.11 against the USD.
- Indonesia: Indonesia will likely struggle to hit its growth target of 5.3% for 2019 according to finance minister Sri Indrawati. The government, however, remains confident that momentum remains intact and that growth will still likely be above 5%. Meanwhile, the minister indicated that the government will be monitoring global growth trends and look to possible fallout from the US-China trade war for direction.
- Philippines: Domestic liquidity conditions remain relatively tight with the central bank reporting 8.4% money supply growth for November, the 3rd straight month of single-digit growth. With short-term rates remaining elevated and inflation slowing, this could be the opening for the BSP to conduct the first of its much-anticipated reserve requirement cut as early as the 1Q meeting. Meanwhile, bank lending posted strong double-digit growth of 16.8% but this was the slowest pace of expansion since early 2016 as 175 bps BSP rate hike sapped some demand for loans.
What to look out for: Fed chatter and minutes, US-China trade talks
- Fed Evans speaks (9 January)
- US Fed Rosengren speaks (10 January)
- US Fed meeting minutes (10 January)
- Philippines trade (10 January)
- Fed Powell speaks (11 January)
- Fed Bullard, Evans and Clarida speak (11 January)
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This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more