20 November 2018
ASEAN morning bytes

General market tone: Wait and see.

Bluechip technology shares weighed on overall sentiment with major stock indices falling on Monday. Lackluster US housing data sent bond yields lower, which were already pressured by dovish comments from a Fed official.

International theme: US-China trade spat in focus while investors watch oil

  • The US dollar pulled back on falling Treasury yields with investors now cautious about the Fed’s dot plots in 2019 in the wake of Clarida’s comments. Poor outlook for heavyweight tech shares dragged on overall sentiment with investors turning to OPEC for direction on oil prices. 
Thailand: A huge downside GDP miss

The 3Q18 performance is bad enough to dent the official optimism about the economy this year and the next, with continued 4%-plus GDP growth. It should also dampen the central bank’s hawkish rhetoric on tightening recently  

Net trade dents GDP growth

Thailand’s GDP growth slowed more than expected to 3.3% year-on-year in the third quarter of 2018 from 4.6% in the second quarter. The outcome was far below the analysts’ consensus, which centred on 4.2% growth. We were at the low end with a 3.7% estimate.

As the graph below shows, net exports were the main drag on GDP growth in 3Q18, led by a sharp slowdown in export growth. While import growth remained robust, this seems to be more due to higher oil imports rather than an improvement in domestic demand. The contribution of private consumption to GDP was slightly better than the second quarter, while that of government consumption and fixed capital formation was little changed. This left inventories in the prime spot as the GDP driver for yet another quarter, not a healthy sign for future growth.  

Reading time around one minute

Good MornING Asia - 20 November 2018

Look away from markets for a few days, and when you turn back, the outlook has changed dramatically - USD lower, Fed expectations reeling, bond yields way down and stocks too. Nice for emerging markets while it lasts, but only whilst the US growth story still holds together too.

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