Chief Economist & Political Strategist, CrossASEAN Research

Prasenjit K. Basu

Chief Economist & Political Strategist

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Macroeconomics

<ul>
<li>A RMB7.96tn (US$1.2tn) increase in TSF in May-Jun'22 (US$3.1tn in H1CY22) boosted FAI and industrial growth in Jun'22, helping avert a Q2 GDP contraction. Full-year RGDP growth won't exceed 4%. </li>
<li>Exports accelerated but imports were near-stagnant, contributing to a trade surplus of US$391bn in H1CY22-- but FX reserves still declined US$179bn. Easing options are limited by fear of capital flight.</li>
<li>Falling home sales, weaker property values and tighter global liquidity will spread the current financial crisis to more provinces. With monetary easing constrained, China's financial system crisis will deepen. </li>
</ul>


A RMB7.96tn (US$1.2tn) increase in TSF in May-Jun'22 (US$3.1tn in H1CY22) boosted FAI and industrial growth in Jun'22, helping avert a Q2 GDP contraction. Full-year RGDP growth won't exceed 4%. 
Exports accelerated but imports were near-stagnant, contributing to a trade surplus of US$391bn in H1CY22-- but FX reserves still declined US$179bn. Easing options are limited by fear of capital flight.
Falling home sales, weaker property values and tighter global liquidity will spread the current financial crisis to more provinces. With monetary easing constrained, China's financial system crisis will deepen. 


China: Financial Crisis Looms as Tighter Global Liquidity Limits Easing Options

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

<ul>
<li>Broad global MSCI equity indexes (ACWI,ACWI ex-U.S.,EAFE, and EM) remain bearish with YTD downtrends intact. Until these indexes reverse downtrends, we are bearish and view bounces as bear market rallies.</li>
<li>Major non-U.S. countries appear to be much further along in the bottoming process, a potential sign that U.S. indexes could take a back seat once global equities finally bottom.</li>
<li>Indexes that have not made a new low since March: Nikkei 225, TOPIX, TOPIX Small, Hang Seng, Europe’s EURO STOXX 50, and China's MSCI China (MCHI-US) and China Internet (KWEB-US).</li>
</ul>


Broad global MSCI equity indexes (ACWI,ACWI ex-U.S.,EAFE, and EM) remain bearish with YTD downtrends intact. Until these indexes reverse downtrends, we are bearish and view bounces as bear market rallies.
Major non-U.S. countries appear to be much further along in the bottoming process, a potential sign that U.S. indexes could take a back seat once global equities finally bottom.
Indexes that have not made a new low since March: Nikkei 225, TOPIX, TOPIX Small, Hang Seng, Europe’s EURO STOXX 50, and China's MSCI China (MCHI-US) and China Internet (KWEB-US).


Hang Seng, MSCI China Near Major Base Breakouts; Bottoms-Up Stock Rec's in Hong Kong, China, & Japan

iShares MSCI ACWI ETF / Technical Analysis

<ul>
<li>Many indexes (ACWI-US,ACWX-US,etc.) are near support, and we could see a bear market bounce, but until these indexes reverse their downtrends and break above resistance levels, we cannot be bullish.</li>
<li>On a positive note, we are starting to see signs that inflation is peaking, as commodity prices have pulled back substantially, and the Energy/Materials Sectors are under significant pressure.</li>
<li>If inflation and commodity prices have indeed peaked, global equities are likely in the early stages of a bottoming process.</li>
</ul>


Many indexes (ACWI-US,ACWX-US,etc.) are near support, and we could see a bear market bounce, but until these indexes reverse their downtrends and break above resistance levels, we cannot be bullish.
On a positive note, we are starting to see signs that inflation is peaking, as commodity prices have pulled back substantially, and the Energy/Materials Sectors are under significant pressure.
If inflation and commodity prices have indeed peaked, global equities are likely in the early stages of a bottoming process.


Inflation Peaking?; ACWI, ACWI Ex-US Near Support; Many Bottoms-Up Stock Recommendations

Macroeconomic and Investing, The Macro Compass

Alfonso Peccatiello (Alf)

Macroeconomic and Investing

The Macro Compass

Actionable investment ideas and unique global macro insights. From the desk of a former Head of $20 bn Investment Portfolio straight to your inbox.

Actionable Investment Ideas

<ul><li>Investing is all about probabilities: all you need to do is assess the chances markets are assigning to different scenarios today and anticipate how this probability distribution will move over time.</li><li>In other words, you don’t need to be necessarily right on what happens next but just be able to grasp how market consensus will move from here.</li><li>Ignoring this simple principle has been a very expensive exercise for European fixed income investors over the last few weeks: the-ECB-will-never-really-hike mantra is melting under the eyes of bond investors married to a dovish narrative which has been successful for a decade but offers a very bad risk-reward today.</li></ul>

Investing is all about probabilities: all you need to do is assess the chances markets are assigning to different scenarios today and anticipate how this probability distribution will move over time.In other words, you don’t need to be necessarily right on what happens next but just be able to grasp how market consensus will move from here.Ignoring this simple principle has been a very expensive exercise for European fixed income investors over the last few weeks: the-ECB-will-never-really-hike mantra is melting under the eyes of bond investors married to a dovish narrative which has been successful for a decade but offers a very bad risk-reward today.

The Biggest Macro Risk You Might Be Ignoring

<ul>
<li>Despite cumulative trade surpluses of US$215bn for Jan-Apr'22, foreign reserves declined by US$130bn, suggesting substantial capital flight. China's ability to ease monetary policy is severely constrained. </li>
<li>China's M2 money supply is up 500% since Aug'08 (pre-GFC), while US M2 has only expanded 180% over the period. China's record monetary growth has funded massive property/industrial over-capacity.  </li>
<li>Real GDP is unlikely to exceed 4.5% growth in 2022. Global monetary tightening will rein-in China's property market, and constrain FAI growth, likely tipping the financial system towards crisis.  </li>
</ul>


Despite cumulative trade surpluses of US$215bn for Jan-Apr'22, foreign reserves declined by US$130bn, suggesting substantial capital flight. China's ability to ease monetary policy is severely constrained. 
China's M2 money supply is up 500% since Aug'08 (pre-GFC), while US M2 has only expanded 180% over the period. China's record monetary growth has funded massive property/industrial over-capacity.  
Real GDP is unlikely to exceed 4.5% growth in 2022. Global monetary tightening will rein-in China's property market, and constrain FAI growth, likely tipping the financial system towards crisis.  


China Faces the Perfect Storm: Global Tightening, Capital Flight, Overcapacity

China

iShares MSCI China ETF is an exchange-traded fund incorporated in the USA. The ETF seeks to track the performance of the MSCI China Index. The Index is a free float adjusted market cap weighted index designed to measure the performance of equity securities in the top 85% in market cap of Chinese equity markets, as represented by the A-Shares, H-Shares, B-Shares, Red Chips, & P-Chips.

iShares MSCI China ETF (MCHI US)

China: Financial Crisis Looms as Tighter Global Liquidity Limits Easing Options

Implied capital+ flight was US$155bn in Jun'22 & US$570bn YTD, limiting monetary easing options. RGDP growth will barely be 4% this year. Real...

Prasenjit K. Basu

Hang Seng, MSCI China Near Major Base Breakouts; Bottoms-Up Stock Rec's in Hong Kong, China, & Japan

Hong Kong's Hang Seng and China's $MCHI and $KWEB are near major base breakouts. We are watching is 22,700 on Hang Seng and $56.60 on MCHI; we are...

Vermilion Research

Inflation Peaking?; ACWI, ACWI Ex-US Near Support; Many Bottoms-Up Stock Recommendations

We're starting to see signs that inflation is peaking, as commodity prices have pulled back substantially or are breaking, and the Energy $XLE and...

Vermilion Research

The Biggest Macro Risk You Might Be Ignoring

Investing is all about probabilities: all you need to do is assess the chances markets are assigning to different scenarios today and anticipate...

Alfonso Peccatiello (Alf)

China Faces the Perfect Storm: Global Tightening, Capital Flight, Overcapacity

$215bn trade surplus in Jan-Apr'22, but FX reserves fell $130bn. Global tightening constrains China's ability to boost liquidity. Property...

Prasenjit K. Basu