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>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

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>Our outlook remains bearish at the index level as downtrends remain intact on the MSCI broad global indexes and also within Japan, Hong Kong, Europe, Germany, and China.</li>
<li>Our preferred Sector overweights continue to be defensives (Utilities, Staples, and Health Care) and commodity Sectors (Energy and Materials).</li>
<li>The secular bull market in commodities (Bloomberg Commodity index, WTI and Brent crude oil, etc.) remains intact, which continues to support our overweight recommendations on the Energy and Materials Sectors.</li>
</ul>


Our outlook remains bearish at the index level as downtrends remain intact on the MSCI broad global indexes and also within Japan, Hong Kong, Europe, Germany, and China.
Our preferred Sector overweights continue to be defensives (Utilities, Staples, and Health Care) and commodity Sectors (Energy and Materials).
The secular bull market in commodities (Bloomberg Commodity index, WTI and Brent crude oil, etc.) remains intact, which continues to support our overweight recommendations on the Energy and Materials Sectors.


Still Bearish at the Index Level; Remain Overweight Defensives & Commodity Sectors

iShares MSCI Emerging Markets / Technical Analysis

<ul>
<li>Indexes have plunged since violating our "lines-in-the-sand" of 3875 on EURO STOXX 50, 14,815 on the DAX, $54 on ACWI ex-US (ACWX-US), $75.25 on EAFE (EFA-US), and $99 on ACWI(ACWI-US).</li>
<li>More recently, Japan’s TOPIX broke below the key 1840 level, as the number of countries breaking down increases.</li>
<li>We remain bearish at the index level as long as these indexes continue to make lower highs, and we expect that any bottoming process would take weeks/months to develop.</li>
</ul>


Indexes have plunged since violating our "lines-in-the-sand" of 3875 on EURO STOXX 50, 14,815 on the DAX, $54 on ACWI ex-US (ACWX-US), $75.25 on EAFE (EFA-US), and $99 on ACWI(ACWI-US).
More recently, Japan’s TOPIX broke below the key 1840 level, as the number of countries breaking down increases.
We remain bearish at the index level as long as these indexes continue to make lower highs, and we expect that any bottoming process would take weeks/months to develop.


Monitoring For A Bottom; Focus On Defensives

Marriott International / Technical Analysis

<ul>
<li>While we are not yet out of the woods, we are seeing several encouraging signals that indicate improving risk appetites.</li>
<li>Additionally, we are starting to see improvement within the Consumer Discretionary (hotels/resorts, casinos, leisure, cruises), Transportation (airlines), and Materials (metals/mining) Sectors -- we highlight several attractive stocks to buy.</li>
<li>The fact that more areas are becoming attractive (and not <em>just</em> Energy and Financials) is a step in the right direction for bulls.</li>
</ul>


While we are not yet out of the woods, we are seeing several encouraging signals that indicate improving risk appetites.
Additionally, we are starting to see improvement within the Consumer Discretionary (hotels/resorts, casinos, leisure, cruises), Transportation (airlines), and Materials (metals/mining) Sectors -- we highlight several attractive stocks to buy.
The fact that more areas are becoming attractive (and not just Energy and Financials) is a step in the right direction for bulls.


Risk Appetites Improving; Buying Cyclicals (Hotels/Resorts/Casinos, Metals/Mining)

<ul>
<li>China's M2 has expanded 5-fold since Aug2008, while the US's M2 has expanded just 2.5-fold. Yet China cut RRR by 100bp this year, and lowered its LPR too. </li>
<li>In May-Nov2021, FAI (fixed asset investment) <em>declined</em> by an average of 3.2% YoY. Retail sales decelerated from 24% YoY growth in 1H21, to 5.1%YoY in 3Q21 and 4.4%YoY in Oct-Nov21. </li>
<li>Booming external trade took the trade surplus to a record US$595bn in Jan-Nov21, but foreign reserves were up by just US$5bn. Capital flight constrains the ability to ease more. </li>
</ul>


China's M2 has expanded 5-fold since Aug2008, while the US's M2 has expanded just 2.5-fold. Yet China cut RRR by 100bp this year, and lowered its LPR too. 
In May-Nov2021, FAI (fixed asset investment) declined by an average of 3.2% YoY. Retail sales decelerated from 24% YoY growth in 1H21, to 5.1%YoY in 3Q21 and 4.4%YoY in Oct-Nov21. 
Booming external trade took the trade surplus to a record US$595bn in Jan-Nov21, but foreign reserves were up by just US$5bn. Capital flight constrains the ability to ease more. 


China's Monetary Easing Will Do Little to Counter a Structural Slowdown

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 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

Still Bearish at the Index Level; Remain Overweight Defensives & Commodity Sectors

Our outlook remains bearish at the index level as downtrends remain intact on the MSCI broad global indexes and also within Japan, Hong Kong,...

Vermilion Research

Monitoring For A Bottom; Focus On Defensives

Defensive Sectors including Consumer Staples, Health Care, and Utilities are emerging as leadership -- add exposure. Today we are focusing on...

Vermilion Research

Risk Appetites Improving; Buying Cyclicals (Hotels/Resorts/Casinos, Metals/Mining)

We are seeing encouraging signals that indicate improving risk appetites, including improvement within the Discretionary, Transports, and Materials...

Vermilion Research

China's Monetary Easing Will Do Little to Counter a Structural Slowdown

China's M2 grew 5-fold since Aug08 (vs 2.5-fold for the US), but China cut RRR 100bp in 2021. FAI fell 3.2%YoY in 2H21, but capital flight of...

Prasenjit K. Basu