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

Cross Asset Strategy

<ul>
<li>PM Anwar was strengthened in the near-term by PH comfortably winning the 3 states where it was the incumbent, although the alliance helped UMNO gain leverage in Negri Sembilan. </li>
<li>PAS won landslide victories in Kelantan, Terengganu and Kedah (three states that were part of Thailand until 1909, with smaller non-Malay populations). Bersatu is a token junior partner everywhere. </li>
<li>As the prospect of PAS gaining national power grows, non-Malay emigration and capital flight will increase, reversing the positive gain from the PKR-DAP vision of renewed strength for multi-racialism. </li>
</ul>


PM Anwar was strengthened in the near-term by PH comfortably winning the 3 states where it was the incumbent, although the alliance helped UMNO gain leverage in Negri Sembilan. 
PAS won landslide victories in Kelantan, Terengganu and Kedah (three states that were part of Thailand until 1909, with smaller non-Malay populations). Bersatu is a token junior partner everywhere. 
As the prospect of PAS gaining national power grows, non-Malay emigration and capital flight will increase, reversing the positive gain from the PKR-DAP vision of renewed strength for multi-racialism. 


Malaysia: State Elections Bolster Anwar Near-Term; Long-Term PAS Shadow Grows

Macroeconomics

<ul>
<li>Markets are right to hail Anwar's appointment as PM, as his multi-racial vision fits perfectly with the federalist ideas that Sabah-Sarawak desire, which will lend stability to his government. </li>
<li>Anwar should have been Malaysia's 5th PM, not its 10th. But his multi-racial approach, and commitment to fighting cronyism, support of the poor and simplicity among ministers have been consistent.</li>
<li>Anwar seeks a cleaner, more internationally-linked and fiscally responsible Malaysia. With the levers of power in his hand, he will deliver this during a single 5-year term. We are bullish. </li>
</ul>


Markets are right to hail Anwar's appointment as PM, as his multi-racial vision fits perfectly with the federalist ideas that Sabah-Sarawak desire, which will lend stability to his government. 
Anwar should have been Malaysia's 5th PM, not its 10th. But his multi-racial approach, and commitment to fighting cronyism, support of the poor and simplicity among ministers have been consistent.
Anwar seeks a cleaner, more internationally-linked and fiscally responsible Malaysia. With the levers of power in his hand, he will deliver this during a single 5-year term. We are bullish. 


Malaysia: PM Anwar Ibrahim Has a Lifetime of Experience to Deliver Unity & Progress

<ul>
<li>Although Anwar-led Pakatan Harapan (PH) won a plurality as we expected, the Islamist PAS unexpectedly emerged as the largest Malay party, winning 49 seats (vs UMNO's 26 and Bersatu's 24).</li>
<li>PH could attempt to form coalition with the Borneo Bloc (28 seats) plus a few smaller parties. A stabler alliance would involve PH joining PAS, given their leaders' ABIM pasts. </li>
<li>PN and BN could attempt to cobble an alternative alliance with the Borneo Bloc, but the latter will be wary of PAS being the largest party in it. Uncertainty ahead! </li>
</ul>


Although Anwar-led Pakatan Harapan (PH) won a plurality as we expected, the Islamist PAS unexpectedly emerged as the largest Malay party, winning 49 seats (vs UMNO's 26 and Bersatu's 24).
PH could attempt to form coalition with the Borneo Bloc (28 seats) plus a few smaller parties. A stabler alliance would involve PH joining PAS, given their leaders' ABIM pasts. 
PN and BN could attempt to cobble an alternative alliance with the Borneo Bloc, but the latter will be wary of PAS being the largest party in it. Uncertainty ahead! 


PH Wins a Narrow Plurality, but PAS Is the Single Largest Party: Uncertainty Ahead

<ul>
<li>Expansionary fiscal and monetary policy have bolstered growth at the expense of a 13%YoY depreciation of the ringgit and capital flight reflected in shrinking FX reserves amid surging trade surpluses. </li>
<li>Elevated crude-oil and palm oil prices boosted the trade surplus, but the current account surplus shrank to less than 1% of GDP in 1H2022, as foreign-worker remittances soared. </li>
<li>Despite 24 years of current account surpluses, Malaysia's reserves provide just 4.6 months' import cover. Net FPI outflows persisted even when global equities were soaring. Kleptocracy is inducing capital flight.  </li>
</ul>


Expansionary fiscal and monetary policy have bolstered growth at the expense of a 13%YoY depreciation of the ringgit and capital flight reflected in shrinking FX reserves amid surging trade surpluses. 
Elevated crude-oil and palm oil prices boosted the trade surplus, but the current account surplus shrank to less than 1% of GDP in 1H2022, as foreign-worker remittances soared. 
Despite 24 years of current account surpluses, Malaysia's reserves provide just 4.6 months' import cover. Net FPI outflows persisted even when global equities were soaring. Kleptocracy is inducing capital flight.  


Malaysia: Local and Foreign Investors Are Fleeing Despite the Commodity Boom

Silver Point

Thomas J. Monaco

Independent Insight Provider

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

Equity Bottom-Up

<ul>
<li>Maybank reported 4Q21 NPAT of MYR 2.1 bn, improving MYR 372 mn (22.1%) linked quarter, reflecting revenue improvement across the board and a provision cut; </li>
<li>Net new NPLs aggregate MYR 2.3 bn, intimates an 83.4% QOQ increase in problem loans on an annualized basis; and  </li>
<li>Maybank was less than aggressive provisioning, and now an MYR 8.0 bn reserve shortfall exists today in its loan loss reserve or three quarters of NPAT. </li>
</ul>


Maybank reported 4Q21 NPAT of MYR 2.1 bn, improving MYR 372 mn (22.1%) linked quarter, reflecting revenue improvement across the board and a provision cut; 
Net new NPLs aggregate MYR 2.3 bn, intimates an 83.4% QOQ increase in problem loans on an annualized basis; and  
Maybank was less than aggressive provisioning, and now an MYR 8.0 bn reserve shortfall exists today in its loan loss reserve or three quarters of NPAT. 


Malayan Banking – Heightened Credit Risk

United States

iShares MSCI Malaysia ETF is an exchange-traded fund incorporated in the USA. The ETF's objective seeks to provide investment results that correspond to the performance of the Malaysian market, as measured by the MSCI  Malaysia Index. The ETF invests in a representative sample of index stocks using a  "portfolio sampling" technique.

iShares MSCI Malaysia ETF (EWM US)

Malaysia: State Elections Bolster Anwar Near-Term; Long-Term PAS Shadow Grows

Anwar's govt retains stability after PH victories in Penang & Selangor, plurality in NS. But PAS landslides in 3 states, & gains in all 6, suggest...

Prasenjit K. Basu

Malaysia: PM Anwar Ibrahim Has a Lifetime of Experience to Deliver Unity & Progress

Anwar is PM despite enormous obstacles placed in his path over the past 25 years. A multiracial, fiscally responsible & non-corrupt government are...

Prasenjit K. Basu

PH Wins a Narrow Plurality, but PAS Is the Single Largest Party: Uncertainty Ahead

Islamist PAS is the largest party in the new parliament, an outcome that will worry markets. Multi-racial PH does have the plurality, but any...

Prasenjit K. Basu

Malaysia: Local and Foreign Investors Are Fleeing Despite the Commodity Boom

Expansionary fiscal & monetary policy have bolstered growth but induced capital flight. Despite 24yrs of CA surpluses, FX reserves provide just 4.6...

Prasenjit K. Basu

Malayan Banking – Heightened Credit Risk

MAYBANK: Maybank reported QOQ 4Q21 NPAT increase of 22.1%, reflecting revenue improvement and a provision cut. NPLs accelerated while reserves...

Thomas J. Monaco