Macro

• The Week That Was in ASEAN@Smartkarma is filled with an eclectic mix of differentiated, substantive, and actionable insights, macro and equity bottom-up, from across South East Asia.
• The past week saw insights on Sea Ltd after its exit from India, the GoTo IPO as it approaches listing, and Cisaru Modern Dairy following strong results.
• There were also timely notes from Henry Soediarko on Comfortdelgro Corp (CD SP) and Platinum Group PCL (PLAT TB) both of which are COVID-recovery plays.

• India is the biggest loser in the Russia-Ukraine war. India’s reliance on Russian arms and historically warm relations explain Delhi’s pushback against calls to take a stand on the war.
• Near-Term, a rapture in the Russo-Indian symbiotic relationship is not likely as India needs more time to diversify away from Russian arms. 
• On the economic front, there may be small positives from soaring commodity prices but the net effect is overwhelmingly negative as the subsidy bill comes under pressure.

• Economy Update 3QFY22 Balance of Payments/1HFY23 borrowing CAD at 2.7% of GDP in 3QFY22; 1HFY23 borrowing at 59% of budget The current account deficit (CAD) stood at US$23.2bn (2.7% of GDP) in 3QFY22, marginally lower than our estimate of US$23.9bn (3.2% of GDP).
• The CAD widened from 1.3% of GDP in 2QFY22 on the back of a higher trade deficit.
• The better-than-expected performance against our estimate in 3QFY22 was led by higher remittances (9.7% YoY) and services exports (17.8% YoY).

Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

• Commodities as a stock market timing indicator: As the Fed raises rates, the inflation-sensitive commodity bull will fade and take the stock market down with it as economic growth decelerates.
• One way of measuring the strength of the global inflation and commodity trade is the long producer/short importer country pair trades, which are in strong relative uptrends. 
• Widespread breakdowns in these pairs would be a sign of a transition from a late-cycle market regime to a contractionary phase. 

• The markets are being battered by geopolitical risk in the short term, which is stagflationary, and a Fed tightening cycle in the long term.
• Current conditions call for a commitment to the stagflation trade, with an overweight position in late-cycle hard assets plays such as energy, materials, agriculture and real estate.
• The key indicator of a regime shift from stagflation to recession will be bond yields. If yields were to decisively decline, it would be a market signal of slower growth.

• In this insight, we discuss end of the mandatory lock-up periods for 45 stocks in Korea in March 2022, among which 4 are in KOSPI and 41 are in KOSDAQ.
• These 45 stocks on average could be subject to further selling pressures in April and could on average underperform relative to the market. 
• In this monthly, we also added data for market cap, free float, and ADTV. 

• China is supposed to become the largest economy in the world over the next decade, and yet it still looks like a black box to many.
• By many metrics, investors are still under-allocated to Chinese exposure but arguably there are structural reasons why that’s the case.
• So, how does China fit in a global macro portfolio?

• Chinese cities affected by the recent Covid-19 outbreak — the most serious one since early 2020 — have rolled out policies, such as tax cuts and consumption vouchers, to cushion its impact on local businesses.
• On Tuesday, Shanghai announced a bundle of policies to prop up businesses.
• The measures include tax and fee cuts, rent cuts for small businesses renting state-owned property, and credit support.

• Firmer and broad-based real GDP growth in 2022
• Economic & border opening, targeted policy support
• Big upward revisions in commodity price forecasts

For 2022, BNM still expect firmer real GDP growth of +5.3% to +6.3% range (2022F: +5.5% to +6.5%; 2021: +3.1%). Real GDP value for 2022 is MYR1,466.6b i.e. +5.8% growth or mid-point of the current forecast range and vs Budget 2022’s +6.0% (mid-point of previous forecast range). Growth will be driven by expansions in all economic sectors and demand aggregates. By sectors, services accelerates to +6.9% (2022F previous: +7.0%; 2021: +1.9%) as manufacturing growth moderates to +5.2% (2022F previous: +4.7%; 2021: +9.5%) amid rebounds in mining (2022F: +2.5%; 2022F previous: -0.3%; 2021: +0.7%), agriculture (2022F: +1.5%; 2022F previous: +3.9%; 2021: -0.2%) and construction (2022F: +6.1%; 2022F previous: +11.5%; 2021: +5.2%).

• Group-buying / In Depth: The shake-out of China’s community group-buying market

• Huawei / Huawei’s 2021 net profit soars 76% even as revenue plummets

• Tax relief / China offers tax relief for workers with children under age 3

• The Week That Was in ASEAN@Smartkarma is filled with an eclectic mix of differentiated, substantive, and actionable insights, macro and equity bottom-up, from across South East Asia.
• In the past week, we saw insights on Bukalapak’s building ecosystem, Siloam International Hospitals’ growing base case revenues, and Prodia’s core diagnostic strength. 
• We also had an insight on the ongoing True Corp Pcl and Total Access Communication (DTAC TB) merger along with a look at Bukalapak‘s expiring lock-ups.

• The Ukraine war will affect Asia through two principal channels – slower European growth and higher energy prices. 
• Our analysis suggests that the impact on Asian growth will be lower growth of between 10 and 30 basis points.
• But, the easing of pandemic restrictions is unfolding as we had expected. This will boost domestic demand and tourism, both of which will have powerful positive impacts on growth.

• The BSP stood pat in last week’s monetary policy meeting, but there remains the tail risk of a premature rate hike in 2Q22, depending on the pass-through from oil price.
• RBI governor Das dismissed suggestions of stagflation and reiterated his view that inflation will moderate moving forward, vindicating the RBI’s dovish stance.
• The BoK got a new governor, who is known to be dovish. But, his hawkish remarks imply that the central bank is still on track to raise rates in April.

• This being a “political-transition” year, with President Xi Jinping seeking re-selection in Oct-Nov’22 for another 5 years, real GDP growth is targeted at 5.5% but will likely be slower.
• Two RRR cuts (Jul’21, Dec’21) and an LPR cut (Jan’22) enabled TSF to expand 19.3% faster in Jan’22 than any previous month. This boosted FAI by 12.2%YoY in Jan-Feb’22. 
• Serial lockdowns in Shenzhen, Shenyang, Jilin, Shanghai will constrain growth in Mar’22, likely eating into 2Q2022 as well. IMF forecast of 4.8% likelier than government’s 5.5% aim.