In today’s briefing:
- How Emerging Markets Fare Admidst High US Interest Rate
- EM Watch – No fiscal stimulus from China as long as export-business is thriving!
- US: Inverted Yield Curve No Longer Predicts Economic or Stock Market Recession
- CX Daily: The Key Ingredients to Sustain Hong Kong’s Stock Rally
- UK: GDP Fills In the H2 Hole
- Korea Policy Rate 3.5% (consensus 3.5%) in Jul-24
- Malaysia Policy Rate 3.0% (consensus 3.0%) in Jul-24
- Heard From Fortress Hill: Weekly Market Observations (12 July 2024)
How Emerging Markets Fare Admidst High US Interest Rate
- Rise in US interest rate was widely deemed a catalyst for the Asian Financial Crisis (1997-1998).
- So as US interest rate has remained moderately high in recent years, it makes people ponder the chance for another financial crisis in EMs.
- Most EMs that suffered from the Asian Financial Crisis have stronger fundamentals now and are salient according to the Greenspan-Guidotti Rule.
EM Watch – No fiscal stimulus from China as long as export-business is thriving!
- Welcome to our weekly EM watch, which typically centers around developments in Asia and Latin America.
- We continue to see signs of Chinese efforts to balance global metals markets by exporting local excesses, while the export-sector driven growth in China limits the probability of major local fiscal stimulus to fuel domestic consumption.
- The softening of the USD side of the equation will likely leave local monetary authorities in a wait-and-see mode despite continued weakness in both CNY and JPY.
US: Inverted Yield Curve No Longer Predicts Economic or Stock Market Recession
- Inverted yield curve used to predict stock market correction and economic recession.
- This relationship maybe losing as US is immersed in a long period of yield curve inversion, yet the economy and stock market thrive.
- The reason for the disappearing relation is multi-faceted, ranging from central bank policies to structural change of the economy.
CX Daily: The Key Ingredients to Sustain Hong Kong’s Stock Rally
- Stocks / In Depth: The key ingredients to sustain Hong Kong’s stock rally
- Power /Caixin Explains: Why China needs a new green power system and how it could work
Kidnap /: Another case of kidnapped Chinese in Philippines emerges
UK: GDP Fills In the H2 Hole
- Another surprisingly strong GDP growth rate in May has extended output’s above-trend rise to the point where the H1 excess broadly matches the shortfall from H2 2023.
- Returning to trend would require flat output through Q3, but other indicators suggest growth is only slowing, not stalling, so that may be too pessimistic.
- Activity data do not signal policy as overly tight, although unemployment suggests it is a little tight. Nonetheless, rate cuts remain likely as policymakers look elsewhere.
Korea Policy Rate 3.5% (consensus 3.5%) in Jul-24
- The Bank of Korea maintained the Policy Rate at 3.5%, consistent with the economic consensus, due to the need to confirm the continuation of slowing inflation trends and concerns over financial stability risks from exchange rate volatility and rising household debt.
- Global economic conditions, including differentiated monetary policies among major economies, geopolitical risks, and fluctuations in financial markets, will significantly influence future monetary policy decisions.
- Strong export performance and moderate growth are tempered by an uneven recovery in consumption and investment, alongside persistent financial stability concerns related to household debt and real estate project financing, guiding a cautious approach to future interest rate adjustments.
This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.
Malaysia Policy Rate 3.0% (consensus 3.0%) in Jul-24
- Bank Negara Malaysia maintained the OPR at 3.00%, aligning with the economic consensus amid a cautious approach to managing inflation and supporting economic growth.
- Future interest rate policies will be influenced by global economic stability, the strength of the domestic tech upcycle, and the impact of domestic policy measures on subsidies and price controls.
- Inflation is expected to rise moderately in the second half of 2024 due to subsidy rationalization. Still, overall pressures are mitigated by targeted measures to support businesses, with headline and core inflation projected to average between 2.0% – 3.5% and 2.0% – 3.0%, respectively.
This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.
Heard From Fortress Hill: Weekly Market Observations (12 July 2024)
- US market tanks on Thursday and we suffer heavy losses for our long call position on a few tech giants.
- Small stocks thrive as chances of rate cuts increase, though we hold onto our non-consensus view of no Fed rate cut this year.
- Hong Kong market would likely move sideway between 16000 to 18000 levels.
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