In today’s briefing:
- Jackson Hole – Takeaways for Asia
- Post-Jackson Hole: Don’t Fight The Fed… Euro Collapse Threatened?
- Asian Electronics: Near-Term Bearish But Secular Trends Remain Solid
- Malaysia: The Noose Tightens Around UMNO
- The Week That Was in ASEAN@Smartkarma – Sido Muncul’s Inflationary Pinch, XL Axiata, and Thai Banks
- The Commodity Report #66
Jackson Hole – Takeaways for Asia
- First, the developed economies will persist with a more stringent pace of monetary tightening than expected.
- Second, a more complex global environment is making it difficult to design monetary policy which is becoming less effective.
- Finally, the US Dollar has strengthened even more following the event, with more pressure on Asian central bankers to follow suit even if downside risks to global growth have intensified.
Post-Jackson Hole: Don’t Fight The Fed… Euro Collapse Threatened?
- Chairman Powell’s short and direct Jackson Hole speech emphasized the need to conquer inflation and (unusually) warned us to expect some economic pain
- US monetary tightening is being front-end loaded. The Fed sees QT/QE operating like an ‘air conditioning unit’ whirring in the background. But we see QT as a wrecking ball
- Too much liquidity is being sucked out of financial markets by Central Banks. Among other things it may trigger Euro instability? Will this force a policy pivot sometime in 2023?
Asian Electronics: Near-Term Bearish But Secular Trends Remain Solid
- Lead indicators point to slowing global electronics demand which will inflict some short-term pain on Asian economies.
- However, secular growth trends in electronics make for a soft landing for Asian electronics while long-term growth is likely to be stellar.
- Within Asia, Malaysia and Taiwan are the most vulnerable to an electronics slowdown. India and Indonesia are the two economies least affected by the slowdown.
Malaysia: The Noose Tightens Around UMNO
- Former Premier and UMNO leader Najib Abdul Razak was hauled to jail to start his 12-year prison sentence after his last-ditch attempt to stall proceedings was dismissed by the courts.
- Tensions flared up within UMNO that reeked of desperation. PM Ismail Sabri was allegedly given an ultimatum to call for elections this year or risk being sacked by the party.
- Budget 2023, brought forward to be tabled on 7 Oct 22, now looks likely to be an election budget with handouts and goodies to sweeten the ground.
The Week That Was in ASEAN@Smartkarma – Sido Muncul’s Inflationary Pinch, XL Axiata, and Thai Banks
- 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 Sido Muncul as inflation bites, XL Axiata (EXCL IJ), Kalbe Farma (KLBF IJ) and Grab (GRAB US) plus the BA Airport Leasehold REIT IPO.
- There we also insights on the KLSE rebalancing, Krung Thai Bank, and the Thai Banking sector as loan demand starts to accelerate in July.
The Commodity Report #66
- The benchmark, CRB Commodity Index, ended the week 2,4% higher
- While natural gas made a higher high, the fertilizer complex remained in a sideways market for some time.
- Last week fertilizer prices saw an awakening, as especially European natgas prices rallied further. US Gulf Urea futures jumped 20% while Middle East Urea futures jumped 18% w/w.
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