In today’s briefing:
- Positioning Watch – Everything better turn out the way markets want it
- Solid Brazilian Rains Dampen Soybean Prices
- Energy Cable #48 – Natural Gas Longs to Scholz: “Thank You!”
- The Week That Was in ASEAN@Smartkarma – Indofood’s On Track, ROTI’s Rising, and BliBli’s Omnichannel
- Malaysia: Rate Cut by Mar’24, Lower Fiscal Deficit to Spur Cyclical Recovery in 2024
- India Politics: State Elections Show Favourable Political Winds for Modi
- Regional Economics: Can China’s Struggles Re-Open Window for Growth in Emerging Asia?
Positioning Watch – Everything better turn out the way markets want it
- Hello everyone, and welcome back to our weekly positioning watch, where we dig into everything positioning and sentiment-related.
- This week will be all about equities and fixed income, which seems to be running the show at current junctures – just give the gold chart a look, which jumped some 2% on the back of pivot hopes and strong buying activity this morning during Asian hours, while sellers were nowhere to be seen, but fast-forwarding 10-11 hours, gold is now down somewhere near 0.2%.
- A huge turnaround in markets which smells a lot like a short-squeeze or tight liquidity in the Asian markets today.
Solid Brazilian Rains Dampen Soybean Prices
- Brazil’s weather is set to improve with forecasts suggesting milder weather and rainfall; This alleviates concerns over Brazilian Soy crop.
- Seasonal trends during El Niño years differ: Soybean provides negative returns in December-February. Worsening El Niño likely to lead to more favorable conditions for Brazilian Soy crop.
- Technicals point to price reversal and bearish outlook. Options OI and futures positioning per COT report reaffirms bearish outlook.
Energy Cable #48 – Natural Gas Longs to Scholz: “Thank You!”
- Takeaways: Cohesion back at OPEC, but for how long?
- US the biggest winner in crude oil markets.
- Last week’s much anticipated OPEC meeting concluded with the decision to cut production further by 1 million barrels per day.
The Week That Was in ASEAN@Smartkarma – Indofood’s On Track, ROTI’s Rising, and BliBli’s Omnichannel
- The past week has seen insights on Indofood CBP Sukses (ICBP IJ), PT Nippon Indosari Corpindo (ROTI IJ), Global Digital Niaga (BELI IJ), OCBC (OCBC SP) and Vinfast (VFS US).
- There were also macro insights on the Philippines and Vietnam from Manu Bhaskaran and insights on Leader Energy IPO, Mkh Bhd, Vale Indonesia, Aneka Tambang, Bank Tabungan, and Medco Energi.
- 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 Southeast Asia.
Malaysia: Rate Cut by Mar’24, Lower Fiscal Deficit to Spur Cyclical Recovery in 2024
- Real GDP growth in 2023 will likely be less than 3%, with near-zero net FDI inflow and net foreign portfolio outflows of 2.9% of GDP in Jan-Sep’23.
- But with inflation moderating, we expect BNM to cut its policy rate by Mar’24, spurring a rebound to 4.5% real GDP growth in 2024, and inducing positive net FDI inflows.
- Budget 2024 credibly widens the tax base, raises services taxes, and begins the tough process of targeted subsidy rationalisation. The lower fiscal deficit should crowd-in private investment. We’re cautiously bullish.
India Politics: State Elections Show Favourable Political Winds for Modi
- Premier Modi’s BJP outperformed expectations by winning three state assembly elections, putting it in prime position for re-election in the 2024 general election.
- Modi’s personal appeal and welfarist policies will likely deliver dividends in the next elections. But a landslide win is far from guaranteed given the political dynamics.
- The government will thus avoid rocking the boat in terms of economic policy.
Regional Economics: Can China’s Struggles Re-Open Window for Growth in Emerging Asia?
- China’s prior dominance in international trade and attracting investments closed off access to advanced markets by other Asian markets, denying them crucial dynamic benefits.
- Emerging Asian economies experienced stymied structural transformation as they geared their structures towards exporting to China, made worse by policy mismanagement.
- Shifts in the global economic and geopolitical architecture, as well as in domestic and regional policy are cause for optimism that the region can exploit this opportunity.
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