In today’s briefing:
- Singapore’s Latest Property Measures Only a Partial Solution
- EA: HICP Surprises Rebalanced in Apr-23
- Spending Watch: Looking into the Balance Sheet of US Households
- AFC Uzbekistan Fund April 2023 Update: Earnings Season Starts off Strong!
- Takeover Plots No Cause for Alarm on Malaysian Government Stability
- Recession fears scare commodities again & World Banks forecasts major drop
Singapore’s Latest Property Measures Only a Partial Solution
- The government’s latest measures to cool housing inflation will be only partially effective. Stringent demand management can provide only limited relief to rising prices.
- There is a broader problem of asset price inflation beyond just the housing sector.
- Without a more holistic assessment that untangles the diverse underlying drivers of rising prices, there will be more episodes of spikes in home prices.
EA: HICP Surprises Rebalanced in Apr-23
- Flash EA inflation increased by another 0.1pp to 6.99% in Apr-23, despite weakness in Germany as upside news in Italy offset it. Overall, food and energy undershot for us.
- Reassuringly, the surprise distribution across all member states was relatively balanced this month after regularly skewing higher, and core pressures eased slightly.
- Underlying inflation remains too high, so the ECB should keep hiking, but the lack of upside news supports a 25bp step rather than reverting to another 50bp jump.
Spending Watch: Looking into the Balance Sheet of US Households
- If you were to take the US consumer at face value, their conditions look solid
- Consumers earn more than they spend (also relatively now) and they save more money than they obtain new debt
- If the trend of better living conditions for US households continues, the economy could rebound
AFC Uzbekistan Fund April 2023 Update: Earnings Season Starts off Strong!
- April saw the start of the first quarter 2023 earnings season, where several of the companies the AFC Uzbekistan Fund owns, have filed reports with impressive results, providing continued confirmation that the fund is invested in the right publicly traded companies, which give us ample leverage to Uzbekistan’s robust GDP growth, which came in at 5.5% in the first quarter 2023. The April 2023 fund NAV rose to an estimated USD 1,775.3 (+1.4%) or +77.5% since inception on 29th March 2019.
- “If investing is entertaining, if you’re having fun, you’re probably not making any money. Good investing is boring.”
- The above quote from George Soros is fitting in the current investment environment on the Tashkent Stock Exchange as we have experienced cycles, from very exciting (as we saw in 2020 and 2021 when the AFC Uzbekistan fund’s performance was +22.69% and 49.82% respectively), to very dull as we await the next phase of the multi-year re-rating.
Takeover Plots No Cause for Alarm on Malaysian Government Stability
- The opposition Perikatan coalition is reportedly engineering an attempt to take over the government via parliamentary defections, causing concern about political turbulence.
- Any such plot will face formidable barriers given the coalition government’s large majority and the levers available to Anwar Ibrahim to pre-empt and stymie such efforts.
- A more realistic threat comes from a potential underperformance in the six state assembly elections, but the coalition’s combined strength should deliver a sufficient performance.
Recession fears scare commodities again & World Banks forecasts major drop
- In its latest Commodity Markets Outlook report the World Bank said last week that global commodity prices are expected to decline this year at the fastest pace
- The agency expects prices to fall 21% compared to last year during 2023.
- For 2024 the World Bank expects prices to remain stable.
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