In today’s briefing:
- Vietnam’s Economy Is on Shaky Ground
- Macro Regime Model Update: Qe-Like Environment Continues
- Malaysia’s Long Road to Reform: Opportunities and Challenges
- ISM Manufacturing: Zero Upside Left for Equities
- Gold’s Big Breakout – Us$2,000 and Beyond
- Recent NPS Buys and Sells in Korea
Vietnam’s Economy Is on Shaky Ground
- Vietnam’s 1Q23 GDP figures reveal underlying weaknesses due to a slowdown in external demand. Manufacturing growth has also suffered as a result of poor export performance.
- Private consumption is also under pressure, with higher inflation, higher borrowing costs, and a bleaker labour market weighing on consumer and business sentiment.
- Real estate is another source of downside risk, with project suspensions and the closure of construction firms among the causes of worry. Policy remedies are on the way.
Macro Regime Model Update: Qe-Like Environment Continues
- Liquidity indeed increased through March, which was accelerated by bank failures leading to liquidity injections via lending programs.
- Our forward-looking indicators have all increased their conviction in continued disinflation through March
- The depth of the slowdown/contraction will likely be decided by the credit standards from banks.
Malaysia’s Long Road to Reform: Opportunities and Challenges
- The cyclical outlook remains broadly positive, with consumption showing resilience despite losing the one-off boosts from pension drawdowns and excess savings
- The government is proceeding cautiously with its pace and sequencing of reforms, Working relationships with the bureaucracy are also carefully managed
- A key strategic aim should be to rationalize and consolidate the fragmented patchwork of policies and frameworks in areas such as social welfare and investment promotion
ISM Manufacturing: Zero Upside Left for Equities
- With the ISM below 50 and falling, this historically has been one of the weakest phases for equities. On average, the 3-month average return has been virtually zero.
- For any level below 46.0, our ‘Neutral’ scenario, equities have no upside, including Emerging Market Equities.
- Our ISM Manufacturing Index scenarios call for a long US Treasuries, short US Equities strategy.
Gold’s Big Breakout – Us$2,000 and Beyond
- Last month, I wrote how the last time government bond yields rose above 4%, it brought down the UK government.
- It happened again, and five banks, including the almighty Credit Suisse, failed.
- As a result, an old driver of the gold price has re-emerged, which is Sovereign risk.
Recent NPS Buys and Sells in Korea
- NPS adjusted holdings of 101 stocks in Korea as of 5 April 2023, of which it reduced ownership in 53 of them and raised ownership in 47 of them.
- In this insight, we discuss 39 stocks major stocks in Korea which have experienced changes in their ownerships by the NPS in the past several weeks.
- NPS has noticeably increased stakes in reopening related plays and it has also reduced stakes in numerous rechargeable battery related plays in the past several weeks.
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