In today’s briefing:
- China: Incrementally More Optimistic on GDP Growth in 2022
- Global Economy: One Thing Certain in an Uncertain World – Higher Inflation Expectations
- Singapore Budget 2022: Pivoting from Crisis Management to Tackling Secular Challenges
- CX Daily: State Insurance Boss’s Capital Games in Hong Kong
- Active GEM Funds: Indonesia Rebound
- India: Going Beyond Budget FY23 – 4 Implications
- UK: An Ageing Cycle in the Labour Market
- CX Daily: Will Subsidized Housing Stabilize The Real Estate Industry?
China: Incrementally More Optimistic on GDP Growth in 2022
- Chinese policymakers, now more worried about growth prospects and especially the health of the labour market, are likely to resort to innovative tools to stimulate the economy.
- This, alongside a more flexible approach to property-related controls, makes us more optimistic about growth this year, but untested new tools could pose risks as well.
- Private consumption will remain the weak point of the economy; the current “dynamic zero-COVID-19” policy will be maintained while direct fiscal transfers to households are unlikely.
Global Economy: One Thing Certain in an Uncertain World – Higher Inflation Expectations
- Key commodity prices are up because of political tensions and supply bottlenecks.
- Central banks across the developed world, fearing unanchored inflationary expectations, might tighten monetary policy pre-emptively.
- But sustained inflationary pressures is not the base case for Asia
Singapore Budget 2022: Pivoting from Crisis Management to Tackling Secular Challenges
- Revenue raising measures take center stage: the GST will be hiked from 7% to 9%, carbon taxes will be raised in stages and a modest wealth tax will be announced.
- The government will offer substantial support measures to help the lower-income groups weather the impact of higher GST rates.
- Expect more measures to help businesses to scale up and move up the value chain by adopting new technologies and schemes to retrofit the city-state’s infrastructure for “greener” growth.
CX Daily: State Insurance Boss’s Capital Games in Hong Kong
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Active GEM Funds: Indonesia Rebound
- Active GEM managers are increasing allocations in Indonesian stocks, with all 4 of our measures of ownership increasing over the last 6-months
- Bank Central Asia (BBCA IJ) is far and away the most favoured stock, held by 46% of the active EM managers in our analysis
- However, active GEM funds are a long way from their maximum allocations in Indonesian stocks, there is plenty of headroom for allocations to grow further from here.
India: Going Beyond Budget FY23 – 4 Implications
- First, the increase in capex is less impressive after accounting for special factors, specifically the Air India capital injectons.
- The assumption that massive public spending will crowd in private investments is questionable, and the bond market is poised for indigestion, given the deluge of borrowings amid tightening financial conditions.
- Furthermore, the dearth of details on a credible fiscal consolidation plan raises the risk of fiscal dominance by compromising the RBI’s reaction function.
UK: An Ageing Cycle in the Labour Market
- The downtrend in the UK unemployment rate paused in Dec-21 as employment flatlined, and the population shrank slightly for the first time.
- Unemployment is unlikely to match the BoE’s forecast, which should help slow hikes beyond March. The other side of an ageing cycle is wages, where the latest impulse was strong.
- Inflation is more than eroding that, and the real-terms weakness will weigh on activity growth into 2022, ultimately preventing the Bank rate from going too high.
CX Daily: Will Subsidized Housing Stabilize The Real Estate Industry?
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