In today’s briefing:
- MSCI EM Indices Korean Stocks Allocations Amid Potential Inclusion of Korea in MSCI Developed
- China: CNY to Out-Perform Despite Fed and PBOC’s Divergent Stances
- The Week That Was in ASEAN@Smartkarma – Bank Rakyat Indonesia, Buy Now Pay Later, and BFI Finance
- Alpha Bites: Long Israeli Shekel (ILS) Vs Short British Pound (GBP)
MSCI EM Indices Korean Stocks Allocations Amid Potential Inclusion of Korea in MSCI Developed
- There are two main reasons why Korean stocks included in the MSCI EM Large Cap Index could outperform the Korean stocks included in the MSCI EM Small Cap Index.
- First, there is an increasing probability that South Korea could finally be included in the MSCI Developed country status.
- Second, amid the increasing market volatility along with higher interest rates, capital preservation may become emphasized and more investors may shift towards large cap versus small cap stocks.
China: CNY to Out-Perform Despite Fed and PBOC’s Divergent Stances
- The trade surplus will remain in China’s favour given the likelihood of weak domestic demand in China juxtaposed against a recovery in consumer demand and capex in her trading partners.
- Capital flows may also favour the CNY. Continued liberalisation of the services sector will support FDI, while weak domestic inflation will support China’s positive real yield differential vs. the RoW.
- The key risk to our view: capital outflows sparked by the authorities’ radical changes in the regulation of big tech, and the shift in the political economy against big capital.
The Week That Was in ASEAN@Smartkarma – Bank Rakyat Indonesia, Buy Now Pay Later, and BFI Finance
- 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 pasy week in insights on BFI Finance Indonesia following the news that Jerry Ng of Bank Jago will take a controlling stake plus an update on microlender Bank Rakyat.
- We also look at OVO’s destiny, food delivery, and explore why Buy Now Pay Later is different in South East Asia plus the rising importance of ESG for Indonesian investors.
Alpha Bites: Long Israeli Shekel (ILS) Vs Short British Pound (GBP)
- The shekel has been the worst-performing currency in EM since late November with potential Fed hikes and hedging activity related to the sell-off in international stock markets weighing on it.
- The shekel should resume its appreciating trend as the central bank would likely raise rates this year with inflation making a comeback and the balance of payment position remaining strong.
- I recommend funding the shekel in British pounds to minimize exposure to the dollar, which continues to be volatile, and the BoE is further along in its rate-hiking cycle.
Before it’s here, it’s on Smartkarma
