In today’s briefing:
- What the Ukraine Crisis Means for Asia
- Mid Feb 2022 – Additional Blow to Market Sentiment
- The Week That Was in ASEAN@Smartkarma – XL Coverging, Kalbe Rebalancing, and SCB Refocusing
- End of Mandatory Lock-Up Periods for 43 Stocks in Korea in March 2022
- The Thailand Turnaround
- Indian Financials: Momentum Returns to Key Overweight
- Policy Rates Feeling for a Higher Neutral
- Alpha Bites: Receive Poland 10y Vs Pay Eurozone 10y Local Rate
- CX Daily: China’s Game Studios Face Long March as Titles Languish Unapproved
What the Ukraine Crisis Means for Asia
- The world has entered a new era: it is a much more insecure world for Asia, marked by an enduring increase in global political risk which hurts Asia.
- The short term economic impact on Asia is modestly negative, thanks to higher energy prices. A sustained surge in inflation is unlikely, however.
- There will also be longer term economic impacts, such as acceleration in supply-chain reconfiguration, more defence spending and a shift away from imported hydrocarbons.
Mid Feb 2022 – Additional Blow to Market Sentiment
- Supply chain disruptions, labor shortages, re-emerging virus variants, interest rate hikes…one thing after another keeps disrupting the market.
- The common belief is that war is good for the economy because the increased level of government spending boosts the economy
- In the case of the current Russia-Ukraine conflict, the most immediate impact on the U.S. economy will be the oil price
The Week That Was in ASEAN@Smartkarma – XL Coverging, Kalbe Rebalancing, and SCB Refocusing
- 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 past week saw insights on XL Axiata (EXCL IJ), Kalbe Farma (KLBF IJ), BFI Finance Indonesia (BFIN IJ), and Astra International (ASII IJ) post recent results.
- We also take a close look at Siam Commercial Bank Pub Co (SCB TB) after its numbers but also look more closely at its upcoming restructuring.
End of Mandatory Lock-Up Periods for 43 Stocks in Korea in March 2022
- In this insight, we discuss the end of the mandatory lock-up periods for 43 stocks in Korea in March 2022.
- Among these 43 stocks, 5 stocks are in KOSPI and 38 stocks are in KOSDAQ.
- These 43 stocks could be subject to further selling pressures in March and could on average underperform relative to the market.
The Thailand Turnaround
- The long-term decline in Thailand allocations among Asia Ex-Japan funds appears to be stabilising.
- Over the past 6-months, Thailand weights have increased by 0.29%, with 6.5% of the funds in our analysis adding exposure, though managers remain underweight and underinvested.
- CP ALL PCL is the most widely held stock, but recent fund activity has favoured Central Pattana Pub, Bangkok Dusit Medical Services and Asian Sea.
Indian Financials: Momentum Returns to Key Overweight
- Exposure in Indian Financials has reached peak levels among Asia Ex-Japan managers. A key overweight, 77% of Asia Ex-Japan managers are now positioned above benchmark.
- HDFC Bank Limited is the most widely held stock, with Housing Development Finance Corp, ICICI Bank Limited and Kotak Mahindra well held stocks and net overweights in Asia Ex-Japan portfolios
- HDFC Bank Limited is a key holding for many investors, with the bulk of allocations above 2% and high conviction positions well above that
Policy Rates Feeling for a Higher Neutral
- Monetary policymakers are rapidly back-peddling with the BoE hiking at consecutive meetings. Markets price this pace continuing to far higher levels than reached recently.
- UK forward rates imply a neutral setting near 1%, whereas our macro estimates suggest it is nearer 1.5%. The US appears to be unwinding some of the Great Recession’s drop.
- The BoE needs to feel where the neutral rate lies by watching the economy. If neutral feels high, policy can follow, but then it need not fall so far afterwards.
Alpha Bites: Receive Poland 10y Vs Pay Eurozone 10y Local Rate
- Long-End rates in Central European (CE) countries are close to the highest in five years due to inflationary pressures arising from overheating economies and highly negative real rates.
- The spread between CE and the eurozone is close to its widest in at least a decade because, unlike the eurozone, these countries have been hiking rates aggressively.
- The spread is a function of the inflation differential between the regions. With inflation peaking in the coming months and the eurozone yet to start hiking, the spread should narrow.
CX Daily: China’s Game Studios Face Long March as Titles Languish Unapproved
In Depth: China’s game studios face long march as titles languish unapproved
Cover Story: The beginning of the end of the post-Cold War world order
China Merchants Bank to join Greater Bay Area testing ground for fintech
Before it’s here, it’s on Smartkarma
