In this briefing:
- Semiconductor Sales Dive A Record 7% MoM In December. 2019 Will Be A Low-To-No Growth Year.
- The Week that Was in ASEAN@Smartkarma – Elections, Inflation, and Indonesian Retail Therapy
- Capital Flows Return To Asia and India
- Sathorn Series N: Thai Cryptocurrency Regulations Update
1. Semiconductor Sales Dive A Record 7% MoM In December. 2019 Will Be A Low-To-No Growth Year.
Global Semiconductor Sales for December 2018 amounted to $38.2 billion, down a record 7.0% MoM, according to the latest data published by the Semiconductor Industry Association (SIA). The December data reflects a sharp acceleration of a downward trend which began in November and comes as little surprise following an earnings season characterised by profit warnings led by industry giants such as Apple, Samsung and Nvidia.
The December decline amounted to ~$3 billion in absolute terms, far less than the roughly $15 billion that failed to materialise in fourth quarter sector revenues and implying that substantial amounts of inventory still remain to be consumed from within the supply chain.
As such we anticipate monthly semiconductor sales continuing to decline through April-May timeframe before stabilizing and returning to growth thereafter. We now anticipate growth to moderate significantly from the 13.7% experienced in 2018 to just 1% in 2019.
2. The Week that Was in ASEAN@Smartkarma – Elections, Inflation, and Indonesian Retail Therapy
This week’s offering of Insights across ASEAN@Smartkarma is filled with another eclectic mix of differentiated, substantive and actionable insights from across South East Asia and includes macro, top-down and thematic pieces, as well as actionable equity bottom-up pieces. Please find a brief summary below, with a fuller write up in the detailed section.
The past week’s macro offering is focused on upcoming elections in Indonesia and Thailand, with insights on both under Smartkarma Originals from Virgil Fernandez Esguerra. In the Equity Bottom-Up section, Angus Mackintosh finds middle-class retail therapy in Indonesia alive and well following a meeting with Mitra Adiperkasa (MAPI IJ), whilst Travis Lundy comments on the ongoing takeover of Bank Danamon Indonesia (BDMN IJ) by Mitsubishi Ufj Financial Group Inc (Adr) (MTU US). In the Sector and Thematic section Athaporn Arayasantiparb, CFA comments on Cryptocurrency in Thailand.
In the first country piece in elections in a series under Smartkarma Originals, 2019 Elections – Part 1. Thailand: Magic Moment for Democracy’s Return?, Virgil Fernandez Esguerra focuses on the upcoming Thai Election.
In part 2 of a series under Smartkarma Originals, 2019 Elections – Part 2. Indonesia: Jokowi’s Policies – Magic Bullet or Bitter Pill?, Virgil Fernandez Esguerra zero in on Indonesia’s upcoming Presidential election.
In Army Offered Plums / Widodo Hammers ‘propaganda’ / Steady GDP / March KCIC Land Target / Kamil 2024, Kevin O’Rourke comments on the most significant political and economic developments in Indonesia over the last week.
In Indonesia’s Negative Investment List – “Open For Business” Is Lip-Service Only, Dr Jim Walker zeros in on Indonesia’s negative investment list which has yet to be published.
In Philippine CPI: Normalization Begins in January with Another Inflation Fade Out, Jun Trinidad provides us with his views on inflation in the Philippines.
Equity Bottom-Up Insights
In Mitra Adiperkasa (MAPI IJ) – Retail Therapy Is Alive and Well, CrossASEAN Insight provider Angus Mackintosh revisits Mitra Adiperkasa (MAPI IJ) post a meeting with management in Jakarta.
In BDMN/BBNP Merger Leads to BDMN Buyout Arb, Events Specialist Travis Lundy revisits the ongoing acquisition of Bank Danamon Indonesia (BDMN IJ) by Mitsubishi Ufj Financial Group Inc (ADR) (MTU US) and finds there is a trade to be done.
In Wilmar: China Listing at ~20x Might Prove Too Optimistic. , commodity specialists Charles Spencer discusses Wilmar International (WIL SP) ‘s China list and os sceptical about lofty valuations.
In Silverlake Axis Rally Ignition and Hurdles, technical specialist Thomas Schroeder works his magic on Silverlake Axis (SILV SP).
Sector and Thematic Insights
In Sathorn Series N: Thai Cryptocurrency Regulations Update, Thai Guru Athaporn Arayasantiparb, CFA zeros in on Cryptocurrency regulations in Thailand.
3. Capital Flows Return To Asia and India
- Latest January ‘flash’ data show cross-border capital returning to Asia
- Asian EM and India favoured
- Reinforces similar evidence in December and helps reverse big outflows a year ago
- Adds support to our view that Asia is leading the Global cycle higher
4. Sathorn Series N: Thai Cryptocurrency Regulations Update
The cryptocurrency regulatory framework in Thailand is still less than a year old, but after going through the details, we find that:
- Operators. Three exchanges have already been licensed. In addition, coins.co.th has already been licensed as both broker-dealer.
- Definitions of cryptos and digital tokens as well as defining industry structure and practices similar to what we already have in equities.
- Flexible application process. Regulators don’t actually define a period by which operators will get licensed by them, but will allow them to operate until their application is rejected.
- Learning process. Given how brief the regulatory outlines are at this phase, we believe they are also learning the ropes at the same time as everyone else. Operators that apply will probably have significant dialog with regulators before they get approved.
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