Chief Economist & Political Strategist, CrossASEAN Research

Prasenjit K. Basu

PK Basu has 34 years experience covering Asia's economies and markets (equities, fixed income and currencies), including 20 years covering the global economy. He was Chief Economist (SE Asia & India) at Credit Suisse First Boston for 5 years, and Chief Asia (x-Jpn) Economist at Daiwa Securities for a similar period. Among other roles, he was global head of research at Maybank Kim Eng, Malaysia equity research head and chief ASEAN economist at Macquarie, Chief Economist at ICICI Securities, ASEAN economist at UBS and the first chief economist at Khazanah Nasional (where he was co-head of research, and led all agri-business initiatives). PK Basu started his career in the Asia Service of WEFA (Wharton Econometrics) in Philadelphia in 1990, rising to be Director of their Asia Service in June 1994. 
PK's book, "Asia Reborn: A continent rises from the ravages of Colonialism and War to a New Dynamism" won the Tata Literature First Book Award (non-fiction) for 2018. It is the first single chronicle of the modern economic and political history of the whole of Asia (from Iraq and Turkey to Korea and Japan, and everything in between), told from an Asian perspective.

Chief Economist & Political Strategist

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CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Macroeconomics

While the FOMC formally maintains an accommodative stance (including the promised purchase of US$120 billion worth of bonds monthly), the US monetary base has declined by US$15 billion between April and June 2021. Despite this stealth taper of the monetary base, M2 was still up 11.1% YoY in June 2021 -- faster than the fastest pace of M2 growth reached during QE1 and QE2 (10.4% YoY in January 2009 and January 2012) -- despite the high base of 20.6-27% YoY growth in M2 during April 2020-March 2021.  The excessively rapid pace of monetary growth inevitably is contributing to inflation: the broadest measure, the GDP deflator, was up 6%QoQsaar in 2Q 2021, core PCE inflation was 6.1% and PCE inflation was 6.4% annualized in 2Q 2021. The YoY pace of core-PCE inflation (3.5% in June) and core CPI inflation (4.5%) are at 29-year highs, but do not yet reflect the impact of soaring house prices on OERs and rental rates: the Case-Shiller 20-city house price index was up 17% YoY in May 2021 (the fastest in its 30 year history), which will inevitably seep into the consumer inflation gauges during the course of 2H 2021. To pretend housing inflation is transitory is fatuous.  In the second half of July, the US overtook Indonesia for the dubious distinction of the country with the highest number of new Covid cases globally (569K in the last week of July, 400K in the previous week). But the 7-day moving average (80K) is still less than a third the new daily cases the US was reporting at the peak (11 January 2021), and nearly half the US population has been fully vaccinated. ISM manufacturing for July (with the PMI at 59.5 and new orders at 64.9, both still suggesting spectacular growth but 1.1 points lower than June) suggests a very mild impact from this second Covid wave: real GDP will decelerate in 2H 2021, but (having already surpassed pre-Covid levels) will continue to grow faster than the US economy's potential growth, keeping the pressure on inflation. We note that taper has already begun, but will have to be formally acknowledged by the November FOMC meeting, as inflation continues to print well above the 3% YoY mark for the rest of 2021. A premature rise in the Fed Funds is inevitable before the end of 2021, completely against the market's expectations. We would stay underweight equities.

While the FOMC formally maintains an accommodative stance (including the promised purchase of US$120 billion worth of bonds monthly), the US monetary base has declined by US$15 billion between April and June 2021. Despite this stealth taper of the monetary base, M2 was still up 11.1% YoY in June 2021 -- faster than the fastest pace of M2 growth reached during QE1 and QE2 (10.4% YoY in January 2009 and January 2012) -- despite the high base of 20.6-27% YoY growth in M2 during April 2020-March 2021.  The excessively rapid pace of monetary growth inevitably is contributing to inflation: the broadest measure, the GDP deflator, was up 6%QoQsaar in 2Q 2021, core PCE inflation was 6.1% and PCE inflation was 6.4% annualized in 2Q 2021. The YoY pace of core-PCE inflation (3.5% in June) and core CPI inflation (4.5%) are at 29-year highs, but do not yet reflect the impact of soaring house prices on OERs and rental rates: the Case-Shiller 20-city house price index was up 17% YoY in May 2021 (the fastest in its 30 year history), which will inevitably seep into the consumer inflation gauges during the course of 2H 2021. To pretend housing inflation is transitory is fatuous.  In the second half of July, the US overtook Indonesia for the dubious distinction of the country with the highest number of new Covid cases globally (569K in the last week of July, 400K in the previous week). But the 7-day moving average (80K) is still less than a third the new daily cases the US was reporting at the peak (11 January 2021), and nearly half the US population has been fully vaccinated. ISM manufacturing for July (with the PMI at 59.5 and new orders at 64.9, both still suggesting spectacular growth but 1.1 points lower than June) suggests a very mild impact from this second Covid wave: real GDP will decelerate in 2H 2021, but (having already surpassed pre-Covid levels) will continue to grow faster than the US economy's potential growth, keeping the pressure on inflation. We note that taper has already begun, but will have to be formally acknowledged by the November FOMC meeting, as inflation continues to print well above the 3% YoY mark for the rest of 2021. A premature rise in the Fed Funds is inevitable before the end of 2021, completely against the market's expectations. We would stay underweight equities. 

Dow Jones Industrial Average (INDU INDEX)

2 Months of Stealth Taper and Mild Delta-Driven Slowdown; but Inflation Still Surging