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

China: Rising Capital Flight Suggests Limits to Further Monetary Stimulus This Year

China Has Been the Global Winner from the Liquidity Glut of 2008-21; Now Comes Pain

Biden's "Socialist" Remake of the US: How Much Will Be Too Much for the Blue Dogs?

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

FAI (fixed asset investment) declined in 2Q 2021, a sensible response to China's massive industrial overcapacity. Net exports and consumption were the key drivers of 7.9% YoY real GDP growth in 2Q 2021, which took 1H 2021 growth to 12.7% YoY. TSF (total social financing) did decelerate in January-May 2021, but began re-accelerating in June 2021 as the PBOC turned more dovish, following through with an RRR cut (effective 15 July 2021). With China's monetary conditions easing, at a time when US monetary policy is gradually hardening, the RMB will depreciate further, continuing the trend depreciation that began at the start of June 2021. Even during the period of a strengthening RMB, China was experiencing large capital flight: in 1H 2021, China's foreign reserves declined (by a marginal US$3 billion) even as the trade surplus remained elevated at US$255 billion. Despite the persistence of capital controls, China's capital flight is likely to accelerate in the rest of 2021 as monetary policy eases. With limited support from easier monetary policy, FAI will continue to decline marginally, and private consumption will decelerate (as the underlying social causes of high savings remain). Net exports will be less helpful, as the impact of de-globalization and reshoring of manufacturing reduces the demand for China's exports. So real GDP will likely decelerate to 6.7% YoY in 3Q 2021, and to 5% YoY in 4Q 2021. Overcapacity issues will begin to exert a significant drag on bank asset quality by 4Q 2021. We would recommend being mildly underweight China equities, as political risk factors begin rising further.

FAI (fixed asset investment) declined in 2Q 2021, a sensible response to China's massive industrial overcapacity. Net exports and consumption were the key drivers of 7.9% YoY real GDP growth in 2Q 2021, which took 1H 2021 growth to 12.7% YoY. TSF (total social financing) did decelerate in January-May 2021, but began re-accelerating in June 2021 as the PBOC turned more dovish, following through with an RRR cut (effective 15 July 2021). With China's monetary conditions easing, at a time when US monetary policy is gradually hardening, the RMB will depreciate further, continuing the trend depreciation that began at the start of June 2021. Even during the period of a strengthening RMB, China was experiencing large capital flight: in 1H 2021, China's foreign reserves declined (by a marginal US$3 billion) even as the trade surplus remained elevated at US$255 billion. Despite the persistence of capital controls, China's capital flight is likely to accelerate in the rest of 2021 as monetary policy eases. With limited support from easier monetary policy, FAI will continue to decline marginally, and private consumption will decelerate (as the underlying social causes of high savings remain). Net exports will be less helpful, as the impact of de-globalization and reshoring of manufacturing reduces the demand for China's exports. So real GDP will likely decelerate to 6.7% YoY in 3Q 2021, and to 5% YoY in 4Q 2021. Overcapacity issues will begin to exert a significant drag on bank asset quality by 4Q 2021. We would recommend being mildly underweight China equities, as political risk factors begin rising further.  

CHINAGOV CDS USD SR 5Y D14 (CCHIN1U5 CORP)

China to Decelerate: Overcapacity Weakens FAI, Capital Flight Limits Monetary Ease