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

Massive Fiscal Stimulus A Near-Term Game Changer but Long Term Trouble

FOMC Fires All Its Bazookas: 100bp Rate Cut, Resumption of QE, More

FOMC, in Full Panic Mode, Makes a 50bp Inter-Meeting Rate Cut

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

The truly horrific NFP prints are likely a month and two hence, with unemployment topping 10%. State and local governments (required by law to balance budgets) will automatically be obliged to cut spending and payrolls, and negative wealth effects will counteract the initial impact of the fiscal stimulus. Risk assets are likely to sell off over the next month. The early evidence is in: the robust US labour market took a beating in March 2020 (even before the full impact of a nation-wide lockdown had kicked in), but the manufacturing sector was almost unscathed last month. Non-farm payrolls (NFP) declined for the first time since September 2010, declining by a dramatic 701,000 (although the survey was completed by 12th March, before the US went into lockdown). The unemployment rate rose to 4.4% in March (from 3.5% in February). The labour market will deteriorate substantially further in April 2020. The 9.9million new claims for unemployment insurance over the past two weeks will ensure that the April NFP is the worst in at least 75 years, and the unemployment rate rises very substantially -- to 10% by mid-year. The manufacturing sector barely fell back into contraction, after two months of expansion, with the ISM manufacturing PMI edging down to 49.1 (although new orders slumped to 42.2 and employment to 43.8, both pointing to severe contraction). ISM's non-manufacturing PMI was still in slight expansionary territory for the 122nd month (at 52.5 in March), but with business activity (48) and employment (47) already contracting. The economy will worsen substantially before the impact of the fiscal stimulus boosts activity in the final quarter of 2020. The negative wealth effect (from equity-market losses in 1Q 2020, and likely declines in house prices over the next half year), and the drag on government employment and spending at the state and local levels (where balanced-budget laws ensure that spending is automatically cut in a recession), will counteract the initial impact of the fiscal stimulus. We therefore expect real GDP to contract severely in 2Q 2020 (-24 to -28% QoQsaar), continue a more modest contraction in 3Q 2020, but begin to recover in 4Q 2020. Near-term, equities (and other risk assets) will provide negative returns over the next one month, but positive returns over the 3-6 month horizon.

The truly horrific NFP prints are likely a month and two hence, with unemployment topping 10%. State and local governments (required by law to balance budgets) will automatically be obliged to cut spending and payrolls, and negative wealth effects will counteract the initial impact of the fiscal stimulus. Risk assets are likely to sell off over the next month. The early evidence is in: the robust US labour market took a beating in March 2020 (even before the full impact of a nation-wide lockdown had kicked in), but the manufacturing sector was almost unscathed last month. Non-farm payrolls (NFP) declined for the first time since September 2010, declining by a dramatic 701,000 (although the survey was completed by 12th March, before the US went into lockdown). The unemployment rate rose to 4.4% in March (from 3.5% in February). The labour market will deteriorate substantially further in April 2020. The 9.9million new claims for unemployment insurance over the past two weeks will ensure that the April NFP is the worst in at least 75 years, and the unemployment rate rises very substantially -- to 10% by mid-year. The manufacturing sector barely fell back into contraction, after two months of expansion, with the ISM manufacturing PMI edging down to 49.1 (although new orders slumped to 42.2 and employment to 43.8, both pointing to severe contraction). ISM's non-manufacturing PMI was still in slight expansionary territory for the 122nd month (at 52.5 in March), but with business activity (48) and employment (47) already contracting. The economy will worsen substantially before the impact of the fiscal stimulus boosts activity in the final quarter of 2020. The negative wealth effect (from equity-market losses in 1Q 2020, and likely declines in house prices over the next half year), and the drag on government employment and spending at the state and local levels (where balanced-budget laws ensure that spending is automatically cut in a recession), will counteract the initial impact of the fiscal stimulus. We therefore expect real GDP to contract severely in 2Q 2020 (-24 to -28% QoQsaar), continue a more modest contraction in 3Q 2020, but begin to recover in 4Q 2020. Near-term, equities (and other risk assets) will provide negative returns over the next one month, but positive returns over the 3-6 month horizon. 

Dow Jones Industrial Average (INDU INDEX)

Sudden Stop in Labor Market, Mild Damage in Manufacturing: Worse Ahead