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

Cross Asset Strategy

There is no global "second wave" of Covid, but the Schiller CAPE ratio is at levels it has rarely exceeded in the past 150 years, while the "Buffett Indicator" of market-cap to GDP is at an all-time high of 1.78x. Both valuation measures suggest the equity market is ripe for a significant sell-off, aided by the growing uncertainty surrounding the US election. The global market sell-off this month (especially since 16 September) has been attributed to a "Second Wave" of new Covid cases, but this simply reflects the over-representation of Britons (and British newspapers) in the global business media. There is an undoubted second wave in the UK and France, but no discernible second wave globally. Among the 10 worst-hit countries globally, #8 Spain has had a second wave that isn't quite over, and Russia has a mild second wave that is barely at half its mid-May peak. But the top-3 Covid-hit countries (the US, India, Brazil) are past their peaks, with Brazil and the US now well below their end-July peak in new cases.   The sell-off in equity markets, however, owes primarily to the sell signal from two of the best long-term measures of equity value -- the Schiller CAPE (cyclically adjusted P/E ratio) and Buffett's favourite indicator, market-cap to GDP.  The CAPE has rarely been above 30 in the past 150 years -- but it was above that level at the end of August 2020 (and also at end-February 2020). The equity market invariably sells off when valuations are this rich. Similarly, the US market capitalization to GDP ratio is now at an all-time high of 1.78x -- and this is the reddest of red flags, suggesting the market is ripe for a sell-off. Given the uncertainties over the US election, and particularly the fact that the likely winner of the US election (Joe Biden) is poised to raise the corporate tax rate to 28% (and to 30.8% for any corporate that outsources any manufacturing or services outside the US), US corporates' post-tax earnings will suffer. Consequently, we recommend that investors should Underweight Equities in the runup to the US presidential election.

There is no global "second wave" of Covid, but the Schiller CAPE ratio is at levels it has rarely exceeded in the past 150 years, while the "Buffett Indicator" of market-cap to GDP is at an all-time high of 1.78x. Both valuation measures suggest the equity market is ripe for a significant sell-off, aided by the growing uncertainty surrounding the US election. The global market sell-off this month (especially since 16 September) has been attributed to a "Second Wave" of new Covid cases, but this simply reflects the over-representation of Britons (and British newspapers) in the global business media. There is an undoubted second wave in the UK and France, but no discernible second wave globally. Among the 10 worst-hit countries globally, #8 Spain has had a second wave that isn't quite over, and Russia has a mild second wave that is barely at half its mid-May peak. But the top-3 Covid-hit countries (the US, India, Brazil) are past their peaks, with Brazil and the US now well below their end-July peak in new cases.   The sell-off in equity markets, however, owes primarily to the sell signal from two of the best long-term measures of equity value -- the Schiller CAPE (cyclically adjusted P/E ratio) and Buffett's favourite indicator, market-cap to GDP.  The CAPE has rarely been above 30 in the past 150 years -- but it was above that level at the end of August 2020 (and also at end-February 2020). The equity market invariably sells off when valuations are this rich. Similarly, the US market capitalization to GDP ratio is now at an all-time high of 1.78x -- and this is the reddest of red flags, suggesting the market is ripe for a sell-off. Given the uncertainties over the US election, and particularly the fact that the likely winner of the US election (Joe Biden) is poised to raise the corporate tax rate to 28% (and to 30.8% for any corporate that outsources any manufacturing or services outside the US), US corporates' post-tax earnings will suffer. Consequently, we recommend that investors should Underweight Equities in the runup to the US presidential election.   

Dow Jones Industrial Average (INDU INDEX)

There's No Global "Second Wave" Of Covid, but Long-Term Valuations Are Very Elevated