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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Macroeconomics

VinaCapital Vietnam Opportunity Fund (VOF LN)

Vietnam's export performance remains stellar, with Vietnam retaining its status as the only East Asian economy that has had consistent monthly YoY export growth every month since 2005 (except during the Lunar New Year months). November's 12.4% YoY export growth only confirmed the trend. Although imports are now accelerating, and the monthly trade balances have deteriorated in the last 4 months, Vietnam will end 2016 with a trade surplus of close to US$3bn.Given its strong services/incomes surplus, the swing from last year's deficit to a merchandise surplus in 2016 should ensure that the current account surplus widens to 4% of GDP this year (from 0.5% in 2015). Although capital outflows remain significant, they are smaller than net FDI inflows, so the overall balance of payments remains solidly in surplus. We continue to recommend staying long VND, as the currency will continue to strongly outperform other EM currencies. However, the fragility of the banking system remains a challenge for Vietnam. The VAMC was under-capitalized, and did not purchase banks' NPLs at realistic valuations -- instead largely taking NPLs off banks' books at face value. Even after NPLs are removed, the bank (not VAMC) remains responsible for restructuring the loan. Progress on resolving NPLs has predictably been glacially slow, but banks have resumed growing loans faster (despite an elevated L-D ratio of over 110%). We would recommend staying underweight Vietnam's Banking sector. The only Vietnamese banks worth investing in are those that have sold the majority of their NPLs to the DATC -- which will buy at a discount to face -- and thereby resolved their legacy NPLs.

Vietnam's export performance remains stellar, with Vietnam retaining its status as the only East Asian economy that has had consistent monthly YoY export growth every month since 2005 (except during the Lunar New Year months). November's 12.4% YoY export growth only confirmed the trend. Although imports are now accelerating, and the monthly trade balances have deteriorated in the last 4 months, Vietnam will end 2016 with a trade surplus of close to US$3bn.Given its strong services/incomes surplus, the swing from last year's deficit to a merchandise surplus in 2016 should ensure that the current account surplus widens to 4% of GDP this year (from 0.5% in 2015). Although capital outflows remain significant, they are smaller than net FDI inflows, so the overall balance of payments remains solidly in surplus. We continue to recommend staying long VND, as the currency will continue to strongly outperform other EM currencies. However, the fragility of the banking system remains a challenge for Vietnam. The VAMC was under-capitalized, and did not purchase banks' NPLs at realistic valuations -- instead largely taking NPLs off banks' books at face value. Even after NPLs are removed, the bank (not VAMC) remains responsible for restructuring the loan. Progress on resolving NPLs has predictably been glacially slow, but banks have resumed growing loans faster (despite an elevated L-D ratio of over 110%). We would recommend staying underweight Vietnam's Banking sector. The only Vietnamese banks worth investing in are those that have sold the majority of their NPLs to the DATC -- which will buy at a discount to face -- and thereby resolved their legacy NPLs.

Vietnam Enterprise Investments (VIETENI KY)

Vietnam: Export Champion Is Allowing Its Banking Problems to Fester