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 and Asia sector strategist 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

VinaCapital Vietnam Opportunity Fund (VOF LN)

The export-led economy has succumbed to the impact of a severe outbreak of Covid in the current quarter -- after having successfully contained the pandemic in 2020 and 1H 2021. Vietnam had just 16,863 Covid cases until end-June 2021, but that number has jumped to 645,640 by mid-September. The resulting economic disruptions caused exports to decline 3.3% YoY in August 2021. Apart from pandemic-related disruptions, however, the mild appreciation of the VND (+1.6% since end-2020, after a year of stability in 2020 and 8 years of mild depreciation) had contributed to a swing from steady trade surpluses in 2019 and 2020 to monthly trade deficits in 6 of the past 8 months. Vietnam's imports expanded 34.6% YoY in Jan-Aug 2021, strongly outpacing export growth (+23.8% YoY) for the period.   Vietnam's real GDP expanded 2.9% in 2020 (one among very few economies to have expanded last year) as the pandemic was well-contained in 2020 after tight movement controls were established during 2Q 2020 in any pocket of the country where an outbreak was reported. This year, real GDP accelerated to 6.6% YoY growth in 2Q 2021 (benefitting from the low base of 0.4% YoY growth in 2Q 2020) from 4.6% YoY in 1Q 2021, but growth is expected to moderate sharply in the current quarter -- and full year real GDP growth is likely to be a modest 4% in 2021, despite the relatively strong start in 1H 2021. With inflation still well-contained (2.8% YoY in August 2021), the real policy rate remains solidly positive. The current account surplus (likely around 5.5% of GDP in 2020) is likely to shrink this year to below 1% of GDP. However foreign reserves (US$101.26 billion in May 2021, the latest available) still provide about 4 months of import cover. Given that inflation is moderate, growth is slumping and the strong VND is hurting the trade balance, we expect a 50bp rate cut by December 2021. In the near-term, however, the movement restrictions and slump in tourist inflows will slow the economy further, and we would recommend being underweight Vietnam.

The export-led economy has succumbed to the impact of a severe outbreak of Covid in the current quarter -- after having successfully contained the pandemic in 2020 and 1H 2021. Vietnam had just 16,863 Covid cases until end-June 2021, but that number has jumped to 645,640 by mid-September. The resulting economic disruptions caused exports to decline 3.3% YoY in August 2021. Apart from pandemic-related disruptions, however, the mild appreciation of the VND (+1.6% since end-2020, after a year of stability in 2020 and 8 years of mild depreciation) had contributed to a swing from steady trade surpluses in 2019 and 2020 to monthly trade deficits in 6 of the past 8 months. Vietnam's imports expanded 34.6% YoY in Jan-Aug 2021, strongly outpacing export growth (+23.8% YoY) for the period.   Vietnam's real GDP expanded 2.9% in 2020 (one among very few economies to have expanded last year) as the pandemic was well-contained in 2020 after tight movement controls were established during 2Q 2020 in any pocket of the country where an outbreak was reported. This year, real GDP accelerated to 6.6% YoY growth in 2Q 2021 (benefitting from the low base of 0.4% YoY growth in 2Q 2020) from 4.6% YoY in 1Q 2021, but growth is expected to moderate sharply in the current quarter -- and full year real GDP growth is likely to be a modest 4% in 2021, despite the relatively strong start in 1H 2021. With inflation still well-contained (2.8% YoY in August 2021), the real policy rate remains solidly positive. The current account surplus (likely around 5.5% of GDP in 2020) is likely to shrink this year to below 1% of GDP. However foreign reserves (US$101.26 billion in May 2021, the latest available) still provide about 4 months of import cover. Given that inflation is moderate, growth is slumping and the strong VND is hurting the trade balance, we expect a 50bp rate cut by December 2021. In the near-term, however, the movement restrictions and slump in tourist inflows will slow the economy further, and we would recommend being underweight Vietnam. 

Vietnam: The Rockstar Economy Succumbs to Covid and a Strong VND; Rate Cut Near?