We expect NEA to outperform, SEA to underperform on Fed tapering due to C/A, cyclicality of investors
• USD should rally against SEA, commodity currencies, JPY and CHF; EUR and GBP should hold up better
• Asian bond yields should peak in Q1; INR...
• EM rates should have an inflexion point around tapering; EM bearish into tapering, followed by recovery
• Our total-return analysis identifies Indonesia, India and Brazil as the favourites for 2014
• Pre-tapering: Bond investors should buy 3Y KT...
• Bank Indonesia (BI) kept the BI rate unchanged at 7.50% at its policy meeting in December. It also kept the BI overnight lending facility (repo) rate at 7.50% and the BI overnight deposit facility (FASBI) rate at 5.75%; the repo rate is ...
Top 3 data/events
• Australia – RBA likely to maintain status quo, reiterate AUD is elevated
• Singapore – November PMI readings likely to remain firm
• US – ISM manufacturing survey likely moderated
• Market focus
• Shift to a Neutral duratio...
Top 3 data/events
• Singapore – We revise our SGS yield forecasts for 2014-16
• Singapore – Inflation likely rose slightly in October
• Taiwan – Rising export orders may have boost industrial production
• Market focus
• Investors believe Fed...
We recommend tactically buying 10Y IDR bonds at 8.30%; target: 7.50%, stop-loss: 8.70%
• We see value in the 10Y after its 160bps rise in November; near-term supply outlook is constructive
• Fundamentals are improving as BI shifts priority to ens...
Event – Bank Indonesia (BI) unexpectedly hiked the BI rate by 25bps to 7.50% at its November policy meeting. It also hiked the overnight deposit facility (FASBI) rate by 25bps to 5.75% and the repo rate by 25bps to 7.50%. The FASBI rate is the lower...
We close our 5Y SGD IRS receiver and the 5Y/10Y SGS flattener; near-term upside risks to yields remain
• Stay Neutral duration on SGS, given the delayed start of QE tapering, manageable near-term supply
• The risk of indigestion will be significan...
In 2010 we argued that fast growth in emerging markets (EM) and their increasing weight in world GDP was driving an economic super-cycle. We have lowered our forecasts for China, India and others, but the case broadly still holds (see Part 1).
Parliament passed a non-expansionary budget for 2014, with a deficit target of 1.7% of nominal GDP
• We maintain our forecast of a deficit of 1.5% of nominal GDP
• Net supply target is IDR 205tn, or 12% lower than in 2013; stay Overweight duration...
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This report provides an economic outlook for more than 60 economies worldwide and investment implications for commodities, credit, equities, FX and interest rates markets in 2014. We expect a better 2014, with world economic growth picking up and inflation staying benign. Global growth should increase to 3.5% in 2014 from 2.7% in 2013, helped by improvements in economic activity in the US and Europe. A pick-up in growth in the West is good news for the rest of the world, and we expect emerging economies’ growth to outpace G7 growth by almost 4 percentage points.
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