• Hiking fuel prices and dealing with a fragmented parliament are among Jokowi’s first challenges
• We revise our inflation, BI rate, and GDP growth forecasts to reflect expected fuel-price hikes in Q4-2014
• Rates market is largely pricing in a f...
• We expect faster growth in most Asian economies in 2014
• Inflation pressure is manageable for now
• Export growth should pick up and boost current accounts
• Indonesia’s economic fundamentals are not as weak as they seem
• We still project the BI rate at 8.00% by end-2014, but adjust the timing of the next rate hikes to Q2 and Q3
• A further rally in IDR bonds will be tactical and limited; we maintai...
Top 3 data/events
• India – IIP to turn negative, CPI remains sticky
• Indonesia – We expect BI to hike rates at the December meeting
• South Korea – BoK is likely to keep its policy rate at 2.5%
• Market focus
• Cumulative upside data surpris...
• We see growth improving across the region, despite recent financial-market distress. Fretting over the growth outlook because of portfolio outflows is missing the point, in our view. We think more optimism is in order, as simultaneous growth in ma...
The Fed‟s decision to delay QE tapering, possibly until Q1-2014, has given Indonesian policy makers much needed breathing room. Indonesia‟s economic fundamentals are worse than they were 12 months ago. Without a sharp rebound in prices of commoditie...
To paraphrase Mark Twain, the reports of the death of EM bond markets have been greatly exaggerated. Increased global allocations to local EM bond markets have been not cyclical but primarily structural in nature, reflecting these markets’ rising ec...
The change in composition of BI’s board of governors allows for a much more hawkish monetary policy
• We now expect BI to hike the BI rate to 7.00% and the FASBI rate to 5.25% by end-2013
• Stay Underweight IDR bonds; USD-IDR and IDR bond yields t...
• Indonesia’s economic fundamentals are deteriorating; the market perceives that country risk is rising
• We revise our BoP, GDP growth and government budget deficit forecasts
• We expect the IDR and IDR bonds to weaken further on inflation risks...
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