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).
We maintain our long-held call for the MAS to keep its policy stance unchanged; risk is of minor easing
• Ongoing restructuring to keep MAS focused on inflation; current SGD NEER level offers loosening room
• Leveraged funds: Sell SGD-THB, target ...
• Although Indonesia’s economic fundamentals are still strong, its external exposures are rising
• Balance-of-payments deterioration needs to be addressed with structural rather than ad-hoc measures
• External debt has risen in recent years, but ...
• The MYR market sold off sharply in July amid concerns over the weak fiscal and external position
• We revise our BNM policy rate call and now expect the next hike in Q3-2014 (not in Q4-2013)
• We recommend MYR 2Y/5Y IRS steepener, see more valu...
• Worries over the impact of eventual US tightening and policy actions in China may have affected markets, but Asia’s underlying macro resilience remains intact. Domestic demand indicators have been holding up. We have downgraded our 2013 growth for...
The two key macro signals – the market’s Fed view and China’s data – signal more near-term pain
• The key positioning signal – high cash levels – dampens negative feedback from redemption flows
• In H2, slightly better China growth and lower...
We examine the impact of aggressive BoJ easing on Asia and G10 via trade, FDI and portfolio channels
• In Asia, Thailand is the clear winner, benefiting from the trade impact and also from likely bond inflows
• Korea, Singapore, Malaysia and Thai...
We expect a larger current account surplus in 2013, supported by services exports and remittances
• The BoP backdrop provides a strong argument for an investment-grade rating by 2014
• We maintain our Overweight stance on the PHP, although we expe...
MYR is vulnerable short-term to JPY weakness, position risk; set to outperform medium-term on C/A, palm oil
• If USD-MYR spikes higher and foreigners sell MYR bonds, local investors have the capacity to absorb MGS
• We estimate that 20-30% of fore...
Top 3 data/events
• Japan – No expected change in BoJ’s policy rate and asset purchases
• Philippines – April should show healthy growth in remittances
• United States – Headline weakness takes time to hit the core
• Market focus
• Investors s...
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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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