• Overview – In a challenging market environment, macroeconomic and policy divergence – the ‘new normal’ – remains the critical foundation of our updated views and forecasts, with the US economy, USD and US rates leading the way higher. This will ev...
• BoK cuts the base rate to a record-low 1.75%, against consensus
• We expect no further easing this year
• We recommend Underweight short-term FX weighting on the KRW and Neutral on KTB duration
Event – The Bank of Korea (BoK) surprised the market today by cutting the base rate by 25bps to 1.75%, a record low – even lower than the level reached during the global financial crisis in 2009. The move was against the market consensus view of no ...
• RGI rose 2.3% m/m in January, the fastest gain in eight months; index shows steady momentum
• We see upside risk to USD-CNY in the near term; band widening is unlikely until at least H2-2015
• Shanghai FTZ spearheads capital account liberalisati...
• 2014 was another strong year for CNH market development, with the RGI rising 53%
• We outline our top 10 calls for 2015 for the Renminbi and its internationalisation
• Formosa bonds are set to receive more policy support; KRW-CNY direct trading ...
Top 3 data/events
China – Inflationary pressure likely remained subdued
Philippines – Global influences weigh on remittance growth
UK – Unemployment likely continued trending lower in August
We expect the BoK to keep the base rat...
• Domestic demand reflects recovering consumer sentiment, but supply-side sentiment remains soft
• While industrial activity signals an expansion, trade flows have weakened due to China’s slowdown
• We think the BoK will stay on hold in September;...
A new methodology capturing Korea’s overseas activity is a key driver of the BoK’s stronger trade data
• We believe this is a more significant driver than the change in the treatment of shipbuilding orders
• We raise our current account surplus f...
• Current economic trends and sentiment will likely receive more attention than headline economic figures
• We expect a 25bps policy rate cut at the August MPC meeting
• Hold KRW 5Y/10Y curve-steepening trade (entry: 20bps, current: 22bps; targe...
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...
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