Deutsche Bank-Asia Macro Strategy Notes ASEAN in Pictures-108792453.pdf

DeutscheBankResearchJoeyChungjoey.chung@db.comJune2024IMPORTANTRESEARCHDISCLOSURESANDANALYSTCERTIFICATIONSLOCATEDINAPPENDIX1.MCI(P)041/10/2023.UNTIL19thMARCH2021INCOMPLETEDISCLOSUREINFORMATIONMAYHAVEBEENDISPLAYED,PLEASESEEAPPENDIX1FORFURTHERDETAILS.ASEANinPicturesDistributedon:21/06/202401:01:06GMT7T2se3r0Ot6kwoPaDeutscheBankResearch❑ThegrowthandinflationtrajectorieswithinASEANhavebeenincreasinglydivergent.InflationisstillachallengeinSingapore,VietnamandPhilippines,butlesssoinIndonesia.TheupsideriskstopricepressuresarearguablymostpronouncedintheregioninMalaysiaandThailand.Ontheotherhand,whilegrowthisholdingupbetterinIndonesiaandPhilippines,butrecoveryintherestofthemoreexport-orientedeconomieshasbeenrelativelytepid,withASEANyettocapitalizesignificantlyonthesurgeindemandforAI-relatedchipexports.❑Intermsofmonetarypolicy,centralbanksinASEANhavehadtocontendwithnotjusttheirdomesticgrowth-inflationmixbutalsoexpectationsofinterestratedifferentials.Withcurrencypass-throughintoinflationcarryingarelativelyhighweightageincentralbankreactionfunctionsintheregion,thetimingforinitiatingpolicyeasingcontinuestobecontingentontheFed.❑GrowingmarketconcernsaroundfiscaldominanceinEMextendtosomeextenttoASEANaswell,andpossiblythemostintheregioninThailandandIndonesia.FiscalriskscouldbecomemoreofadifferentiatingfactorwithinEMinthecomingmonthsonwhichmarketsinvestorschoosetoown.❑RecentfundflowsintoAsiahavebeenrelativestrong,butASEANhasnotpartakeninmuchofthesame.WithbondyieldsinmuchofASEANtradingatnearrecordlowspreadsoverUST,interestfromoffshoreinvestorshasbeenrelativelytepid.1SummaryASEANMacroinPictures|JoeyChung|June2024DeutscheBankResearchIDMYPHSGTHVN20192020202120222023242ASEANeconomiesarefacingvaryinggrowthandinflationdynamicsOurmacroandinflationheatmapsshowASEANeconomiesasfacingvaryinggrowthandinflationdynamics,whichcanbebroadlyclassifiedintofourcategories.1)Improvinggrowthandhighinflation:Philippines.2)Improvinggrowthandstableinflation:Indonesia,Malaysia.3)Moderategrowthandstickyinflation:Singapore,Vietnam.4)Moderategrowthandlowinflation:Thailand.MacroheatmapASEANMacroinPictures|JoeyChung|June2024InflationheatmapSource:DeutscheBank,BloombergFinanceLP,CEIC,HaverAnalyticsNote:Themacroheatmapisconstructedfrommonthlyindicatorsincludingexportgrowth,IP,moneysupply,unemployment,importgrowth,privatecreditgrowth,PMIandconsumption.Themonthlyeconomicindicatorsaretransformedintorolling10-yearz-scoresbeforeaveragingintoacompositez-scoreforeachcountry.TheInflationheatmapisconstructedbytakingthe10-yearz-scoresofyoyheadlineinflation.IDMYPHSGTHVN2420212022202320192020DeutscheBankResearch3PMIsaremixedacrosstheregion,althoughallarebackinexpansionaryterritoryManufacturingPMIsshowrelativelymoreconvergenceacrosstheregionafterhavingexperienceddifferingtrajectoriespostCovid.SingaporeandIndonesiaarerecordingsofterPMIfigures,whilesentimentinThailandandMalaysiahaveimprovedsignificantly.ASEANMacroinPictures|JoeyChung|June2024ManufacturingPMI464850525456SGIDPHVNTHMYprevious3maveragelatestdeteriora