Asia/Pacific (ex-China/Japan) Outlook: Resilience Through Realignment

March 25, 2025 10:44 AM UTC

·       In 2025, growth across emerging Asia will remain steady but uneven, with investment-driven economies such as India and Malaysia outperforming on the back of infrastructure and industrial policy momentum. While global demand is set to recover modestly, geopolitical friction and tariff

Japan Outlook: Inflation Sustainably Above 2%?

March 25, 2025 10:00 AM UTC

·         Private consumption will have a modest growth in 2025 along the gradual change in business price/wage setting behavior before slowing to average in 2026. Wage hike in 2025 looks to be at least on par with 2024 after early result of the spring wage negotiation. SMEs are going to be

China Outlook: Construction and Trade Headwinds v Policy Stimulus

March 24, 2025 9:00 AM UTC

   We look for 4.5% GDP growth in 2025.  Though residential property investment will subtract less from GDP growth, net exports will also be a drag on the economy in 2025 due to the trade war with the U.S.  Further fiscal stimulus beyond March’s NPC measures will be required to achieve a 5% GD

Bank Indonesia Holds Steady Amid Fiscal Fears and Rupiah Rout

March 20, 2025 7:49 AM UTC

Bank Indonesia has decided to maintain its benchmark interest rate at 5.75%, reflecting a cautious stance amid the rupiah's depreciation and mixed economic signals. With the rupiah near five-year lows and influenced by external uncertainties, the central bank is balancing the need to support economi

Bank Indonesia Policy Review: Rate Pause As BI Remains Watchful

March 17, 2025 6:45 AM UTC

Bank Indonesia's upcoming monetary policy decisions will hinge on a delicate balance of domestic economic indicators and global financial conditions. With a focus now tilted slightly more towards economic growth than in previous years, BI could surprise markets with its timing and decisions, dependi

Japan: "Nimble" JGB Intervention, but not now

March 4, 2025 12:00 AM UTC

As JGB yields edged higher on BoJ's further tightening, Japanese officials and BoJ members are voicing their concern over its potential impact. The BoJ has suggested "nimble" response to JGB market volatility after they removed Yield Curve Control last year but we think we will not see any response

Bank Indonesia Policy Review: Rate Pause As BI Steadies IDR

February 20, 2025 1:25 AM UTC

In line with our view Bank Indonesia kept its policy rate steady at 5.75% in its February 18-19 meeting after last month’s surprise cut. The weakening rupiah and external uncertainties reman critical factors influencing the rate decision. The central bank is likely to assess the impact of its Janu

RBNZ Review: Continue the Easing Cycle

February 19, 2025 5:59 AM UTC

RBNZ cut its cash rate by 50bp to 3.75%

Bank Indonesia Policy Preview: Rate Pause Likely as Rupiah Stability Takes Priority

February 13, 2025 4:55 AM UTC

Bank Indonesia is expected to keep rates steady at 5.75% in its February 18-19 meeting after last month’s surprise cut. While inflation remains low and growth is steady, the weakening rupiah and external uncertainties may delay further easing. The central bank is likely to assess the impact of its

India CPI Review:Rate Cuts in Sight as Prices Cool

February 13, 2025 4:12 AM UTC

India’s inflation cooled to 4.31% in January, clearing the way for more rate cuts as food prices dipped. The RBI is shifting focus to growth. But risks remain—rupee weakness and global commodity prices could still stir inflationary trouble.

Bank Indonesia’s Policy Shift: Is More Easing on the Horizon?

January 28, 2025 9:01 AM UTC

Bank Indonesia’s surprise rate cut marks a departure from its traditionally cautious approach and underscores the central bank’s growing focus on stimulating growth. While the decision provides a much-needed boost to economic activity, it also raises questions about the future trajectory of mone

Rupee at Record Low: Can India Weather the Dollar Storm?

January 21, 2025 5:03 AM UTC

The Indian rupee has slumped to an all-time low of 86 against the US dollar, underscoring the pressure on emerging market currencies as the dollar index surges to multi-month highs. For India, this currency depreciation signals potential disruptions in financial markets, with equities and bonds—no

India CPI Review: CPI Cools but Target Not in Sight

January 16, 2025 2:27 PM UTC

India’s retail inflation eased to a four-month low of 5.22% in December 2024, driven by a seasonal decline in food prices, particularly vegetables and cereals. With inflation within the RBI’s target range, all eyes are on the upcoming monetary policy review for potential rate cuts.

India CPI Preview: A Cautiously Optimistic Outlook

January 10, 2025 10:36 AM UTC

Bottom line: India's inflation rate for October is projected to ease to 5.2% y/y due to base effects and domestic food prices. Moderating food pressures and global commodity prices will see inflationary pressures ease in the coming months. 

Reserves, Rates, and Reform: BI’s 2025 Strategy to Stabilise the Rupiah

January 10, 2025 8:06 AM UTC

Currency pressures and policy pivots define BI’s entry into 2025, with the rupiah breaching 16,000 per dollar. Strong reserves and strategic moves signal resilience, but sustaining investor confidence in the face of fiscal and structural vulnerabilities remains a tough challenge.

Bank Indonesia Holds Rate to Support IDR

December 20, 2024 12:06 PM UTC

Bank Indonesia held its key interest rate at 6% in its December meeting. The decision to hold rates steady is primarily influenced by the need to stabilize the Indonesian rupiah. Inflation remains within target, and GDP growth forecasts are steady. Future rate cuts depend on US Federal Reserve actio

Japan Outlook: Lukewarm Japan and BoJ

December 20, 2024 12:00 AM UTC

·        Due to the slow recovery in consumption, 2024 GDP has been revised lower to -0.5%. Private consumption will continue to grow throughout 2025/26 gradually as business price/wage setting behavior gently shift and Japanese consumers adapting to higher inflation. Wage growth in 2025 wil

Asia/Pacific (ex-China/Japan) Outlook: Trump Tariffs, China +1 and Growth

December 19, 2024 10:57 AM UTC

Emerging Asian economies are projected to lead global growth in 2025, with India and Southeast Asia at the forefront. These regions will anchor resilience in Asia, even as China's economic growth remains moderate.  
Inflation trajectories will vary across Asia, with India experiencing sticky prices

Equities Outlook: U.S. Exceptionalism v Valuations

December 18, 2024 10:05 AM UTC

·        The glory days of exceptionalism for U.S. equities will likely extend in Q1 2025 to bring the S&P500 to 6200-6300. The problem is that valuations have now become stretched with S&P500 ex magnificent 7 on a forward P/E of 19 and valuations out of line with real bond yields (Figure 1)

China Outlook: Construction and Trade Headwinds v Policy Stimulus

December 17, 2024 11:00 AM UTC

  We do see a package of stimulative fiscal policy measures for 2025 including Yuan1-3trn infrastructure spending; Yuan1trn funds to buy completed homes for affordable housing and Yuan1trn capital injection to the big six state banks. Some modest measures for low-income households and to boost soci

RBI Decision Review: RBI Balances Inflation and Growth with Neutral Policy

December 7, 2024 2:25 PM UTC

The RBI kept the repo rate unchanged at 6.5% but unexpectedly cut the CRR by 50 basis points to inject ₹1.16 lakh crore into the banking system. Growth forecasts for FY2025 were revised down to 6.6%, while inflation expectations rose to 4.8%. This cautious approach reflects the central bank’s fo

RBI Decision Preview: Growth Slackens, Inflation Soars: RBI’s Policy Tightrope

December 3, 2024 6:42 AM UTC

The Reserve Bank of India (RBI) is gearing up to announce its last monetary policy decision for 2024 on December 6. For the upcoming meeting, we anticipate that the RBI will likely keep the repo rate unchanged at 6.5%, given the recent uptick in inflation. The decision to hold rate will come despite

Indonesia CPI Review: Headline Inflation Eases in November, but Core Pressures Build

December 3, 2024 6:29 AM UTC

Easing food inflation saw headline CPI decline to 1.5% yr/yr in November. Nonetheless, price pressures from a weakening IDR persist. Bank Indonesia will likely hold rates till the end of 2024. 

RBNZ Review: Front Loading Cuts

November 27, 2024 4:30 AM UTC

RBNZ cut its cash rate by 50bp to 4.25%

Bank Indonesia Retains Rate Prioritises Rupiah

November 21, 2024 7:20 AM UTC

Bank Indonesia held its key interest rate at 6% to stabilise the rupiah and attract FX inflows, while maintaining interventions in the FX and bond markets. Inflation remains within target, and GDP growth forecasts are steady. Future rate cuts depend on US Federal Reserve actions. A 25bps cut is expe

India CPI Review: CPI Hits New Heights

November 13, 2024 12:05 PM UTC

Bottom line: The latest CPI figure of 6.2% yr/yr underscores significant inflationary pressures within the Indian economy, primarily driven by food prices but also influenced by housing costs. With inflation now at a 14-month high, the RBI's response will be another rate hold in December. Earliest r

Imports Surge, Growth Slows: Indonesia’s Q3 GDP Falls Short of 5% Mark

November 11, 2024 6:43 AM UTC

Bottom line: Indonesia’s Q3 GDP growth slipped to 4.95% yr/yr in Q3, missing the 5% target as soaring imports weighed on the headline figure. Private consumption remained steady, while fixed investment showed resilience with notable gains. Looking ahead, Q4 may bring further softening. 

India CPI Preview: Food prices to weigh on headline CPI

November 11, 2024 5:00 AM UTC

Bottom line: India's inflation rate for October is projected to rise to 5.7% y/y  due to base effects and domestic food prices. In the short term, global crude oil prices and domestic food price surge may pressure inflation further. The Reserve Bank of India is anticipated to maintain a neutral mon

China Corporate Debt Deleveraging

October 21, 2024 10:45 AM UTC

Private companies ex property developers have seen a small pay down of debt, but the largest remaining portion of non-financial debt ex LGFV is central and local SOE’s.  They have low profitability and have shown few signs of increased leverage.  This leaves the onus on fiscal policy.  

U.S. Tensions for China: Protected by BRICS and BRI?

October 15, 2024 9:30 AM UTC

BRICS can provide a political buffer but not economic, as BRICS are still searching for practical areas for cooperation.  However, Donald Trump universal tariffs threats could focus BRICS on more intra EM trade. BRI has already helped to redirect China exports to EM countries, despite the slowdown

China Fiscal Stimulus: Details to Follow

October 14, 2024 8:37 AM UTC

Further details of the size of extra central government spending/scaled up local authority purchases of unsold complete homes for affordable housing should be seen late October/early November from the National People Congress.  We estimate Yuan1.5-2.0trn in total of extra spending, which leads us t

China and Japan Debt Compared

October 10, 2024 1:35 PM UTC

China housing crisis will likely mean that household debt/GDP flat lines in the coming years like Japan after 1990 and be a headwind for consumption.  Meanwhile, the downturn in residential construction is already greater than that experienced by Japan after 1990 and in itself will be remain a stru

RBNZ Review: Cutting Along the Playbook

October 9, 2024 1:46 AM UTC

RBNZ cut its cash rate by 50bp to 4.75%

India CPI Preview: Inflation to Surge as Base Effects Fade

October 8, 2024 10:49 AM UTC

Bottom line:India’s September inflation level is expected to trend up to 4.1% y/y, given base effects. Global crude oil prices and heightened geopolitical tensions pose risks to inflation in the near term. Meanwhile, monetary policy is expected to remain tight and policy rate to be retained at 6.5

China: Any Lessons from the 1997-98 Asian Crisis?

October 3, 2024 1:30 PM UTC

Overall, the warning from slow real credit growth on reduced credit supply and demand is the main lesson from the Asia crisis 1997-98.  China High FX reserves; low borrowing overseas and dominance of domestic investors in Yuan markets argues against a currency crisis.  Asia widespread banking cris

Indonesia CPI Review: Cooling Inflation Signals More Rate Cuts Ahead for Indonesia

October 1, 2024 9:25 AM UTC

In September, Indonesia experienced its slowest inflation in nearly three years, driven by a drop in food and transport costs. Core inflation edged up, reflecting price increases in non-essential goods. The ongoing deflationary trend since May, influenced by supply-side factors like strong harvests,

RBI’s October Rate Call: Patience May Prevail Over Pressure

September 30, 2024 6:58 AM UTC

The RBI is expected to keep interest rates unchanged in its October meeting, despite global central banks initiating rate cuts. Domestic inflation concerns and uncertainties over MPC appointments are likely to drive a cautious "wait-and-watch" approach, with potential easing only by December. 

Asia/Pacific (ex-China/Japan) Outlook: Shifting Gears for Growth

September 25, 2024 7:57 AM UTC

Emerging Asian economies are poised to remain the fastest growing globally. India and Southeast Asia will drive regional resilience amid China’s cooling growth engine in 2025. For India, while the external environment remains challenging due to weaker global demand and geopolitical tensions, domes

China Outlook: Unbalanced Growth and Slowing

September 24, 2024 8:54 AM UTC

      Growth is benefitting from momentum in public investment/exports and high tech production.  However, domestic demand is slower and this is a drag on H2 2024 and 2025 growth prospects.  Aside from the ongoing negative drag from the residential construction crisis, consumption is also softe

China Steps Up Support, But Not a Game changer

September 24, 2024 8:39 AM UTC

China has surprised and cut the 7 day reverse repo rate by 20bps to 1.5%, with a 50bps cuts in the RRR rate.  Combined with other measures this is a step-up in support and could help GDP on the margin, but the measures are not game changers as monetary policy is currently ineffective.  While furth

Equities Outlook: Choppy U.S. and Outperformance Elsewhere

September 24, 2024 8:30 AM UTC

 •     We now forecast 5450 for the S&P500 for end 2024, but could see a move to 5200/5000 in the next 3-6 months as volatile data keeps the soft v hard landing debate alive.  On our baseline of a U.S. soft landing, we would see the S&P500 at 5600 by end 2025. The tech sector is still really i

Japan Outlook: A Hawkish Take

September 24, 2024 5:30 AM UTC

·       GDP growth for 2024 has been revised lower to +0.2% after the consumption contraction in Q1 2024 and the subsequent sluggish recovery in Q2. Private consumption is expected to pick up along improving real wages but its magnitude will be limited by the unwillingness to consume at high

BoJ Preview: Signaling More Tigthening

September 19, 2024 7:38 AM UTC

The BoJ will likely keep rate unchanged in the Sep 20 meeting with forward guidance of more tightening to come

China Banking Stress Tests: The Good, The Bad and the Ugly

September 18, 2024 8:05 AM UTC

The good news is that China’s 19 major domestic systemically important banks (D-SIB’s and 72% of loans) hold up well under most solvency and liquidity tests, though some capital shortfalls start to appear with a moderate or severe NPL sensitivity shock scenario.  The safety net would likely be

Bank Indonesia Preview: Rupiah Defense - BI to Hold Rates, Eye Future Easing

September 16, 2024 8:24 AM UTC

Easing food inflation saw headline CPI decline to 2.1% yr/yr in July. Nonetheless, price pressures from a weakening IDR persist. Bank Indonesia will likely hold rates till Q4-2024. 

China: Weak August Data

September 16, 2024 6:58 AM UTC

China August data was worse than expected and confirms the weak trend in H2, with retail sales a real worry. The government risks missing the 5% growth target for 2024 and targeted fiscal policy moves are likely, but need to be implemented quickly.  10bps cut in the 7 day reverse repo rate is also

India CPI Review: India's Inflation Edges Up to 3.65% in August, Staying Below RBI Target

September 16, 2024 6:55 AM UTC

Bottom line: India’s August rose to 3.6% yr/yr, rising marginally from 3.53% y/y in July, reflecting higher food prices. Anticipate increased inflation over Q4, as festive demand drives up prices and the high base effects drop out of the equation. 

India CPI Review: Easing Prices, but Monsoon Risks Loom

September 10, 2024 9:14 AM UTC

Bottom line: India’s August inflation level is expected to trend down to 3.5% yr/yr, from 3.53% y/y in July, reflecting higher base effects. Interest rate cut is unlikely though as the RBI perceives this as a temporary reprieve. 

China Equities: More of the Same or Game changing Policies

September 9, 2024 9:15 AM UTC

 We remain strategically underweight China Equities in global and EM equity baskets, due to the structural slowing of growth and low EPS prospects. Event risk around the U.S. presidential election will also start to be considered.  Further targeted policies from China authorities could cause inter