ASEAN Speaks

As markets brace after Archegos' fire sale of $20b worth of stocks last Friday, Asian markets seem to have held up well on Mon’s open. Malaysia’s Ministry of Finance has revised Malaysia’s budget deficit to 6% of 2021 GDP; will this lead to the introduction of capital gains tax as market grapevine suggests? As the Federal Reserve prepares to do away with restrictions on bank dividends and buybacks, are there signs that Singapore banks will follow suit? Intel announced that it will spend $20b to build 2 fabrication plants in Arizona, including a plan to serve third party and fabless chip designers. Will this swing the balance with TSMC and who are the supply chain winners in ASEAN?

With bitcoins hogging so much limelight, Maybank's FX team joins the debate if Bitcoin and equity price moves will continue to remain positively correlated and the drivers of this relationship. Thailand’s equity market valuations are lofty, which suggests that the market is ripe for profit taking. We see tactical rotations into laggards such as Petrochemicals, Autos, Consumer Finance & banks. Singapore REITs are not impervious to rising rates. How low will valuations go and where does value lie?

With the FOMC minutes due on Wed (2pm Eastern standard time), market expectations and particularly, the distribution of the FOMC’s dot plot, are likely to diverge sharply. Whether the signal for a lift-off in interest rates comes now or later, it is prudent to take stock of the current rotation in funds flow. This week, we discuss about Top Glove’s changing fundamentals, Malaysia’s NFO sector, finding value in Thai healthcare and our top picks in the Philippines that may double returns in 5 years time.

We continue with our analysis how capital markets are expected to trend as we rotate out of a Goldilocks environment with the apparent bottoming of interest rates. Key of which, we ask ourselves what new observations can we infer from the last taper tantrum in 2013 when the fed funds rate started to reflate? Sector wise, our strategists review their picks for medical gloves, banks, property and tourism sectors as these are most sensitive to a market cycle that is transitioning out of its recovery phase.

With the spectre of rising interest rates and market volatility, we look at past episodes of taper tantrums and the vulnerability of ASEAN’s capital markets. As the earnings season comes to a close, we investigate what surprised our Singapore banks and Philippines conglomerates analysts. Finally, we also look at Malaysia’s decision to bring forward its 5G plans for commercial use by 2021. Who are the winners and losers because of their exposure to this development?

The lunar year of the ox is said to bring success in many ways for all zodiac signs. It is no coincidence that markets are bearing witness to firmer bond yields, which we interpret as investor expectations of a strong economic recovery. As of last Fri, the 10y UST benchmark yield stood at 1.344%, up from 1.157% just 5 trading sessions earlier. Maybank’s strategists will focus on the implications that inflation might have on the ASEAN bond markets, commodity markets, and cyclical sectors like banks and high growth tech stocks.

Singapore Budget 2021 was announced on Feb 16 by Deputy Prime Minister Heng Swee Keat. With an overall budget deficit projected at 2.2% of GDP, this estimate is much lower than the consensus median range of 4%. What are the risks of a fiscal cliff and implications on MAS’ FX policy? Are there material changes to Maybank Kim Eng’s investment outlook for the Singapore market?

We assess the impact of Myanmar’s coup on its economy as the country reverts to its past with the Lady detained and military back in charge. Malaysia has extended its MCO by 2 weeks, which was scheduled to end on Feb 4. The key question here is if MCO becomes protracted, given how fast government debt is rising, is there still room for even more stimulus? The bull run in ASEAN bank shares is showing no signs of abating - we now ask the big question which country poses the most risk and why. Over in the Philippines, we ask which sectors will be the biggest beneficiaries from the passage of the Create Act and corporate income tax cuts. Last but not least, we do some crystal ball gazing what palm oil benchmark futures signal with the recent selldown.

Today our economics team shares on their latest outlook for Singapore. With the recent suspension of reciprocal travel bubbles with Malaysia, South Korea and Germany, how large an impact will this have on migrant workers as more than 30% of Singapore’s workforce is non resident. Lockdowns or not, Vietnam’s exports and manufacturing activity is humming. We explain the drivers behind this economic resilience and why we still think Vietnam’s stock market will go from strength to strength. ASEAN Banks have outperformed by 30% since 4Q last year. Despite this, our banks research team remains positive and shares their high conviction ideas for 2021.

As US Democrats push for US$1.9tn in stimulus, the prospects of easy monetary and fiscal policies continue to underpin ebullient conditions for global equity markets. Central banks in Malaysia and Indonesia left policy rates unchanged last week, we get a pulse check from Maybank’s economics team on the likelihood of further rate cuts and which Asian currencies are the most undervalued. On growth themes, is it premature to rotate out of Singapore and Malaysia’s semiconductor equipment sector? Finally, the Thai Healthcare sector has been hit as hard as the tourism industry. Has the sector’s risk reward improved for investors to accumulate select names?