Chief Economist & Political Strategist, CrossASEAN Research

Prasenjit K. Basu

Chief Economist & Political Strategist

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Macroeconomics

<ul>
<li>With CPI inflation still 6%YoY and core CPI +5.5%YoY (annualised 6%MoM) in Feb'23, the Fed will be obliged to hike 25bp, and likely also reintroduce a reserve requirement for banks. </li>
<li>Unemployment at 3.6% is far below the long-accepted NAIRU of 4.5%, reflected also in average wages still rising 4.6%YoY in Feb'23. M2 declined in Dec'22-Jan'23 but needs to contract more. </li>
<li>A 50bp hike would've been warranted, but the collapse of 3 tech-related banks obliges the Fed to be a bit circumspect. The disappearance of CS can't influence the FOMC decision. </li>
</ul>


With CPI inflation still 6%YoY and core CPI +5.5%YoY (annualised 6%MoM) in Feb'23, the Fed will be obliged to hike 25bp, and likely also reintroduce a reserve requirement for banks. 
Unemployment at 3.6% is far below the long-accepted NAIRU of 4.5%, reflected also in average wages still rising 4.6%YoY in Feb'23. M2 declined in Dec'22-Jan'23 but needs to contract more. 
A 50bp hike would've been warranted, but the collapse of 3 tech-related banks obliges the Fed to be a bit circumspect. The disappearance of CS can't influence the FOMC decision. 


US: Elevated Inflation and Tight Labour Market to Force Hikes Despite Bank Turmoil

Financials & FinTech research, Galliano’s Financials Research

Victor Galliano

Financials & FinTech research

Financials & FinTech, EM & Developed Markets

Galliano’s Financials Research

Galliano's Financials Research provides fundamental research in Emerging Markets financials, including FinTech, as well as financials in select Developed Markets.

The investment style applied is generally value oriented, although Growth At Reasonable Price (GARP) strategies can also be used where appropriate. 

Our investment research approach aim is often contrarian, looking to capitalise on overly sceptical or optimistic consensus views. In terms of valuation techniques, the focus is on PBV ratio to ROE, PE multiples and dividend yield, as well as the application of PEG ratios and, where appropriate, Sum of the Parts (SOTP) valuations.

Thematic (Sector/Industry)

<ul>
<li>The UBS acquisition of Credit Suisse includes the write-off of CHF15.8bn (USD17bn) of Additional Tier 1 (AT1) bonds, despite there being residual equity value for CS shareholders in the deal</li>
<li>AT1s are the most junior, loss absorbing of bonds; precedent exists for the zeroing of AT1s in Spain’s Banco Popular 2017 failure, but importantly this also included shareholders being zeroed</li>
<li>The Credit Suisse AT1 write-off is by far the biggest so far and this unconventional treatment of shareholders versus junior bondholders should lead European banks’ cost of equity to rise</li>
</ul>


The UBS acquisition of Credit Suisse includes the write-off of CHF15.8bn (USD17bn) of Additional Tier 1 (AT1) bonds, despite there being residual equity value for CS shareholders in the deal
AT1s are the most junior, loss absorbing of bonds; precedent exists for the zeroing of AT1s in Spain’s Banco Popular 2017 failure, but importantly this also included shareholders being zeroed
The Credit Suisse AT1 write-off is by far the biggest so far and this unconventional treatment of shareholders versus junior bondholders should lead European banks’ cost of equity to rise


Global Multi-Asset Investment Strategist, True Insights

Jeroen Blokland

Global Multi-Asset Investment Strategist

Build Well-Diversified Multi-Asset Portfolios

True Insights

Our research helps investors build well-diversified multi-asset portfolios and profit from market developments. In addition, our unique and proven Macro – Sentiment – Valuation (MSV) investment framework ensures a consistent flow of new investment opportunities. Together with our market views, these opportunities will be reflected in our live ETF-based Global Multi-Asset Portfolios.

Cross Asset Strategy

<ul>
<li>Monday market dynamics suggest more liquidity is needed to limit contagion risks.</li>
<li>5% is the magic level at which things start to break. The Fed needs time to make things whole again before resuming rate hikes.</li>
<li>Recent events will profoundly impact consumer and business confidence and increase the odds of a recession. Just watch oil!</li>
</ul>


Monday market dynamics suggest more liquidity is needed to limit contagion risks.
5% is the magic level at which things start to break. The Fed needs time to make things whole again before resuming rate hikes.
Recent events will profoundly impact consumer and business confidence and increase the odds of a recession. Just watch oil!


Monetary Policy Update! Federal Reserve Unlikely to Hike Rates in March

<ul>
<li>Interest rate risk in the system increased with the Fed’s steep interest rate hikes and due to the opt-out for many US banks on the AFS securities market-to-market capital hit</li>
<li>Uninsured and concentrated deposits, at the first hint of bank trouble, can take flight very quickly especially in the case of concentrated, key elements of the Silicon Vally Bank collapse</li>
<li>We believe that it is premature to look for buy opportunities in US banks, although we believe that the largest US banks are sound in terms of their balance sheets</li>
</ul>


Interest rate risk in the system increased with the Fed’s steep interest rate hikes and due to the opt-out for many US banks on the AFS securities market-to-market capital hit
Uninsured and concentrated deposits, at the first hint of bank trouble, can take flight very quickly especially in the case of concentrated, key elements of the Silicon Vally Bank collapse
We believe that it is premature to look for buy opportunities in US banks, although we believe that the largest US banks are sound in terms of their balance sheets


US Bank Sector Stress – Old Fashioned Risks and a Regulatory Loophole Meet the Digital Age

<ul>
<li>A concise overview of the latest developments in the unfolding banking crisis and the surprise central bank intervention following them.</li>
<li>Three key reasons equities markets did not collapse: 1) LIQUIDITY, 2) ECB, 3) The Outlier Narrative.</li>
<li>Other Macro data not to be overlooked and our Fear &amp; Frenzy Sentiment Index moved away(!) from Fear this week.</li>
</ul>


A concise overview of the latest developments in the unfolding banking crisis and the surprise central bank intervention following them.
Three key reasons equities markets did not collapse: 1) LIQUIDITY, 2) ECB, 3) The Outlier Narrative.
Other Macro data not to be overlooked and our Fear &amp; Frenzy Sentiment Index moved away(!) from Fear this week.


Weekly Market Monitor (10) - Central Banks Intervene to Fight Contagion Risks

Switzerland

Credit Suisse Group AG is an international financial services group. The Group provides investment banking, private banking, and asset management services to customers located around the world.

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Credit Suisse (CSGN VX)

US: Elevated Inflation and Tight Labour Market to Force Hikes Despite Bank Turmoil

CPI inflation of 6%YoY & core CPI rising 6%MoM annualized leave no room for the FOMC to abjure a rate hike. The collapse of 3 techy banks will mean...

Prasenjit K. Basu

AT1 Bonds; Life After Credit Suisse

The CS AT1 write-off due to UBS's acquisition is an unconventional action on bondholders versus shareholders, implying a rising banks' cost of...

Victor Galliano

Monetary Policy Update! Federal Reserve Unlikely to Hike Rates in March

Elevated contagion risks, ongoing liquidity needs, and lack of trust likely force the Fed to pause, not end hiking rates.

Jeroen Blokland

US Bank Sector Stress – Old Fashioned Risks and a Regulatory Loophole Meet the Digital Age

US bank system strains reflects heightened interest rate risk, exacerbated by uninsured and concentrated deposits at a time of sharply rising...

Victor Galliano

Weekly Market Monitor (10) - Central Banks Intervene to Fight Contagion Risks

The Weekly Monitor - Your weekly chart storm covering all major developments in Macro, Sentiment, and Valuation and their impact on Portfolio...

Jeroen Blokland

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