Deputy Chief Economist

Sharmila Whelan

Independent and original Asian investment research

Aletheia Capital

Aletheia Capital (HK) Ltd. (previously known as Asianomics) combines the extensive knowledge of its experienced team with technology and regulatory changes to disrupt Global Markets business in Asia. The firm is completely independent with no conflicts of interest either on Investment Banking advisory or Capital Markets execution.

Macroeconomics

Hong Kong’s economy is in deep downturn and her future uncertain. The passage of the new national security bill has made sure that the island is not going back to the pre-protests Hong Kong. However Beijing will be hard pushed to replace Hong Kong. Aside from its dependence on the island’s financial markets, services industry, independent legal system and the central role it plays in China’s GBA and BRI initiatives, it is not in Beijing’s interest to do so. For now China will want to continue to leverage off Hong Kong’s international reputation. The introduction this week of the Hong Kong-Greater Bay Area wealth management connect is a case in point. There are no immediate alternatives. Five years out from now is a different story.

Hong Kong’s economy is in deep downturn and her future uncertain. The passage of the new national security bill has made sure that the island is not going back to the pre-protests Hong Kong. However Beijing will be hard pushed to replace Hong Kong. Aside from its dependence on the island’s financial markets, services industry, independent legal system and the central role it plays in China’s GBA and BRI initiatives, it is not in Beijing’s interest to do so. For now China will want to continue to leverage off Hong Kong’s international reputation. The introduction this week of the Hong Kong-Greater Bay Area wealth management connect is a case in point. There are no immediate alternatives. Five years out from now is a different story.

Panic has replaced complacency as the number of new coronavirus cases outside China soar. If the worst-case scenario of a global profit-led recession does materialises, the concern is that this could precipitate an emerging-market, external-debt meltdown. Assessing Asian corporate foreign currency liabilities, we would steer clear of Malaysian and Korean firms.

Panic has replaced complacency as the number of new coronavirus cases outside China soar. If the worst-case scenario of a global profit-led recession does materialises, the concern is that this could precipitate an emerging-market, external-debt meltdown. Assessing Asian corporate foreign currency liabilities, we would steer clear of Malaysian and Korean firms.

Virus Fallout - Corporate Asia's Foreign Debt

We are underweight Hong Kong in our relative regional portfolio this year. The 2019 political crisis was exacting a heavy price on the economy and businesses even before the island was hit by the coronavirus pandemic. In this note we look at the longer-term fallout of both for Hong Kong and ask can and will Singapore become Asia’s number one financial centre? Also how China’s thinking is changing with regards to Hong Kong. We do not see Singapore replacing Hong Kong.  Hong Kong’s scale, liquidity, track record and experience as an international financial centre argue against it. It is plausible though that in the future Hong Kong will benefit less from the upside when China booms.

We are underweight Hong Kong in our relative regional portfolio this year. The 2019 political crisis was exacting a heavy price on the economy and businesses even before the island was hit by the coronavirus pandemic. In this note we look at the longer-term fallout of both for Hong Kong and ask can and will Singapore become Asia’s number one financial centre? Also how China’s thinking is changing with regards to Hong Kong. We do not see Singapore replacing Hong Kong.  Hong Kong’s scale, liquidity, track record and experience as an international financial centre argue against it. It is plausible though that in the future Hong Kong will benefit less from the upside when China booms. 

Taiwan has emerged as the surprise outperformer among Asia’s new industrialised economies. Taiwan’s economy has gone from strength to strength this year and the driver of growth for a change is not exports but rather domestic demand and in particular investment. We are optimistic about growth prospects in 2020 and remain overweight Taiwanese equities.

Taiwan has emerged as the surprise outperformer among Asia’s new industrialised economies. Taiwan’s economy has gone from strength to strength this year and the driver of growth for a change is not exports but rather domestic demand and in particular investment. We are optimistic about growth prospects in 2020 and remain overweight Taiwanese equities. 

Global Economist, DeSaque Macro Research

Said Desaque

Global Economist

Delivering Global Macro Investment Insights

DeSaque Macro Research

DeSaque Macro Research Limited was formed by Said DeSaque in April 2012 with the view to delivering global macro investment insights aimed at providing new ideas to clients.

Said DeSaque has over 26 years of experience working as a professional economist in financial services. Prior to establishing DeSaque Macro Research, Said held positions as Senior Economist at Robert W Baird and William Blair. He began his career as a graduate at PaineWebber in 1986, where he eventually became Head of the London Economics Department.

Said takes a very keen interest in international relations, along with their implications for economic development. His research interests include the economic transformation of China and its implications for global capital markets, particularly in the United States. He is a member of Chatham House in London.

The US economy and capital markets have historically been Said’s main focus of attention. He frequently presents his views to institutional investors in diverse geographic locations. In recent years, Said has also been carefully monitoring economic developments in Asia, particularly China and Japan.

FX & Rates

<ul>
<li>Prior to 1983, Hong Kong experienced economic overheating and high inflation. The currency peg’s inception coincided with the rising anti-inflationary credibility of Fed policy conduct. </li>
<li>Hong Kong is, however, now totally exposed to any draconian attempts by the Fed to recoup lost credibility via tighter policy settings.</li>
<li>China needs its own sovereign-controlled financial hub.  Hong Kong could be China’s financial centre, but recent currency weaponisation implies tenability of the currency board becomes increasingly driven by geopolitics.</li>
</ul>


Prior to 1983, Hong Kong experienced economic overheating and high inflation. The currency peg’s inception coincided with the rising anti-inflationary credibility of Fed policy conduct. 
Hong Kong is, however, now totally exposed to any draconian attempts by the Fed to recoup lost credibility via tighter policy settings.
China needs its own sovereign-controlled financial hub.  Hong Kong could be China’s financial centre, but recent currency weaponisation implies tenability of the currency board becomes increasingly driven by geopolitics.


Last Major Currency Peg: Hong Kong’s Fate Could Be Determined by the Fed and Geopolitics

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Hong Kong Treasury (HONG KONG GOVT)

Hong Kong: Uncertain Times But...

Hong Kong’s economy is in deep downturn and her future uncertain. The passage of the new national security bill has made sure that the island is...

Sharmila Whelan

Virus Fallout - Corporate Asia's Foreign Debt

Panic has replaced complacency as the number of new coronavirus cases outside China soar. If the worst-case scenario of a global profit-led...

Sharmila Whelan

Hong Kong - Fallout

We are underweight Hong Kong in our relative regional portfolio this year. The 2019 political crisis was exacting a heavy price on the economy and...

Sharmila Whelan

Taiwan - The Surprise Outperformer

Taiwan has emerged as the surprise outperformer among Asia’s new industrialised economies. Taiwan’s economy has gone from strength to strength this...

Sharmila Whelan

Last Major Currency Peg: Hong Kong’s Fate Could Be Determined by the Fed and Geopolitics

Hong Kong adopted its dollar peg in 1983 when Fed credibility was rising. Its future depends on the Fed's efforts to recoup lost credibility and...

DeSaque Macro Research

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