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>Despite core inflation being below its (headline) inflation target of 4% since Dec'23, the RBI has rigidly failed to cut its policy rate, thus constraining RGDP (&amp; EPS) growth. </li>
<li>Vegetable inflation (6% of CPI) has indeed surged, but monetary policy can do little to influence that. Vegetable and cereal inflation are likely to moderate sharply now, after strong harvest. </li>
<li>We thus expect 75bp of rate cuts in Feb-Jun'25. Near-term RGDP growth will disappoint (7.5% in H2FY25, driven by rebounding government spending), but a rate-driven recovery will occur in H1FY26. </li>
</ul>


Despite core inflation being below its (headline) inflation target of 4% since Dec'23, the RBI has rigidly failed to cut its policy rate, thus constraining RGDP (&amp; EPS) growth. 
Vegetable inflation (6% of CPI) has indeed surged, but monetary policy can do little to influence that. Vegetable and cereal inflation are likely to moderate sharply now, after strong harvest. 
We thus expect 75bp of rate cuts in Feb-Jun'25. Near-term RGDP growth will disappoint (7.5% in H2FY25, driven by rebounding government spending), but a rate-driven recovery will occur in H1FY26. 


India: RBI Extends Rate Policy Error Despite Slow Growth and Prospect of Low Inflation

<ul>
<li>Headline CPI rose 1.33%MoM in Jun'24, because of a 3.17%MoM spike in food CPI. Consequently, headline CPI rose 5.08%YoY, driven by food inflation of 9.36%YoY.</li>
<li>Although core inflation was at 3.1%YoY in May-Jun'24, India targets headline inflation, not core. Vegetable inflation (+29.3%YoY) remained the main culprit pushing up headline inflation. Fiscal solutions will take time.  </li>
<li>Headline CPI inflation is likely to stay close to 5%YoY in Jul-Sep'24 (vs earlier expectations of it abating below 4%YoY). The first rate cut is therefore unlikely before Dec'24. </li>
</ul>


Headline CPI rose 1.33%MoM in Jun'24, because of a 3.17%MoM spike in food CPI. Consequently, headline CPI rose 5.08%YoY, driven by food inflation of 9.36%YoY.
Although core inflation was at 3.1%YoY in May-Jun'24, India targets headline inflation, not core. Vegetable inflation (+29.3%YoY) remained the main culprit pushing up headline inflation. Fiscal solutions will take time.  
Headline CPI inflation is likely to stay close to 5%YoY in Jul-Sep'24 (vs earlier expectations of it abating below 4%YoY). The first rate cut is therefore unlikely before Dec'24. 


India: Inflation Setback in June Pushes Out Prospect of Rate Cuts to Later in the Year

<ul>
<li>The FY25 Budget projects a fiscal deficit of 4.9% of GDP (vs previous projection of 5.1%), but the 12mma of the fiscal deficit was already 4.8% of GDP by May'24. </li>
<li>With real GDP likely to grow 8.5% this year, direct tax revenue should considerably exceed official projections. Government's lower borrowing requirement should crowd-in private investment, further fuelling RGDP. </li>
<li>Hikes in LTCG and STT (on derivatives) are near-term negatives for stocks. But fiscal prudence, employment generation and agricultural productivity enhancements will create a virtuous circle in the medium-term. </li>
</ul>


The FY25 Budget projects a fiscal deficit of 4.9% of GDP (vs previous projection of 5.1%), but the 12mma of the fiscal deficit was already 4.8% of GDP by May'24. 
With real GDP likely to grow 8.5% this year, direct tax revenue should considerably exceed official projections. Government's lower borrowing requirement should crowd-in private investment, further fuelling RGDP. 
Hikes in LTCG and STT (on derivatives) are near-term negatives for stocks. But fiscal prudence, employment generation and agricultural productivity enhancements will create a virtuous circle in the medium-term. 


India: Mild Near-Term Negative for Stocks; Solidly Positive for Medium Term Growth

<ul>
<li>Merchandise exports grew 11.9%YoY in Feb'24 (+7.5%YoY in Jan-Feb'24) amid a broad-based rebound in engineering, pharma, chemical, electronic exports. With exports outpacing imports, the merchandise deficit declined 8.2%YoY in Apr'23-Feb'24. </li>
<li>Services exports are robust, with many hitherto-imported services also moving onshore. The services trade surplus widened 20%YoY in Apr'23-Jan'24, likely enabling the FY24 CAD to shrink to 0.6% of GDP.</li>
<li>With goods exports set to accelerate, and crude oil prices relatively tame, we expect the current account to swing to a surplus in CY24 (and +0.5% of GDP in FY25). </li>
</ul>


Merchandise exports grew 11.9%YoY in Feb'24 (+7.5%YoY in Jan-Feb'24) amid a broad-based rebound in engineering, pharma, chemical, electronic exports. With exports outpacing imports, the merchandise deficit declined 8.2%YoY in Apr'23-Feb'24. 
Services exports are robust, with many hitherto-imported services also moving onshore. The services trade surplus widened 20%YoY in Apr'23-Jan'24, likely enabling the FY24 CAD to shrink to 0.6% of GDP.
With goods exports set to accelerate, and crude oil prices relatively tame, we expect the current account to swing to a surplus in CY24 (and +0.5% of GDP in FY25). 


India: Merchandise and Services Both Help Toward a CA Surplus in CY24

Head of Research, Steno Research

Emil Moller

Head of Research

Macro and Geopolitical Research House

Steno Research

Steno Research is a new macro and geopolitical research house. We are based out of Copenhagen, Denmark, but have an international team and a strong network of sources and partners around the world. The team is lead by Andreas Steno, previous global head of strategy at Nordea Bank, and Mikkel Rosenvold, former chief consultant in the Danish Ministry of Finance.

<ul><li>The early hikers club comprising e.g. Brazil and Mexico could be a decent steepener trade from here as long as FX vol remains relatively muted</li><li>Receiving rates in Brazil, Poland or India amidst this global bond party makes sense</li><li>As markets have outpaced central banks and vanilla economists in pricing in future rate cuts while eagerly purchasing bonds, the question that arises is how to effectively navigate this transition from a period of rapid buying to an anticipated rate cutting cycle in the emerging markets.</li></ul>

The early hikers club comprising e.g. Brazil and Mexico could be a decent steepener trade from here as long as FX vol remains relatively mutedReceiving rates in Brazil, Poland or India amidst this global bond party makes senseAs markets have outpaced central banks and vanilla economists in pricing in future rate cuts while eagerly purchasing bonds, the question that arises is how to effectively navigate this transition from a period of rapid buying to an anticipated rate cutting cycle in the emerging markets.

EM by EM #33: Early Hikers = Early Steepeners?

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India Treasury (INDIA GOVT)

India: RBI Extends Rate Policy Error Despite Slow Growth and Prospect of Low Inflation

RBI policy error constrains growth prospects in FY25, but food inflation is likely to moderate sharply with the strong harvest, allowing 75bp of...

Prasenjit K. Basu

India: Inflation Setback in June Pushes Out Prospect of Rate Cuts to Later in the Year

Headline CPI rose to 5.08%YoY in Jun'24 due to food inflation (9.36%YoY). Despite the high base from Jul-Aug'23, CPI inflation will be near 5%YoY...

Prasenjit K. Basu

India: Mild Near-Term Negative for Stocks; Solidly Positive for Medium Term Growth

FY25 Budget advanced reforms, notably in fiscal consolidation, employment, farm productivity and rationalising LTCG. But the latter (and higher STT...

Prasenjit K. Basu

India: Merchandise and Services Both Help Toward a CA Surplus in CY24

Goods exports grew 7.5%YoY in Jan-Feb24, leading to a decline in the merchandise deficit. With the services surplus up 20%YoY, a swing to a...

Prasenjit K. Basu

EM by EM #33: Early Hikers = Early Steepeners?

Conclusions up front:– The early hikers club comprising e.g. Brazil and Mexico could be a decent steepener trade from here as long as FX vol...

Steno Research

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

India: RBI Extends Rate Policy Error Despite Slow Growth and Prospect of Low Inflation

RBI policy error constrains growth prospects in FY25, but food inflation is likely to moderate sharply with the strong harvest, allowing 75bp of...

Prasenjit K. Basu

India: Inflation Setback in June Pushes Out Prospect of Rate Cuts to Later in the Year

​Headline CPI rose to 5.08%YoY in Jun'24 due to food inflation (9.36%YoY). Despite the high base from Jul-Aug'23, CPI inflation will be near 5%YoY...

Prasenjit K. Basu

India: Mild Near-Term Negative for Stocks; Solidly Positive for Medium Term Growth

FY25 Budget advanced reforms, notably in fiscal consolidation, employment, farm productivity and rationalising LTCG. But the latter (and higher STT...

Prasenjit K. Basu

India: Merchandise and Services Both Help Toward a CA Surplus in CY24

​Goods exports grew 7.5%YoY in Jan-Feb24, leading to a decline in the merchandise deficit. With the services surplus up 20%YoY, a swing to a...

Prasenjit K. Basu

EM by EM #33: Early Hikers = Early Steepeners?

Conclusions up front:– The early hikers club comprising e.g. Brazil and Mexico could be a decent steepener trade from here as long as FX vol...

Steno Research

Headline CPI rose to 5.08%YoY in Jun'24 due to food inflation (9.36%YoY). Despite the high base from Jul-Aug'23, CPI inflation will be near 5%YoY...

Goods exports grew 7.5%YoY in Jan-Feb24, leading to a decline in the merchandise deficit. With the services surplus up 20%YoY, a swing to a...