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>FX reserves, which had declined over 10% from Mar'22 to Oct'22, rebounded by 8.9% in Nov-Dec'22. Anwar's inclusive policies will likely induce a steady rebound in net capital inflows. </li>
<li>Base effects have facilitated 9.3%YoY real GDP growth in Q1-Q3 2022 led by strong private consumption and net exports; better growth cut the fiscal deficit to 4% of GDP YTD.    </li>
<li>Net foreign portfolio outflows averaged 1.75% of GDP since 2013. As FPI rebounds, and non-bumiputera businesses invest anew, Malaysia's real GDP will grow 6% despite the OECD recession in 2023.</li>
</ul>


FX reserves, which had declined over 10% from Mar'22 to Oct'22, rebounded by 8.9% in Nov-Dec'22. Anwar's inclusive policies will likely induce a steady rebound in net capital inflows. 
Base effects have facilitated 9.3%YoY real GDP growth in Q1-Q3 2022 led by strong private consumption and net exports; better growth cut the fiscal deficit to 4% of GDP YTD.    
Net foreign portfolio outflows averaged 1.75% of GDP since 2013. As FPI rebounds, and non-bumiputera businesses invest anew, Malaysia's real GDP will grow 6% despite the OECD recession in 2023.


Malaysia: Anwar Well-Positioned to Spur Economic Recovery as Capital Flows Back

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Index Rebalance

Hong Kong Exchanges and Clearing / Index Rebalance

Hong Kong Exchanges and Clearing (388 HK)

<ul>
<li>The FRTIB benchmark switch from the EAFE Index to the ACWI IMI ex-USA ex-China ex-Hong Kong Index will result in a round trip trade of around US$56bn.</li>
<li>The changes for the <a href="https://www.smartkarma.com/entities/shanghai-shenzhen-csi-300-inde" target="_blank" data-smartkarma-citation="entities:22906:1" rel="noopener">CSI 300</a>, <a href="https://www.smartkarma.com/entities/csi-smallcap-500-index-shang" target="_blank" data-smartkarma-citation="entities:35347:1" rel="noopener">CSI 500</a>, <a href="https://www.smartkarma.com/entities/sse-science-and-technology-innovation-board-50-index" target="_blank" data-smartkarma-citation="entities:29279:1" rel="noopener">STAR50</a>, <a href="https://www.smartkarma.com/entities/shanghai-stock-exchange-sse-50-a-share-index" target="_blank" data-smartkarma-citation="entities:31073:1" rel="noopener">SSE50</a> and a bunch of other mainland China indices will be announced after market close on Friday.</li>
<li>Relatively quiet week for ETF flows with no major creations or redemptions during the week.</li>
</ul>


The FRTIB benchmark switch from the EAFE Index to the ACWI IMI ex-USA ex-China ex-Hong Kong Index will result in a round trip trade of around US$56bn.
The changes for the CSI 300, CSI 500, STAR50, SSE50 and a bunch of other mainland China indices will be announced after market close on Friday.
Relatively quiet week for ETF flows with no major creations or redemptions during the week.


Index Rebalance & ETF Flow Recap: FRTIB, Japan, CSI300, CSI500, STAR50, WuXi XDC, Asahi

Cross Asset Strategy

<ul>
<li>Anwar's PH was trounced by UMNO-led BN in the Johor state election (48 seats to 8). Johorean Ex-PM Muhyiddin's PN drew a complete blank, denting his PPBM/Bersatu's standing vs PAS.</li>
<li>Anwar's ally DAP was the biggest loser in both Johor and Sabah (Nov'25), suffering because of its support for Anwar, who has hewed to pro-Malay rather than PH's multi-racial policies. </li>
<li>For UMNO to capitalise on its coalition's Johor triumph, its Johor leader Onn Hafiz Ghazi needs larger national role. Anwar is weakened relative to BN, but will survive until GE16.  </li>
</ul>


Anwar's PH was trounced by UMNO-led BN in the Johor state election (48 seats to 8). Johorean Ex-PM Muhyiddin's PN drew a complete blank, denting his PPBM/Bersatu's standing vs PAS.
Anwar's ally DAP was the biggest loser in both Johor and Sabah (Nov'25), suffering because of its support for Anwar, who has hewed to pro-Malay rather than PH's multi-racial policies. 
For UMNO to capitalise on its coalition's Johor triumph, its Johor leader Onn Hafiz Ghazi needs larger national role. Anwar is weakened relative to BN, but will survive until GE16.  


Malaysia: Anwar's Leadership Wanes as Voters Desert Pseudo-UMNO Slant

Chief Executive Officer, Emmer Capital Partners Limited

Manishi Raychaudhuri

Chief Executive Officer

Emmer Capital Partners Limited

Emmer Capital Partners is an Asia Pacific focused financial advisory firm engaging in strategic financial asset allocation advice, bespoke thematic research and advising early-stage companies and connecting them to investors. Emmer Capital provides macro-economic and multi-asset investment strategy inputs to institutions, family offices, private wealth managers, private equity, and corporate boards directly and through independent research platforms. Emmer Capital also advises a wide range of startup companies on fund raising and business strategy. Emmer Capital's active engagement with the print and electronic media reaches a broad spectrum of investors across the globe.

<ul>
<li>Asia is cheap relative to the US - trading at less than 40% of US's P/BV - but that's because Asia's ROE has consistently declined relative to US's.</li>
<li>Over the next couple of years Asian ROEs are forecast to revive relative to the US's but all Asian markets are not forecast to participate in this recovery.</li>
<li>The "ROE Winners" (rising forecast ROEs) are Korea, Taiwan, India, Malaysia. Indonesia to stay flat but solidly higher than Asian average. We are skeptical of HK/China and Thailand's ROE recovery.</li>
</ul>


Asia is cheap relative to the US - trading at less than 40% of US's P/BV - but that's because Asia's ROE has consistently declined relative to US's.
Over the next couple of years Asian ROEs are forecast to revive relative to the US's but all Asian markets are not forecast to participate in this recovery.
The "ROE Winners" (rising forecast ROEs) are Korea, Taiwan, India, Malaysia. Indonesia to stay flat but solidly higher than Asian average. We are skeptical of HK/China and Thailand's ROE recovery.


Asian Equities: Be Selective - Focus on The "ROE Winners"

<ul>
<li>Real GDP growth in 2023 will likely be less than 3%, with near-zero net FDI inflow and net foreign portfolio outflows of 2.9% of GDP in Jan-Sep'23. </li>
<li>But with inflation moderating, we expect BNM to cut its policy rate by Mar'24, spurring a rebound to 4.5% real GDP growth in 2024, and inducing positive net FDI inflows.</li>
<li>Budget 2024 credibly widens the tax base, raises services taxes, and begins the tough process of targeted subsidy rationalisation. The lower fiscal deficit should crowd-in private investment. We're cautiously bullish. </li>
</ul>


Real GDP growth in 2023 will likely be less than 3%, with near-zero net FDI inflow and net foreign portfolio outflows of 2.9% of GDP in Jan-Sep'23. 
But with inflation moderating, we expect BNM to cut its policy rate by Mar'24, spurring a rebound to 4.5% real GDP growth in 2024, and inducing positive net FDI inflows.
Budget 2024 credibly widens the tax base, raises services taxes, and begins the tough process of targeted subsidy rationalisation. The lower fiscal deficit should crowd-in private investment. We're cautiously bullish. 


Malaysia: Rate Cut by Mar'24, Lower Fiscal Deficit to Spur Cyclical Recovery in 2024

Malaysia

The FTSE Bursa Malaysia KLCI Index comprises of the largest 30 companies by full market capitalization on Bursa Malaysia's Main Board. When launched, on July 6, 2009 it replaced the Bursa Malaysia KLCI Index starting at the closing value of the KLCI Index on July 3 2009, also inheriting the full history of the KLCI Index.

Kuala Lumpur Composite Index (KLCI) (FBMKLCI INDEX)

Kuala Lumpur Composite Index (KLCI) (FBMKLCI INDEX)

Malaysia: Anwar Well-Positioned to Spur Economic Recovery as Capital Flows Back

FX reserves & MYR have rebounded since Anwar became PM. Non-bumi businesses which were investing outside Malaysia since 2000 are set to return,...

Prasenjit K. Basu

Index Rebalance & ETF Flow Recap: FRTIB, Japan, CSI300, CSI500, STAR50, WuXi XDC, Asahi

This recap highlights Insights covering Asian index rebalances (announcements/ forecasts/ IPO Fast Entry/ M&A driven changes). We also highlight...

Brian Freitas

Malaysia: Anwar's Leadership Wanes as Voters Desert Pseudo-UMNO Slant

Anwar weakened by PH's drubbing by UMNO/BN in Johor. Latter's state leader Onn Ghazi gained it seats from DAP, but its national leaders won't. DAP...

Prasenjit K. Basu

Asian Equities: Be Selective - Focus on The "ROE Winners"

Asia's cheap P/BV compared to the US is due to low ROE. Over the next couple of years Asian ROE is forecast to revive relative to US, driven by...

Manishi Raychaudhuri

Malaysia: Rate Cut by Mar'24, Lower Fiscal Deficit to Spur Cyclical Recovery in 2024

PM Anwar's 1st year has been disappointing, with sluggish growth & net outflows of FPI. But inflation abated, so policy rate is set to decline....

Prasenjit K. Basu

Malaysia: Anwar Well-Positioned to Spur Economic Recovery as Capital Flows Back

FX reserves & MYR have rebounded since Anwar became PM. Non-bumi businesses which were investing outside Malaysia since 2000 are set to return,...

Prasenjit K. Basu

Index Rebalance & ETF Flow Recap: FRTIB, Japan, CSI300, CSI500, STAR50, WuXi XDC, Asahi

This recap highlights Insights covering Asian index rebalances (announcements/ forecasts/ IPO Fast Entry/ M&A driven changes). We also highlight...

Brian Freitas

Malaysia: Anwar's Leadership Wanes as Voters Desert Pseudo-UMNO Slant

Anwar weakened by PH's drubbing by UMNO/BN in Johor. Latter's state leader Onn Ghazi gained it seats from DAP, but its national leaders won't. DAP...

Prasenjit K. Basu

Asian Equities: Be Selective - Focus on The "ROE Winners"

​Asia's cheap P/BV compared to the US is due to low ROE. Over the next couple of years Asian ROE is forecast to revive relative to US, driven by...

Manishi Raychaudhuri

Malaysia: Rate Cut by Mar'24, Lower Fiscal Deficit to Spur Cyclical Recovery in 2024

PM Anwar's 1st year has been disappointing, with sluggish growth & net outflows of FPI. But inflation abated, so policy rate is set to decline....

Prasenjit K. Basu

Asia's cheap P/BV compared to the US is due to low ROE. Over the next couple of years Asian ROE is forecast to revive relative to US, driven by...