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

While the FOMC formally maintains an accommodative stance (including the promised purchase of US$120 billion worth of bonds monthly), the US monetary base has declined by US$15 billion between April and June 2021. Despite this stealth taper of the monetary base, M2 was still up 11.1% YoY in June 2021 -- faster than the fastest pace of M2 growth reached during QE1 and QE2 (10.4% YoY in January 2009 and January 2012) -- despite the high base of 20.6-27% YoY growth in M2 during April 2020-March 2021.  The excessively rapid pace of monetary growth inevitably is contributing to inflation: the broadest measure, the GDP deflator, was up 6%QoQsaar in 2Q 2021, core PCE inflation was 6.1% and PCE inflation was 6.4% annualized in 2Q 2021. The YoY pace of core-PCE inflation (3.5% in June) and core CPI inflation (4.5%) are at 29-year highs, but do not yet reflect the impact of soaring house prices on OERs and rental rates: the Case-Shiller 20-city house price index was up 17% YoY in May 2021 (the fastest in its 30 year history), which will inevitably seep into the consumer inflation gauges during the course of 2H 2021. To pretend housing inflation is transitory is fatuous.  In the second half of July, the US overtook Indonesia for the dubious distinction of the country with the highest number of new Covid cases globally (569K in the last week of July, 400K in the previous week). But the 7-day moving average (80K) is still less than a third the new daily cases the US was reporting at the peak (11 January 2021), and nearly half the US population has been fully vaccinated. ISM manufacturing for July (with the PMI at 59.5 and new orders at 64.9, both still suggesting spectacular growth but 1.1 points lower than June) suggests a very mild impact from this second Covid wave: real GDP will decelerate in 2H 2021, but (having already surpassed pre-Covid levels) will continue to grow faster than the US economy's potential growth, keeping the pressure on inflation. We note that taper has already begun, but will have to be formally acknowledged by the November FOMC meeting, as inflation continues to print well above the 3% YoY mark for the rest of 2021. A premature rise in the Fed Funds is inevitable before the end of 2021, completely against the market's expectations. We would stay underweight equities.

While the FOMC formally maintains an accommodative stance (including the promised purchase of US$120 billion worth of bonds monthly), the US monetary base has declined by US$15 billion between April and June 2021. Despite this stealth taper of the monetary base, M2 was still up 11.1% YoY in June 2021 -- faster than the fastest pace of M2 growth reached during QE1 and QE2 (10.4% YoY in January 2009 and January 2012) -- despite the high base of 20.6-27% YoY growth in M2 during April 2020-March 2021.  The excessively rapid pace of monetary growth inevitably is contributing to inflation: the broadest measure, the GDP deflator, was up 6%QoQsaar in 2Q 2021, core PCE inflation was 6.1% and PCE inflation was 6.4% annualized in 2Q 2021. The YoY pace of core-PCE inflation (3.5% in June) and core CPI inflation (4.5%) are at 29-year highs, but do not yet reflect the impact of soaring house prices on OERs and rental rates: the Case-Shiller 20-city house price index was up 17% YoY in May 2021 (the fastest in its 30 year history), which will inevitably seep into the consumer inflation gauges during the course of 2H 2021. To pretend housing inflation is transitory is fatuous.  In the second half of July, the US overtook Indonesia for the dubious distinction of the country with the highest number of new Covid cases globally (569K in the last week of July, 400K in the previous week). But the 7-day moving average (80K) is still less than a third the new daily cases the US was reporting at the peak (11 January 2021), and nearly half the US population has been fully vaccinated. ISM manufacturing for July (with the PMI at 59.5 and new orders at 64.9, both still suggesting spectacular growth but 1.1 points lower than June) suggests a very mild impact from this second Covid wave: real GDP will decelerate in 2H 2021, but (having already surpassed pre-Covid levels) will continue to grow faster than the US economy's potential growth, keeping the pressure on inflation. We note that taper has already begun, but will have to be formally acknowledged by the November FOMC meeting, as inflation continues to print well above the 3% YoY mark for the rest of 2021. A premature rise in the Fed Funds is inevitable before the end of 2021, completely against the market's expectations. We would stay underweight equities. 

2 Months of Stealth Taper and Mild Delta-Driven Slowdown; but Inflation Still Surging

Alpha-Centric ESG Research

Kyle Rudden

I recently published <a href="https://www.smartkarma.com/insights/u-s-esg-legislation-h-r-1187-unlikely-to-survive-the-republican-senate-but-there-is-more-to-come" target="_blank" data-smartkarma-citation="insights:55304" rel="noopener">U.S. ESG Legislation (H.R.1187) Unlikely to Survive the Republican Senate But There Is More to Come</a>, a brief update on ESG legislative activity in the U.S. Congress, specifically House bill (<a href="https://www.congress.gov/117/bills/hr1187/BILLS-117hr1187rfs.pdf" target="_blank" rel="noopener">H.R.1187</a>), commonly known by its short title, the "ESG Disclosure Simplification Act."That Insight told a bitter-sweet tale. On one hand, H.R.1187 is the first substantive ESG legislation in U.S. history and its passage by the House to the Senate represents a watershed moment for U.S. ESG policy. On the other hand, the bill is likely already dead on arrival in the Republican Senate.A key point made in that Insight is that whilst H.R.1187 seems destined to die on the Senate floor, it would not be in vain. H.R.1187 and its precursors set the wheels of U.S. ESG policy in motion to such a degree that Congressional legislation is merely one locus of current ESG policy activity.Aside from ESG legislation in Congress, ESG regulation at the Securities and Exchange Commission is a second epicentre of U.S. ESG policy – and in many respects, the SEC is the more promising of the two. In the first Insight, I promised a summary of the SEC's ESG-related activity.So here we are; a quick catch-up on recentg SEC activity, an overview of its ESG agenda, and a few thoughts on where things are headed vis-à-vis climate and ESG disclosure regulations.

I recently published U.S. ESG Legislation (H.R.1187) Unlikely to Survive the Republican Senate But There Is More to Come, a brief update on ESG legislative activity in the U.S. Congress, specifically House bill (H.R.1187), commonly known by its short title, the "ESG Disclosure Simplification Act."That Insight told a bitter-sweet tale. On one hand, H.R.1187 is the first substantive ESG legislation in U.S. history and its passage by the House to the Senate represents a watershed moment for U.S. ESG policy. On the other hand, the bill is likely already dead on arrival in the Republican Senate.A key point made in that Insight is that whilst H.R.1187 seems destined to die on the Senate floor, it would not be in vain. H.R.1187 and its precursors set the wheels of U.S. ESG policy in motion to such a degree that Congressional legislation is merely one locus of current ESG policy activity.Aside from ESG legislation in Congress, ESG regulation at the Securities and Exchange Commission is a second epicentre of U.S. ESG policy – and in many respects, the SEC is the more promising of the two. In the first Insight, I promised a summary of the SEC's ESG-related activity.So here we are; a quick catch-up on recentg SEC activity, an overview of its ESG agenda, and a few thoughts on where things are headed vis-à-vis climate and ESG disclosure regulations.

U.S. ESG Regulation Expected By Year-End; SEC to Mandate Climate/ESG Disclosure By Listed Companies

During the 2020 U.S. Presidential Election and transition (August 2020 through February 2021), I published a series of Insights on the likely U.S. sustainability/ESG policies under various election outcome scenarios. Too many Insights to list, but the following are representative examples:<ul>
<li>
<a href="https://www.smartkarma.com/insights/u-s-elections-a-biden-win-would-be-a-win-for-esg-investing-and-sustainable-finance" target="_blank" data-smartkarma-citation="insights:44503" rel="noopener">U.S. Elections: A Biden Win Would Be a Win for ESG Investing and Sustainable Finance</a> </li>
<li>
<a href="https://www.smartkarma.com/insights/u-s-elections-a-biden-win-would-include-reversing-trump-s-anti-esg-handiwork" target="_blank" data-smartkarma-citation="insights:44764" rel="noopener">U.S. Elections: A Biden Win Would Include Reversing Trump's Anti-ESG Handiwork</a> </li>
<li>
<a href="https://www.smartkarma.com/insights/biden-making-good-on-major-environmental-promises-new-sec-is-more-esg-focused" target="_blank" data-smartkarma-citation="insights:48662" rel="noopener">Biden Making Good on Major Environmental Promises: New SEC Is More ESG-Focused</a> </li>
</ul>Since then, I have not written much about ESG in the U.S., for two reasons: 1) the interesting ESG activity in Asia stole my attention, and 2) there was little worth writing about here. Early in 2021, there were a few events – individually important, but too isolated to be collectively substantive.That changed in the last month, as the Biden administration's climate agenda manifested itself in several areas, not the least of which is ESG disclosure – ESG disclosure legislation in Congress, and ESG disclosure regulation at the U.S. Securities and Exchange Commission (SEC). This Insight is a brief update on the ESG disclosure legislation working its way through Congress, notably House Bill 1187 (H.R.1187), the "ESG Disclosure Simplification Act." H.R.1187 is likely dead on arrival in the Senate (too much Republican opposition), but it heralds more to come.It is the proverbial tip of an iceberg.

During the 2020 U.S. Presidential Election and transition (August 2020 through February 2021), I published a series of Insights on the likely U.S. sustainability/ESG policies under various election outcome scenarios. Too many Insights to list, but the following are representative examples:

U.S. Elections: A Biden Win Would Be a Win for ESG Investing and Sustainable Finance 

U.S. Elections: A Biden Win Would Include Reversing Trump's Anti-ESG Handiwork 

Biden Making Good on Major Environmental Promises: New SEC Is More ESG-Focused 
Since then, I have not written much about ESG in the U.S., for two reasons: 1) the interesting ESG activity in Asia stole my attention, and 2) there was little worth writing about here. Early in 2021, there were a few events – individually important, but too isolated to be collectively substantive.That changed in the last month, as the Biden administration's climate agenda manifested itself in several areas, not the least of which is ESG disclosure – ESG disclosure legislation in Congress, and ESG disclosure regulation at the U.S. Securities and Exchange Commission (SEC). This Insight is a brief update on the ESG disclosure legislation working its way through Congress, notably House Bill 1187 (H.R.1187), the "ESG Disclosure Simplification Act." H.R.1187 is likely dead on arrival in the Senate (too much Republican opposition), but it heralds more to come.It is the proverbial tip of an iceberg.

U.S. ESG Legislation (H.R.1187) Unlikely to Survive the Republican Senate But There Is More to Come

Smartkarma Research Team, Smartkarma

Smartkarma Research

Smartkarma Research Team

Smartkarma

Smartkarma unites the fragmented investment industry, connecting institutional investors, independent research providers, and corporates within a single network.

Research Reinvented

For our next Smartkarma Webinar, we are thrilled to welcome back Insight Provider <a href="https://www.smartkarma.com/profiles/kyle-rudden" target="_blank" data-smartkarma-citation="accounts:4495" rel="noopener">Kyle Rudden</a> , who will be sharing insights on the trending issue of Environmental, Social, and Governance Investing. ESG investing is widely seen as a way of investing “sustainably” where investments are made with consideration of the environment and human well-being, as well as the economy. Kyle believes global sustainability is imperative and views private-sector capital as its cornerstone. As such, he supports the various impact-oriented strategies typically associated with ESG investing. However, his views on ESG and investing lean more pragmatic than idealistic, and his research focuses on applying ESG analysis to general investing rather than to "ESG investing" per se. Kyle subscribes to the Triple Bottom Line view of sustainability, where economic and financial metrics are deemed as important as ESG factors.This webinar is organised jointly by Smartkarma and SGX.<h3>The webinar will be hosted on Wednesday, 14 July 2021, 17:00 SGT/HKT.</h3><div class="content-highlight"><h2><a href="https://share.hsforms.com/1H9pFZOB-RF2J00kbvMmxcw2c5gj?zoom_webinar_id=86937019742" target="_blank" rel="noopener">Register for the Webinar here</a></h2></div>Kyle Rudden is an ESG (Environmental, Social, Governance) analyst with an alpha-centric approach to ESG research. After all, ESG investing is, first and foremost, investing. "Alpha-centric" does not mean apathetic, however. Quite the contrary. Kyle believes global sustainability – i.e., environmental stewardship, social equality, and economic prosperity – is imperative, and private-sector capital is its cornerstone. Private-sector capital still has fiduciary responsibilities. Profitability is necessary for sustained impact. The Triple Bottom Line. People, Planet, AND Profit.

For our next Smartkarma Webinar, we are thrilled to welcome back Insight Provider Kyle Rudden , who will be sharing insights on the trending issue of Environmental, Social, and Governance Investing. ESG investing is widely seen as a way of investing “sustainably” where investments are made with consideration of the environment and human well-being, as well as the economy. Kyle believes global sustainability is imperative and views private-sector capital as its cornerstone. As such, he supports the various impact-oriented strategies typically associated with ESG investing. However, his views on ESG and investing lean more pragmatic than idealistic, and his research focuses on applying ESG analysis to general investing rather than to "ESG investing" per se. Kyle subscribes to the Triple Bottom Line view of sustainability, where economic and financial metrics are deemed as important as ESG factors.This webinar is organised jointly by Smartkarma and SGX.The webinar will be hosted on Wednesday, 14 July 2021, 17:00 SGT/HKT.Register for the Webinar hereKyle Rudden is an ESG (Environmental, Social, Governance) analyst with an alpha-centric approach to ESG research. After all, ESG investing is, first and foremost, investing. "Alpha-centric" does not mean apathetic, however. Quite the contrary. Kyle believes global sustainability – i.e., environmental stewardship, social equality, and economic prosperity – is imperative, and private-sector capital is its cornerstone. Private-sector capital still has fiduciary responsibilities. Profitability is necessary for sustained impact. The Triple Bottom Line. People, Planet, AND Profit.

Smartkarma Webinar | Foundations of Sustainable/ESG Investing and Finance

As ever-increasing numbers of companies report sustainability performance, and as more investors integrate ESG into their investment processes, sustainability/ESG data becomes more critical than ever. In turn, sustainability reporting standards-setters take on greater responsibility.There is a problem, however... a big problem. There are too many standards-setting organisations and frameworks. This generates confusion, hinders corporate reporting, and diminishes usefulness and compatability and of reported sustainability/ESG data and information.Too many cooks in the kitchen, as it were.Well, there is one less cook in that kitchen now, with the recent closing of the merger between the International Integrated Reporting Council (IIRC) and Sustainability Accounting Standards Board (SASB), creating a new standards organisation called the Value Reporting Foundation.It's still a crowded kitchen, however (there are more than 700 standards in the world). A singularity is neither realistic, nor desirable. Niche frameworks, which comprise the majority of that 700, play important roles. But the top of the ecosystem – large general frameworks – needs streamlining.The IIRC/SASB merger is a small, but important, step in aligning and streamlining sustainability reporting. This Insight is a very brief look at the IIRC/SASB merger, as well as GRI's reboot of its Sector Program – and 40 sector-specific GRI standards that will start rolling out later this year.

As ever-increasing numbers of companies report sustainability performance, and as more investors integrate ESG into their investment processes, sustainability/ESG data becomes more critical than ever. In turn, sustainability reporting standards-setters take on greater responsibility.There is a problem, however... a big problem. There are too many standards-setting organisations and frameworks. This generates confusion, hinders corporate reporting, and diminishes usefulness and compatability and of reported sustainability/ESG data and information.Too many cooks in the kitchen, as it were.Well, there is one less cook in that kitchen now, with the recent closing of the merger between the International Integrated Reporting Council (IIRC) and Sustainability Accounting Standards Board (SASB), creating a new standards organisation called the Value Reporting Foundation.It's still a crowded kitchen, however (there are more than 700 standards in the world). A singularity is neither realistic, nor desirable. Niche frameworks, which comprise the majority of that 700, play important roles. But the top of the ecosystem – large general frameworks – needs streamlining.The IIRC/SASB merger is a small, but important, step in aligning and streamlining sustainability reporting. This Insight is a very brief look at the IIRC/SASB merger, as well as GRI's reboot of its Sector Program – and 40 sector-specific GRI standards that will start rolling out later this year.

Sustainability/ESG Reporting Frameworks: One Less Cook in the Kitchen But It Is Still Too Crowded

United States

MSCI Inc. provides investment decision support tools to investment institutions worldwide. The Company produces indices and risk and return portfolio analytics for use in managing investment portfolios.

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MSCI Inc (MSCI US)

2 Months of Stealth Taper and Mild Delta-Driven Slowdown; but Inflation Still Surging

US base money declined by $15bn between April and June 2021, a stealth taper. House prices up 17%YoY will push up PCE inflation via OERs, & growth...

Prasenjit K. Basu

U.S. ESG Regulation Expected By Year-End; SEC to Mandate Climate/ESG Disclosure By Listed Companies

While ESG reporting legislation is tied up in Congress, ESG reporting regulation is moving swiftly at the SEC unencumbered by the bipartisanship of...

Kyle Rudden

U.S. ESG Legislation (H.R.1187) Unlikely to Survive the Republican Senate But There Is More to Come

After much of nothing for years, U.S. ESG policy is coming to life. This is a brief look at ESG legislation in Congress. Just the tip of an...

Kyle Rudden

Smartkarma Webinar | Foundations of Sustainable/ESG Investing and Finance

On 14 July, 5pm SGT, join our webinar with Kyle Rudden, who will be sharing his insights on the trending issue of ESG Investing and the Triple...

Smartkarma Research

Sustainability/ESG Reporting Frameworks: One Less Cook in the Kitchen But It Is Still Too Crowded

A brief word on the recently-closed IIRC/SASB merger and what it portends for sustainability reporting, plus a bit on GRI's reboot of its sector...

Kyle Rudden

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