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>Markets are right to hail Anwar's appointment as PM, as his multi-racial vision fits perfectly with the federalist ideas that Sabah-Sarawak desire, which will lend stability to his government. </li>
<li>Anwar should have been Malaysia's 5th PM, not its 10th. But his multi-racial approach, and commitment to fighting cronyism, support of the poor and simplicity among ministers have been consistent.</li>
<li>Anwar seeks a cleaner, more internationally-linked and fiscally responsible Malaysia. With the levers of power in his hand, he will deliver this during a single 5-year term. We are bullish. </li>
</ul>


Markets are right to hail Anwar's appointment as PM, as his multi-racial vision fits perfectly with the federalist ideas that Sabah-Sarawak desire, which will lend stability to his government. 
Anwar should have been Malaysia's 5th PM, not its 10th. But his multi-racial approach, and commitment to fighting cronyism, support of the poor and simplicity among ministers have been consistent.
Anwar seeks a cleaner, more internationally-linked and fiscally responsible Malaysia. With the levers of power in his hand, he will deliver this during a single 5-year term. We are bullish. 


Malaysia: PM Anwar Ibrahim Has a Lifetime of Experience to Deliver Unity & Progress

<ul>
<li>Although Anwar-led Pakatan Harapan (PH) won a plurality as we expected, the Islamist PAS unexpectedly emerged as the largest Malay party, winning 49 seats (vs UMNO's 26 and Bersatu's 24).</li>
<li>PH could attempt to form coalition with the Borneo Bloc (28 seats) plus a few smaller parties. A stabler alliance would involve PH joining PAS, given their leaders' ABIM pasts. </li>
<li>PN and BN could attempt to cobble an alternative alliance with the Borneo Bloc, but the latter will be wary of PAS being the largest party in it. Uncertainty ahead! </li>
</ul>


Although Anwar-led Pakatan Harapan (PH) won a plurality as we expected, the Islamist PAS unexpectedly emerged as the largest Malay party, winning 49 seats (vs UMNO's 26 and Bersatu's 24).
PH could attempt to form coalition with the Borneo Bloc (28 seats) plus a few smaller parties. A stabler alliance would involve PH joining PAS, given their leaders' ABIM pasts. 
PN and BN could attempt to cobble an alternative alliance with the Borneo Bloc, but the latter will be wary of PAS being the largest party in it. Uncertainty ahead! 


PH Wins a Narrow Plurality, but PAS Is the Single Largest Party: Uncertainty Ahead

Thematic (Sector/Industry)

<ul>
<li>We expect PH to win the 15th General Election, because it will win a majority of the seats in West Malaysia as the non-PH vote splits between UMNO and PN. </li>
<li>PH may fall short of a national majority because it competes with local parties (rather than aligning with any major ones) in Sabah-Sarawak, which may hold the final cards.</li>
<li>While that is our baseline scenario, if current polling holds, PH will comfortably form the government with Anwar as PM. Winners will be technology companies and Hong Leong group.</li>
</ul>


We expect PH to win the 15th General Election, because it will win a majority of the seats in West Malaysia as the non-PH vote splits between UMNO and PN. 
PH may fall short of a national majority because it competes with local parties (rather than aligning with any major ones) in Sabah-Sarawak, which may hold the final cards.
While that is our baseline scenario, if current polling holds, PH will comfortably form the government with Anwar as PM. Winners will be technology companies and Hong Leong group.


Malaysia: PH Is Stronger in West Malaysia, but Sabah-Sarawak May Hold Final Cards

<ul>
<li>Expansionary fiscal and monetary policy have bolstered growth at the expense of a 13%YoY depreciation of the ringgit and capital flight reflected in shrinking FX reserves amid surging trade surpluses. </li>
<li>Elevated crude-oil and palm oil prices boosted the trade surplus, but the current account surplus shrank to less than 1% of GDP in 1H2022, as foreign-worker remittances soared. </li>
<li>Despite 24 years of current account surpluses, Malaysia's reserves provide just 4.6 months' import cover. Net FPI outflows persisted even when global equities were soaring. Kleptocracy is inducing capital flight.  </li>
</ul>


Expansionary fiscal and monetary policy have bolstered growth at the expense of a 13%YoY depreciation of the ringgit and capital flight reflected in shrinking FX reserves amid surging trade surpluses. 
Elevated crude-oil and palm oil prices boosted the trade surplus, but the current account surplus shrank to less than 1% of GDP in 1H2022, as foreign-worker remittances soared. 
Despite 24 years of current account surpluses, Malaysia's reserves provide just 4.6 months' import cover. Net FPI outflows persisted even when global equities were soaring. Kleptocracy is inducing capital flight.  


Malaysia: Local and Foreign Investors Are Fleeing Despite the Commodity Boom

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Technical Analysis

Jakarta Stock Exchange Composite Index / Technical Analysis

Jakarta Stock Exchange Composite Index (JCI INDEX)

<ul>
<li>Hiding spots that are coming under pressure -  Indonesia's JKSE just cracked key support that makes the USD/IDR one of the last holdouts to see a big USD move.</li>
<li>USD/IDR bull triangle breakout unfolding with risk of a big USD short squeeze.</li>
<li>USD/MYR break above 4.50 would increase odds of devaluation and a more painful USD move in Asian FX. A huge pivot level to watch.</li>
</ul>


Hiding spots that are coming under pressure -  Indonesia's JKSE just cracked key support that makes the USD/IDR one of the last holdouts to see a big USD move.
USD/IDR bull triangle breakout unfolding with risk of a big USD short squeeze.
USD/MYR break above 4.50 would increase odds of devaluation and a more painful USD move in Asian FX. A huge pivot level to watch.


Indonesia the Latest Safe Haven to Buckle with KLSE in Pursuit

Malaysia

The Malaysian ringgit is the official currency of the Federation of Malaysia. 

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Malaysia: PM Anwar Ibrahim Has a Lifetime of Experience to Deliver Unity & Progress

Anwar is PM despite enormous obstacles placed in his path over the past 25 years. A multiracial, fiscally responsible & non-corrupt government are...

Prasenjit K. Basu

PH Wins a Narrow Plurality, but PAS Is the Single Largest Party: Uncertainty Ahead

Islamist PAS is the largest party in the new parliament, an outcome that will worry markets. Multi-racial PH does have the plurality, but any...

Prasenjit K. Basu

Malaysia: PH Is Stronger in West Malaysia, but Sabah-Sarawak May Hold Final Cards

Anwar Ibrahim will be PM by the end of November. PH will win west Malaysia comfortably, but may fall short nationally because of Borneo states....

Prasenjit K. Basu

Malaysia: Local and Foreign Investors Are Fleeing Despite the Commodity Boom

Expansionary fiscal & monetary policy have bolstered growth but induced capital flight. Despite 24yrs of CA surpluses, FX reserves provide just 4.6...

Prasenjit K. Basu

Indonesia the Latest Safe Haven to Buckle with KLSE in Pursuit

Hiding spots that are coming under pressure - Indonesia's JKSE just cracked key support that makes the USD/IDR one of the last holdouts to see a...

Thomas Schroeder

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