In today’s briefing:
- Defence Spending Is Not Stimulative
- Asian Equities: Absolute and Relative Valuations – Spotting Mean Reversion Opportunities
- Thailand: Policy Rate Held At 1.75% (Consensus 1.75%) in Jun-25
- Exports Nosedive, But Sri Lanka’s Rubber Industry Aims High
Defence Spending Is Not Stimulative
- NATO raised its target for defence spending to 5% of GDP, with Spain opting out. This increases pressure for tighter monetary conditions than were otherwise appropriate.
- Defence spending offers weak growth multipliers, so the policy is more likely to stoke deficits than productivity. Central banks may respond with a more hawkish stance.
- With debt levels already high, the move risks crowding out other spending and lifting sovereign risk premiums. Bond yields suffer from higher deficits and future rates.
Asian Equities: Absolute and Relative Valuations – Spotting Mean Reversion Opportunities
- We take a detailed look at forward PE multiples, absolute and relative to Asia, of all Asia ex Japan markets. North Asia is in line with average valuations, India expensive.
- Juxtaposing valuations in comparison to history with the earnings environment of each market, we arrive at conclusions about which market should rerate and which should derate.
- We posit continued rerating for Korea and Philippines. India should derate. HK, Taiwan, Indonesia and Singapore could rerate modestly. Malaysia and Thailand are cheap but seem destined to remain so.
Thailand: Policy Rate Held At 1.75% (Consensus 1.75%) in Jun-25
- The Bank of Thailand maintained its policy rate at 1.75% by a 6-1 vote, in line with expectations, citing robust first-half growth but heightened risks from US trade policy and global uncertainties.
- Despite raising its 2025 growth forecast to 2.3%, the MPC flagged a likely economic slowdown in the second half of the year, subdued inflation well below target, and negative credit growth as key factors influencing future rate decisions.
- The Committee signalled a data-dependent approach, preserving limited policy space and indicating that further rate cuts would require a significant deterioration in growth or inflation outlook.
This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.
Exports Nosedive, But Sri Lanka’s Rubber Industry Aims High
- Export earnings fall 8.16% YoY to US$61.15 million in April 2025
- Latex harvesting starts in drier North-Central Province areas
- Bid to scale up global market share in rubber products from 0.25%
Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Data and News
- ✓ Events & Webinars
Unlock all research summaries