Daily BriefsMacro

Macro: The Week That Was in [email protected] – BNI Is Happening and more

In today’s briefing:

  • The Week That Was in [email protected] – BNI Is Happening, Indonesian Hospitals, and the PSE
  • Alpha Bites: Monthly Trade Ideas Recap (May 2021)
  • India State Elections: BJP’s Political Juggernaut Stopped In Its Tracks
  • India: Some Light At The End Of The Tunnel For the Virus-Ravaged Economy
  • Q1 Earnings Monitor: Priced For Perfection
  • The US & Asia: Beyond The First 100 Days, What Difference Can Biden Make?

The Week That Was in [email protected] – BNI Is Happening, Indonesian Hospitals, and the PSE

By Angus Mackintosh

The week that was in [email protected] is filled with another eclectic mix of differentiated, substantive, and actionable insights from across South East Asia and includes macro, top-down and thematic pieces, as well as actionable equity bottom-up and credit insights over the past week.

We add below a NEW section, which includes emerging themes in ASEAN and selects important news flow or developments for commentary, which may impact SE Asian companies and markets. 

Macro Insights

In Singapore: Further Scope For Growth Surprises, economist Nigel Chiang discusses Singapore’s economic outlook, where he sees GDP potentially exceeding +6% in 2021.

Equity Bottom Up

In Bank Negara Indonesia (BBNI IJ) – The Happening, CrossASEAN Insight Provider Angus Mackintosh revisits one of Indonesia’stop four banks and finds an encouraging picture.

In Mitra Keluarga Karyasehat (MIKA IJ) – Occupancy and Profitability Rising, CrossASEAN Insight Provider Angus Mackintosh revisits Indonesia’s leading hospital player post its recent results. 

 In Matahari Department Store (LPPF IJ) – Uncertain Waters Ahead of Lebaran, CrossASEAN insight provider Angus Mackintosh revisits Matahari Department Store (LPPF IJ) after the company released its 1Q21 results. 

In Philippine Stock Exchange Inc (PSE PM) – Overlooked and On the Up, Angus Mackintosh provides an initial view on Philippine Stock Exchange (PSE PM), which is seeing higher volumes and a surge in IPOs. 

In AC Energy Re-IPO – Lots of Moving Parts, Needs the Dust to Settle, Zhen Zhou, Toh provides an initial view on AC Energy Corp (ACEN PM), which is looking to raise up to US$341m in its upcoming IPO in the Philippines.

In PSEi Index Rebalance Preview: Follow-On Offering Could See ACEN Added, DMC Deleted, Brian Freitas, takes a look at the Philippines Stock Exchange PSEi Index (PCOMP INDEX)‘s rebalance preview. He sees a possibility of AC Energy Corp (ACEN PM) being included in the index, which would see DMCI Holdings (DMC PM) potentially being excluded.

In High Conviction Ideas 2021 Update: Travel Bubble, Taxi, Henry Soediarko revisits Comfortdelgro Corp (CD SP) after Singapore plans to forge a Travel Bubble agreement between Singapore and Hong Kong. 

In Monde Nissin, Pre-IPO – Thoughts on Valuation, Sumeet Singh reports back on Monde Nissin Corp’s (0191881D PM)‘s earnings forecasts and valuations. 

In MSCI Singapore Index – Upcoming Changes, Brian Freitas discusses upcoming changes on MSCI Singapore Free Index (SIMSCI INDEX).  

In SCGP: Benefiting from Supply Shortage in 1H21, Country Group maintains a HOLD rating for SCG Packaging Public Company Limited (SCGP TB) after the company announced its 1Q2021 results. 

Credit Insights

In Morning Views Asia: Road King Infrastructure, Sirtex Medical, credit specialist Leonard Law, CFA provides a bird’s eye view on Sri Rejeki Isman (SRIL IJ) after the Fitch rating agency downgraded its ratings to C from CCC-, after the company failed to pay c. USD 850k of interest payments due on 23 April. 

Alpha Bites: Monthly Trade Ideas Recap (May 2021)

By Gautam Jain, PhD, CFA

This is the third edition of our monthly trade ideas recap note in which we list our current trade recommendations and discuss whether any need to be closed. We have made a total of 12 trade recommendations so far, of which 8 are in the money.

India State Elections: BJP’s Political Juggernaut Stopped In Its Tracks

By Manu Bhaskaran

Assembly elections were held in five states outside the Hindi heartland where the ruling BJP has its base. The result was a clear rebuff to Premier Modi’s ruling BJP party. 4 key takeaways:

  • First, the limits of the Hindu nationalism that the BJP espouses are being reached. While the BJP’s vote share in West Bengal soared, it still fell far short of winning the state as it had expected – despite a massive personal effort by Modi and his senior colleagues. It barely made gains in south India though it held onto its strong position in Assam.
  • Second, the BJP’s opponents are finding ways to blunt the BJP’s use of Hindu nationalism, showing they can maintain their appeal to Hindus while not forsaking the Muslim vote, which is significant in states such as West Bengal and Kerala.
  • Third, it looks like the BJP was under-performing electorally even before the horrendous surge in COVID infections and deaths might have turned voters against it. It is fair to assume that its current standing with voters is probably even worse than the results showed.
  • Finally, the Indian polity remains highly fragmented. The former ruling party, the Indian National Congress continued to lose votes and only parties with a limited regional base appear able to stand up to the BJP. That fact may help the BJP maintain its overall grip on national power.

India: Some Light At The End Of The Tunnel For the Virus-Ravaged Economy

By Nicholas Chia

  • By transposing the previous peak-to-trough data back in September 2020, we estimate that the tragic surge in COVID infections in India should peak sometime in the third quarter this year, if not earlier.
  • In the meantime, growth will slow as footfall fared poorly and employers anxious over the impact on employees. Supply-side disruptions will fan inflationary pressures, and key policy initiatives will be delayed. Shipments of AstraZeneca vaccines to other emerging economies such as Indonesia and the Philippines will be delayed for a few months.

Q1 Earnings Monitor: Priced For Perfection

By Cam Hui

We are well into Q1 earnings season; 60% of the S&P 500 has reported their results and the top- and bottom-line beat rates are well above average. The V-shaped recovery is complete.

However, the market is priced for perfection. We reiterate our warning that risks are rising for the stock market. You can tell a lot about market psychology by how the market reacts to the news. The six largest stocks in the S&P 500 reported last week and they all beat consensus estimates, but the index was flat.

A “Sell in May” strategy may be a useful investment template for the next few months.

The US & Asia: Beyond The First 100 Days, What Difference Can Biden Make?

By Manu Bhaskaran

Looking beyond the commentaries on Biden’s first 100 days, we believe two themes will drive Biden’s longer term impact on Asia.

  • First, the ideological changes his economic policies represent will influence policy making in Asia as well, encouraging a larger role for the state. Biden’s ambitious economic programmes will also help strengthen demand for Asian exports for several years. However, Biden’s trade policies may carry less favourable implications for Asia.
  • Second, the geo-political consequences may be more mixed. America’s re-engagement with allies in Asia and tough posture towards China will give the smaller Asian nations more room to manoeuvre against an assertive China. But China is undeterred for now, and may well step up its pressure on Taiwan and other countries with whom it has territorial disputes.

Before it’s here, it’s on Smartkarma