Chief Economist & Political Strategist, CrossASEAN Research

Prasenjit K. Basu

PK Basu has 35 years experience covering Asia's economies and markets (equities, fixed income and currencies), including 20 years covering the global economy. He was Chief Economist (SE Asia & India) at Credit Suisse First Boston for 5 years, and Chief Asia (x-Jpn) Economist at Daiwa Securities for a similar period. Among other roles, he was global head of research at Maybank Kim Eng, Malaysia equity research head and chief ASEAN economist at Macquarie, Chief Economist at ICICI Securities, ASEAN economist and Asia sector strategist at UBS and the first chief economist at Khazanah Nasional (where he was co-head of research, and led all agri-business initiatives). PK Basu started his career in the Asia Service of WEFA (Wharton Econometrics) in Philadelphia in 1990, rising to be Director of their Asia Service in June 1994. 
PK's book, "Asia Reborn: A continent rises from the ravages of Colonialism and War to a New Dynamism" won the Tata Literature First Book Award (non-fiction) for 2018. It is the first single chronicle of the modern economic and political history of the whole of Asia (from Iraq and Turkey to Korea and Japan, and everything in between), told from an Asian perspective.

Chief Economist & Political Strategist

Chinese Easing Drives Next Phase of Liquidity-Driven Boom. Could EM Soar?

Surging TSF Buoys China in March, but Excess Capacity Exacerbated by Recession

China's Vicious Stagflation Likely to Morph into Recession and Financial Crisis

How China Has Defied the Monetarist View of the Quantity Theory of Money

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

2Q 2020 will be the best quarter of this year for China; with the rest of the world locked down, China was able to expand steel &amp; aluminium output, and exports were merely stagnant in April-May. But the surge in public FAI (+18.1% YoY in May) is only adding to excess infrastructure. As the rest of the world restarts production, anti-dumping actions against China will accelerate. Labour market slack will keep consumer spending weak. We recommend taking advantage of near-term strength in China equities to take profit over the next month, as the Chinese economy likely deteriorates in 2H 2020 as demand drivers evaporate. Despite a spectacular gusher of new total social financing (TSF), which has already risen this year by RMB17.36 trillion (+57.8% YoY faster than in Jan-May 2019, and almost equal to all new TSF in the whole of 2018), retail sales still declined 2.8% YoY in May 2020, and were down 13.5% YoY in the year-to-date.  But surging TSF has enabled FAI to expand 7.1% YoY in April and 9.7% YoY in May 2020, with public (government-linked) FAI surging 18.1% YoY in May. FAI cannot be sustained at this pace, and will likely lose MoM momentum in 2H 2020. Consumer spending too will likely stay sluggish. And BRI partners will continue to face debt-related constraints, eroding all the main sources of potential incremental demand, going forward. The supply side of China's economy has rebounded quite handsomely, with industrial output growing 3.9% and 4.4% YoY in the last two months. Among the 5 main industries afflicted by over-capacity in China (in most of which China has "globalized" over-capacity by expanding to more than half global production of steel, aluminium, cement and a third of autos and chemicals), China has actually increased steel and aluminium production this year (while global output of both slumped). Given that it isn't possible to export by sea, China has been obliged to reduce cement output in the past 3 years. The same decline has happened in autos and chemicals (because of a global glut), but China's auto output has begun rebounding in the past two months. As the US, India and (perhaps) the EU begin restricting China's exports, the domestic output glut will worsen sharply. Increasingly, non-Asian markets are likely to seek to restrict China's exports ("dumping") of steel and aluminium, while product-relocation strategies gather pace, reducing additional sources of demand for China's output. Excess capacity will worsen, especially in the September-December period, and into 2021. We recommend using the next month of good results for 2Q to take profits in China equities, and switch to other emerging markets.

2Q 2020 will be the best quarter of this year for China; with the rest of the world locked down, China was able to expand steel &amp; aluminium output, and exports were merely stagnant in April-May. But the surge in public FAI (+18.1% YoY in May) is only adding to excess infrastructure. As the rest of the world restarts production, anti-dumping actions against China will accelerate. Labour market slack will keep consumer spending weak. We recommend taking advantage of near-term strength in China equities to take profit over the next month, as the Chinese economy likely deteriorates in 2H 2020 as demand drivers evaporate. Despite a spectacular gusher of new total social financing (TSF), which has already risen this year by RMB17.36 trillion (+57.8% YoY faster than in Jan-May 2019, and almost equal to all new TSF in the whole of 2018), retail sales still declined 2.8% YoY in May 2020, and were down 13.5% YoY in the year-to-date.  But surging TSF has enabled FAI to expand 7.1% YoY in April and 9.7% YoY in May 2020, with public (government-linked) FAI surging 18.1% YoY in May. FAI cannot be sustained at this pace, and will likely lose MoM momentum in 2H 2020. Consumer spending too will likely stay sluggish. And BRI partners will continue to face debt-related constraints, eroding all the main sources of potential incremental demand, going forward. The supply side of China's economy has rebounded quite handsomely, with industrial output growing 3.9% and 4.4% YoY in the last two months. Among the 5 main industries afflicted by over-capacity in China (in most of which China has "globalized" over-capacity by expanding to more than half global production of steel, aluminium, cement and a third of autos and chemicals), China has actually increased steel and aluminium production this year (while global output of both slumped). Given that it isn't possible to export by sea, China has been obliged to reduce cement output in the past 3 years. The same decline has happened in autos and chemicals (because of a global glut), but China's auto output has begun rebounding in the past two months. As the US, India and (perhaps) the EU begin restricting China's exports, the domestic output glut will worsen sharply. Increasingly, non-Asian markets are likely to seek to restrict China's exports ("dumping") of steel and aluminium, while product-relocation strategies gather pace, reducing additional sources of demand for China's output. Excess capacity will worsen, especially in the September-December period, and into 2021. We recommend using the next month of good results for 2Q to take profits in China equities, and switch to other emerging markets.    

MSCI AC Asia Pacific Excluding Japan Index (MXAPJ INDEX)

MSCI AC Asia Pacific Excluding Japan Index

供給側は回復しているが、需要の低迷で過剰生産能力が悪化する