🌏 In our Q2 Asia Corporates Newsletter, our Asia Pacific research team delves into the macro backdrop currently setting the scene for corporates in the region. 💲 The Federal Reserve is looking set for a delayed, potentially more drawn out and eventually shallower interest rate cycle than in the past. This position puts central banks in Asia in a bind, as higher for longer core rates and a stronger US dollar make it harder for them to respond to their domestic imperatives of growth and inflation. 🛢️ Upside risks to oil are again potentially upsetting the balance of both trade and inflation in the region. Also, while elections in Asia are mostly done, the political calendar is set to heat up in the second half of the year in the lead-up to the US presidential election. This all points to the next few months being likely challenging in Asia. 🚗 However, there are also key opportunities like the Goldilocks-ish macro environment in India, investments being made in ASEAN to move up the semiconductor value chain and Thailand’s efforts to become a regional export hub for Electric Vehicles. For more insights, registered clients can read our full Q2 Asia Corporate Newsletter here: https://lnkd.in/emn6xKCs #dbresearch #electricvehicles #Asia #AsiaPacific Deutsche Bank Sameer Goel Tim Baker Michael Hsueh Liam Fitzpatrick Perry Kojodjojo Bryant Xu Joey Chung
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We are cautious on chasing the post-stimulus China equity market bounce. Taking a step back, although Chinese EPS growth has troughed as we expected, recent data points suggest that the recovery is likely to be slow as the headwinds from sluggish consumer spending, rising tariff risk, and deflationary forces will likely more than offset stimulus tailwinds. Indeed, consensus expectations for China's 2025 EPS growth have started to fall and the market's EPS revisions ratio has turned sharply lower following the recent reporting season, in contrast to resilience elsewhere in EMs. Clients can read our full China equities outlook note here --> https://lnkd.in/e7RHuxqY
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Most recently, we wrote on #China, #Risk, durable #Goods and the #Currency war. Read ⬇️ 🌏 China's Economic Confidence Boost As China approaches its 75th anniversary, authorities are working hard to revitalize confidence. The People's Bank of China (PBOC) has announced a comprehensive package addressing policy rates, liquidity, the property sector, and the stock market, with unexpected guidance on future policies. However, to truly uplift domestic confidence, further fiscal spending is necessary, as hinted at in this week's Politburo meeting. Despite aiming for an official growth target of "around 5%" for this year, downside risks remain, while 2025 could see an upside to our forecast of +4.3%. 📊 Quarterly Country and Sector Risk Changes: Normalization Complete We've upgraded 14 countries, reflecting the ongoing recovery in economic outlooks. Yet, the journey ahead is uneven due to protectionist policies and geopolitical tensions. In sectoral analysis, nine sectors have improved while five have declined. Downgrades were seen across all regions, particularly in the automotive sector in Germany and Switzerland, and the retail sector in China due to weak consumer outlooks. 📈 Durable Goods: Poised for a Rebound in 2025 Following a slowdown in 2022 and 2023, durable goods sales are projected to remain sluggish in 2024 but are set for a robust recovery in 2025. Key factors include decreasing financing costs, a shift from expensive services to goods, replacement cycles from 2021 purchases, technological innovation, and easing supply-chain disruptions. 💱 The Great Loosening Cycle: Balancing FX, Inflation, and Growth Central banks are navigating a complex landscape. The Fed's significant cut is a positive move for the global FX market, yet challenges remain. We categorize countries into four clusters based on their priorities: Emerging Europe, Chile, and Colombia: Focus on boosting growth while managing inflation. Advanced economies in Europe, China, and Thailand: Growth with fewer inflation concerns. Most of Asia, Latin America, South Africa, and Norway: Slower easing due to weak exchange rates and financial stability. Large African economies, Türkiye, and Argentina: Restoring exchange rate confidence and reducing inflation. Switzerland and Japan may need interventions to manage appreciation pressures. #Ludonomics #AllianzTrade #Allianz https://lnkd.in/eby-DUBQ
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Tough day in the office for Chinese equities! 💼 Given the current market sentiment, is today a good opportunity to increase exposure to China stocks, or should we remain cautious and wait for further clarity? 🤔📊 For now, we're choosing to stay cautious. If anyone's interested, feel free to reach out, and I’d be happy to send you the report mentioned. 📩 #ChinaStocks #MarketTrends #InvestmentStrategy #FinanceInsights #StockMarket #StayInformed
We are cautious on chasing the post-stimulus China equity market bounce. Taking a step back, although Chinese EPS growth has troughed as we expected, recent data points suggest that the recovery is likely to be slow as the headwinds from sluggish consumer spending, rising tariff risk, and deflationary forces will likely more than offset stimulus tailwinds. Indeed, consensus expectations for China's 2025 EPS growth have started to fall and the market's EPS revisions ratio has turned sharply lower following the recent reporting season, in contrast to resilience elsewhere in EMs. Clients can read our full China equities outlook note here --> https://lnkd.in/e7RHuxqY
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*APAC Market Monitor*– In APAC, governments and firms are evaluating their level of exposure to a Trump presidency. Moreover, currency and financial markets have been experiencing some volatility due to the election and the Fed’s recent hawkish comments. APAC currencies have been depreciating under these circumstances, and they will face further downside risks in 2025. Other developments in the region include: 👉 The Chinese government released a much-anticipated stimulus package, which is likely to disappoint businesses in the market. 👉 Meanwhile, Japan wrapped up its tumultuous leadership race and announced a fresh stimulus package as well. 👉 Finally, Q3 GDP figures were released for several key markets in the region, including South Korea, Malaysia, and Indonesia. Subscribers can access the full APAC Market Monitor for December here 👇 Or follow the same link to read a summary and then sign up for a free trial to enjoy full access to our market-leading insights, research and data: https://lnkd.in/eyc73usF #APAC #APACmarketmonitor #APACcurrencies #APACTrump #investmentstrategies #planning2025
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🌍 𝗚𝗹𝗼𝗯𝗮𝗹 𝗘𝗰𝗼𝗻𝗼𝗺𝘆 𝗶𝗻 𝗙𝗹𝘂𝘅: 𝗜𝗻𝘀𝗶𝗴𝗵𝘁𝘀 𝗳𝗿𝗼𝗺 𝗖𝗵𝗶𝗻𝗮, 𝗔𝘂𝘀𝘁𝗿𝗮𝗹𝗶𝗮, 𝗚𝗲𝗿𝗺𝗮𝗻𝘆, 𝗮𝗻𝗱 𝗦𝗼𝘂𝘁𝗵 𝗞𝗼𝗿𝗲𝗮 𝗯𝘆 Syed Muhammad Osama Rizvi🚀 The interconnected threads of trade policies, central bank maneuvers, and sector-specific dynamics are creating ripples across the globe. Syed Muhammad Osama Rizvi’s latest analysis dives deep into the stories shaping the economic trajectories of four key players: 𝗖𝗵𝗶𝗻𝗮: Optimism with caution. While services PMI indicates resilience, potential tariff hikes and property market woes raise questions about the sustainability of growth. 𝗔𝘂𝘀𝘁𝗿𝗮𝗹𝗶𝗮: Fragility beneath the surface. A mere 0.3% Q3 growth, propped up by government spending, highlights the delicate balance between fiscal support and private sector resilience. 𝗚𝗲𝗿𝗺𝗮𝗻𝘆: Industrial pressures mount. While labor markets hold steady, the manufacturing sector continues to face grim prospects, raising concerns about broader economic stability. 𝗦𝗼𝘂𝘁𝗵 𝗞𝗼𝗿𝗲𝗮: Political volatility impacts the economy. The reversal of martial law signals fragility, with potential global ripple effects on semiconductor and EV supply chains. From the Federal Reserve’s "higher-for-longer" rate scenario to Europe’s accelerating rate cuts and Asia-Pacific’s vigilance against capital flow volatility, central banks remain at the heart of these transformations. 📊 This article underscores how local developments carry profound global implications. 🌏 𝘿𝙞𝙫𝙚 𝙙𝙚𝙚𝙥𝙚𝙧 𝙩𝙤 𝙪𝙣𝙙𝙚𝙧𝙨𝙩𝙖𝙣𝙙 𝙝𝙤𝙬 𝙩𝙝𝙚𝙨𝙚 𝙙𝙮𝙣𝙖𝙢𝙞𝙘𝙨 𝙖𝙧𝙚 𝙨𝙝𝙖𝙥𝙞𝙣𝙜 𝙩𝙝𝙚 𝙜𝙡𝙤𝙗𝙖𝙡 𝙚𝙘𝙤𝙣𝙤𝙢𝙮: https://lnkd.in/dtPw7ZS9 𝗧𝗼 𝗴𝗲𝘁 𝗮 𝗳𝘂𝗹𝗹 𝘀𝘂𝗺𝗺𝗮𝗿𝘆 𝗼𝗳 𝗶𝗻𝘀𝗶𝗴𝗵𝘁𝘀 𝗳𝗿𝗼𝗺 𝗼𝘂𝗿 𝗴𝗹𝗼𝗯𝗮𝗹 𝗻𝗲𝘁𝘄𝗼𝗿𝗸, 𝘀𝘂𝗯𝘀𝗰𝗿𝗶𝗯𝗲 𝘁𝗼 𝗼𝘂𝗿 𝗻𝗲𝘄𝘀𝗹𝗲𝘁𝘁𝗲𝗿 👉 https://lnkd.in/db4Shxrw #GlobalEconomy #China #Australia #Germany #SouthKorea #TradePolicies #CentralBanks #EconomicTrends #MarketInsights
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As Mr Thilan Wickramesinghe, head of research at Maybank Securities pointed out, for most of the year, markets worked on the mantra of “don’t bet against the Fed”. “Now, it may need an update to ‘don’t bet against the PBOC (People’s Bank of China)’. China’s stimulus signalling cannot be ignored and may provide support for market sentiment and momentum in the near term. Investors should keep in view sectors and stocks that could benefit from fiscal and monetary stimulus in China as well as rising consumption.” Indeed, the common belief is that China’s economic recovery will benefit not just the region, but also market sentiment around the Asia-Pacific. #maybank #china #equityresearch #strategy
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As we get to the end of the week in Singapore, here are a few thoughts on macro, markets, and politics: #Markets are seeing a V-shaped recovery currently, and a combination of good US inflation data (soft 0.2% m-o-m) and robust retail sales will see the #Fed cut rates by between 50-75bps by year-end, starting in September. #Harris is still doing well in polls and betting odds. She’ll probably get another bump going into and after the #DNC. Harris is leading in polls in key swing states #Michigan and #Pennsylvania. Lots of central banks are getting on with cuts and even surprising some analysts as they focus on supporting growth now that inflation looks better. #Chinese data came in soft with weak prints in credit growth, retail sales, unemployment, and house prices. Our below-consensus growth forecast of 4.7% still looks good to us. GDP releases out of Japan and UK showed mixed growth. Nothing stellar, but nothing terrible either. From a geopolitical perspective, the world is still waiting to see what Iran does in terms of retaliation. They’ll have to establish deterrence, but I’m hoping this low-key approach is part of a de-escalatory strategy. #Ukraine's incursion into Russian territory continues to advance. This definitely helps Ukraine’s bargaining position in the event of a deal. Over the next few days, I’ll be keeping an eye out for the Harris economic agenda, flash PMIs, and the #JacksonHole Economic Symposium. #BMI #EmergingMarkets #Politics
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🌏 It’s an extraordinary time for Asian economies with risks from the upcoming US election in particular driving a fork in the road on the outlook for the region into year-end. Our Global Head of Emerging Markets and Asia Pacific Research, Sameer Goel and his team take a closer look at the binary nature of these risks in their latest quarterly Asia Corporate Newsletter. On the one hand, the Fed is in a good position to manage an almost perfect landing, which should give Asia room to ‘normalise’ its policy settings. And with China’s economic stimulus potentially the largest ever in nominal terms, the team feels comfortable that the left tail risk for the economy should be better contained in the near term. To the extent that the latest round of stimulus in China also actively targets a recovery in consumption, the rest of Asia should also benefit. 📶 On the other hand, the outcome of the US election could bear heavily on the relationship between US and China, and by extension, other parts of Asia, with the use of tariffs potentially being a key differentiating factor between alternative scenarios. The newsletter talks about potential hedging strategies in the current environment for corporates with underlying Asia FX exposure. It also suggests that this may be an opportune time for Asian corporates to issue USD-denominated bonds. ➡️ Deutsche Bank clients can read the full report here: http://deu.ba/6044fuN3E #dbresearch #DeutscheBank #AsiaPacific
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15 amazing facts about the FTSE China A50 Index you probably didn't know: Top 50 Companies: The FTSE China A50 Index comprises the 50 largest A-share companies listed on the Shanghai and Shenzhen Stock Exchanges. Market Capitalization: Companies are selected based on their market capitalization, making it a benchmark for equity investment in Mainland China. Diverse Sectors: The index includes companies from various sectors such as banking, insurance, consumer goods, industrials, and financial services. Banking Dominance: The banking sector holds the largest weight in the index, averaging around 44%. Quarterly Review: The index is reviewed quarterly by an independent committee to ensure it remains representative of the Chinese market. High Liquidity: The China A50 is known for its high liquidity and low spreads, making it popular among traders. Global Economic Indicator: The index is often used as an indicator of the overall health of the Chinese economy. Ping An Insurance: One of the notable companies in the index is Ping An Insurance, a major player in the life insurance sector. China Merchants Bank: Another significant company in the index is China Merchants Bank, which is a key player in the banking sector. Industrial Giants: The index includes industrial giants like Sany Heavy Equipment and Great Wall Motor. Consumer Goods: The consumer goods sector, which includes companies like BYD and Haier, represents about 12% of the index. Financial Services: The financial services sector, including companies like CITIC Securities, holds an 11% share in the index. Economic Growth: The growth of the China A50 index reflects China’s rapid economic development over the past few decades. Currency Impact: The value of the index can be influenced by the strength or weakness of the Chinese yuan (CNY). Trade Relations: Changes in China’s trade relationships, especially with major partners like the US, can significantly impact the index. #markets #chinaA50 #trading #trade #stocks #indices
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Since it was opened up and reformed in the late 1970s, China’s economy has grown at an average rate of 9% a year. Not this year. Facing strong disinflationary pressures, a severe property downturn and frail consumer confidence, China risks missing its own annual growth target of around 5%. So, as the week began, markets reacted enthusiastically to the People’s Bank of China unveiling a major package of aggressive measures designed to stimulate the economy. https://lnkd.in/eaM2Mx8g
WeekWatch - 30/09/2024
wylliewealth.co.uk
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