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Asean Confidential - Premium Investment Insight

Update alert

Indonesia subsidy cut, rate hike to weigh on consumption

We expect that President Joko Widodo’s cuts to fuel subsidies will likely impact residential property prices and monthly vehicle sales, although demand should recover after 2Q15 once consumers have adjusted. This initial dip in consumption may hurt firms such as PT Astra International. While the cut was not a surprise because President Jokowi had pledged during his election campaign to reduce subsidies, this should help soothe some investor concern about his ability to pursue reforms. We note that the move will give him savings of IDR110-140tn rupiah but this is nowhere close to the IDR1,300tn extra he needs annually for initiatives to improve Indonesia's dilapidated infrastructure.

18 Nov

Thai GDP disappoints again

The Thai economy grew just 0.6% YoY (1.1% QoQ, seasonally adjusted) in 3Q14, below already low expectations of 1-2%, making clear that the return of immediate-term political stability and stimulus by the junta could not jump start the economy as quickly as hoped. Nonetheless we observe a number of positive signs that indicate a moderate recovery is underway, and believe 4Q14 and 2015 will be less disappointing – assuming that the political outlook remains stable. 

18 Nov

Weaker investment and exports hurt Malaysia’s 3Q14 growth

Malaysia’s 3Q14 GDP growth decelerated to 5.6% YoY from 6.5% YoY in the previous quarter. We note that private consumption strengthened slightly, in line with Asean Confidential’s 3Q14 Economic Sentiment Index and our Discretionary Spending Index.

14 Nov

Macro

Pitfalls awaiting consumers and corporates

We examine a key policy platform for the Malaysian government that is intended to spur growth along its border with Singapore, but find that there are several pitfalls that await investors, whether they are consumers or corporates. In Vietnam we looked into Vingroup's plans to enter the e-commerce market and express concern that the behemoth's plans may be overly aggressive. Thailand's macro outlook remains lacklustre while the Philippines central bank moved to clamp down on capital requirements for banks but then diluted these measures with generous grace periods.

12 Nov

Big Call

Vietnam retail: a tipping point?

Vietnam’s modern retail sector has rapidly become an underdeveloped cash cow for foreign investors such as Aeon and Lotte. Vingroup, the country’s largest private conglomerate, is looking to out-compete foreign competitors with an ambitious investment plan for everything from e-commerce to convenience stores.

12 Nov

Finance

Thai consumer debt continues to rise

A year ago, Asean Confidential warned of the rapid expansion in household debt in Thailand, arguing that while no crisis was imminent, credit-fuelled spending could no longer spur private consumption. While growth in consumer borrowing has decelerated rapidly over the past year, household debt continues to rise.

12 Nov

Consumer

Supermarkets thrive as incomes climb

Urbanisation, rising incomes, positive demographics and increased food consumption have been a boon to hypermarket and supermarket chains operating across Asean.

12 Nov

Capital Investment

Iskandar’s inevitable condo oversupply

Approximately 27,000 high-end properties will be completed in just two areas of Iskandar between 2014 and 2018. This supply onslaught constitutes a major distortion of the market and, with prices having reached Kuala Lumpur levels, we expect construction plans to be scaled back.

12 Nov

Palm oil – biodiesel mandate to lift industry

With palm oil prices at five-year lows, moves by governments in Malaysia and Indonesia to push ahead with plans to increase the amount of palm oil in biodiesel could be a game changer. Corporates are also braced for a scramble for land in 2015 when a moratorium on forest clearance in Indonesia ends.

01 Oct

Indonesia hammers out mineral future

Indonesian metal miners may likely resume exports shortly following the government's reduction of the export tax. We note that the KPK has also begun to combat smuggling and we believe that this has had some impact on black market supplies of tin and possibly nickel. We believe that tin prices will likely rise as supply contracts, while nickel slips and aluminium and copper stay roughly level.

06 Aug

Myanmar gets connected

The opening of Myanmar’s mobile phone market has provoked fierce competition between Telenor and Ooredoo as the new licensees look to exploit a virtually untapped market. We expect rapid growth in the sector, though the telecoms companies will face significant logistical and regulatory challenges. 

06 Aug

Lift-off for Myanmar’s real estate and banking sectors

Our research looks at the rapidly advancing property market in Myanmar, where foreign developers are driving a construction boom, though legal deficiencies continue to provide reasons for caution. Similarly, the opening up of the banking sector is attracting strong foreign interest, though the government will carefully limit the activities of the first foreign licensees.

09 Jul

Latest Report

2014-11-13 Report

13 Nov 2014

Iskandar's housing bubble

A major onslaught of supply in Iskandar is distorting the market. With prices having reached Kuala Lumpur levels, some developers are scaling back their plans but a handful such as Country Garden are resistant to doing so.

Bottom line

20141112-Bottom-Line

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