Deutsche Bank-Asia Macro Strategy Notes ASEAN in Pictures-108792453

Deutsche BankResearch Joey Chung joey.chung@db.com June 2024IMPORTANT RESEARCH DISCLOSURES AND ANALYST CERTIFICATIONS LOCATED IN APPENDIX 1. MCI (P) 041/10/2023. UNTIL 19th MARCH 2021 INCOMPLETE DISCLOSURE INFORMATION MAY HAVE BEEN DISPLAYED, PLEASE SEE APPENDIX 1 FOR FURTHER DETAILS.ASEAN in PicturesDistributed on: 21/06/2024 01:01:06 GMT7T2se3r0Ot6kwoPaDeutsche Bank Research❑The growth and inflation trajectories within ASEAN have been increasingly divergent. Inflation is still a challenge in Singapore, Vietnam and Philippines, but less so in Indonesia. The upside risks to price pressures are arguably most pronounced in the region in Malaysia and Thailand. On the other hand, while growth is holding up better in Indonesia and Philippines, but recovery in the rest of the more export-oriented economies has been relatively tepid, with ASEAN yet to capitalize significantly on the surge in demand for AI-related chip exports.❑In terms of monetary policy, central banks in ASEAN have had to contend with not just their domestic growth-inflation mix but also expectations of interest rate differentials. With currency pass-through into inflation carrying a relatively high weightage in central bank reaction functions in the region, the timing for initiating policy easing continues to be contingent on the Fed. ❑Growing market concerns around fiscal dominance in EM extend to some extent to ASEAN as well, and possibly the most in the region in Thailand and Indonesia. Fiscal risks could become more of a differentiating factor within EM in the coming months on which markets investors choose to own.❑Recent fund flows into Asia have been relative strong, but ASEAN has not partaken in much of the same. With bond yields in much of ASEAN trading at near record low spreads over UST, interest from offshore investors has been relatively tepid.1Summary ASEAN Macro in Pictures | Joey Chung | June 2024Deutsche Bank ResearchIDMYPHSGTHVN20192020202120222023242ASEAN economies are facing varying growth and inflation dynamicsOur macro and inflation heatmaps show ASEAN economies as facing varying growth and inflation dynamics, which can be broadly classified into four categories. 1) Improving growth and high inflation: Philippines. 2) Improving growth and stable inflation: Indonesia, Malaysia. 3) Moderate growth and sticky inflation: Singapore, Vietnam. 4) Moderate growth and low inflation: Thailand. Macro heatmapASEAN Macro in Pictures | Joey Chung | June 2024Inflation heatmapSource: Deutsche Bank, Bloomberg Finance LP, CEIC, Haver AnalyticsNote: The macro heatmap is constructed from monthly indicators including export growth, IP, money supply, unemployment, import growth, private credit growth, PMI and consumption. The monthly economic indicators are transformed into rolling 10-year z-scores before averaging into a composite z-score for each country. The Inflation heatmap is constructed by taking the 10-year z-scores of yoy headline inflation. IDMYPHSGTHVN242021202220