The three major economies in Southeast Asia will hold important elections in the next two months, and in the eyes of many analysts, the stock markets of these countries may usher in new opportunities to gradually recover the lost ground that had fallen sharply last year.
According to the official schedule, Thailand will hold a general election on March 24, while Indonesian and the Philippines’ official elections are scheduled on April 17 and May 13 respectively. As a regional emerging economy, affected by the pressure of capital outflow caused by the strengthening of the US dollar and the suppression of export demand by trade frictions, the economic growth rate of the three countries slowed down last year and the financial market fell into turmoil. Therefore, investors generally hope that the upcoming election will bring new vigor to the economy.
Although global stock markets rebounded collectively at the beginning of this year, the market performance of the three Southeast Asian countries not only ranks low among emerging economies, but also significantly lags behind the average level. According to statistics from the First Financial reporter, as of March 12, the Thai SET index has risen by 4.3% this year, the Philippines Manila PSEi comprehensive index has risen by 3.8%, Indonesia Jakarta comprehensive index has risen by 2.8%, and the MSCI emerging market index has risen by 7.8% during the same period.
Robert Subbaraman, head of research on emerging markets and Asia, told the First Financial reporter that if global economy begins to recover, emerging markets will perform better than developed countries. However, considering that the systemic risks of emerging economies are generally higher than those of developed countries, their downward pressure is also greater. Judging from the current situation, the bottoming of the economy requires waiting for a more certain signal. Of course, the Federal Reserve's monetary policy is also crucial.
Regarding the upcoming elections of Southeast Asian countries, Su Bowen believes that business and investment expenses will fluctuate due to changes in the election situation in a short period of time, but only if the election goes smoothly, the investment and market environment of these countries will be boosted in the future, and the stock market will also benefit.
Morgan Stanley is also optimistic about the future of emerging economies' stock markets. In the latest research report released on Monday, the institution recommended that investors focus on China, India, Indonesia, Singapore and Brazil.
Thailand stimulates consumption and promotes growth Prayut is expected to win
As the second largest economy in Southeast Asia, Thailand's economic growth has been restricted by a variety of objective factors in recent years. Data released on February 18 showed that Thailand's GDP grew by 3.7% in the fourth quarter of last year, reversing the sharp decline in the third quarter. Thailand's GDP growth rate in 2018 was 4.1%, slightly lower than the market's expectations of 4.2%. The sluggish trade environment has a great impact on exports. Thailand's trade deficit was US$4.02 billion in January, a record high since 2014. The Bank of Thailand's February interest rate decision kept interest rates unchanged, saying that loose policy is still appropriate and GDP growth this year may be lower than in 2018.
According to the current election situation, the current Thai Prime Minister Prayut, who has a military background, is expected to win the general election held on March 24 and continue to serve as prime minister. Analysts believe this will benefit the long-term continuity of economic policies. Capital Economics believes that as long as the political situation remains stable, Thailand's economy will have an opportunity to develop.
In order to stimulate consumption and boost the economy, the Thai government previously announced that it would issue 87 billion baht (about 18 billion yuan) cash subsidies to low-income people. Malayan Bank Kim Eng believes that if the final consumption expenditure is successfully converted, it will have a major benefit for retailers and food and beverage sectors in the Thai stock market.
Indonesia's economy is resilient and Jokovic is almost suspenseful in his re-election as president
As the largest economy in Southeast Asia, Indonesia will hold presidential and parliamentary elections on April 17. Affected by the high current account deficit, the Indonesian rupiah fell to a low in nearly a decade last year. The Indonesian central bank raised interest rates seven times and finally successfully stabilized the exchange rate by launching an NDF (no principal delivery forward) contract. Faced with the pressure of economic downturn, the current President Jokovic Jokovic has targeted the 2019 budget submitted to Congress.
Singapore DBS (DBS) stock market strategist Joanne Goh believes that in the context of the global economic slowdown, Indonesia's domestic consumption is highly resilient, with the joint support of low interest rates and government stimulus policies. Indonesia's domestic consumption and retail data have stabilized and rebounded, and bank stocks and consumer goods sectors are expected to gain favor.
The latest poll shows that Jokovic is in a far leading position in his support rate and is expected to be re-elected as the new Indonesian president. Of course, the challenges ahead are still not small. As of January this year, Indonesia's foreign trade import and export data have declined month-on-month for four consecutive months, and the proportion of current account deficit to GDP in 2018 has risen to 3%.
Philippines may relax monetary policy. Duterte's approval rating is very high.
is slightly different from Thailand and Indonesia. This year is not the Philippines' election year. But for President Duterte , whose six-year term is just over halfway through, the vote to elect members of the legislature can be seen as a referendum on its governance effect. The Philippines' GDP grew by 6.2% last year, just behind Vietnam in Southeast Asia.
Dutert's approval rating has remained high in recent months, and polls show that its parties and allies will continue to retain majority control over Congress. In the latest government budget, Duterte has increased its fiscal spending, focusing on improving people's livelihood and infrastructure projects, and plans to allocate 1.377 trillion pesos (about 170 billion yuan) for social services, accounting for 36.7% of the total budget.
In its latest research report, HSBC pointed out that in addition to elections, the possibility of relaxing monetary policy in the Philippines is one of the reasons for holding Philippine stocks. The bank raised the Philippines stock rating from "reduced holdings" to "increased holdings" last week, and believed that the performance of the financial and real estate industries would outperform the market.
