Indian economy most vulnerable among emerging markets in Asia, says Societe Generale

[Indos]

Indian economy most vulnerable among emerging markets in Asia, says Societe Generale​

Indonesia and Malaysia look most resilient, thanks to relatively low inflation and commodity exports. China is at number 3.​

MONEYCONTROL NEWS

JULY 26, 2022 / 01:28 PM

India is the most vulnerable economy in the Asia emerging market (EM) space amid high inflation and twin deficits, Societe Generale said in a July 25 note.

“Thailand and the Philippines also suffer in the ranking for the same factors,” India Economist Kunal Kumar Kundu and EM Strategist Vijay Vikram Kannan said. “Indonesia and Malaysia look most resilient, thanks to relatively low inflation and commodity exports. China follows.”

Indonesia leads the tally followed by Malaysia, China, Taiwan, Vietnam, Singapore, South Korea, Thailand, Philippines and India.

The rankings, based on inflation pressure, vulnerability to tightening financial conditions and exposure to growth risks, correlate fairly well with the year-to-date FX performance of these countries, the note added.

India’s inflation gap—the central bank’s inflation target minus core retail inflation—is seen at negative 2.4 percentage points, while its output gap since the start of the pandemic is seen at 11.7 percent, the analysts said.

The country’s current account deficit is projected at 2.9 percent of the gross domestic product for 2022 and the general government fiscal deficit is seen at 9.9 percent of gross domestic product.

In an interview to Moneycontrol earlier this month, Kundu had highlighted that India’s growth prospects had taken a hit due to the consistent stress faced by the so-called micro, small and medium enterprises and the weak recovery in domestic demand.

Kundu said in the latest note that while inflation may have peaked, the slow pace of easing would continue to hinder the recovery, which would also face headwinds from a struggling domestic demand, weak currency and a weakening current account deficit.

The house expects the Reserve Bank of India to remain aggressive in the short term, with an estimated 85 basis points of rate hikes at the next two meetings.

Cooling commodity prices and a high base effect, however, could cap the policy repo rate at 5.75 percent as inflation starts easing and the RBI refocuses on growth, the note said.

Indian economy most vulnerable among emerging markets in Asia, says Societe Generale

Indonesia and Malaysia look most resilient, thanks to relatively low inflation and commodity exports. China is at number 3.

www.moneycontrol.com

 

[Indos]

Next pain point for rupee is $79 billion of unhedged debt​

SECTIONS
Next pain point for rupee is $79 billion of unhedged debt

By Divya Patil and Subhadip Sircar, Bloomberg
Last Updated: Jul 21, 2022, 01:55 PM IST

Synopsis

The proportion of unhedged foreign loans has built up as companies were lulled into complacency about their dollar exposure by RBI’s intervention, which ensured the rupee was less volatile than its emerging-market peers. In recent months however, stock outflows and broad dollar strength has seen the currency’s losses accelerate and sent it to a series of record lows.​

Indian companies are rushing to hedge their overseas dollar debt against further declines in the rupee, a process that threatens to cascade into additional losses for the battered local currency.

The nation’s firms had $79 billion of unhedged offshore loans at the end of March, about 44% of their total overseas borrowings, according to the latest data from the Reserve
Bank of India
. The cost of repaying that has been soaring as the rupee has tumbled more than 7% this year.

“We have seen increased activity among corporates to hedge their dollar exposure ever since USD/INR broke above 79,” said Parul Mittal Sinha, head of India financial markets at Standard Chartered Plc in Mumbai. “The proportion that is dollar hedged is expected to increase in the current risk-off environment, increasing dollar demand.”

Agencies


The proportion of unhedged foreign loans has built up as companies were lulled into complacency about their dollar exposure by RBI’s intervention, which ensured the rupee was less volatile than its emerging-market peers. In recent months however, stock outflows and broad dollar strength has seen the currency’s losses accelerate and sent it to a series of record lows.

While companies are starting to boost hedging levels, the current proportion remains far below the minimum 63% recommended for periods of high foreign-exchange volatility, according to a central-bank study.

The rupee slid to all-time low of 80.06 per dollar on Tuesday, and has lost 2.4% over the past month, the third-worst performing Asian currency over the period. Global funds have offloaded $29.5 billion of Indian shares this year, on course for a record annual outflow, according to data compiled by Bloomberg data starting in 1999.

The increased demand for hedging by Indian companies is evident in the rise of dollar-rupee forward premiums, and the process is set to become a key source of depreciation pressure on the rupee, according to Citigroup Inc.

“Holders of external debt are likely to refinance their debt or repay from forex revenue sources,” Citi economists Samiran Chakraborty and Baqar Zaidi wrote in a research note this month. “That said, the increasingly aggressive US Fed tightening could raise the cost of external financing and along with a squeeze in global liquidity could pose some challenges to the large refinancing of external debt due this year.”

Citibank has lowered its 12-month forecast for the rupee to 81 per dollar from an earlier prediction of 79, the economists said.

Cheaper Funding
One alternative to hedging overseas borrowing is to switch away from dollar funding altogether and seek cheaper domestic options.

ReNew Energy Global, one of India’s leading green energy companies, recently refinanced $525 million of its dollar-denominated bonds with longer-term funding in rupees.

“The company’s broader policy is to hedge the forex exposure as and when the need arises to protect the currency and interest-rate movement risk,” ReNew Power chief financial officer Kedar Upadhye said in an interview last week.

Next pain point for rupee is $79 billion of unhedged debt

The proportion of unhedged foreign loans has built up as companies were lulled into complacency about their dollar exposure by RBIs intervention, which ensured the rupee was less volatile than its emerging-market peers. In recent months however, stock outflows and broad dollar strength has seen...

economictimes.indiatimes.com

 

[pikkuboss]

India has Zero Probability of slipping into recession - Says Bloomberg

India has zero probability of slipping into recession, says survey

The probability of recession for several other Asian economies remained unchanged in the survey. Economists see a 20% chance that China will enter recession, and a 25% likelihood that South Korea or Japan will enter one. Asian economies have largely remained resilient compared to Europe and the...

m.economictimes.com

India : 0%
Indonesia : 3%
Pakistan : 20%
China : 20%
Sri Lanka : 85%

@Indos

 

[m52k85]

I dont think they categorize Pakistan in emerging markets so best not to read too much into it.

 

[Catalystic]

Lolz

Pakistan shall remain, no matter what. India ka kuch pata nai kya hoga…….covid ne kaisa haal kiya india ka……pata ha sabko.

Bari bari batein na kero, seek forgiveness and be humble.

 

[Unknown-V]

India has Zero Probability of slipping into recession - Says Bloomberg

India has zero probability of slipping into recession, says survey

The probability of recession for several other Asian economies remained unchanged in the survey. Economists see a 20% chance that China will enter recession, and a 25% likelihood that South Korea or Japan will enter one. Asian economies have largely remained resilient compared to Europe and the...

m.economictimes.com

View attachment 865304

India : 0%
Indonesia : 3%
Pakistan : 20%
China : 20%
Sri Lanka : 85%

@Indos

I don't get it, what the hell is recession probability? Is recession like gambling?

 

[Black Tornado]

I don't get it, what the hell is recession probability? Is recession like gambling?

Probability that the country/countries will face a recession.

 

[Nan Yang]

Next pain point for rupee is $79 billion of unhedged debt​

SECTIONS
Next pain point for rupee is $79 billion of unhedged debt

By Divya Patil and Subhadip Sircar, Bloomberg
Last Updated: Jul 21, 2022, 01:55 PM IST

Synopsis

The proportion of unhedged foreign loans has built up as companies were lulled into complacency about their dollar exposure by RBI’s intervention, which ensured the rupee was less volatile than its emerging-market peers. In recent months however, stock outflows and broad dollar strength has seen the currency’s losses accelerate and sent it to a series of record lows.​

Indian companies are rushing to hedge their overseas dollar debt against further declines in the rupee, a process that threatens to cascade into additional losses for the battered local currency.

The nation’s firms had $79 billion of unhedged offshore loans at the end of March, about 44% of their total overseas borrowings, according to the latest data from the Reserve
Bank of India
. The cost of repaying that has been soaring as the rupee has tumbled more than 7% this year.

“We have seen increased activity among corporates to hedge their dollar exposure ever since USD/INR broke above 79,” said Parul Mittal Sinha, head of India financial markets at Standard Chartered Plc in Mumbai. “The proportion that is dollar hedged is expected to increase in the current risk-off environment, increasing dollar demand.”

Agencies


The proportion of unhedged foreign loans has built up as companies were lulled into complacency about their dollar exposure by RBI’s intervention, which ensured the rupee was less volatile than its emerging-market peers. In recent months however, stock outflows and broad dollar strength has seen the currency’s losses accelerate and sent it to a series of record lows.

While companies are starting to boost hedging levels, the current proportion remains far below the minimum 63% recommended for periods of high foreign-exchange volatility, according to a central-bank study.

The rupee slid to all-time low of 80.06 per dollar on Tuesday, and has lost 2.4% over the past month, the third-worst performing Asian currency over the period. Global funds have offloaded $29.5 billion of Indian shares this year, on course for a record annual outflow, according to data compiled by Bloomberg data starting in 1999.

The increased demand for hedging by Indian companies is evident in the rise of dollar-rupee forward premiums, and the process is set to become a key source of depreciation pressure on the rupee, according to Citigroup Inc.

“Holders of external debt are likely to refinance their debt or repay from forex revenue sources,” Citi economists Samiran Chakraborty and Baqar Zaidi wrote in a research note this month. “That said, the increasingly aggressive US Fed tightening could raise the cost of external financing and along with a squeeze in global liquidity could pose some challenges to the large refinancing of external debt due this year.”

Citibank has lowered its 12-month forecast for the rupee to 81 per dollar from an earlier prediction of 79, the economists said.

Cheaper Funding
One alternative to hedging overseas borrowing is to switch away from dollar funding altogether and seek cheaper domestic options.

ReNew Energy Global, one of India’s leading green energy companies, recently refinanced $525 million of its dollar-denominated bonds with longer-term funding in rupees.

“The company’s broader policy is to hedge the forex exposure as and when the need arises to protect the currency and interest-rate movement risk,” ReNew Power chief financial officer Kedar Upadhye said in an interview last week.

Next pain point for rupee is $79 billion of unhedged debt

The proportion of unhedged foreign loans has built up as companies were lulled into complacency about their dollar exposure by RBIs intervention, which ensured the rupee was less volatile than its emerging-market peers. In recent months however, stock outflows and broad dollar strength has seen...

economictimes.indiatimes.com

Don't say I did not warn everybody.

 

[satyamev]

Indonesia’s Economic Problems: Asia's Big Bad Economy - InvestAsian

Indonesia's economic problems make it one of ASEAN's worst-performing economies despite its ranking as Southeast Asia’s largest economy. Learn more.

www.investasian.com

"Indonesia’s Economic Problems: Asia’s Big Bad Economy​

Indonesia enjoys Southeast Asia’s largest economy. Sadly, numerous problems make Indonesia one of the ASEAN region’s worst performing economies.

They’ve lagged behind frontier market peers such as Vietnam and the Philippines over the past decade. Meanwhile, Indonesia’s annual GDP growth was stagnant at around the 5% range during that time – which is rather mediocre for an emerging economy.

Indonesia’s economic problems will unfortunately keep posing a big challenge throughout the next decade. Some issues can be solved with time and money. Yet others are more structural in nature and will stay around for awhile.

Fixing Indonesia’s economic issues will require greater effort than anyone is putting forth right now. Both the government and private sector are falling way behind on implementation, even if there’s plenty of talk and meetings.
Broader concerns still overshadow these positive traits though. Indonesia’s problems include slower economic growth, pressure on the state budget, a widening deficit, plunging currency, and sheer lack of competitiveness when compared to elsewhere in Southeast Asia.

Needless to say, such trends are all extremely worrying for Indonesia’s long term prospects.
Regardless, the mere fact that GDP growth in Indonesia is slowing while the current account deficit widens is causing even more concern."

the Indonesian economy is over dependent on palm oil and coal exports.
this one track dependence points to a upcoming sudden economic collapse, as soon oil prices drop due to environmental concerns.

 

[Indos]

Indonesia’s Economic Problems: Asia's Big Bad Economy - InvestAsian

Indonesia's economic problems make it one of ASEAN's worst-performing economies despite its ranking as Southeast Asia’s largest economy. Learn more.

www.investasian.com

"Indonesia’s Economic Problems: Asia’s Big Bad Economy​

Indonesia enjoys Southeast Asia’s largest economy. Sadly, numerous problems make Indonesia one of the ASEAN region’s worst performing economies.

They’ve lagged behind frontier market peers such as Vietnam and the Philippines over the past decade. Meanwhile, Indonesia’s annual GDP growth was stagnant at around the 5% range during that time – which is rather mediocre for an emerging economy.

Indonesia’s economic problems will unfortunately keep posing a big challenge throughout the next decade. Some issues can be solved with time and money. Yet others are more structural in nature and will stay around for awhile.

Fixing Indonesia’s economic issues will require greater effort than anyone is putting forth right now. Both the government and private sector are falling way behind on implementation, even if there’s plenty of talk and meetings.
Broader concerns still overshadow these positive traits though. Indonesia’s problems include slower economic growth, pressure on the state budget, a widening deficit, plunging currency, and sheer lack of competitiveness when compared to elsewhere in Southeast Asia.

Needless to say, such trends are all extremely worrying for Indonesia’s long term prospects.
Regardless, the mere fact that GDP growth in Indonesia is slowing while the current account deficit widens is causing even more concern."

the Indonesian economy is over dependent on palm oil and coal exports.
this one track dependence points to a upcoming sudden economic collapse, as soon oil prices drop due to environmental concerns.

Look like the writer of this nobody publication is investors in Cambodia and Vietnam, why dont you put his full article in here ?

"If you’re a real estate or stock investor, think about looking elsewhere for your frontier market exposure.

Frontier markets such as Cambodia and Vietnam, among other countries in ASEAN, have much of Indonesia’s upside and less of its drawbacks."

Any way why dont you put the photo on the article as well ? I always put photo posted on any article I posted in PDF to make the article not boring

At least the media shows good photo of Jakarta

As someone who understand the work of the media, this photo must be put by the design graphic guy, as the writer made ridiculous analyst which is driven by negative sentiment and could be because he or his company he works for invests a lot in Cambodia and Vietnam stock market LOL

Jakarta

 

[satyamev]

Look like the writer of this nobody publication is investors in Cambodia and Vietnam, why dont you put his full article in here ?

"If you’re a real estate or stock investor, think about looking elsewhere for your frontier market exposure.

Frontier markets such as Cambodia and Vietnam, among other countries in ASEAN, have much of Indonesia’s upside and less of its drawbacks."

Any way why dont you put the photo on the article as well ? I always put photo posted on any article I posted in PDF to make the article not boring

At least the media shows good photo of Jakarta

As someone who understand the work of the media, this photo must be put by the design graphic guy, as the writer made ridiculous analyst which is driven by negative sentiment and could be because he or his company he works for invests a lot in Cambodia and Vietnam stock market LOL

Jakarta
View attachment 865773

never post full article due to copyright issues.
link is their.
Indonesia seems to be a laggard in its neighborhood.
over dependence on export of primary products points to a under developed economy.
countries like Vietnam are sweeping ahead while Indonesia is exporting coal !
do you think its because Indonesia is a religious country ?

 

[Indos]

never post full article due to copyright issues.
link is their.
Indonesia seems to be a laggard in its neighborhood.
over dependence on export of primary products points to a under developed economy.
countries like Vietnam are sweeping ahead while Indonesia is exporting coal !
do you think its because Indonesia is a religious country ?

Many of his analyst is plainly wrong, he made the article in May 2022 right ? That was the start of Russian invasion (late February), he made projection in May where he is basically no body, there recent report from France biggest financial institution has been put on above you (July 2022), where is his article in July 2022 ?

I will give an example of his mislead data

Deficit of what ?

Indonesia has got around 25 billion USD trade surplus in Semester 1 2022. We have already been in surplus since the commodity prices fall in 2020. We are rarely posting any trade deficit in our trade history alhamduliLLAH, the biggest was in 2018 which is only 8 billion USD (Want to compare with Indian trade deficit ? )

State budget deficit ? Indonesia projected state budget deficit is around 3.7 % of GDP for this 2022 fiscal year while India is around 10 percent of its GDP

Well having large coal deposit is a bless right ? Why you are so upset ? You can see many data about Indonesia in Indonesian defense forum, I dont need to explain too much on this issue.

Competitiveness

Yup Indonesia is a religious country and AlhamduliLLAH look like getting more religious Today

West Java

Jakarta