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Asia Outlook
2021
Contents 3 Executive summary 4 Regional Overview: Asian Recovery – Hard Work Has Just Begun 6 2021 Top trade ideas 8 China Theme: Defaults Amidst Tightening Financial Conditions 10 China 11 India 12 Indonesia 13 Malaysia 14 Philippines 15 Singapore 16 South Korea 17 Thailand 18 Forecasts 19 Disclaimer 2 — Asia Outlook December 2020
Executive Summary
we expect the PBoC to keep policy rates
unchanged for a prolonged period
allowing the economic recovery to
broaden. As financial conditions tighten
further, more cracks in the credit market
will appear. If the market were to
interpret recent events as a pullback in
implicit government guarantees, more
defaults from SOE-linked issuers would
be inevitable. Looking ahead, corporate
bond defaults will likely rise in H1 2021.
Even with liquidity provisions, bond yields
are unlikely to decline substantially in the
coming months.
Asian Recovery - Hard
Work Has Just Begun
Asia Country Views
Asia’s growth outlook in 2021 will be that
of a recovery. As relief measures ease,
the true impact of the pandemic is
revealed. China’s growth recovery
continues. Beijing is confident enough to
Cut-off date: 1 December 2020
impose market discipline again. For the
rest of EM Asia, growth will technically
rebound in 2021 after contracting in Eugenia Fabon Victorino
2020. Yet, the outlook will keep the Head of Asia Strategy
region below pre-pandemic production Eugenia.victorino@seb.se
levels by end-2021. +65 6505 0583
2021 Top Trade Ideas
• Long China A shares
• Short USD/PHP
• Short USD/IDR
• Short TWD/KRW
China Theme: Defaults Amidst
Tightening Financial Conditions
A string of bond defaults by Chinese
state-linked firms rocked investor
confidence in November, throwing a
wrench on new bond issuance. Even so,
Asia Outlook December 2020 — 3Regional Overview
Asian Recovery - Hard Work Has Just Begun
Asia’s growth outlook in 2021 will be that of a recovery. As relief
measures ease, the true impact of the pandemic is revealed. China’s
growth recovery continues. Beijing is confident enough to impose
market discipline again. For the rest of EM Asia, growth will
technically rebound in 2021 after contracting in 2020. Yet, the
outlook will keep the region below pre-pandemic production levels
by end-2021.
Asia’s growth outlook in 2021 will be that of a Recovery began in Q3
recovery. Even as the region turns the page on 5
the damage wrought by the pandemic, the hard
work towards full recovery has only just begun. 0
Following the deep contraction in 2020, the -5
GDP, % y/y
rebound in 2021 will be technical. For the region -10
excluding China, output will not fully return to pre-
pandemic levels before 2022. Even as the -15
recovery in China broadens, the rest of Asia faces -20
a gradual climb up. -25
CHN TWN KOR MYS IDN SIN THA IND PHL
Growth in 2020-21 will be far from pre- Sep 20 Jun 20
pandemic rates
Source: CEIC, SEB
7
6
Manufacturing is leading the recovery and
should stay positive in 2021. Export growth
5
numbers surprised to the upside through most of
4
Q3. The upside surprise was driven by strong
GDP, % y/y
3
global demand for medical and technology
2
related products. While our outlook for these
1
products remain sanguine, we are cautious of the
0 lack of breadth in the improvement in external
-1 trade. The dearth of fixed investment around the
-2 world has kept exports of capital equipment
CHN IDN KOR MYS IND PHL SGP THA
2020-2021 ave F 2015-2019 ave
weak. Considering the damage inflicted by the
pandemic on corporate balance sheets, a rise in
Source: CEIC, SEB investments is unlikely in 2021. Consequently,
this will prevent a more broad-based recovery in
Although COVID-19 is not yet over, Asia has
Asia’s exports. Robust shipments of consumer
passed the nadir of its economic impact. As a
goods and electronics will continue to benefit
result of its decisive lockdown in Q1, China clearly
China, Singapore, Taiwan and Korea. Yet, the big
led the recovery with a rebound in sequential
share of capital goods in Korea’s export basket
growth in Q2. For the rest of the region, the worst
also implies an imbalanced recovery for the
occurred in Q2, followed by impressive surges in
sector. Meanwhile, the incoming Biden
activity in Q3.
administration lowers the risk of an acute
escalation of US-China tensions in the coming
year. Even as we expect more anti-China
regulations to come from the US, policy
uncertainty is likely to ease.
4 — Asia Outlook December 2020Regional Overview
Sharp recovery in exports Mobility indicators vary across the region
15 15 10
Mobility, % of pre-COVID level, 7d ma
0
-10
0 0
Exports, % yoy 3mma
Exports, % yoy 3mma
-20
-30
-15 -15 -40
-50
-60
-30 -30
-70
-80
-45 -45 -90
2019 2020 Feb 20 Mar 20 Apr 20 May 20 Jun 20 Jul 20 Aug 20 Sep 20 Oct 20 Nov 20
2019 2020
CHN IND KOR SGP IDN MYS IND IDN MYS PHL SGP THA KOR
HKG TWN PHL THA VNM
Source: CEIC, SEB *Average mobility in retail & recreation, transit stations,
workplaces
Despite the sharp improvement in exports, a
Source: Google, SEB
full-bodied recovery will require a rise in the
services sector. Mobility indicators have As the recovery gains traction, we expect
improved starting Q3. Consumption picked up and governments to modestly ease fiscal support.
the improvement continues in Q4. Although new Several governments have already released their
waves of infections still occur, fatality rates have 2021 budgets. While fiscal deficits are likely to be
fallen for the most part. Even for the worst hit narrower, supportive policies are expected to
country, India’s daily new cases have been stay through end-2021. We foresee some policy
gradually declining since mid-September. Even so, tightening and an increased willingness to impose
a resurgence of infections can easily derail the market discipline in China as Beijing becomes
consumption recovery, as we have seen in more confident of the sustainability of the
Malaysia and South Korea. Asian governments recovery.
are also pursuing a more targeted approach to
Monetary policy will remain accommodative.
flattening the curve. Localized restrictions are
Except for India, inflation will remain a non-issue
now preferred to nationwide lockdowns. As a
in the region. For economies with limited policy
result, people have started to move and to spend
space, improving policy transmission will be the
more, indicating that the region has adjusted to a
priority. The space for further easing is narrow.
new normal.
Yet, we cannot rule out more opportunistic cuts
by Bank Indonesia if the appreciation in the rupiah
Recent vaccine developments have raised the
overshoots our expectations.
probability of having a widely available vaccine
earlier than expected. A roll out of the vaccine Asian currencies are poised for more
by Q2 2021 would hasten the recovery for the appreciation. Beyond a weak dollar,
region by speeding up the normalization in fundamentals are supportive of Asian currencies.
domestic demand. Moreover, it would enable After the massive outflows in Q1, foreign flows
global travel to resume which would benefit have been gradually returning. Yet, positioning
Singapore and Thailand. Yet, we are cognisant of remains light. With major central banks expected
the challenges ahead. Even if sufficient safety to maintain asset purchases, we expect Asia to
data are reached, logistical challenges abound. benefit from increased investor allocations.
Indeed, countries with less developed Meanwhile, we expect regional central banks to
infrastructure like India, Indonesia and the resist rapid appreciations versus USD via market
Philippines face significant headwinds to a speedy intervention. Yet defending a particular level
delivery of the vaccine to their massive cannot be sustained if fundamentals are strong
populations. enough.
Asia Outlook December 2020 — 5Top trade ideas
2021 Top Trade Ideas
• Long China A shares
• Short USD/PHP
• Short USD/IDR
• Short TWD/KRW
systemic risks. This paves the way for a “healthy
Trade #1: Long China A shares bull market.” As long as the rise in equity prices is
We recommend staying long on China A50 reasonable and gradual, we believe the market
futures, with a spot reference of 17,019, will be able to manage the rotation towards
targeting 20,500 with a tighter stop loss at traditional sectors while overbought names
15,500. decline. Finally, a continued rise in the yuan
provides another tailwind to Chinese equities.
We have been bullish on Chinese equities since
end-2019 and that view has played out well. China A shares in “healthy bull” run
While the pandemic temporarily derailed the rise 18,000 300
280
in Chinese risk assets, China’s broadening
FTSE China A50
16,000 260
240
recovery will ensure that its relative 220
14,000
outperformance of growth will persist in 2021. 200
180
Considering that China was able to contain the 12,000
160
140
pandemic in a relatively short period, we expect 10,000 120
the impact on the economy to be short-lived. This 8,000
100
80
is in stark contrast to other economies where 60
RSI
6,000 40
permanent destruction of incomes has occurred. 20
4,000 0
President-elect Biden is expected to be less 2017 2018 2019 2020
erratic in his foreign policy. Even though we FTSE China A50 Index RSI (RHS)
expect anti-China regulations to intensify, global Source: Bloomberg, SEB
policy uncertainty should decline. In any case, the
market is less sensitive to geopolitical issues Trade #2: Short USD/PHP
given that the market is still dominated by We are opening a short USD/PHP trade via rolling
domestic investors. 6m NDF with an entry price of 48.04, targeting
46.00 and a stop loss at spot rate of 49.00.
Strategically important sectors will benefit from
China’s drive for self-reliance and its “dual- The Philippine peso is the second best performing
circulation” strategy. The prospect of a widely currency in the region in 2020. We expect the
available vaccine combined with a normalizing peso to remain on an appreciation path in the
economy is supportive of traditional industries coming year. Aside from broad expectations of a
such as financials. The financials-heavy index will soft dollar, idiosyncratic factors provide more
likely benefit from this environment. We expect tailwind to the PHP.
Chinese banks to raise their participation in debt
The effect of the pandemic on the Philippine
and equity capital markets. Moreover, banks may
economy has been drastic. Beyond the imposed
adjust their lending focus to priority sectors like
mobility restrictions, widespread voluntary
renewable energy and technology.
restrictions have led to a collapse in domestic
Although the market has faced price bubbles in demand. The resulting decline in imports
the past, we expect policymakers to be ready to sufficiently narrowed the trade deficit for the
impose market discipline. Even in the early stages current account to return to a surplus. We expect
of post-pandemic recovery, the government had a protracted recovery in domestic demand in the
introduced a number of measures that lowered coming year such that the surplus in the current
6 — Asia Outlook December 2020Top trade ideas
account will remain at least through H1. Incomes Return of portfolio flows will lead to stronger IDR
have been permanently destroyed which will 100 6000
Indonesia: Equity & Bond Flows USD bn
delay the return to trend growth of household 90
8000
80
spending. Meanwhile, corporates’ focus will be on
USD/IDR (in reverse)
70
repairing balance sheets, pushing major capital 60
10000
investments to the wayside. As long as domestic 50 12000
demand is far from a full bodied recovery, we 40
14000
expect the PHP to get even stronger. 30
20
16000
Current account surplus returns on weak on 10
domestic demand 0 18000
2000 2004 2008 2012 2016 2020
10 40
Cumulative Bond & Equity Flows USD/IDR
8 42
44 Source: CEIC, Bloomberg, SEB
USD/PHP (in reverse)
6
46
4
% of GDP
2
48
Trade #4: Short TWD/KRW
50
0 We are opening a short TWD/KRW trade via
52
-2 54
rolling 1m NDF with an entry price of 39.0,
-4 56 targeting 36.00 and a stop loss at spot rate of
-6 58 40.00.
2011 2012 2013 2014 2015 2016 2017 2018 2019
Trade Balance + Remittances Current Account USD/PHP North Asian currencies led the recovery against
the greenback in 2020. The continued recovery
Source: CEIC, Bloomberg, SEB
in exports, particularly in the technology related
Trade #3: Short USD/IDR products will continue to provide support to
We are initiating a short USD/IDR trade via rolling exporting heavyweights like Taiwan and South
3m forward/ NDF with an entry price of 14,140, Korea. Despite the gradual recovery in the won
targeting 13,500 and a stop loss at spot rate of since May, it continues to lag the Taiwan dollar.
14,500. Thus, there is room for the KRW to outperform
even before a vaccine becomes widely available.
The Indonesian rupiah has been lagging the Although the momentum for mean reversion may
recovery among the Asian currency suite, having take a breather in the near term, positive carry in
lost 1.9% against the greenback year to date. favor of the won will compensate for periods of
Although the current account position improved retracement.
substantially in 2020, it remains in deficit. Thus,
the rupiah remains dependent on portfolio While both central banks would like to see
inflows. Following the substantial outflows in Q1, measured gains in their currencies, we see
portfolio flows have been trickling back to the Taiwan’s central bank posing a greater headwind
benefit of the IDR. Yet, foreign positioning to further gains in spot TWD. Moreover, bond
remains light. As major central banks are likely to flows into South Korea has been strong, attracting
keep rates low for longer, we expect the around USD 57.6 billion year to date. Bonds from
favorable interest rate differential in Indonesia to South Korean issuers have been highly coveted
attract foreign investors once again. for its safe haven characteristics.
Bank Indonesia (BI) is unlikely to stand in the way KRW is lagging the TWD despite similarly strong
of rupiah appreciation. At its last policy meeting, exports
the central bank reiterated its view that the 42 300
280
currency is undervalued. Indeed, recent gains in 40
260
240
TWD/KRW
the currency opened the space for BI to deliver an 38
220
200
unexpected but opportunistic interest rate cut in 180
160
November. 36
140
120
34 100
80
60
RSI
32
40
20
30 0
2016 2017 2018 2019 2020
CNH/KRW RSI (RHS)
Source: CEIC, Bloomberg, SEB
Asia Outlook December 2020 — 7China Theme
Defaults Amidst Tightening Financial
Conditions
A string of bond defaults by Chinese state-linked firms rocked investor confidence in
November, throwing a wrench on new bond issuance. Even so, we expect the PBoC to
keep policy rates unchanged for a prolonged period allowing the economic recovery
to broaden. As financial conditions tighten further, more cracks in the credit market
will appear. If the market were to interpret recent events as a pullback in implicit
government guarantees, more defaults from SOE-linked issuers would be inevitable.
Looking ahead, corporate bond defaults will likely rise in H1 2021. Even with liquidity
provisions, bond yields are unlikely to decline substantially in the coming months.
A string of bond defaults by Chinese state- Recent credit events throw a wrench on
linked firms rocked investor confidence in Chinese new bond issuance. As of 24 November,
November (Chart 1). On the face of it, missed at least 20 Chinese entities suspended plans to
payments on a corporate bond worth issue new debt. Onshore bond issuance has
CNY 1 billion (USD 152 million) was unlikely to surged in the last five years with almost
send tremors across the second largest bond CNY 50 trillion of new bonds issued year to date
market in the world. Yet, the default by (Chart 2). By the end of 2019, the onshore bond
Yongcheng Coal & Electricity was not only market was equivalent to 100% of China’s GDP.
unexpected but was also by a state-linked entity. Although the official classification of a majority of
Yongcheng Coal is a subsidiary of Henan Energy & bonds issued are by non-government entities, in
Chemical Industry Group which is a State-owned reality, the public sector dominates the market
enterprise (SOE). Prior to the credit event on with issuances by SOE-linked debtors. Chinese
10 November, there have only been a handful of commercial banks hold the lion’s share of bonds,
defaults by SOEs in 2020, maintaining the trend in owning almost 70% of outstanding bonds.
2019. A few days later, high-profile memory chip Despite the massive portfolio inflows into the
manufacturer Tsinghua Unigroup also missed a debt market, foreign investors held around 3% of
payment on a CNY 1.3 billion bond. Unigroup is a outstanding bonds by end-2019.
subsidiary of the prestigious Tsinghua University,
Chart 2:Onshore Bond issuance remains strong
an entity under the Ministry of Education. Soon
after, Brilliance Auto Group, the Chinese SOE 50
Issued Bonds at Face Value, CNY trn
45 *2020 is as of 25 Nov ytd
partner of BMW also defaulted. Investors have 40
long considered such firms as safe because of 35
their implicit government backing. Yet the 30
consecutive defaults by previously immune 25
20
issuers indicate that the blanket protection by the 15
government is no longer a given. 10
5
Chart 1: Recent rise in onshore bond defaults 0
45 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Peking University
40 Founder Yongcheng Non-Govt Govt Total Issued Total, CNY
Onshore Bond Defaults, CNY bn
Coal &
35 Brilliance
30 Auto &
Tsinghua Source: Bloomberg, SEB
25
Unigroup
20
15
Even so, we expect the central bank to keep
10
5
policy rates unchanged for a prolonged period
0 allowing the economic recovery to broaden.
Jan 18 Jul 18 Jan 19 Jul 19 Jan 20 Jul 20 Since May, the People’s Bank of China (PBoC) has
Outstanding on Default Date
maintained a steady hand on policy interest rates.
Source: Bloomberg, SEB Indeed, the central bank’s reluctance to cut
interest rates further has pushed up interbank
rates from the lows of around 1.30% in April
towards the PBoC’s 7-day reverse repo rate
8 — Asia Outlook December 2020China Theme
currently at 2.20% (Chart 3). As a result, financial tolerance” approach to violations in the bond
conditions have tightened from the combined market. Officials cited “cyclical, institutional and
effects of lower credit intensity (measured by behavioral factors” have led to the rise in defaults.
new credit as a share of GDP) and higher cost of A few days before Unigroup missed its payments,
credit (measured by real interest rates). The it pledged about USD1.4 billion of assets to Bank
defaults in November led to a spike in interbank of Beijing for a CNY 10 billion credit line. Unigroup
rates to around 3.30%. This prompted the central reportedly did not receive any fresh loans leading
bank to provide the market with daily cash to allegations of malicious transfer of assets.
injections, pushing the interbank rates back down.
Chart 4:High Incoming Bond Maturities in H1
The liquidity provision is now capping the sell off
2021
in the corporate bond market that spilled over 1.4
government debt. Incoming
maturities
1.2
Outstanding Bonds by Maturity,
Chart 3: PBoC controls the spike in interbank 1.0
rates
0.8
CNY trn
4.00
0.6
3.50
0.4
3.00
0.2
2.50
%
0.0
2.00 2018 2019 2020 2021
Source: Bloomberg, SEB
1.50
1.00
Jan 20 Mar 20 May 20 Jul 20 Sep 20 Nov 20
Corporate bond defaults will likely rise in H1
7d Interbank RP 7d RRP 7d SLF 1y Bond 2021. Looking ahead, the number of expected
maturities is expected to increase in March and
Source: Bloomberg, SEB April (Chart 4). According to a Bloomberg
estimate, at least 83 Chinese companies face
repayment pressure through end-2021 on
As financial conditions tighten further, more
outstanding bonds totaling USD51.7 billion. In the
cracks in the credit market will appear. The
near term, the market is looking at 17 coal mining
tightening prior to the Yongcheng Coal credit
companies with debt due before the end of 2020.
event reflects policymakers’ concerns on
Against this backdrop, we expect the central bank
exacerbating the exessive leverage already in
to maintain its prudent approach to policy with
place. While the goal of avoiding past policy
liquidity injections even as policy rates are held
mistakes is wise, it will likely dampen economic
steady. This drip feed approach is unlikely to
growth in 2021. Sustained tightness in financial
lower bond yields substantially in the coming
conditions led to slower growth momentum in
months, in our view.
2012 and 2014. Moreover, tighter financial
conditions will once again expose the risks
surrounding weak debtors. This will lead investors
and creditors to reasses risks. If the market were
to interpret the credit events in November as a
pull back in implicit government guarantees,
more defaults from SOE-linked issuers would
be inevitable.
The defaults indicate Beijing’s comfort
regarding the trajectory of the recovery. The
deleveraging drive had been delayed by the trade
war and the pandemic. With the economic
recovery broadening, policymakers are
increasingly confident to impose market discipline
yet again. Without the cushion of implicitly
guaranteed credit, exits of weak firms can
intensify. Thus, defaults can pave the way for the
long awaited SOE reform. On 21 November,
China’s top financial regulators vowed a “zero
Asia Outlook December 2020 — 9China
China’s recovery is on track. Growth has been improving since Q2
although the momentum of recovery is now easing. The supply side
recovery which led the charge in the early part of the recovery has
now peaked. Even so, GDP growth of at least 2.0% is assured for
2020. We expect a technical rebound of 8.0% in 2021, before it
eases towards trend growth in 2022.
Growth in industrial production may have already reached its cycle
peak, even though base effects were at work in October. Private
sector activity is now making up for the gradual decline in
production of public enterprises. The latest beat in official and
Caixin PMI suggest an upside bias to Q4 overall growth.
Although household spending is still lagging behind the overall
China’s recovery is gaining breadth. Although the recovery, consumption is gaining ground. As of October, spending on
supply side driven push may be past its peak, discretionary items improved. Meanwhile, catering and restaurant
demand side recovery is deepening. Yet, upcoming activity finally posted its first positive growth in 10 months, boosted
by the long holidays in October. The latest Singles Day posted
regulatory changes to developers’ capital another blockbuster sales, which could further boost retail sales in
structures may lead to lackluster activity in 2021. November. However, new but manageable waves of infection in
Also, bond defaults among SOE-linked entities will certain parts of the country could delay the pace of normalization of
private spending. Recent outbreaks near the Shanghai airport
keep onshore rates supported in H1. immediately led to an increase in traffic in the streets of Shanghai as
people opted to drive their own vehicles rather than take public
transport.
While residential property sales maintained its strong expansion,
we are cautious of the sector in the coming year. Expectations of
regulatory tightening in property development may come as soon as
January 2021. The proposed three red lines with regard
developers’ capital structures will likely constrain construction
activity as a number of developers must raise cash to improve their
balance sheets. Since the proposal for the regulatory changes was
released in Q3, a number of developers have slashed their prices in
Recovery is still uneven
a bid to move property inventory. As such, monthly gains in new
20
home prices eased for the second consecutive month in October. If
15
this trend persists, the contribution to growth of the construction
10 sector may decline in 2021.
5
As policymakers become more confident of the pace of recovery,
% y/y
0 we expect financial conditions to remain tight in 2021. This will
-5 likely intensify corporate bond defaults, specifically in H1. Although
-10 we expect the People’s Bank of China (PBoC) to keep its policy
-15
rates on a prolonged hold, the uncertainties regarding which SOE-
related bonds will ultimately default will keep interbank rates
-20
Residential Goods Electricity Fixed Asset Industrial Retail Sales elevated. Thus, we expect the central bank to maintain its drip feed
Property Exports, RMB Consumption Investment
Sales
Production
approach with regard liquidity provision to cap gains in bond yields.
Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20
Further, the pressures in the corporate bond market will likely keep
government bond yields supported. With the recovery on track, we
expect the negative output gap to narrow, limiting the space to ease
Rate differentials point to yuan appreciation interest rates even amidst rising defaults.
8.50 300
Fundamentals are supportive of the yuan. With the US Federal
250
200
Reserve likely keep rates low for longer, rate differentials are in
8.00 favor of further yuan appreciation. Market discomfort with bond
Rate Differential, bps
150
100 defaults are keeping onshore rates elevated. This will keep the rate
7.50 differential wide in the coming months. Rate differentials or around
USD/CNY
50
0 250bps point to USD/CNY approaching 6.40 by end-2021. We
-50
7.00 acknowledge risks for an overshoot to 6.30 if conversion rates
-100
-150
among Chinese corporates rise suddenly.
6.50
-200
-250
6.00 -300
2006 2008 2010 2012 2014 2016 2018 2020
USD/CNY US-CH 10yr Bond Spread
Source: CEIC, Bloomberg, SEB
10 — Asia Outlook December 2020India
Economic recovery in India will be slow and uneven with GDP
likely to decline by 8% in 2020 before a technical rebound
by 7.6% in 2021. After the record contraction of 23.9% y/y
in Q2 (Q1 FY 21), India’s growth unexpectedly beat market
expectations at -7.5% y/y in Q3. Although there was a broad-
based improvement across services and industry in Q3, the
underlying momentum remains soft. The growth outlook in
India will depend on how long the pandemic will suppress
domestic demand. With almost 9.4 million COVID-19 cases
and more than 137,000 deaths, India has the second highest
caseload in the world. Even so, the phased-in reopening is
The weakest point in India’s growth is past. While underway as the government has shifted its focus to
protecting incomes.
growth upswing is underway, the persistently high
daily new COVID-19 cases will likely stall the After trending lower for 5 weeks into end-October, new virus
recovery. Despite an expected technical rebound in cases are once again rising. This will stall the recovery in the
coming year. The services sector, which account for almost
2021, output is unlikely to regain pre-pandemic 54% of pre-pandemic output, continues to lag the recovery.
levels until 2022. Depressed domestic demand will Meanwhile, the manufacturing/industry sector is still
lead to continued improvement in the current struggling from the lingering effects of the flight of local
account, allowing INR to gain and catch up with the migrants during the stringent lockdown. After pulling back
other EM Asian currencies in 2021. from a peak of 23.5% in April, the space for further declines
in unemployment in the near term is limited. According to the
survey conducted by local think tank Centre for Monitoring
Indian Economy (CMIE), job losses are creeping up in the
rural areas.
Policy response has been limited. Thus far, monetary policy
has done the heavy lifting. Yet, considering the elevated
inflation prints, we forecast limited easing in the coming
Weakest point in GDP growth is past months. We expect another further 50 bps cuts in the policy
16
rate by Q1 2021. Meanwhile, the Reserve Bank of India
12
%pt Contribution to GDP growth
8 (RBI) maintains an active presence in the secondary market
4 for central and state government bonds in a bid to limit
0 premature tightening in financial conditions.
-4
-8 The Indian rupee continues to lag the rise in other EM Asia
-12 currencies with a decline of 5.6% against the greenback year
-16
to date. We have been of the view that INR will eventually
-20
-24 catch up in posting gains against the greenback with
-28 USD/INR approaching 69 by end-2021. As domestic demand
-32 is likely to remain weak, we expect the trade deficit to
2014 2015 2016 2017 2018 2019 2020
Change in Inv Net trade Investment continue to improve. This should ultimately narrow the
Govt Consumption GDP shortfall in the current account. Meanwhile, equity flows
continue to gain with a year to date inflow of USD14.9billion.
Services are still struggling from elevated COVID-19 cases Yet, bond flows remain weak with year to date outflows of
USD14.6 billion. With improved risk sentiment benefitting EM
65
Asian markets, we expect the still light positioning in Indian
60
55
bonds to provide support to the rupee over the next year.
50
PMI, 3mma
45
40
35
30
25
20
15
2008 2010 2012 2014 2016 2018 2020
Composite PMI Manufacturing PMI Services PMI
Source: CEIC, Macrobond, Bloomberg, SEB
Asia Outlook December 2020 — 11Indonesia
Indonesia’s growth has been hit by the pandemic more than
we initially expected. The 3.49% contraction in Q3 points to
a slower recovery than we had initially expected. Although
domestic demand and external trade are showing signs of
improvement, its pace of recovery is still hampered by
elevated virus caseloads. Thus, we expect GDP to decline by
2.1% in 2020, followed by a 4.3% rise in 2021. Our base
scenario foresees a shallow recovery in 2021.
We expect some permanent losses in incomes on the back of
broadening job losses. The pandemic remains uncontained
and testing rates are still low. Even so, the government has
Growth outlook in Indonesia remains grim. A avoided strict lockdowns and daily mobility data show some
sharper contraction of 2.1% in 2020 will likely be progress towards normalization.
followed by a shallow recovery of 4.3% rise in Government spending did the heavy lifting in 2020 and we
2021. Uncontained virus outbreaks will continue to expect continued fiscal support in the coming year.
hinder the recovery in domestic demand which will Policymakers expect the budget deficit to narrow to 5.7% of
lead to some permanent loss in incomes. GDP in 2021, compared to the planned 6.34% shortfall in
2020. The government temporarily suspended its 3% deficit
limit for 2020-22 period anticipating the need to keep fiscal
support in the wake of the pandemic. The targeted deficit for
the coming year would imply a net bond supply of IDR1,207
trillion from the IDR1,174 trillion projection in 2020. Bank
Indonesia (BI) likely mopped up around 50% of the 2020 net
bond supply, though its support is likely to decline to around
25-40% by 2021. So far, the financing strategy for the
coming year has not yet been revealed. Meanwhile,
Indonesia has inked USD3.2 billion worth of bilateral loans
from China, Japan, Australia and Germany in the last few
Uncontained outbreaks have led to slow recovery months. Combined with the potential leftover financing from
10
2020, this will help offset bond supply risks at the margin.
%pt Contribution to GDP growth
8
6 The central bank has reduced its policy rate by 125bps so far
4 this year. The improvement in the outlook for the rupiah
2 opened the space for the central bank to deliver a surprise
0 interest rate cut to 3.75% in November. In the policy
-2 statement, BI reiterated its view that the currency is still
-4 undervalued, suggesting that the central bank will not stand
-6 in the way of further gains in the currency in the near term.
-8 While the challenging growth outlook requires continued
2013 2014 2015 2016 2017 2018 2019 2020 monetary support, for now we are maintaining our forecast
Change in Inv Net trade Investment
Govt Consumption GDP of a prolonged hold in 2021. The risks to our view tilts
towards further cuts should the IDR improve faster than
expected.
Weak inflation will not limit monetary policy
9.0 The rupiah has been the second worst performer in the Asian
8.0 currency suite. Despite broad dollar weakness, IDR is holding
7.0 on to 1.83% losses year to date. After the massive outflows
6.0 in Q1, portfolio flows have staged a modest return. In light of
5.0 broad expectations of continued dollar decline in 2021,
%
4.0
portfolio flows improved in Q4. Foreigners have bought a net
3.0
USD2.6 billion of local currency bonds quarter-to-date,
2.0
1.0
narrowing the net outflows for the year. However, they
0.0 remain a net seller of domestic equities of USD0.5 billion in
2014 2015 2016 2017 2018 2019 2020 Q4 thus far. Overall, foreign positioning is still light and there
Inflation Target Range
CPI, % y/y Core CPI, % y/y is room for the IDR to gain once flows into EM space resume.
BI rate
Thus, we expect USD/IDR to approach 13,600 by end-2021.
Source: CEIC, Macrobond, Bloomberg, SEB
12 — Asia Outlook December 2020Malaysia
The path to recovery has become even more challenging in
recent months. Malaysia’s Q3 GDP beat market expectations
with a rebound of 18.2% q/q sa, more than offsetting the
16.5% contraction in Q2. Yet the resurgence of virus
infections since September has led the government to
impose mobility restrictions yet again. Thus we expect a
deeper GDP contraction of 6.1% y/y in 2020 followed by a
5.7% increase in 2021.
The recovery in manufacturing is losing steam. Industrial
production is benefitting from the upturn in the global tech
cycle, allowing the manufacturing sector to outpace the
Notwithstanding the upside surprise in Q3 GDP, the recovery of other sectors. Even so, the return of mobility
resurgence of virus infections has derailed the restrictions were immediately reflected by a pullback in
recovery process. Although an ongoing upturn in monthly PMI numbers. This suggests that the stellar
global tech cycle is benefiting exports, the re- performance in Q3 is unlikely to be maintained in Q4.
imposition of mobility restrictions will dampen The deeper damage to the economy implies a deeper pain to
domestic demand. micro, small and midsized enterprises. The longer lasting hit
to output could lead to a permanent loss in incomes,
dampening the recovery in household spending.
Fiscal spending supported domestic demand this year. In Q3,
real government consumption jumped by 6.9% y/y from the
2.3% print in Q2. We expect a modest tightening going
forward with the government planning a 5.4% budget deficit
in 2021 from the 6.0% shortfall in 2020. The announced
2021 budget implies net financing requirements will go
down to MYR 86 billion, from the projected total of MYR 87
billion in 2020. This year, sufficient demand from banks
PMI is mirroring the deterioration in mobility allowed the market to smoothly digest the increased bond
55 issuance. However, the outlook for next year may be more
0 challenging. Even so, there is enough space for the central
50 -10 bank to support the bond market next year.
-20
Headline inflation remains deeply in the negative territory.
-30
45 Latest inflation prints emphasize prolonged disinflationary
-40
pressures resulting in negative inflation for 2020. Although
-50
40
we expect a modest increase in inflation in 2021, it will
-60
remain benign and unlikely to compel Bank Negara Malaysia
35 -70
(BNM) to tighten policy next year. Thus, we expect BNM to
-80
remain on hold keeping its policy rate at 1.75% through end-
Jul 20
Mar 20
Oct 20
Apr 20
May 20
Nov 20
Feb 20
Jun 20
Aug 20
Sep 20
30
Feb 20 May 20 Aug 20 Nov 20
2021. A high proportion of loans are under a repayment
Mobility from Pre-pandemic moratorium. When these expire, higher loan loss provisions
PMI
are inevitable. While Malaysian banks are resilient, loss
Easing momentum in manufacturing bodes ill for GDP growth provisions could tighten financial conditions even as the
central bank keeps it policy rate steady.
15 15
10 10 We expect the ringgit to continue to appreciate toward 3.95
5 against the dollar by end-2021. Year-to-date the MYR has
5
0 risen a modest 0.3% due to widening trade surpluses. The
GDP, % y/y
risk to our view depends on the outcome of OPEC+
IP, % y/y
0 -5
-10
negotiations regarding the production levels next year. If
-5
-15
supply outstrips demand and oil prices decline once again,
-10 the recovery of the ringgit may falter.
-20
-15
-25
-20 -30
2006 2008 2010 2012 2014 2016 2018 2020
GDP IP
Source: CEIC, Bloomberg, SEB
Asia Outlook December 2020 — 13The Philippines
Domestic demand in the Philippines is struggling to gain
traction. Although GDP growth improved in Q3, the
contraction of -11.5% y/y was deeper than market
expectations. Thus, we expect GDP to decline by 9.3% in
2020, followed by an 8.2% technical rebound in 2021.
The pace of normalization in private sector activity has been
slow. Lingering voluntary restrictions remain even as the
government had already eased imposed mobility controls.
Private consumption, which accounted for more than 72% of
pre-pandemic GDP, contracted 9.3 % y/y in Q3 after the
15.3% plunge in Q2. Meanwhile, fixed investment
The pace of normalization of activity in the contracted 37.1% in Q3, even worse than the 36.5% print in
Philippines has been slow. Although government- Q2.
imposed restrictions have eased, household Fiscal spending has been disappointing. As of September,
demand is constrained by lingering caution over only 70% of planned disbursements had been spent by the
elevated virus infections. The outlook for domestic government. Spending has likely picked up in Q4 with the
demand is challenging in 2021 with households and national government trying to exhaust the budget
allocations. This should take the fiscal deficit to 9.6% of GDP
enterprises dealing with permanent damage to
in 2020. In 2021, the government is targeting a shortfall of
balance sheets. 8.4% with the net borrowing likely to remain at PHP3 trillion.
Despite the widening in the deficit, funding pressure has
been limited with the bulk of the net supply of bonds
absorbed by the central bank. The Bureau of Treasury also
increased retail net issuance to PHP 628 billion by the end of
Q3 compared to a total of PHP 236 billion for the full year
2019.
The growth outlook for 2021 is grim. Despite the expected
Slow normalization in domestic demand technical rebound in the coming year, a permanent loss in
16 16 output will dampen the recovery in household spending.
Permanent damage on corporate balance sheets will keep
%pt Contribution to GDP
12 12
8 businesses away from capital spending.
8
4
4 Overall weakness in domestic demand will persist in 2021,
growth
GDP, % y/y
0
-4 0 keeping import growth suppressed. The monthly trade deficit
-8 -4 continued to narrow to USD 26 billion as of September from
-12 -8 its widest at USD46 billion in March 2019. As such, external
-16
-12 balances have sharply improved even with the pull back in
-20 remittances. This led to the outperformance of the Philippine
-24 -16
peso this year with a 5.4% gain ytd, coming in second only to
-28 -20
14 15 16 17 18 19 20 the yuan. We expect this trend to persist considering that the
Change in Inv Govt Net trade meaningful rebound in domestic demand is unlikely in 2021.
Investment Consumption GDP
Thus, we expect USD/PHP to remain on a downtrend
External balances are improving on weak domestic demand approaching 46.0 by end-2021.
15 The Bangko Sentral ng Pilipinas (BSP) surprised the market
10 at it policy meeting in November with a 25 bps cut to 2.00%
in the policy rate. Since the onset of the pandemic, the
Current Account, % GDP
5
cumulative rate reduction is now to 200 bps, though policy
0
transmission has been limited. The central bank’s inflation
-5 forecasts of 2021 and 2022 at 2.7% and 2.9% respectively
-10
remain in the lower half of the target range. Weak demand
pull price pressures are unlikely to limit monetary policy in
-15
the foreseeable future.
-20
2008 2010 2012 2014 2016 2018 2020
Secondary Income Primary Income Services
Goods Current Account
Source: CEIC, Bloomberg, SEB
14 — Asia Outlook December 2020Singapore
Even after Singapore emerged from the deep recession in
Q2, Singapore’s economic rebound will likely remain
lackluster. Q3 GDP showed a rise of 9.2% q/q sa from the
record decline of 13.2% in Q2. This implies an annual growth
of -5.8% y/y in Q3. After emerging from a technical recession
in Q3, sequential growth in Q4 is likely slower. Policymakers
expect GDP to contract 5-7% in 2020 with a return to
above-trend growth next year. On the back of a phased in
easing of restrictions, we expect GDP to contract 5.9% in
2020 before a technical rebound of 4.6% in 2021. At this
rate, overall activity is unlikely to return to pre-pandemic
Despite emerging from the deep contraction in Q2, levels until 2022.
the sequential growth in the near term will likely be Since the trough in late April, economic activity has been
slower. Domestic demand is steadily improving as steadily improving. After imposing a tight “circuit breaker” in
community transmissions of COVID-19 eased. Q2, Singapore has managed to lower the daily community
transmissions to single digits. Combined with the low death
Unless global travel resumes, recovery will be rate, the government pursued a gradual re-opening that will
constrained for a small and open economy like likely continue through 2021. Despite substantially lower
Singapore. mobility restrictions, recovery will be limited until global
travel goes back to normal for a small and open economy like
Singapore.
Recovery has been uneven. Manufacturing is now producing
above pre-pandemic levels, driven by an upturn in global
demand for semiconductors and technology related
products. The pharmaceutical industry is also adding to the
strong performance of industrial production. Meanwhile, the
construction sector is still far from trend. Aside from public
works, resumption of development projects has been
MAS to remain neutral amidst weak growth and inflation lagging. Finally, the dearth of international tourism has
20 8 prevented the services sector from attaining a full recovery.
15 6 Given that the weaknesses are in jobs-rich sectors of the
MAS Core CPI, % y/y
10 economy, the outlook for the labor market remains
4
challenging. The unemployment rate is likely to deteriorate
GDP, % y/y
5
2 before it improves by H2 2021. Since February, core inflation
0
has been in negative territory. Upward price pressures are
0
-5 unlikely to emerge as long as the negative output gap
-10 -2 persists.
-15 -4 In October, the Monetary Authority of Singapore (MAS) kept
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
its policy settings steady with a 0% rate of appreciation of
MAS Neutral Policy GDP, y/y MAS Core CPI, y/y
the S$NEER. The width and level of the policy band was also
maintained. Since the MAS pursued a double easing on 30
MAS S$NEER has room to appreciate within the band March, the policy S$NEER has remained slightly above the
midpoint. We expect the MAS to maintain a stable and
129
128
neutral policy through end-2021, allowing fiscal spending to
127
lead the charge in lifting the growth momentum. Even so,
126 there is ample room for the Singdollar to appreciate against
125 the greenback. In the past, the S$NEER tended to trade on
124 the upper half of the policy band in times of neutral policy.
123 Thus, we expect USD/SGD to approach 1.335 by end 2021.
122
121
120
2015 2016 2017 2018 2019 2020
Lower Bound SEB S$NEER daily
Midpoint Upper Bound
MAS S$NEER
Source: CEIC, Bloomberg, SEB
Asia Outlook December 2020 — 15South Korea
Downside South Korea’s economy has been gradually
improving since H2 2020. After two quarters of sequential
contractions, GDP rose 2.1% q/q sa in Q3. The economic
damage in South Korea has not been as severe as we initially
expected. Thus, we expect GDP growth to decline to -1.0% in
2020 before rising to 3.0% in 2021.
The country is now dealing with its third wave of COVID-19
infections, which has stalled the pace of normalization.
Indeed, mobility indicators in retail and recreation, transit
stations and workplaces have declined yet again after the
government re-imposed tighter social distancing restrictions.
The damage to South Korea’s economy has not Private consumption and personal incomes will inevitably
been as severe as we had expected. While weaken reflecting the pull back in consumer confidence.
moderate waves of infection is slowing the pace of Even so, the country’s response has been lauded as one of
normalization, the export recovery is providing a the most effective in the region having kept the fatality rate
low.
sufficient offset. Bank of Korea will likely be on a
prolonged hold until the durability of recovery is Export rebound continues. External demand is holding up,
ensured. providing a substantial offset to the resurgence of infections
among younger populations. The latest manufacturing PMI is
pointing to further gains in new export orders and business
expectations. Resilient demand for technology related
products from Korea’s major trading partners props up the
momentum of recovery. Shipments of semiconductors have
posted double digit growth in the three months to November.
However, the resurgence of virus outbreaks in the US and
Europe is raising uncertainties about the persistence of the
export recovery. Also, intensifying US sanctions on China
may affect South Korea’s ability to export semiconductor
Export rebound leads recovery chips to China. Moreover, there are risks that excess
8
inventory may eventually dampen the outlook in 2021.
%pt Contribution to GDP % y/y growth
6 Overall, the uncertain outlook in the industry will likely put a
4 dampener on private investment. Meanwhile, South Korea’s
dependence on tourism is relatively low. Thus, the delayed
2
recovery in tourist receipts will likely have a limited impact
0 on the growth momentum.
-2 Policy support provided cushion to domestic demand. Relief
-4 payouts and the reduction in consumption tax protected
against the downturn in H1 2020. The government’s third
-6
2013 2014 2015 2016 2017 2018 2019 2020 supplementary budget of around 1.8% of GDP is already at
Change in Inv Net trade Investment work. In addition, the fourth package worth 0.4% of GDP
Govt Consumption GDP
was only approved in late September. Loan maturities and
deferment of interest payments for SMEs were extended for
Weak inflation pressure will BOK on prolonged hold another six months until March 2021. This lowers the risk of
4.5
a solvency crisis in the medium term.
4.0
3.5 The Bank of Korea (BOK) kept its policy at 0.50% in
3.0 November, having reduced its policy rate by 75bps in 2020.
2.5 The central bank raised its growth forecasts citing improved
2.0 outlook for exports and global recovery. However, unless a
%
1.5 sustainable recovery is ensured, policy will remain
1.0 supportive. Thus, we expect a prolonged hold from the BOK.
0.5
0.0
Although the won has been appreciating since July, it lags its
-0.5 North Asian counterparts. The cyclical rotation in equities
2013 2014 2015 2016 2017 2018 2019 2020 will likely benefit Korean names. Along with export recovery,
Target Range CPI, y/y Core CPI, y/y BoK Rate we expect USD/KRW to remain on a downtrend approaching
Source: CEIC, Bloomberg, SEB 1,080 by end-2021.
16 — Asia Outlook December 2020Thailand
Thailand’s economy is on the mend with domestic demand
leading the gains. While GDP prints in Q3 were stronger than
expected, the dearth of tourist arrivals will prevent the
economy from achieving pre-pandemic output levels. We
expect GDP to contract by 6.5% y/y in 2020 followed by
3.5% rise in 2021.
GDP growth in Q3 beat market expectations by a wide
margin at 6.5% q/q sa (mkt: -3.9%), marking a sharp
rebound from the 9.9% contraction in Q2. The recovery in
domestic activity led the government to revise its 2020 GDP
forecast to -6% y/y from the previous forecast range of
Thailand’s relative success in limiting local -7.3% to -7.8%. Industrial production (IP) is likely to
transmission of the virus has led to a broad- maintain its momentum of recovery. The government now
based recovery in Q3. Yet, the economy’s high expects IP to contract 8% in 2020, compared to its earlier
dependence on tourism implies that achieving estimate of around -9%. In 2021, manufacturing growth is
forecast to be in the range of 4-5%.
pre-pandemic output levels is unlikely until
global travel normalizes. Final domestic demand rose 6.2% q/q in Q3, more than
offsetting the 4.7% contraction in Q2. The relative success of
Thailand in containing local transmission of the virus has led
to a steady improvement in mobility indicators since April.
While the improvement was broad-based, the persistent
contraction in services exports or tourism put a dampener on
growth. We expect the sector to remain soft for several more
months until global travel normalizes. Before the pandemic,
tourist receipts accounted for 13% of GDP, the highest in the
region. Although Thailand has started to accept foreign
tourists back, the government’s cautious approach to the
Lack of tourist arrivals pandemic capped tourist arrivals to 1,200 per month starting
40 60 Q4. This is far from the pre-pandemic intake of an average 3
40 million foreign tourists per month. While the Minister of
Real exports of services , % y/y
20
Tourism is pushing for quarantine-free travel bubbles with
Visitor Arrivals, % y/y 3mma
20
0 0 low risk countries, any travel bubbles are unlikely to be
-20 signed soon.
-20
-40
Despite the rebound in domestic activity, the labor market
-40 -60 remains grim. The number of under employed and
-60
-80 unemployed remains elevated. This will limit the recovery in
-100 household spending. Thus, fiscal policy needs to remain
-80 -120 supportive. The government is planning to widen the central
12 13 14 15 16 17 18 19 20
government deficit to 4.5% of GDP in FY 2021 from the
Real exports of services Visitors Arrivals (RHS)
projected deficit of 4.3% in FY 2020. The ample excess
liquidity onshore will allow the market to absorb the
Recovery in manufacturing cannot lift GDP growth alone expected increase in bond issuance. However, there is a risk
20 60
that political tensions could lead to instability. In the past,
prolonged political instability capped public spending.
15 45
30 After cutting the policy rate by 75bps ytd, we expect Bank of
10
15
Thailand (BOT) to keep a steady hand through end-2021.
GDP, % y/y
IP, % y/y
5 However, the central bank’s continued concern with regard
0
0 the baht strength will likely usher in more measures to
-15
-5
facilitate outflows. Combined with political tensions, we
-30
expect the pace of appreciation of the baht to be muted
-10 -45 leading the USD/THB towards 30.2 by end-2021.
-15 -60
2004 2006 2008 2010 2012 2014 2016 2018 2020
GDP IP
Source: CEIC, SEB
Asia Outlook December 2020 — 17Forecasts
Real GDP, % y/y
2016 2017 2018 2019 2020 2021 2022
China 6.9 6.9 6.8 6.2 2.0 8.0 5.6
India 9.0 6.5 6.8 4.9 -8.0 7.6 10.9
Indonesia 5.0 5.1 5.2 5.0 -2.1 4.3 4.7
Malaysia 4.4 5.8 4.8 4.3 -6.1 5.7 5.5
Philippines 7.2 6.9 6.3 6.0 -9.3 8.2 6.2
Singapore 3.2 4.3 3.5 0.7 -5.9 4.6 3.2
South Korea 3.0 3.2 2.9 2.0 -1.0 3.0 2.7
Thailand 3.4 4.1 4.1 2.4 -6.5 3.5 3.8
Australia 2.8 2.4 2.8 1.8 -3.5 4.1 3.8
New Zealand 4.2 3.8 3.2 2.2 -4.8 3.1 4.0
Eurozone 1.8 2.7 1.9 1.3 -8.8 6.6 3.4
US 1.7 2.3 3.0 2.2 -5.5 4.0 3.5
Japan 0.5 2.2 0.3 0.7 -5.8 2.4 0.7
CPI, % y/y
2016 2017 2018 2019 2020 2021 2022
China 2.1 1.5 2.1 3.1 2.5 1.6 2.0
India 5.0 3.3 4.0 3.7 6.5 4.6 4.0
Indonesia 3.5 3.8 3.3 2.8 2.1 2.5 2.9
Malaysia 2.1 3.8 1.0 0.7 -1.1 0.8 1.0
Philippines 1.3 2.9 5.2 2.5 2.5 3.1 2.9
Singapore -0.5 0.6 0.4 0.6 -0.3 0.8 1.2
South Korea 1.0 1.9 1.5 0.4 0.5 1.0 1.2
Thailand 0.2 0.7 1.1 0.7 -0.9 1.1 1.2
Australia 1.3 1.9 1.9 1.6 0.7 1.2 1.3
New Zealand 0.6 1.9 1.6 1.6 1.6 1.1 1.2
Eurozone 0.2 1.5 1.8 1.2 0.6 1.0 1.2
US 1.3 2.1 2.4 1.8 1.1 1.8 1.9
Japan -0.1 0.5 1.0 0.5 0.1 0.1 0.5
Policy Rate Forecasts
03 Dec 20 Mar 21 Jun 21 Sep 21 Dec 21 Mar 22
China 1Y LPR 3.85 3.85 3.85 3.85 3.85 3.85
China 7d RRP 2.20 2.20 2.20 2.20 2.20 2.20
China RRR 12.50 12.00 12.00 12.00 12.00 12.00
India 4.00 3.50 3.50 3.50 3.50 3.50
Indonesia 3.75 3.75 3.75 3.75 3.75 3.75
Malaysia 1.75 1.75 1.75 1.75 1.75 1.75
Philippines 2.00 2.00 2.00 2.00 2.00 2.00
South Korea 0.50 0.50 0.50 0.50 0.50 0.50
Thailand 0.50 0.50 0.50 0.50 0.50 0.50
Australia 0.10 0.10 0.10 0.10 0.10 0.10
New Zealand 0.25 0.00 -0.25 -0.25 -0.25 -0.25
Euro Zone -0.50 -0.50 -0.50 -0.50 -0.50 -0.50
US 0.25 0.25 0.25 0.25 0.25 0.25
Japan -0.10 -0.10 -0.10 -0.10 -0.10 -0.10
Current FX Rate Forecasts
03 Dec 20 Mar 21 Jun 21 Sep 21 Dec 21 Mar 22
USD/CNY 6.54 6.66 6.58 6.49 6.40 6.40
USD/CNH 6.53 6.66 6.58 6.49 6.40 6.40
USD/INR 73.93 72.8 71.5 70.3 69.0 69.3
USD/IDR 14,140 14,000 13,900 13,800 13,600 13,500
USD/MYR 4.07 4.05 4.02 3.98 3.95 3.92
USD/PHP 48.05 47.50 47.00 46.50 46.00 45.50
USD/SGD 1.333 1.338 1.337 1.336 1.335 1.329
USD/KRW 1,097 1,103 1,095 1,088 1,080 1,072
USD/THB 30.19 30.40 30.30 30.20 30.20 30.20
AUD/USD 0.74 0.73 0.74 0.75 0.75 0.75
NZD/USD 0.71 0.69 0.69 0.70 0.71 0.71
EUR/USD 1.22 1.21 1.23 1.24 1.25 1.26
USD/JPY 104 103 102 101 100 100
Source: CEIC, Bloomberg, SEB
18 — Asia Outlook December 2020Disclaimer
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SEB Securities Inc. ('SEBSI'), a wholly owned subsidiary of SEB consideration as to any valuations, projections and forecasts contained
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The SEB Group: members, memberships and regulators currency rates of exchange may adversely affect the value, price or
SEB is a member of, inter alia, Nasdaq OMX Nordic, Oslo Stock income of any security or related investment mentioned in this report.
Exchange, the London Stock Exchange, NYSE Euronext, Frankfurt Stock In addition, investors in securities, such as ADRs, whose values are
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SEB is regulated by Finansinspektionen in Sweden and, for the conduct
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UK by the Financial Conduct Authority and Prudential Regulation
Authority (details about the extent of our regulation by the Financial
Conduct Authority and Prudential Regulation Authority are available
from us on request), (vi) Estonia by the Estonian Financial Supervision
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the Monetary Authority of Singapore, and (ix) Hong Kong by Securities
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Asia Outlook December 2020 — 19You can also read
