July 30th, 2008

South Africa
USD weakeness yesterday; lower commodities, weak EM => ZAR somehow stronger
2008 GDP looks to expand 3.2%, slipping to 2.8% in '09 (5.1% in '07)
*reweighting of a CPI basket usually always lowers CPI b/c consumers move away from products that prices are rising in
50bp hike in June showed taking factors other than CPI into account in rates; slowing in real exconomy believed to give more room in rates
PSC E climb yesterday
- lower M3 so less liquidity growth
- means credit extension through credit cards to finance consumption


Thailand
Puea Pandin party withdrew from 6 party coalition government under Samak Sundaravej
Thai Cabinet appointed a new board for Thai Central Bank; new 12 member board has power to change composition of MPC
- opposed to tightening bias adopted by BoT
- Chairing the board is ex-budget advisor to PM Thaksin
- now this board can appoint CB head vs. FM in the past, should provide more CB independence

Malaysia
Anwars Pakatan Rakyat opposition party
- leaked medical report showed no evidence of sodomy

July 30th, 2008

South Africa
April/May move to 7.50 saw very strong portfolio inflows as funds bought back into SA after selling in January
Current move is in the background of foreign selling of local portfolio holdings
Expect inflation to peak in July at 13.2%, dipping to 8.6% in Jan '09, 6.3% in Dec '09
PSCE grew to 20.3%
- surprise upside in PSCE was from volatile corporate borrowings aggregate
- credit extended to households and mortgage aggregate advances both reduced; sign that rate hikes could be working
Next decision on 14Aug; inflation has exceeded 3-6% target range for 14 straight months
CPI expected at 12.1% in Jun vs. 11.7% in May


Thailand
Political uncertainty should keep things bid but BoT can keep things capped at 60 level
Revised upwards inflation forecast to 7.5-8.8

July 22nd, 2008

MYR
Malaysia held rates steady vs. hiking; hurtng credibilty, whole curve went right

South Africa
Due to reweighting of CPI; crude lower, agricultural prices lower and ZAR 5% stronger => expect CPI to peak at 13.2% y/y in July, dipping to 8.6% in Jan '09
expect SARB to keep rates on hold in August and four 50bp cuts over next two years with first in June '09
M3 and PSCE both tomorrow, CPI, PPI and Investec PMI

July 18th, 2008

South Africa

Eskom has shifted from maintaining its credit rating, to just wanting to maintain an investment grade rating

EURZAR breaking 12.00 even with AUD and NZD weakening

Foreigeners net sellers of equities and bonds so gains must be on back of corporate deal or interest rate sensitive flows

Singapore

Well supported at 1.3500 handle; resistance at 1.3540, support at 1.3483

Thailand

July 16th, 2008

KRW
Verbal intervention didnt cap spot and moved higher to 1010

Singapore
Pair surged after weaker than expected NoDX at -10.5% from -6.7% mktexp

South Africa
Interest rates fallen sharply; market only pricing in 20% chance of rate hike..at end June were pricing a full 50bp hike in Aug and chance of another one
maitained view of flat rates on evidence of rapidly slowing economy; SARB has shown they prefer dealing in world of "knowns" rather than unknowns (as they showed from NERSA annoucement)

July 15th, 2008

KRW: Higher on oil and KOSPI



India

Fitch cut India's outlook from stable to negative



Singapore

broke through 1.3468 decade low

Retail sales lower than expected at 4.8% vs. mktep of 6.2%



Thailand

Aggressive selling by Jap names



South Africa

Expect increased importer orders and SARB reserve accumulation the closer we get towards 7.50, year lows

MTN talks with Bharti Airtel would generate huge cash inflow vs. Reliance which would be share swap

July 11th, 2008

Thailand
PM Samak said post-coup constitution needs to be amended to prevent it being too easy to dissolve political parties by court order
- understands that this will cause a crisis but willing to face whatever crisis is possible
- govt ready to increase budget deficit to 3% from 2.5% planned if growth is sub-5%
BoT to have meeting on Wed and expect 25bp hike to 3.5%

South Africa
weakness in US has helped ZAR by pushing out US rate hikes further out increasing carry attractiveness
at some point strong reversal in the cards as concern for US economy will hit carry ccy's with shaky fundamentals
7.60 to hold, long term still see 8.22
MPC still to hike rates in August, and maybe even in October (though market has turned doveish)
- dove dynamic should hold until next CPI/PPI release which will bring back inflation fears
Retail Sales on Wed, expected -1.3%

Singapore
Retail Sales on Tuesday / NoDX on Thursday

Malaysia
Inflationary pressure to be countered with higher rates and ccy appreciation

July 10th, 2008

KRW market quiet after massive move, BoK sold about 600mio USD at 1003 in spot and sold down NDF from 1005 to 1001

Singapore
Spot traded higher after poor GDP (1.9% vs. 3.1% exp); local names seen selling at 1.3620 level
Any dips in NEER to 1.5% level good time to sell USDSGD

Thailand
Daily funding exceedingly expensive tradng b/w 0.7+ at 1.2
spot supported around 33.60, capped at 33.75


Singapore

South Africa
MTN/Reliance deal very likely will be a share swap so now inflows;
better for ZAR would be if deal fell apart which would actually have a cash suitor
7.65 - 7.78 with risk to the upside
Market coming around to view that August rate hike is far from certain; market now pricing in 60% chance of 50bp