CARI Captures Issue 606: Lower house seat distribution in Thai general election on 14 May
Move Forward Party wins 152 seats in stunning upset victory in 14 May, 2023 election
(16 May 2023) In Thailand’s general election held on 14 May, 2023, the Move Forward Party secured a stunning victory, managing to secure 152 seats in the lower house. The Move Forward Party was able to secure provinces previously thought to be loyal to other parties. This included the north and northeast, long known to be loyal to the Pheu Thai party, as well as the conservative south, a stronghold for the Democrat Party and others in the ruling coalition. Move Forward was also able to secure 32 of the 33 seats in Bangkok, long a Democrat stronghold. Move Forward’s planned pro-democracy coalition would control 310 seats in the lower house. In order to form a government, the party must find around 70 more votes from either the House or Senate. Thailand’s constitution allows 250 senators to appoint the prime minister. Among Move Forward’s positions include liberalizing liquor laws, recognizing LGBTQ rights, and reforming the kingdom’s strict lese-majeste laws.
Brunei Darussalam ratifies CPTPP, last of original 11 signatories
(16 May 2023) On 14 May, 2023, the Bruneian government announced in a statement that they had ratified the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP). Brunei Darussalam was the last of the original 11 signatories of the mega-free trade agreement. According to the statement, Brunei notified New Zealand, which serves as depositary for the agreement documents, of its ratification on 13 May. The Bruneian government announced that the CPTPP would provide ‘trading opportunities to new markets like Canada and Latin American countries such as Chile, Peru and Mexico’. The agreement will also increase Brunei’s attractiveness as an investment destination. The agreement is expected to enter into force in mid-July 2023, 60 days after notification.
Inflation in Malaysia rose to 3.3% in 2022 versus 2.5% in 2021
(17 May 2023) According to the Department of Statistics Malaysia (DoSM), inflation in Malaysia rose to 3.3% in 2022 from 2.5% in 2021. This increase was driven mainly by food and beverages (5.8%), restaurants and hotels (5.0%), transport (4.7%), and furnishings, household equipment and routine household maintenance (3.5%). The increase in inflation in 2022 was attributed to the rise in the majority of commodities prices, the strengthening of the US dollar against major currencies, and the Russian invasion of Ukraine. Flooding and landslides last year also caused disruptions in the supply of agricultural products, leading to the shortage of food supplies. The reopening of the tourism sector in April 2022 also saw an increase in prices for restaurants and hotels, which posted a 5% increase last year as compared to 0.4% recorded in 2021. DOSM also noted that although the majority of items in the CPI basket saw an increase in prices, there were 17.0% of items that recorded decreases and remained unchanged, which had indirectly eased the inflation.
Moody’s believes Malaysia’s consolidation of fiscal deficit will take longer than three years
(16 May 2023) Moody’s Investors Service anticipates that the Malaysian government’s consolidation of its fiscal deficit will take longer than the targeted three years due to rigid operating expenditures and difficulties in increasing Malaysia’s revenue base. The Malaysian government is targeting reducing Malaysia’s fiscal deficit to 3.2% by 2025. Rather, Moody’s anticipates the fiscal deficit falling to 3.6% by 2025 and 5% in 2023. Moody’s noted that there are upsides to the government’s fiscal deficit should it manage to follow through with measures they have proposed, like the Fiscal Responsibility Act and fuel subsidies. Moody’s expects Malaysia’s GDP to expand by 4.5% in 2023, and highlighted that fiscal reforms will be crucial as the country’s debt service charges are expected to remain high in the next two years given fixed spending in the government’s budget.
Singapore Airlines reports record annual profit for the year ended March 2023
(16 May 2023) Singapore Airlines Ltd reported a record annual profit for the year ended March 2023, while also stating that forward sales were healthy across all cabin classes, led by bookings to China, Japan and South Korea. Net income for the group totaled US$1.61 billion as people embraced flying again after COVID-19. It posted a loss of US$718.35 million the previous year. Revenue was US$13.28 billion, up from US$5.68 billion. The airline stated it could ramp up operations at short notice when demand for air travel surged after Singapore fully reopened its borders in April 2022. The airline (both Singapore Airlines and its budget arm Scoot) carried 26.5 million passengers in the year, six times higher than the 12 months through March 2022, with passenger capacity rising to 79% of pre-COVID-19 levels in March. In April alone, they carried 1.75 million passengers, up 53% year-on-year.
Singapore rolls out anti-money laundering platform to curb illicit flows
(10 May 2023) The Monetary Authority of Singapore (MAS) will be rolling out an anti-money laundering platform to curb illicit flows into the country. On 16 May, 2023, the Singaporean parliament passed a bill that paves the way for the MAS to set up and maintain a secure digital information-sharing system called Cosmic. The platform is meant to make it easier for financial institutions to detect and deter activities in areas like scams, money laundering and terrorism financing. The platform will allow financial institutions to raise red flags to one another as well as request clients’ information from one another if they spot suspicious transactions related to illegal flows. Under current laws, financial firms are prevented from sharing client information unless through police investigation or court orders. Cosmic will be rolled out from the second half of 2024 to six banks.
Indonesia’s sovereign wealth fund poised to boost spending in 2023 as investor interest in country increases
(17 May 2023) Indonesia’s sovereign wealth fund, the Indonesian Investment Authority (INA), is poised to increase spending in 2023 amidst increased investor interest in the country due to its prominent role in the global green energy transition as well as investors’ eagerness to diversify away from China. The INA stated that by the end of 2023 it would have deployed US$3 billion alongside its partners. As of April 2023, the fund had deployed just over US$2 billion. The INA was launched in February 2021 with US$5 billion in seeding in cash and other assets. As of now, its total assets under management measures up to US$8 billion. Unlike most sovereign wealth funds, which generally manage a country’s surplus export reserves and invest overseas, the INA has raised money from international investors to co-invest in domestic infrastructure, digital and other opportunities. The INA has been envisioned by the Indonesian government as a way for major global institutions to access the potentially higher returns offered by the Indonesian economy.
Industrial output and retail sales growth undershoots forecasts in April 2023
(16 May 2023) China’s industrial output and retail sales growth undershot forecasts in April 2023, suggesting the economy lost momentum at the beginning of the second quarter of 2023. Industrial output grew 5.6% year-on-year in April, accelerating from the 3.9% recorded in March. This was below estimates of a 10.9% increase in a Reuters poll of analysts, although it marked the quickest growth rate since September 2022. On the other hand, retail sales grew by 18.4%, up from a 10.6% increase seen in March. Analysts had expected 21.0% growth. The year-on-year figures were heavily skewed by contractions seen in April 2022 due to lockdown measures in China. Other data recently released have signaled weak domestic demand, including shrinking imports in April, deepening factory gate deflation and worse-than-expected bank loans.
Tencent Holdings’ revenue rises 11% in first quarter of 2023, fastest pace of revenue growth in more than a year
(17 May 2023) Tencent Holdings’ revenue rose by 11% to US$21.4 billion in the first quarter of 2023, beating the average forecast of US$20.91 billion. This was its fastest pace of revenue growth in more than a year. However, Tencent’s net income of US$3.69 fell short of projections, reflecting an uneven internet sector recovery during China’s post-pandemic reopening. China’s big tech firms have endured a year of regulatory crackdowns and COVID-19 restrictions, which impacted consumer and corporate spending. Said firms have been forced to implement aggressive cost cuts to endure an uncertain macroeconomic environment. To revitalize business, Tencent aims to integrate artificial intelligence capabilities across its range of products from WeChat to online media, calling the technology a “growth multiplier.”
Nikkei Stock Average closes over 30,000 for first time since September 2021
(17 May 2023) On 17 May, 2023, the Nikkei Stock Average closed above 30,000 on the Tokyo Stock Exchange for the first time since September 2021. While the outlook for the global economy remains cloudy, investor interest in Japanese equities have increased due to favorable trends such as resilient corporate performance and expectations for improved capital efficiency. Analysts have pointed to ‘market friendly stances’ many Japanese companies have shown, such as improving shareholder returns through share buybacks and increased dividends. The Nikkei average has gained more than 3,500 yen in 2023, strengthening its upward momentum. Foreign investor expectations for management reforms by Japanese companies have risen due to the Tokyo Stock Exchange’s request for improvements among companies with price-to-book ratios below 1x and other factors.