ASEAN
ASEAN Members seek to broaden partnerships through BRICS and OECD memberships 
(12 August 2024) In July, ASEAN hosted a series of meetings in Lao PDR, which included discussions among ASEAN foreign ministers and top diplomats from Japan, the U.S., China, India, and the EU. The meetings underscored ASEAN’s intent to enhance its global diplomatic role. However, three founding ASEAN members—Indonesia, Thailand, and Malaysia—are pursuing different international affiliations. Malaysia applied for BRICS membership following a meeting with Russian Foreign Minister Sergey Lavrov. Indonesia and Thailand applied for OECD membership, with Thailand also seeking BRICS membership. Indonesia’s choice for OECD over BRICS reflects a desire to bolster its investment appeal and continue economic reforms, while Malaysia’s BRICS pursuit aims to diversify economic ties and reduce reliance on the U.S. dollar. Thailand’s dual application represents a strategy to engage with both established and emerging markets. The differing approaches highlight the countries’ distinct strategic priorities and economic standings, with ASEAN’s collective influence facing challenges amid rising global tensions.

MALAYSIA
Economy likely grew by 5.8% year-on-year in Q2 of 2024 
(14 August 2024) Malaysia’s economy likely grew by 5.8% in the second quarter of 2024, marking its fastest expansion since Q4 2022, driven by a strong rebound in exports and increased household consumption, according to a Reuters poll of 20 economists. Exports rose by 9.1% in April, 7.3% in May, and moderated to 1.7% in June year-on-year, contributing to an overall 3.9% growth in the first half of 2024. The economy’s performance aligns with Bank Negara Malaysia’s growth estimate of 4.0% to 5.0% for the year, with expectations that the downturn in technology and electronics exports has bottomed out. Renewed economic ties with China are anticipated to further boost Malaysian exports, and investment trends, particularly foreign direct investment, are being closely monitored for their potential impact on cyclical growth. Economic growth for 2024 is expected to average 4.4%. 

MALAYSIA, INDIA
Malaysia and India to sign multiple agreements during Malaysian PM visit to New Delhi 
(13 August 2024) India and Malaysia are expected to sign multiple agreements during Prime Minister Anwar Ibrahim’s visit to New Delhi on 19 August, 2024, with a key focus on a memorandum of understanding regarding the recruitment, employment, and repatriation of Indian workers. This agreement has gained importance due to past concerns about the treatment of Indian workers in Malaysia, where around 185,000 Indian nationals currently reside. Ibrahim’s visit, his first as prime minister, aims to reset bilateral relations strained by previous political issues, including disputes over India’s internal policies and the presence of controversial preacher Zakir Naik in Malaysia. The discussions will also cover enhancing trade and investment, with potential agreements on accepting India’s Unified Payments Interface (UPI) system and RuPay payment service, as well as trade settlements in domestic currencies. Malaysia ranks as India’s 13th largest trade partner, with bilateral trade amounting to nearly USD 20 billion in 2022-23.

LAO PDR
Lao PDR reports trade deficit of USD 154 million in July
(14 August 2024) In July, Lao PDR reported a trade deficit of USD 154 million, with total trade valued at over USD 1.2 billion. Exports totalled USD 533 million, while imports amounted to USD 687 million. Key export items from Lao PDR included mixed gold, electric equipment, salt, rubber, paper, wasted wood, sugar, cassava flour, copper ore, and cassava. Major imports comprised diesel, mechanical equipment, finished chemical products, land vehicles, electrical appliances, steel, plastic products, gasoline, vehicle spare parts, and beverages. China, Viet Nam, and Thailand were notable export destinations, and the same countries were primary sources of imports for Lao PDR.

THE PHILIPPINES
BSP lowers target interest rate by 25 basis points to 6.25%, first rate cut in nearly four years  
(15 August 2024) The Bangko Sentral ng Pilipinas (BSP) reduced its target interest rate by 25 basis points to 6.25% on Thursday, marking its first rate cut in nearly four years. This decision aligns with forecasts from 13 of 23 economists surveyed by Bloomberg. The BSP Governor indicated that further rate cuts might follow, potentially an additional 25 basis points in October or December. The BSP had previously implemented 450 basis points of tightening to control inflation. Despite a strong GDP growth, domestic demand has shown stress, prompting the rate cut to support consumption. The BSP raised its inflation projection for 2024 to 3.3% from 3.1%, anticipating a decrease in inflation due to lower import tariffs on rice, despite a recent acceleration in inflation to its highest in nine months.

THAILAND
Thai markets expected to face pressure due to removal of Prime Minister
(15 August 2024) Following the removal of Prime Minister Srettha Thavisin by Thailand’s Constitutional Court for an ethics violation, the country’s markets are expected to face ongoing pressure. Analysts are concerned that the transition in leadership may delay crucial policies aimed at enhancing investor confidence. Issues such as elevated household debt and investment attractiveness are unlikely to be addressed promptly until a new government is in place. Additionally, there are uncertainties regarding the implementation of a USD 14 billion cash handout programme. The SET Index, already struggling this year, fell by 0.4% on Wednesday, and the baht declined against regional currencies in early Asian trading.

INDONESIA
New planned capital city Nusantara attracts increased investor interest
(14 August 2024) Indonesia’s planned new capital, Nusantara, is attracting increased investor interest despite previous delays and concerns about its future under incoming President Prabowo Subianto. On Monday, local companies, including Bank Central Asia (BCA), began major projects in Nusantara, collectively investing over IDR 4 trillion (USD 250 million). BCA’s project includes a IDR 75 billion branch office, while other developments include a IDR 1.2 trillion convention centre by Royal Golden Eagle Group, and a IDR 300 billion hotel by Hotel Papua Internasional. Intiland Development plans to invest at least IDR 2.6 trillion in various facilities. So far, private sector commitments total IDR 56.2 trillion across 55 projects, but this is short of the IDR 466 trillion target by 2045. The government is offering long-term land concessions and tax incentives to attract foreign investors. The Nusantara Capital City Authority (OIKN) is discussing nearly USD 2 billion in public-private partnerships, with interest from 475 companies, including foreign firms from China, Singapore, Japan, and Malaysia.

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JAPAN
Japan’s economy grows annualized 3.1% in Q2 2024, exceeding 2.1% forecast  
(15 August 2024) In the second quarter, Japan’s economy grew an annualised 3.1%, significantly exceeding the 2.1% forecast and rebounding from a revised 2.3% contraction in the first quarter. This growth was driven by a 1.0% increase in private consumption, surpassing the predicted 0.5% rise and marking its first gain in five quarters. The Bank of Japan (BOJ) is considering further interest rate hikes following last month’s increase, supported by robust economic performance and real wage growth. However, the resignation of Prime Minister Fumio Kishida and potential political instability may delay additional rate hikes. Government officials expect continued economic recovery, buoyed by strong wage negotiations and increased tourism spending. Capital spending rose 0.9%, matching market forecasts, while external demand slightly detracted from growth. The Japanese yen showed little change at 147.38 to the dollar, and the Nikkei index gained 1.01% in response to positive Wall Street trends.

CHINA
Industrial production grows by 5.1% year-on-year in July, slowest rate in four months
(15 August 2024) In July, China’s industrial production grew by 5.1% year on year, the slowest rate in four months, slightly below the 5.2% forecast and a decrease from June’s 5.3% growth. Unemployment increased to 5.2% from 5% in June, marking the first rise since February. The property market remains weak, impacting household consumption and investor confidence, with new house prices down 4.2% and secondhand prices falling 8.8%. Retail sales rose 2.7%, outperforming expectations, while fixed asset investment grew 3.6% year-to-date, below forecasts. Analysts anticipate further easing measures from the government to stimulate the economy, including potential relaxations in housing policies and mortgage rates. Despite incremental measures, the property market’s downturn has led to warnings of a severe slump in steel production and cement output, with declines of 4% and 12.4%, respectively. 

SOUTH KOREA
South Korean retail investors purchase USD 9 billion in US stocks in H1 2024
(14 August 2024) South Korean retail investors are increasingly investing in US stocks, continuing a trend despite recent global market downturns. In the first half of 2024, South Korean “ant” investors purchased USD 9 billion in US stocks, driven by dissatisfaction with local market returns and valuations. Notably, they have significantly reduced their holdings in domestic stocks, selling a record KRW 16.3 trillion (USD 11.9 billion) and contributing to a 1.3% drop in the KOSPI index. In contrast, foreign investment in Korean stocks also increased to a record KRW 27 trillion, but still lags behind the retail investment proportion. The disparity in dividend payments and valuations between South Korean and US companies, with the latter offering higher returns and more robust growth, continues to draw South Korean investors abroad. Government efforts to boost the domestic market, including proposed tax incentives and a “Corporate Value-up Programme,” face challenges due to entrenched issues within family-run conglomerates and limited immediate impact. As of late July, South Korean holdings in US stocks totalled USD 13.6 billion in Tesla, USD 12 billion in Nvidia, and USD 5.1 billion in Apple. Despite a planned capital gains tax, retail investors remain optimistic about long-term gains from US investments.