汇丰银行东盟商品市场东盟透视商品再配置20170928HSBCASEANPerspectivesCo

Disclaimer&DisclosuresThisreportmustbereadwiththedisclosuresandtheanalystcertificationsintheDisclosureappendix,andwiththeDisclaimer,whichformspartofit.Issuerofreport:TheHongkongandShanghaiBankingCorporationLimitedViewHSBCGlobalResearchat:–ResearchIsyouraccessagreed?CONTACTustodayASEAN’scommodityexposurecontinuestoevolve,complicatingtheregion’ssensitivitytooilandbroadercommoditypricesWhileIndonesiacontinuestohavethelargestcommodityexposure(c50%ofexports),Malaysiahas“re-commoditized”Inthispiece,wetakeafreshlookatcommoditysensitivitiesandconsiderwhathigheroilpriceswouldmeanforASEANExactlytwoyearsagothismonthwelookedatASEAN’ssensitivitytocommodities(see:ASEANPerspectives:Commoditycomplications,September2015).Atthetime,commoditypriceswereinthedoldrumsandwethoughtitwashightimetofleshoutthenumbersandhighlightwheretherewerevulnerabilitiesfromlowcommodityprices(thinkexportsandfiscalrevenues),butalsoopportunities(subsidyreformandpotentialcurrentaccountimprovements).Asimpleyetsalienttakeawaywas,andremains,thatASEANisnolongerastraightforwardcommodityplay.OnlyMalaysiaretainsapositiveoil&gasnetexportbalance,havingrecentlyregaineditsformerstatusasanetoilexporter(albeitonlymarginally).AlthoughthedropincoalandpalmoilpricesinIndonesiaputsignificantpressureonruralconsumption,lowoilpricessimultaneouslyenabledthegovernmenttoopportunisticallytacklesubsidieswhileimprovingthecurrentaccount,heraldingthefundamentalimprovementsthathavecontributedtothevoraciousandseeminglyinsatiableforeigninvestorappetiteforIndonesianassetsasoflate.Inthetwoyearssincethereport,wehaveseenarecoveryinthebroadcommodityindices,albeitanunspectacularone.Still,theimpactofrelativelylowcommoditypricescontinuestobefelt;fromIndonesia’sbankingsystemtoSingapore’soffshoreengineeringindustry,whereoutputcontinuestocontractbydoubledigits.Fornow,thisiseasilydisguisedbysoaringtechshipments,butitremainsaconcernforpolicymakers.Meanwhile,pricesof“soft”commoditiessuchaspalmoilandagriculturalproductshaveperformedbetter,eventhoughfoodpricedisinflationprevails,drivenprimarilybylowricepricesinAsia.CrudePalmOil(CPO)pricesreachedmulti-yearhighsearlierthisyearthanksinparttodemandfromIndia–beforemoderatingsomewhat–benefittingexportsinIndonesiaandMalaysia(c90%ofglobalproduction).RobustpopulationgrowthacrossEMsuggestsagriculturalexportswillremainstrong,aboonforThailandandVietnam.28September2017JosephIncalcaterraEconomistTheH[e-mail][phone]NoelanArbisEcon[e-mail][phone]JingyangChenEcono[e-mail][phone]MaitreyiDasAssociateASEANPerspectivesECONOMICSASEANCommoditybalance,%GDPSource:UNCTAD,HSBC20002001200220032004200520062007200820092010201120122013201420152016ID8.98.97.47.37.67.07.57.38.17.47.27.76.25.34.64.73.8MY8.66.87.410.29.99.78.79.312.99.59.510.98.97.46.75.75.6PH-5.2-5.3-4.7-4.5-5.2-6.0-5.5-5.1-6.8-4.9-5.3-4.8-5.1-3.4-3.1-2.6-3.3SG-8.1-8.2-7.7-6.7-7.1-8.0-8.8-8.0-15.5-12.1-12.2-16.3-19.0-17.1-16.9-8.8-8.3TH1.71.11.11.1-0.7-4.1-3.8-2.5-3.7-0.4-0.9-0.8-2.9-4.3-4.1-1.50.1VN14.413.312.111.212.212.411.58.67.57.16.16.46.85.34.41.74.9CommodityreconfigurationsECONOMICS●ASEAN28September20172ASEANisaregionofcontrasts.Thisisparticularlythecasewhenitcomestocommodityexposure.MalaysiaandIndonesiaarethetwoclearcommodityplaysinAsia–althoughasthetableaboveshows,Vietnamistheonlyothercountrywithasustainednetexportbalanceincommoditiesovertheyears–onethatevenpickedupsharplyin2016.Afterall,despitethecountry’sgrowingmanufacturingprowess,40%ofitslabourforceremainsintheprimarysectorand16%ofGDPisderivedfromagriculture(thedecelerationofwhichexplainsweakGDPperformanceatthestartoftheyear),comparedtoonly14%frommanufacturing,albeitthelatterisswiftlycatchingup.NoteVietnam’s6.9%ofGDPnetbalanceinagricultureinTable2.Aquickrefresher:Thereareafewbroad,andgenerallywell-understoodcommoditybucketsintheregion.IndonesiaandMalaysiaaccountforc90%ofglobalpalmoilproduction(whichmakeup12%,and9%ofexportsineachcountry)andarethelargestgasandoilexportersinAsia.ThailandandVietnamaretheagriculturalcommoditypowerhouses–theworld’s2ndand5thlargestriceexporters.Indonesia,andtoasmallerextentthePhilippines,arekeymetalsandmineraloreexporters–althoughthereisahighdegreeofpolicyuncertaintyinbothcountries,fromanindustrialpolicyperspectiveinIndonesiaandenvironmentalregulationangleinthePhilippines.Thelistgoeson(didwementionthatASEANproducesc87%oftheworld’snaturalrubber?)butthesearetheimportantonestokeeptabson.WeshowcommoditynetexportexposuresbygroupinTable2.ApausefromthesupercycleUnsurprisingly,commoditiesmadeupthelargestshareofASEAN’sexportsaround2011-2012,whenpricespeaked,thankstotheboostfromvalues.Indeed,weakoilpricescontributedtodepressedexportsinAsiabetween2015and2016,asoilimpactedawide-rangeofassociatedexports.Thisresultedina“forced”diversificationofexportsawayfromcommodities.Butiti