To The Moon

$Global X Southeast Asia ETF(ASEA)$

Recently, we have seen that some listed companies are continuing to strengthen their business penetration in Southeast Asian countries such as Vietnam and Malaysia. Then the theme of this article is the economic observation of Southeast Asian countries.

The 10 ASEAN countries include: Myanmar, Thailand, Cambodia, Laos, Vietnam, the Philippines, Malaysia, Singapore, Brunei, and Indonesia, with an area of about 4.49 million square kilometers and a population of about 660 million.

Viewed as a single entity, the 10 ASEAN countries are the third largest economy in Asia and fifth globally, after the United States, China, Japan and Germany.

However, the income levels of ASEAN member states are very varied. The GDP per capita in 2021 was range from a minimum of about $1,209.4 (Myanmar) to $72,700 (Singapore), with an average of $5,024.

Judging from the GDP in 2021 and 2022, only 6 Southeast Asia countries have a GDP higher than $100 billion: Singapore, Indonesia, Thailand, Malaysia, the Philippines, and Vietnam.

Below are two relevant charts shows the population, GDP, and GDP per capita data of each country:

Data source：Worldbank

Data source：Google

From the perspective of economic data of the six ASEAN countries:

Philippines: Affected by high inflation, GDP in the Q123 increased by 6.4% YoY, the slowest growth rate since economic output contracted by 3.8% in the Q1 2021.

In detail, Household consumption, the main driver of the Philippine economy, grew just 6.3% in the Q1, down from a 10% of 2022. Fortunately, the latest data of the inflation rate in the Philippines slowed to 6.6% in April, a third consecutive monthly decline.

$Philippine Stock Exchange, Inc.(PSKXF)$ $iShares MSCI Philippines ETF(EPHE)$ $Global X Southeast Asia ETF(ASEA)$

Malaysia: Due to domestic demand grew, the Q123 GDP increased by 5.6% YoY, better than the previous market consensus.The Ministry of Finance believes that growth in private consumption was the main factor behind the positive economic growth momentum.

The expected growth in domestic demand will contribute to further improvement in the Malaysian economy, however, remains at risk from sluggish exports stemming from weak global growth and more volatile global financial market conditions.

$iShares MSCI Malaysia ETF(EWM)$ $Global X Southeast Asia ETF(ASEA)$

Indonesia: GDP increased by 5.03% YoY as major economic sectors all have grown, the data was better than market expectations.

Among them, the transportation and warehousing industry increased by 15.93% YoY; the hotel and catering industry increased by 11.55%; other service fields increased by 8.90%; the information and communication field increased by 7.19%; enterprise services increased by 6.37%. The growth of these sectors is mainly due to the increase in the mobility of people, the increase in foreign tourists and the holding of some domestic and international events.

The deputy director of the Indonesian National Bureau of Statistics, said that Indonesia's economy will still maintain a growth rate of 5% or higher in 2023 on an annualized basis, which shows that Indonesia's economic growth remains stable and resilient.

$iShares MSCI Indonesia ETF(EIDO)$ $VanEck Indonesia Index ETF(IDX)$

Vietnam: Affected by the decline in exports, Q123 GDP increased by 3.32% YoY, which was a sharp slowdown from the growth rate of 5.05% in the same period 2022.

GDP structure in the first quarter of 2023: service industry accounted for 43.65% (YoY+6.79%), industry and construction accounted for 35.47% (-0.4% YoY), agriculture, forestry and fishery accounted for 11.66% (+2.52% YoY); product tax reduction Product subsidies accounted for 9.22%.

The main reason for the slowdown in Vietnam's GDP is the decline in exports (-11.9% YoY), as Vietnam's exports account for about 80% of overall GDP. Among them, textile and footwear orders fell by 70% to 80%, and electronic product shipments also fell by 10.9% year-on-year. Vietnam's economy is very dependent on exports, especially to the US market, which has become a weakness of the Vietnamese economy.

In the first quarter, there were 42,900 closed companies nationwide (+20.1% YoY); about 12,800 companies were closed and awaiting dissolution (+13.1% YoY); and 4,600 companies were dissolved (+6.5% YoY). In addition, in the Q1 2023, overseas invested a total of US$5.45 billion (-38.8% YoY) in Vietnam. International capital is gradually preparing to abandon "Vietnam"?

$VanEck Vietnam ETF(VNM)$ $Global X MSCI Vietnam ETF(VNAM)$

Thailand: The Q123 GDP grew by 2.7% YoY, as growth in consumption and investment offset declines in exports.

Thailand's economy is mainly driven by strong growth in service exports and private consumption, as well as continued expansion of public and private investment: in the Q1, Thailand's private consumption increased by 5.4% YoY, and total investment increased by 3.1%, while exports fell by 6.4%.

The council's secretary-general said Thailand's economy maintained solid momentum as a steady recovery in tourism and strong consumption offset weak exports. Future policy guidelines suggested focus on prioritizing export issues, expanding commodity export markets and border trade, and taking measures to attract more international tourists.

$iShares MSCI Thailand ETF(THD)$ $iShares Emerging Markets Infrastructure ETF(EMIF)$

Singapore: Due to the manufacturing industry continued to shrink. the Q1 GDP increased by 0.1% YoY, approaching the edge of zero growth, significantly lower than the 2.1% growth in the Q4 2022.

The growth rate of Singapore's three major economic sectors has slowed down, and the export-oriented manufacturing industry has shrunk for two consecutive quarters. As an important engine of economic growth, manufacturing will account for 21.6% of Singapore's nominal GDP in 2022. Singapore's manufacturing products include electronic products, chemicals and chemical products, machinery and equipment, transportation equipment, petroleum products, oil refining and other sectors.

Singapore's manufacturing industry is almost entirely driven by foreign trade. Once the global economic environment is not good and market demand in Europe and the United States declines, a decline in data is inevitable. In the Q1 by industry, almost all manufacturing clusters in Singapore, except for transport engineering, contracted in output.

The above is the sorting out of some economic data fluctuation factors of the six ASEAN countries, among which the "decline in exports" has a certain impact on the GDP growth rate of most of the above countries.

Especially for export-oriented countries such as Singapore and Vietnam, the impact of the global economic slowdown and weakening demand in Europe and the United States is more serious.

$iShares MSCI Singapore ETF(EWS)$ $iShares Asia/Pacific Dividend ETF(DVYA)$

Some perspectives of macro and internal and external policies of six countries

• In terms of macroeconomics: Affected by global factors, the exports of the six ASEAN countries generally fell or remained sluggish, and the prosperity of the manufacturing industry was relatively low. Domestic demand in Malaysia and Indonesia is relatively strong, while Vietnam's short-term economic downturn and employment pressure are relatively high. In the first quarter of 2023, the economic growth rates of Vietnam, Malaysia, the Philippines, and Singapore all declined, while that of Indonesia remained flat. The CPI of the six ASEAN countries all declined year-on-year, but Malaysia and the Philippines are still concerned about high inflation.

• In terms of financial markets: U.S. employment and the economy are still resilient, the liquidity crisis has cooled down in the short term, overseas liquidity has not been further loosened, and the US dollar has strengthened. Recently, ASEAN stock markets have been stable and weak, exchange rates have generally depreciated, and interest rates have declined to varying degrees. In terms of monetary policy, although there are differences in the economic situation, the overall decline in inflation has prompted the margins of the monetary policies of ASEAN countries to be more loose: the central banks of Thailand and Malaysia continue to raise interest rates, and the Philippines and Indonesia may stop raising interest rates.

• In terms of international cooperation: Thailand, Malaysia, and Indonesia are actively promoting local currency settlement and RMB settlement to achieve de-dollarization. RCEP will come into effect for the Philippines on June 2, marking that RCEP will enter a new stage of full implementation.

• In terms of industry trends: Malaysia raised its renewable energy development goals, and Indonesia lowered sales VAT to encourage the development of electric vehicles.

• In terms of political events: Thailand’s general election was settled with the announcement of victory by the leader of the Far Progressive Party, Pita; the leaders of the United States and the Philippines held a meeting at the White House; the Shanghai delegation visited Singapore.

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Seeing all above, among the above 6 Southeast Asian countries, who do you think will develop stronger in the next 5 years? Why?

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