Equity market: Scarcity of growth

Harry Su
Senior Associate Director
Head of Research

Our on-the-ground channel checks suggest severe economic growth deceleration with various sectors experiencing declines of 30-90% y-y. From brick sellers (middle-low) to diamond shops (high), the adverse impact of the current economic slowdown appears to be quite widespread.

We believe this downturn is caused by three main factors: 1. Low commodity prices translating to lower farmers’ incomes; 2. Weak IDR reflecting lower imports and delayed capital expenditures; and 3. The government’s aggressive taxation drive resulting in a slowing economy, putting off investors.

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