EM ASIA CREDIT: CATL (CONAMP, A3/A-/NR) to build battery swapping stations

• China studying countermeasures against further US tariffs (source: Global Times)
• The National Bureau of Statistics of China recently released data showing that in 2024, the nationwide per capita disposable income reached 41,314 yuan ($5,672), exceeding 40,000 yuan for the first time - nearly double the 21,996 yuan recorded in 2015. (source: Global Times)
• China’s equity markets are stronger today, leading into the NPC with Hang Seng up +1.3%, CSI 300 +.4%, Shanghai +0.28%, Shenzhen +0.93%.
• CNY: Yuan Reference Rate at 7.1745 Per USD; Estimate 7.2859
• Bonds remain quiet with the 10YR unchanged at 1.77%

Headline CPI inflation in February printed significantly below expectations at -0.1% y/y after +0.8% y/y. This number doesn’t signal that Bank Indonesia needs to be worried about deflation though as the start of 2025 is impacted by a 50% discount on electricity rates for some consumers. Core inflation is a better indicator of price pressures and it rose 0.1pp to 2.5%, to be at the mid-point of BI’s target corridor. After reaching a high of 16593 on Friday, USDIDR is down 0.5% today to 16488 helped by new forex rules and a softer greenback given the better risk tone. 

• Core inflation has been trending higher for the last year. It troughed in January 2024 at 1.66% y/y, while headline has been shifting lower but it has consistently been impacted by subsidies and price caps. BI’s focus has been persistently on underlying inflation as it reflects second-round effects from changes in headline. 

Indonesia CPI y/y%

• The next BI meeting is March 19 and rising core inflation, elevated USDIDR and weak IDR NEER, which is also likely to driven higher imported inflation, mean that it is likely to be on hold again. However, in the current volatile global environment and with the Prabowo government cutting spending, BI could still cut rates.
• In January, the electricity rebate drove a 22.9% fall in CPI electricity/household fuel. The discount is scheduled to be reversed in March and so headline inflation should return to positive territory this month. The utilities component fell 12.1% y/y in February down from -8.75%.
• Volatile food prices rose 0.6% y/y down from 3.1% y/y in January with the moderation due to rice, tomatoes and chilies.
• Most other categories were little changed on the year. Personal care rose 8.4% y/y up from 7.3% and transportation to 0.9% from 0.8%.

Indonesia imported inflation 

Source: MNI - Market News/Refinitiv

• Gold finished last week down for the first time in 2025, falling by 2.6%.
• Earlier last week, gold hit all time highs of US$2,951.73 and has trended lower since.
• Gold has exhibited its ‘safe-haven’ status given the uncertainty around the implementation of tariffs by President Trump in 2025, which followed on from last 2024 when it performed due to expected rate cuts.
• The moves in recent trading sessions comes despite the fundamental reasons for its rally remaining in place.
• The move lower last week still sees gold up over 8% for the year and opens at $2,857.83 gaining gradually throughout the day to reach @2,866.25
• The move lower however sees gold breach the 20-day EMA of $2,878.48, marking the first breach of this technical level this year.
• The moving averages are still trending upwards, a sign that the bullish momentum remains after eight successive weeks of gains.
• It appears that the US is moving closer to imposing tariffs on Canada, Mexico and China as soon as this week, a move that could see support for gold return.