Bank Of East Asia Ltd. · HKEX:23
Bank Of East Asia — The Bank of East Asia — Investor Presentation (August 2022)
11 slides from Bank Of East Asia's investor presentation, August 2022
Slide 1: Global economic outlook amid rising risk of stagflation
Global economic outlook amid rising risk of stagflation Economic Research Department August 2022 Prepared by The Bank of East Asia, Limited 由東亞銀⾏有限公司編寫
Slide 2: What's stagflation and what causes it
What’s stagflation and what causes it Stagflation is the simultaneous appearance in an economy of slow growth, high unemployment, and rising prices • The 1970s experience of slow growth, high unemployment, and rising prices was the real example of stagflation • Poor fiscal and monetary policy decisi
Slide 3: Similar to the 1970s, supply shocks have driven prices higher
Similar to the 1970s, supply shocks have driven prices higher • Pandemic lockdown led to • Pandemic sparked off a wave of • Geopolitical tensions exacerbated production shutdown and port great resignation energy and food supply issues as congestion well as logistic arrangement Global Supply Chain Pr
Slide 4: Excessive fiscal and monetary accommodation are another factor to blame
Excessive fiscal and monetary accommodation are another factor to blame Budget Deficit (% of GDP) 0 • Generous fiscal transfer was offered to stabilize the labour -2 -4 market -6 -8 • Sharp reduction in policy rates and quantitative easing couldn’t % -10 -12 help pandemic disruption -14 -16 US Euroz
Slide 5: Inflationary pressure reaches multi-decade high
Inflationary pressure reaches multi-decade high • Prolonged supply shocks, slow-to-adjust monetary accommodation and economic reopening resulted in broad-based increase in prices, including stickier services and shelter costs • Unanchored inflation expectation is the last thing the global economy wa
Slide 6: Supply-side pressure could potentially alleviate towards late 2022
Supply-side pressure could potentially alleviate towards late 2022 WTI Crude Oil Futures Price (in USD, Dependence on Russian Natural Gas active contract) 100% 200 80% 150 60% • The global economy (except Greater 100 40% China) is on its way to normal 50 20% functioning 0% 0 -50 • The world is adapt
Slide 7: Rapid interest rate hikes aim to control demand-side inflationary pressure
Rapid interest rate hikes aim to control demand-side inflationary pressure Fed Funds Rate Target (Upper Bound) 25 20 • After a period of inactions, central banks raised rates rapidly, but the rate level remains low compared to the 1970s and 1980s 15 % 10 • Inflation remains far higher than policy ta
Slide 8: Growth slowdown unavoidable in advanced economies but employment markets remain robust
Growth slowdown unavoidable in advanced economies but employment markets remain robust US GDP Growth • According to IMF, no single major economy except Russia is 40 forecasted to post negative growth 30 20 The downward pressure could be offset by economic reopening, % change 10 • 0 -10 strong househ
Slide 9: Mainland economy bottomed in Q2
Mainland economy bottomed in Q2 Mainland China GDP Growth 20% • Mainland economy likely bottomed out in Q2, amid stabilizing 15% pandemic condition, and enhanced policy support YoY change 10% 5% 0% • The evolving regional outbreak and prolonged property market -5% correction could partly offset the
Slide 10: Recovery in Hong Kong remains subdued, staying largely stagnant for 2022
Recovery in Hong Kong remains subdued, staying largely stagnant for 2022 Hong Kong GDP Growth • Hong Kong avoided a technical recession, but its economy 10% contracted 2.6% in 1H 5% • It takes time to fully return to normal, and the impact of YoY Change 0% consumption voucher likely to be short-live
Slide 11: Disclaimer
Disclaimer This material is prepared by The Bank of East Asia, Limited (“BEA”) for customers’ reference only. The content is based on information available to the public and reasonably believed to be reliable, but has not been independently verified. Any projections and opinions contained herein are
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