Macro Insights Livestream, April 2026: Oil shock and Asia

Hello everyone. It is 4:00 p. m. in Singapore. Welcome to the monthly live stream. Now what we have today, the topic of discussion is oil shock and implications on Asia. The two speakers that we have is myself, Radhika. I am a part of the research team. I'll be focusing more on the regional view with an emphasis on ASEAN 6 and India that I cover with my colleague Hunting. Soon after me will be Moji, who is our chief economist for China and Hong Kong. And she'll be you know sharing some of the key takeaways from what this oil energy shock has meant for those economies and discuss the implications as well. So between us we hope to cover about 30 running minutes each. We will be very happy to take your questions and you can place them here on the pigeon hole that you see on your screen. This has the link as well as the password passcode that you need to use. And as you know we'll come back with this slide again, but as the presentation progresses, please do put in your questions in this pigeon hole. Let me then start my part first. And certainly I think each time in the past few live streams that we have had especially in the past 6 months, we have had various kind of risk scenarios or risk developments that have really been front and center of analysis. And each of these risks have meant different things to different countries. And I think at this point especially in the past month and a half, we have really been heavily consumed by what's happening in the Middle East. What started as a war between two three countries has you know since spread to the broader Middle East by way of energy disruptions. And that has certainly rippled, you know, caused a lot of ripples in Asia in particular. This is the first time we've been here you know in the closer in the most recent past in 2022 as well, we had the Russia-Ukraine conflict. I'm not sure if my voice is audible. We have had one audience member mention that they can't hear too well. Can you hear me Mo? I hear you very well. Okay, that's great. Thanks Mo. So coming back to the geopolitical part, certainly energy from this particular shock, that implication has been very high. And I think what you do get a sense that you know Russia-Ukraine back in 2022 also mattered to Asia, but the impact was less. And now we have on hand you know much bigger I would say disruption not only by way of value or the price of energy but also supply shortages. But we shouldn't you know miss the bigger picture. We still have the tariff you know shocks and implications to keep an eye on and tech, which is when I say tech I really mean AI and it's you know other derivatives which have certainly impacted everything from equity markets to you know national government's policies as well as how the central banks are going to eventually look at these things. So from consumer to producer, everybody is likely to be you know playing into this a key actors into this whole risk landscape. And among all of this at various points in various of our monthly live streams, we have touched upon these factors, but this particular discussion is much more focused on geopolitics, especially you know Middle East tensions. And looking at the broader region I'm sure you and I we have spent a lot of time looking at this map in particular

where we have really been very tuned to looking at where the Strait of Hormuz is, where bulk of what a fifth of the world's supply of oil comes through. And not only that, we've got on the other hand Red Sea as well where we've had some supply disruptions to speak of. So between these two channels, certainly a lot more of the supply towards Asia you know emanates. And it's not only the oil piece, but it's the larger hydrocarbon pieces well, which includes LNG, which includes LPG. And we should remember that when we speak of oil reserves, you know, reserves for oil are easier to maintain and keep I would say relatively easier, but for gas certainly it becomes a whole new challenge. So you know we've got a broader disruption in terms of the hydrocarbon piece. And while we hear from our you know various national leaders about ships being stuck in the Gulf Peninsula and trying to come out of the Strait of Hormuz, you can still see barring one or two you know countries domicile perhaps in Iran or in China when we hear that these ships are coming out, it's still a really a very small fraction of the overall supply that used to go through these lanes. And you know like I said mentioned earlier, it's a mix of energy in terms of LNG, LPG as well as oil. We also have some other second, third derivative kind of chemicals and minerals and gases that come make its way through this straight. Uh Regardless of the conversation that's been going on truce on a ceasefire, the reality is certainly that not much has happened in the past month and a half in terms of material change to supply. And much of the Asian economies you know I think had reserves could tide over a month, month and a half, but now when we go into May, June, certainly I think the bite is likely to be much sharper. So with this backdrop, you know, what are the channels of impact on the region? We have here the broader Middle East trade exposure for Asia. Now this does include fuel, but it does include a broader mix of goods that Asia you know trades with the Middle East. So when I say the Middle East we really mean Saudi Arabia, UAE, Qatar, Kuwait, Iran as well as Iraq. And you can see that India, Japan and South Korea for example are very you know deeply tied so to speak especially from the trade channels with this region. Of course energy makes bulk of it. So hence this whole discussion of what the impact could be. Besides the broader goods exposure, if we just come down to crude imports you can see in this spider chart or web chart so to speak is that it's quite asymmetrical. There are some countries which have a lot more exposure and there are some which are better placed. I've got also US here because it also gives us a sense that you know why is the US market. Of course you've seen the gas prices go up there. Pump prices that is. But in the region for example, the exposure and the vulnerability is much more because of anything between India to Japan for instance, you know, 40 45% to almost 80 90% of the supplies do come from the Middle East. Cutting this another way, our net oil importers. So we do know in the region for instance Malaysia and Indonesia have some strengths by way of even Japan for that matter have either gas deposits or oil deposits that has helped you know safeguard its own revenues or own impact or implications. But nonetheless I think majority of the countries in this region are net oil importers of varying sizes, right? So you've got Thailand on one side which is very exposed. Then you've got India, a bit of China and I think I'll let Moji talk about it in greater detail. But North Asia as well as parts of Southeast Asia have certainly you know been impacted by what you're seeing in this region. Now this is like the first year impacts much more talking about oil. If you see the others for instance, the first and second order fertilizer imports are quite important. Just to add in here, I do see that client or one of the participants has raised their hand. Please do you know add your comments in the chat box if any, if not the pigeon hole that we had shown at the very start. We'll be happy to get to it as soon as our parts are done. Coming back to beyond oil, fertilizer is also quite an important point in the

we've got various countries again importing from the Middle East you know as feedstock. Now this goes beyond just the energy index for example in four countries, right? So you've got even the food index for example which could be you know which obviously needs its regular supply of fertilizer. So perhaps if a country for example India goes into summer crop in a couple of months that you know that might not be immediately at risk but if you see further down the line at least for 5 months hence most of the cropping seasons will require you know a timely fertilizer supplies. Going beyond fertilizers there is LPG which is cooking gas. We have seen a couple of few ships have that have gone by the Strait of Hormuz most of which were containing LPG supplies again very important for livelihoods very important for businesses as well as in consumers. Then you've got the helium very important for supply chain. Again alternate sources are available and most countries are kind of trying to look at diversifying their mix but you know at very short order multiple countries looking at the same time certainly is going to have a supply crunch as well as higher prices to deal with. And going beyond the just the product lines are you know balance of payments remittances some of the other channels through a capital flows for example are other channels by which financial markets could also put some amount of pressure on the economies. Um uh We all you know everything has been mentioned and I'm you know in terms of which countries are highly exposed. I thought we will it would be good to see the incoming data. Do you really see any of that play out in at least for the consumer side or for the businesses? And you can see this is just a price chart and jet fuel for one you know not really much in conversation when we just talk about oil and gas but this is one of the sectors and segments where we have seen a very sharp price increase. This goes on to you know ATF prices that goes on to airline prices which in turn is embedded into logistics general transportation costs as well. So across the board you have seen an increase in prices. In terms of the high frequency data PMIs is something that you know came in for March and you can see that for most countries we have seen a bit of a softness. Again it's a bit asymmetrical there are some countries like for example India Thailand and you have seen Vietnam seeing a slightly sharper correction but again all of them are still very much in the you know in the expansion territory. They haven't gone below 50 but that's said you can see that businesses were initially a shade perhaps concerned about what's happening on the you know in the general geopolitics side. We have actually seen that much of that impact also play out in other countries but nobody at least on the PMI point of view which is kind of a manufacturing you know sentiment so to speak. There is worry so it there has been a concern for businesses but not to the extent that they have gone into complete correction mode. Besides PMIs we have also seen regional inflation being the other channel. The inflation numbers are just coming in you know from the first fortnight of April and you can I have compared here 2025 averages for ASEAN 6 and India and you have seen the March 26 data. Across the board there's suddenly a lift in inflation. So the good part is that most countries inflation is coming off a low base. So in to that sense you know most countries on average have been about 2 to 3% inflation Thailand being an exception which was really in negative but so inflation was just beginning to pick up in 2026. Now we have this energy element playing in and you can see that inflation has broadly picked up across these countries. I wouldn't say these are at alarming levels as yet. I think for most countries it's kind of within their inflation target framework and we haven't really seen you know numbers busting through the inflation targets but I think this is also a function of retail price increases in fuel have not really happened. So there are multiple layers of I would say subsidies or covers or defense mechanisms that the governments have imposed which has made sure that inflation has not really picked up too sharply too soon. So this is kind of giving you a sense of the initial impact you know we'll be certainly watching all high frequency numbers very closely to kind of gauge you know how the vulnerability map

largely looks. Baseline and risk scenarios certainly $100 oil is an important one to watch for this region. You know you've got Taiwan for instance which saw very strong growth last year. Our economist team does expect an impact there if 100 oil remains for the whole year. The other one which has relatively higher growth is India. There too we are looking at about a 1% point impact if this oil prices remain so. So growth in general we do see downside risk for growth upside risk for inflation as typically would be the case if we were to see energy shock. And I think this is again a function of you know where the pressure falls in the sense that if there is an energy element does the government's book show it does the private sector shows or the consumer shows it. So there is bound to be some amount of demand destruction in the pipeline. And of course central banks national governments they have come out very quickly to put some amount of you know mitigation measures. So for central bank for instance their focus has been on financial market stability. Currencies have weakened so they have been keen to make sure you know by either by intervention or by swaps or by you know I wouldn't say rate hikes as yet but discussion on potential need to increase or take one off measures administrative measures to kind of stabilize the currency has been quite important. On the bond side as well you've seen bond yields edge higher pricing market pricing for rate hikes has gone up so it's really been a busy few weeks for the central banks in general. And in terms of other measures we have seen everything you know from fuel rationing to conservation steps to asking public sector employees to work from home students to stay back use more public transport try not to use as much private transport and so on. So there's been a mix of measures that have been announced. I wouldn't say you know draconian at that. Philippines is one who has announced an energy emergency. But again that is more of effort to bring centralize your response mechanism. You know more of that rather than you know being very being putting in draconian kind of I would say measures or steps to to kind of address the energy shock on hand. So subsidies continue in most countries where subsidies were in place. There's been efforts to support businesses by way of stimulus measures. Sometimes even industry specific but that risk of fuel price increase continues to linger and that is really a function of how durable high oil prices are because to an extent fiscal books in the region can pick that slack but beyond that it becomes a bigger challenge. In terms of current account and fiscal vulnerabilities this is really the big starting point because if countries have low fiscal deficits have debt levels that are manageable it becomes easier to pick some of this slack or this pain in the system right? So from that point of view I would say India Malaysia Thailand Philippines are in that quadrant where you've seen you know slightly higher public debt to GDP ratios as well as deficits. Indonesia is another of interest because it's stayed below its closing in at about 3% of GDP in terms of the deficit important because that's kind of the mandatory threshold that the government has. Any risk to that will have implications on you know how the market reacts to it. So broadly I think in Asia the deficits and the debt is at a neat balance at this point. So they will be in a condition to take some of the initial pain but if it lasts it certainly becomes a bigger problem. Going on to pockets of action I think the if you see the market pricing at this point implied rates have certainly been especially for the one year out. For most central banks it's showing that there could be rate hikes in the coming 12 month period. The central banks might not agree at this point because they're looking at various other things. How much slack is fiscal policy picking up? Are there fuel price hikes coming? How stable is the currency? These are some of the things that they're jostling with so like we don't really see anyone jumping the gun. That's said Singapore MAS meeting earlier this week they did go ahead to put slight measures in play. I mean tightening move. This is just to make sure that imported inflation does not gather too much momentum and impact inflationary expectations. So we did see the MAS tighten. My colleague Hunting and Philip we had

[snorts] written a very interesting piece policy review for the MAS meeting. We urge you to have a read and that will give you some of the you know reasons why MAS acted and what the implications thereof are. Also in the region we have this kind of a spectrum of action. Singapore has already moved. The others we still think are between the gradualist and the middle ground. Going on to the next slide I'm coming towards the end of my part and in terms of India's policy action the central bank did move recently. They have shown initial impact on growth and inflation but really nothing sounding very alarm alarming. So I think they're assuming $85 for the whole year. So if 100 is what is reality I think we would see certainly more impact on the growth as well as the inflation forecast. At this point from our reading there was no urgency to normalize or tighten policy. And the final one on FX action equity markets flows bonds FX there's been a lot of movement volatility was generally higher in the first half first since about early March. And our FX strategies is looking at various you know this the there's not one single trend or one single thread that's running through all the currencies. We've really seen an entire spectrum. We have seen Yuan that's the Chinese Yuan which is relatively stable and in fact is up on the year. On the other hand we have seen rupee rupiah and peso for some for that matter as well as Thai baht which have underperformed the region. And each of this the reaction in the markets is to do with where the vulnerabilities lie more with the exposure more you know deeper the correction. But again like I said earlier government central banks have been really on top of things to try and stabilize the currencies and the financial markets. So net on our part I will conclude with just my summary points which is that this is not only about the value of energy supply but also volume. So supplies are certainly front and center. Where can we get it from? Which are the alternate sources? At this point Russia US are certainly two sources that countries are looking at and then there's an entire conversation around the petrodollar and Iran also coming out as a potential supplier. So certainly you know widening that supply spread so to speak. But of course that becomes trickier because of the kind of closure of the Strait of Hormuz and this latest talk about a blockade. And compared to 22 Asia is much more exposed to this particular Middle East tension. Among the countries I would say India Thailand and Singapore Malaysia to us are some countries that we're looking at closely. Thailand being most exposed because of high net oil import position as well as India. And the inflation risk premium at this point is something that you can really see being increasingly priced in. So we if we look beyond the Middle East crisis there are reasons to be optimistic in the very immediate term we do think that the we if you were to again you know we have to really work with scenarios because we really don't know how lost how long this conflict will last. But I think it's quite clear that if we were to you know find some kind of truce some kind of ceasefire within the next say a week or so it would take perhaps a quarter or more for commodity prices in general to stabilize because at this time around we have seen actual impact on production centers as well as oil infrastructure. With this I'll stop and pass it on to Moji my colleague. Please do put your questions if any I will be monitoring it in this pigeonhole and we'll be happy to take them towards the end of the presentation. Thank you so much more all yours. Mo I think you will need to turn up your mic. Hi thank you Radhika. Yes and thank you. Next page please. And we know the geopolitical tension has been lasting you know for over 40 days and here we know one important stuff is China. So for the ceasefire given the knowledge that we have China has been talking to Iran wants Iran to keep flexibility and that is why you know the ceasefire start starts and the negotiation starts. But this week in China it's quite busy. We see Taiwan is visiting China UAE Vietnam Spain Russia. So they all visit China. I think during the wartime people all wants to know what's happening all wants to see

if China can really as a mediator to make sure the war wouldn't be you know much bigger from now today. And even for China's foreign affairs minister went to North Korea to have you know conversations. So the world now is very busy. That's number one thing I want to show everyone. Next page please. So I do market all you know concentrate on what China's oil dependence are. So for this page if you see China is the world's largest crude oil importer importing roughly 11 to 12 million barrels per day of the crude oil in recent years. On the left hand side chart you can see Saudi is the biggest net exporter with daily 6. 8 million barrels per day followed [snorts] by Russia Canada Iraq and you know UAE United Iran and Brazil. But it's worth to note United States the production and the consumption almost meet each other. So it's only net exports around 2. 3 million barrels per day. But on the right hand side chart you can see here is about China. China only produces 1. 2 billion barrels per day but the consumption is as high as 16. 2 million meaning it's net importing 11. 1 billion barrels per day. So China has a huge shortage here. India even if it is not as big as China but they're still big. The consumption is at 5. 9. So this is why the net import around five. So for here we know China's highly dependent on that. Then the next page we can see in terms of China's oil security so it's increasing from only 0. 9 billion in 2020 to 1. 3 billion barrels in 2025. So this means in another word you know import coverage from 86 days to 118 days. So it's exceeding the 90-day IEA benchmark. So such as for other countries like Japan 140 days Saudi over 220 days but China's 120 days gives China kind of like around four months if say the war doesn't last more than four months China still have enough inventory to sustain its own economic growth. But in terms of the energy reliance on oil on the right hand side chart you can see oil accounting for around 19% of China's energy consumption. But renewable energy is already increasing to 180 million ton. So [snorts] this is around 20% even though renewable is just surpassing oil but oil is So this kind of oil shock is something China should look into. Next page. There's one thing markets are talking is about the feasibility of the Iranian oil replacement. China is importing around 1. 3 million barrels per day you know from Iran. So that's accounting for 10. 9% of China's oil import. So this is big. But the thing is in the last 40 days the ships from Iran to China is still ongoing. But [snorts] if say the strait has been really blocked it then what it will be? Replacing Iran's 1. 3 million barrels per day is difficult due to Russia's aging fuels and also OPEC plus export limits. So a sudden shift to replace the 1. 3 million barrels per day of Iranian crude oil would require Russia to increase its export volume to China by nearly 57% and that is something mission impossible. So this is why China is looking you know outside. Which other countries can do? Canada and Brazil have significant latent in capacity with only 16 to 70% output currently shipped to China offering potential supply alternatives. But it takes around four to six weeks of shipping. Next page please. In terms of China's oil diversification so China already has diversified partnership outside the Strait of Hormuz. China imports crude oil from 48 trading partners. It's not only like from the Middle East with increasing partnership from Canada 70% year over year growth Latin America 25. 6% year over year growth, and also Africa 14. 5% year over year. On the right-hand side chart, the percent of total crude oil imports from Middle East, Japan 90% highly dependent

Vietnam 87% highly dependent, Singapore 85% also highly dependent. China, even if it's only around 50%, but that's still something huge if the war lasts over 4 months as just now we have been mentioning. So, as we're mentioning for Africa, for Latin America, you know, these and also North America, these are the regions and areas, you know, China can have more, you know, is uh more imports where it can really diversify, you know, its partnership. Next page. We've been talking about the oil impacts. We know China has its oil, you know, security. China has its uh reliance like, you know, on renewable energies, but still, you know, China need this really depending on in terms of the magnitude and also the length of the war. If the war lasts much longer, then China still needs much more in terms of energy supply. Then we know in March, China has been hosting in the NPC meeting and has been disclosing about China's 15th 5-year plan. So, the 15th 5-year plan has been focusing on three important things, and this is also related just now we have been talking. Number one important thing is about boosting domestic demand. So, China has been put its 2026 GDP target at 4. 5% to 5%. So, around 2% you know, consumer inflation, roughly 5. 5% urban unemployment, and over 10 million new urban jobs in 2026. But given the war, we know there's downside pressure. If the oil prices stays at around 100 and 110, China GDP may be cut by 0. 3% to 0. 5%, meaning China will reach its lower end of economic growth around 4. 5% or even lower. If the war lasts even longer, China GDP growth can be, you know, cut in the by the GDP growth will only be around 4. 2%. So, that's why oil impact on China GDP certainly, you know, is happening. But in terms, you know, China's boosting a domestic demand, there is a treating program, and we know there's RMB 250 billion in ultra-long special sovereign bonds will fund consumer goods treating programs. That's where we see China retail sales even though it grows like only around 2. 8%, but, you know, it's not slowing further. You know, there's some bottom there. And in terms of the room where it can grow, as per capita GDP reaching US dollar 12,000 or 14,000, service consumption currently around 52% Chinese household spending is expected to rise. So, this is something we're hoping, you know, China will, you know, catch up, especially in service, you know, uh — [snorts] — the service consumption. And Chinese government in the past 2 weeks has been hosting important big conference about how to boost China service uh sector. Next page, please. The second key focus for China's 15th 5-year plan is about developing new productive forces. If you're not sure about what this means, it means about technology innovation, how China wants to move around there. On the right-hand side chart, industrial production grew at 6. 3% year over year in the first 2 months with high-tech manufacturing growth at 13. 1%. So, this is continuing to drive China's overall industrial production. And in [snorts] the middle, you see China has a target, aims to raise core digital economy industries to 12. 5% of GDP by 2030 from currently only at 10. 5% in 2024. So, this is huge because China's GDP in the in terms of the value, it will be much bigger than today is only around 20 trillion US dollars. And in terms of the semiconductor manufacturing, it's projected to expand at a 23. 7% kicker through 2029. This is where we also see in the most recent data, China's trade, you know, in terms of like imports, exports, semiconductor has been very, very strong. Next page. The number three pillar for China is about its commitment to stabilizing the real estate market. In the 14th 5-year plan, China has been doing real property market correction. Then in terms of this correction, the economy hasn't shown any hard landing signs but either, rather it has been stabilizing. And to really stabilizing real estate market, China has been carry out a

series of measures. But you see, fixed asset investments finally is kind of bottoming out. Property fixed asset investments only dropped around 11. 1% in 2025. So, even though this is worse than Highland growth of the total fixed asset investment, but still is bottoming out. In terms of the sales, property market sales dropped like 29. 1% year to date, but we're also seeing it's kind of like bottoming and, you know, improving, especially like cities, Shanghai or Shenzhen. In terms of the inventory, it still remains elevated at around 30. 6 months in January 2026. This one is the very important thing for China to do, the inventory destocking. But if I say by cities like tier one cities, so you see like such as Shenzhen and Hangzhou, it's already as low as only around 10. 6 or 9. 7 months. So, this is where we see the property market is showing initial stabilizing signs. Next page, please. For China, number one is about, you know, in the 15th 5-year plan starting this year, they will be stimulus measures to try to uh keep a floor for the whole economic growth even though China's facing the oil shock, even though there is still tariff ongoing. So, for the second risk that's showing here is about China-US trade talks. So, if we really reflect the past 1 2 3 4 5 6 uh seven like, you know, US-China trade talks, we can see the triggers vary. But mostly is on the request from the United States. So, it's from rare earths, agriculture, or even most recently, it is the war. So, we see uh seeing China holds much more cards than what US is holding. China has rare earths. China has, you know, can control whether it wants to import agricultural products. And for China also has like US tariffs, you know, it can sell. Even for the war, you know, whether China gives others or try to, you know, being as mediator to make the war like a cooling off. So, we see China has more cards even into like mid-May. If the Xi-Trump meeting is happening, we are seeing the whole year, you know, in terms of the trade will be relatively stable before the US midterm election. So, that means tariff in terms of effective tariff will be around 30%. And if the talk between Xi and Trump uh being like smooth and also like positive, you know, the tariff may be even lower from the current rate. Next page, please. Because we're talking about the trade, and global markets is facing, you know, the oil shock, then the ships cannot move. There also container ships, not only LNG or like you the oil tankers. And the thing is, you see China's trade hasn't been really impacted a lot. Then the export growth only softens slightly in March. The data was just released yesterday. Export growth moderates to 14. 7% year over year, while the import growth accelerates to 22. 7% in January to March. So, this is like there's a base effect, but there's also like, you know, the one work one more working day like, you know, in March. But also in terms of the electronics demand overseas, you know, from within China has been very strong. That is why we see the import has been strong. — [snorts] — If you see the middle chart, the non-US trade, Africa, EU, ASEAN growth 32. 1%, 21. 1%, 20. 5% respectively. All very strong. If we see the right-hand side chart by product, electrical machinery growth 21. 4% in January to March 2026. Of which, integrated circuits and automobile growth 77. 5% and 58. 5% is very strong. One note, you know, we need to see. China has been fighting against overcapacity. But given this war, markets are redefining the definition of overcapacity, especially in China about electric vehicles, about uh solar panels, uh wind turbines. Now, those renewable energy equipments will be on high demand, not only within China, but also overseas. So, we are entering into a new territory where all those previously defined as overcapacity, but it's no longer true. Given the war. Next page, please.

China trade activities remain stable under the geopolitical tensions. So, the oil tankers in the 20 major ports remain stable. And the second one, in the shipment in 20 major ports, hovers around 55 to 60 million ton, relatively stable. Export prices, the higher export prices could keep trade surplus intact. Next page. Markets also wants to know in terms of the oil prices impact on China's prices. So, anti-evolution in effect, so that's why we're seeing prices going up. But, this is also very correlated to oil prices. CPI moderated to 1% in March, but transportation cost rebound. But, for PPI, rose 0. 5% finally back in the positive territory in March, driven by notable increase in the raw material prices. So, for the last chart, you can see PPI has a strong 0. 8. 4 correlation with Brent oil for the past 10 years in China. And that is why we see China PPI has been back to positive territory finally. Next page. In terms of China rates, so for PBOC, what PBOC should do under this war environment? First, we know US, you know, is markets are already pricing no cut for the Fed. And it's no need for the PBOC to cut anytime earlier. But, PBOC will still stay accommodative and state stability oriented. Meaning, whenever there's liquidity needed, they will inject liquidity through other matters. No not only like they need to cut. So, we're now seeing PBOC will cut by 10 basis points one year LPR in the first quarter for terminal rate from 3% to 2. 9% and PBOC keeps injecting liquidity into the system. And CG yields on the rise across the tender as in all other countries. Next page. And this is last page about total China. Listen, they will see because of the petrodollar, so dollar has been relatively strengthening. And on a rapid basis, we're seeing CNY is relatively stable. Even though today the reading is at 6. 81, but it's relatively stable with other currencies. In terms of policy flexibility, PBOC is preserving the flexibility amid this ongoing geopolitical tension and relatively hawkish G3 central banks. So, this is why, you know, we are still seeing CNY as one of the, you know, stabilizer for global currency, for Asian currency. So, I will stop here. So, if you have any questions, please put into pigeonhole. I'll pass it back to my back to Redburn. Uh thank you so much, Mo. Um and uh so, that kind of concludes our part. Um I'll perhaps Mo, there are a few questions that have been posted on the pigeonhole. Um let me pose a couple to you first and then I'll probably take some. Um one of the questions that they asked is, and I think you touched upon it during the presentation as well, um what are the major opportunities that could drive growth in China's economy growing forward? I do know that there were some questions, especially on, you know, internally that we were speaking as well, where the markets have bottomed out and the only way for the economy is going is up. And just to add on, what about the real estate sector? Could you take this question, please? Yes. Um as just now I've been mentioning, I think there are four important opportunities like for China in 2026. Number one is just now I've been mentioning, especially it's about the renewable, you know, energy demand redefining overcapacity in China. So, for the EV, for solar, for wind turbines, all those equipments in terms of demand is overcapacity before, but it's no longer true. So, this is uh something I think is very important, you know, for uh global like investors to look at, for global corporates to look at. If you want to do the overseas expansion, these are the sectors you'll be focused on. Uh number two is technology, just I've been mentioning. So, we see China is leading in many technologies now. Then the thing is, you know, in next phase, you know, all those technology related, not only with government support, but private is very strong. Uh so, we see, you know, the robot, you know, AI, etc., etc. And lastly, just I've been mentioning about trade. Trade has been very strong for China, not only, you know, this year. Last the year before in 2024, China trade surplus one over in surplus one trillion. Last year, 1. 2 trillion. And this year, even under

the war, we're still expecting China trade surplus will continue to be over like one trillion. And because of the decoupling, because of the diversification, because China supply chain has been very complete. And the last one, I think, you know, in the opportunity, certainly is because of the rare earths. So, China has it, not only refining capability, refining equipments, but also in terms of technicians, etc. Given the war, now it's becoming much more precise like AI war, etc. So, we think the demand for rare earths will be even more. So, that's where seeing the opportunities in China, renewable demand, technology demand, trade and also rare earths. Back to you. Sure. Thank you so much. Thanks, Mo. Let me switch gears a bit to talk about Southeast Asia. I think one of the questions is on Indonesia. Uh it was mentioned that Indonesia's trade balance with the Middle East uh is only at 3%. Why is the impact still moderate and reflected in growth and prices? So, thank you for the question. Um certainly, so I think Indonesia's position is a bit unique in the sense that it does not have as much uh I would say uh deep dependence on fossil on fuel, especially say for example, gas, fertilizers as much as some of the other countries do, but Indonesia is a net oil importer. Uh now, typically in face by this kind of energy shock, what most countries have done is, you know, kind of return back to fossil fuel, especially coal, especially if they have, you know, domestic deposits. They have gone back to that to try and make up for any shortages, especially on the utility side. So, I would say Indonesia from that point of view is in a better place because it has, you know, domestic coal deposits. Uh dependence is not very high on natural gas as well. And fertilizers as a derivative. But, oil on there is still dependency. So, at this point, I think countries are kind I would say investors are looking at different countries. And I'm not sure if the question is also talking about how come there is that much volatility in the Indonesian markets if their exposure to the Middle East in general is quite small. Um I think where that stems from is Indonesia Some of the issues that the country was facing, policy facing even before the Middle East crisis, right? So, we have had this concern that you know, fiscal consolidation, you know, that could give way. They could be a potential test of the 3% of deficit target. That's what the markets have been worried about. Then you've got some of the rating agencies had downgraded the outlook earlier in the year. This predates the Middle East crisis. I think so, that kind of has There's been a weak handover in terms of sentiments and that's why I would say in midst of this crisis, we are seeing a bit of a negative overall. Uh more recently on the rupiah, it's not been even though some of the other regional currencies have been, say, since the truce or ceasefire conversation began. We have seen the rupiah kind of still underperform. And I think that has got to do partly with the seasonality of the currency, which is, you know, dividend repatriation period. Um so, that tends to add a layer of weakness to the currency. But, yes, I would say Indonesia in a way is also kind of worries that have come before the Middle East and kind of being compounded by what's happening on the geopolitical side. Um let me There seem to be quite a few of regional questions, so let me take another. Uh It was mentioned that Thailand is most exposed. How is Thailand more exposed than Philippines? I would say both are exposed. These are just degrees of vulnerability. Some of the indicators that we look at, especially net oil imports for example, is bigger for Thailand than it is for Philippines. But, uh there is no two ways to say this, but, you know, both the countries are dependent on imports, especially on much of the fossil fuel supplies. For example, if I were to talk about Philippines, about, I would say, 80-85% of its primary energy consumed is imported. So, that includes coal, oil as well as gas. Not that far for Thailand. You know, Thailand is somewhere again in the 80-90% ballpark. So, both the countries are vulnerable. Philippines a bit more from a inflation point of view because unlike the other countries, Philippines does not have a subsidy over cover. So, you do see a pass through, you know, of higher global prices. Again, something that's similar to Singapore's dynamics as well. You kind of see a quite a fast pass through into retail prices. And one of the reasons why I would say apart from imported price pressures that

the respective central banks could be a bit concerned. So, I would say in our whole central bank spectrum for that matter, we do have Philippines at the risk of being among the first few to move in the region, especially to tighten policy if peso remains under pressure and we do have, you know, inflation problems coming out as well. Latest inflation numbers have already been higher than you know, than the rest. And last point on Philippines, of course, it faces more of a stackflationary risk because growth has also been, you know, weak second half of last year going into 2026 and that was because of some domestic slower public spending as well as related issues. Okay, let me one point out one question to Mo. Mo, this is again on China and what key factors do you think pose the greatest downside risk to China? So, I guess the first question was a bit optimistic and this is asking you if there are any downside risk that you foresee. Yes, this is very balanced and this important. I think, you know, whenever we look at China, so in the past like 5 years, it's about risk first, right? Because of property correction, because all of this. But I think, you know, there are four major risks still facing China. And number one is oil. So, this is what's happening. And number two is tariff. Number three is domestic demand. And number four is property market. So, to elaborate a little bit. So, for the oil just like I've been mentioning. So, in terms of the dependence, security, diversification, because China is the largest oil importer. Not only oil, but also LNG. So, we see LNG imports for China in March has been down 4%. So, it's very significant. And also in terms of fertilizer, you know, components such as sulfur, etc., etc. So, those not only for fertilizer, but also for semiconductor, helium, etc. All those imports will be impacted by oil. So, this will put pressure on China GDP growth, on China's inflation. So, this is something the biggest risk currently. And secondly, certainly is tariff. If Trump changes his mind, tariff has been in the elevated again, that will certainly, you know, hitting China as well. And number three is about domestic demand. China has been trying to boost demand, you know, everything 11th 5-year plan like say uh 15 years ago, but hasn't really been that successful. Then domestic demand has been weak because, you know, wages has been low. Then this is something, you know, how to boost, you know, individual per capita income is one of the key tasks for China. But as your economy slowing, how your wage can really grow like, you know, faster than your economic growth. This is something, you know, China has been debating on. And the last one certainly is property market. So, it has been avoiding hard landing, but still like slowing. In terms of the way what is bottoming, so we're thinking the property market may be like in mid next year or the year after. So, it still takes, you know, the markets will still suffer in terms of the slowing what it has been bringing to the, you know, the wealth, you know, to everything that, you know, the Chinese, you know, population has been holding. So, the property market slowing down continue to hit, you know, the economic growth. So, this is the four major risks China's facing. Oil, tariff, domestic demand, and property market. Back to you. Great. Thank you so much. Let me then take again we have a few country specific questions, so I'll take them. And do wait on Joe, I mean, Mo, we've got one question in particular where I think both of us will have some thoughts to share, right? So, let me take this question first. For Indian corporates, by how much can we expect the cost of sales to increase due to elevated crude oil prices which impacts raw material inputs, packaging, all of that. Okay, so I think that this for a start is certainly if you've seen the latest PMI numbers and the breakdown, we're increasingly seeing that input prices for all businesses have generally been going up. Now, the extent to which these input price increases get passed on is a function of, you know, how much the businesses are able to take in or how much of a margin those businesses have. So, I think that will come with a bit of lag. But if you talk about the kind of margin compression you have seen, it really does differ from company to company. You know, the last time we had spoken to a bunch of corporates locally, they had given us an idea of, you know, everything from packaging. So, if you have a cement company, the bags that you put the cement supplies in, even, you know, those prices had also gone up. So, I think most businesses are finding an increase across different

parts of their chain. And I don't think the bulk of the impact is visible as yet because again, like I had mentioned at the very beginning, some some supply chain, I would say, businesses would kind of try and not pass it on immediately, but you know, I think your holding power could last a quarter or two at best and thereafter you're going to see it passed on. So, from a smaller supply chain operator to a bigger enterprise to then the end consumer. So, I wouldn't necessarily put a number at it. I really do think that it is a function of what kind of a business one is in. At this point certainly, you know, oil marketing companies are one which are kind of playing, have a front row to this entire energy price piece because, you know, they've been taking bulk of the increase in the global prices. In turn, the government has taken some of that burden as well by way of cutting their export duties. Mo, I had told you about a question and this question was put up in the chat. I do request um everyone to be on the pigeonhole, but I just managed to get this question out. And this is saying us that, you know, whatever has happened has happened, true. You know, next week or so there could be more such volatility or disturbance, but what is the more permanent impact that you see on global markets, sectors, and supply chain? Any thoughts on that, Mo? Probably you start off first and then I'll come back to you. Yeah. I think, you know, you might feel. So, the war that the US has been doing, either Venezuela or like, you know, Iran, I think, you know, the ultimate goal for the US is to contain China. Because China imports most of the oil from Iran or Venezuela. So, this is the number one we should, you know, look into the deep goal of the United States. I think number two, so the this that destabilization in the Middle [clears throat] East is happening. Even if the war, you know, ends anytime soon, I think for Middle East countries, they know US may not may no longer be, you know, as before can really protect them. So, they're seeing or they're seeking, you know, other supports, you know, from other countries such as Pakistan sent 13 13,000, you know, soldiers into like, you know, Saudi. And also like UAE has been is now in China to seeking all those, you know, help. I think the region has been stabilize destabilized and the trend will continue. And I think certainly in terms of global supply chain. So, globally we are seeing a K shape. So, the K shape before we all talking about wealthy become wealthy poor become poorer. But I think it's also K shape in a way K is about production, you know, going up. But, you know, down actually is about consumption. So, I see consumption going down, production going up. Why production going up? This is because the relationship between before is about efficiency for economy, right? But now is about security. Every single country wants to have longer supply chain in for themselves, self-sufficiency. They want to have security. So, this is why we are producing much more than before. So, this is where we see production is going up, but consumption going lower because in the per capita GDP actually hasn't been, you know, increasing. So, I think these are the three major trends I'm seeing. So, that is like, you know, US contain China will not stop. Number two, destabilization in the Middle East is happening and it will be even higher. Number three, in terms of the security seeking, then we see production becoming much more and consumption becoming much less. Thank you. Thanks, Mo. Um I think you've put up quite relevant points. I would just add that, you know, most of the countries now if COVID was one such development which had kind of turned supply chains on their head, you know, we really moved from just-in-time to just-in-case. I do think that the Middle East crisis is another such development where we would be seeing a lot more shifts in the supply chain. For one, most of the countries that are very heavy importers will look beyond just the Middle East. I think that exercise is already underway. Of course, there is only finite amount of resources among the other countries, but nonetheless, they will try and look at, you know, second, third kind of dependencies for fuel or fuel supplies. So, prices in general are likely to go up and I think stay elevated even after we are going to see the Middle East tensions come down because this is again, you know, one of those areas where it wasn't perhaps in the risk

landscape or dashboard for companies and it's going to be an additional risk there. The second one I would say would be, you know, to push and we do hope push the renewable agenda a lot more strongly. I think there are countries which have good solar power, which has good wind energy capabilities. I think the only thing lacking perhaps is adequate storage to kind of connect to the national grid. I think that would be perhaps the other one that we could see, you know, that whole piece being activated and being made much faster. And the third one would generally been, you know, be ready for black swan events. I think for more strategy rooms at this point, what could be a potential risk has become a risk. And I think if two, three, past five years in fact has shown us that we could be seeing problems from any country, any sphere, any sector. So, kind of risk management in terms of the financial currency, exposure to rates, exposure to commodity exposure becomes a lot more important and difficult at the same time. So, I think risk management across different segments, seeking as many suppliers as possible and hopefully kind of hasten this whole renewable energy push will become very important. I think we are short of time. In fact, we are exactly at the 5:00 p. m. mark. There are a few more questions in the pigeonhole and we hope to take them in the next live stream. I take this opportunity to thank, you know, all the listeners. Thank you so much for joining us at this live stream today. It's been a pleasure, you know, for me and me to share our views. Please do keep posted at our research webpage as well as, you know, join our mailing list to get more updated views. I would certainly say it's a very fluid place and as developments happen, we'll be happy to provide you our perspective on the economy, markets, as well as strategy in general. So, thank you so much for your time and have a great evening. Thank you.