| Thailand declares a state of emergency. Asia faces a dividend drought. And middle-class Southeast Asians are falling into poverty. Here are some of the things people in markets are talking about today. Thai EmergencyThailand declared a state of emergency in the capital Bangkok after tens of thousands of anti-government protesters surrounded the prime minister's office demanding greater democracy and less power for the monarchy. The declaration goes into immediate effect and bans gatherings of five or more people, according to the Royal Gazette. Demonstrations began in early July. The protesters are calling for the resignation of Prime Minister Prayuth Chan-Ocha, a former army chief who staged a coup in 2014, and a rewriting of the constitution that helped him stay on following elections last year. They also want curbs on the monarchy. Read more here about why protesters are back on Thailand's streets. Stocks in Asia looked set to follow their U.S. peers lower after Treasury Secretary Steven Mnuchin played down the chances of striking a stimulus deal before next month's election. The dollar retreated and Treasuries were steady. Equity futures edged down in Japan, Hong Kong and Australia. The S&P 500 sank as traders also parsed earnings from big banks, with Wells Fargo tumbling after reporting a plunge in profit and warning that net interest income could "get a little bit softer" in 2021. Energy stocks joined a rally in oil and the British pound trimmed gains as investors awaited more news on Brexit negotiations. All across Asia, the worst year for stock dividends in over a decade is upending formerly rock-solid retirement plans. 28% of Asia-Pacific companies — including names like HSBC, Westpac and Nissan — have scrapped or reduced dividends this year as the coronavirus pandemic forces them to conserve cash. That's considerably greater than the 13% in the U.S. though still behind the 50% in Europe, according to data compiled by Bloomberg. Contrary to the stereotype of growth-stock-chasing Asian investors, many in markets like Australia, Singapore and Hong Kong are actually more reliant on yields than their global counterparts. Unlike places like the U.K., annuities are uncommon in the region. That makes company dividends a key income source alongside things like rent from investment properties. As the coronavirus pandemic derails economies worldwide, many of the newly poor will come from Southeast Asia, dealing a huge setback to a region that had been prospering from a surging middle class. Job losses are pausing the outsized boom Southeast Asia has experienced in recent years, with economies possibly taking years to fully recover. A lack of consumer demand, impending bankruptcies and social-distancing measures continue to impinge on the job market, according to Priyanka Kishore, an economist at Oxford Economics Ltd. "In all, this points to a long, drawn-out recovery," she said. "We estimate Southeast Asia's GDP to be 2% below the pre-Covid baseline even in 2022."
As New Zealanders prepare to go to the polls, stocks are surging to record highs and the property market is booming. It's a far cry from three years ago, when investors were spooked by the prospect of Jacinda Ardern's Labour Party taking power. Now, as polls show her winning a decisive victory in the Oct. 17 election, there's very little angst about what lies ahead. Ardern has put the nation's recovery from the pandemic at the center of her re-election campaign and flagged little in the way of big policy initiatives for a second term. That's allowing investors to focus on record-low interest rates, prompting a rush into assets like shares and property. What We've Been ReadingThis is what's caught our eye over the past 24 hours: And finally, here's what Tracy's interested in todayOne of the most interesting things to come out of the pandemic is that we're seeing a lot more emerging markets pursue unconventional monetary policies that once were seen as only possible in developed economies. Central banks in emerging markets are now doing things like quantitative easing and asset purchases that were once believed to be the purview of developed peers. In Indonesia, for instance, the central bank is even experimenting with debt monetization, or direct financing of the government budget. This kind of move has traditionally been seen as a massive no-no for developing markets where the independence of central banks from their respective governments is highly valued.  Bloomberg Bloomberg This shift in EM monetary policy is something I've been thinking about after a conversation with Ruth de Krivoy, the former head of Venzuela's central bank. She argues that institutional stability and the rule of law are key components of monetary policy in emerging markets. In other words, if the central bank doesn't remain credible as an independent entity as it embarks on these unusual steps, things like inflation can spin rapidly out of control. As more and more EM central banks pursue unconventional monetary policy — often aimed at financing or in some way amplifying fiscal support from their governments — the line between independence and cooperation is going to become very blurry. And that's going to make central bank credibility even more important for EMs. Our Odd Lots interview with Ruth Krivoy will be out soon. Subscribe here to listen. You can follow Tracy Alloway on Twitter at @tracyalloway. | 
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