J.P. Morgan: Emerging Markets Asia – Reassessing Energy Vulnerability
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J.P. Morgan’s latest research on Emerging Markets Asia provides a critical reassessment of regional exposure to energy supply shocks, specifically focusing on the potential closure of the Strait of Hormuz. The report constructs a comprehensive vulnerability index by synthesizing three key metrics: oil and gas intensity, dependency on Middle Eastern crude imports, and crude stockpiles measured in days.
The analysis reveals a clear divergence in resilience across the region. Vietnam and the Philippines emerge as the most vulnerable economies due to their high import dependency—exceeding 70% for crude oil—and critically low inventory buffers. In contrast, China and South Korea demonstrate superior resilience, bolstered by substantial stockpiles that can absorb supply disruptions. Thailand, Malaysia, and India also exhibit high energy intensity, while Singapore, Taiwan, and South Korea rely heavily on Middle Eastern gas for power generation.
The report validates its vulnerability framework against March manufacturing PMI data, showing a strong correlation where the most vulnerable economies experienced the steepest output declines. Despite a two-week ceasefire announced between the US and Iran, uncertainty remains regarding the Strait's stability. If closure recurs, the identified vulnerability ranking—highlighting Indonesia, Vietnam, the Philippines, and India as primary risks—will likely dictate market impacts. Immediate policy responses, such as fuel rationing in India and flight restrictions in Vietnam, underscore the acute nature of the threat.