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| ECIC Weekly Market News |
| October 23, 2017 |
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| Market Snapshots |
| Asia and Australasia |
China: Economy grows at 6.8% yr/yr in Q3
China’s economy expanded by 6.8% yr/yr in Q3, slightly below the 6.9% growth in the first half of the year but still above the government’s full-year target of “around 6.5%”. Increased industrial activity and higher commodity prices were major factors behind the strong growth. Separately, at the opening of the 19th Communist party congress, President Xi Jinping laid out a plan to turn China into a leading global power by 2050. Under his plan, China will realise a moderately prosperous society by 2020 and socialist modernisation by 2035.
Japan: Prime Minister Shinzo Abe wins resounding victory in general election
Japanese Prime Minister Shinzo Abe won a resounding victory in Sunday's general election, as his Liberal Democratic Party and its coalition partner retained a two-thirds majority in lower house. During the campaign, Abe framed the vote as a referendum on his handling of the economy and the threat from North Korea. Japan’s economy has grown continuously for the past six quarters, the longest stretch for more than a decade, while Abe has taken a hardline approach to North Korea. The election victory would give him the opportunity to become Japan's longest serving prime minister.
Singapore: Exports down 1.1% yr/yr in September
According to International Enterprise Singapore, non-oil domestic exports (NODX) decreased by 1.1% yr/yr in September, after the 16.7% growth in the preceding month, due to the decrease in electronic NODX which outweighed the increase in non-electronic exports. Electronic NODX declined by 7.9%, led by PCs (-17.6%), ICs (-4.1%) and diodes & transistors (-18.1%). Non-electronic NODX rose by 1.9%, mainly supported by non-monetary gold (+70.2%), petrochemicals (+11.6%) and specialised machinery (+15.5%). By market, NODX to the top 10 markets expanded in September, except Hong Kong, the European Union and Thailand. The largest contributors to the NODX increase were Malaysia (+21.3%), China (+9.6%) and Japan (+18.1%). |
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| Europe |
Eurozone: Trade surplus narrows to EUR 16.1 billion in August
Eurozone’s surplus in goods trade dropped to EUR 16.1 billion in August, its lowest level since January and down from EUR 17.5 billion a year earlier, as year-on-year growth in imports (+8.6%) outstripped that of exports (+6.8%). Although the euro has depreciated against the US dollar from a 2017 peak in early September, it is still up more than 12% this year. As a result, imports from countries outside the eurozone have generally become cheaper while exports more expensive. Separately, the European Central Bank will hold its next policy meeting on 26 October. While the bank currently purchases EUR 60 billion of assets per month, there is a growing view that it should start to scale back its stimulus programme given stronger economic conditions.
UK: Inflation sends retail sales down in September
Data from the Office for National Statistics showed that UK‘s inflation rate edged up to 3.0% in September from 2.9% in August, mainly due to higher transport and food prices. The latest inflation rate is the highest since April 2012 and above the Bank of England’s 2% target. Rising prices and slow wage growth prompted a drop in retail sales in September. According to the Office for National Statistics, retail sales fell 0.8% mth/mth, reversing rises in July and August. It also meant that Q3 retail growth slowed to a year-on-year rate of 1.5%, the lowest since Q2 2013.
Spain: Government cuts 2018 growth forecast
Spain’s government has lowered its forecast for economic growth next year, citing political uncertainty in Catalonia. It now expects growth of 2.3% compared to a previous projection of 2.6%. Tensions have been growing following an independence referendum in the autonomous region on 1 October. Mariano Rajoy, the Spanish prime minister, has announced plans for direct rule in Catalonia, to dissolve the regional government and hold new regional elections within six months. His proposed measures must now be approved by Spain’s Senate. As the ruling party has a majority in the Senate, the measures are likely to pass.
Russia: Retail sales up 3.1% yr/yr in September
According to the Federal Statistics Service, Russia’s retail sales rose 3.1% yr/yr in September, after going up 1.9% in August. It marked the strongest expansion since December 2014. The Russian economy returned to growth in Q4 2016, after seven consecutive quarters of contraction that were mainly caused by a drop in oil prices and Western sanctions. In Q2 2017, the economy advanced 2.5% yr/yr, mainly driven by private consumption (+4.4%) and fixed investment (+6.3%). As economic recovery is under way, Russia’s central bank upgraded its growth forecast for 2017 to 1.7%-2.2% last month, from the previous forecast of 1.3%-1.8%. |
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| North America |
US: Strongest growth in retail sales since March 2015
US retail sales rose 1.6% mth/mth in September, their biggest increase since March 2015, as reconstruction and clean-up efforts in areas devastated by Hurricanes Harvey and Irma boosted demand for building materials and motor vehicles. The two hurricanes slammed parts of Texas and Florida when they made landfall in late August and early September. Excluding automobiles, gasoline, building materials and foodservices, retail sales increased 0.4% in September after being unchanged in the previous month. These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product. |
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Honeywell International Inc. (NYSE:HON), a US-based technology company, has announced its latest results. For the three months ended 30 September, net sales rose 3.2% yr/yr to US$ 10,121 million, while net profit increased 8.7% to US$ 1,348 million. |
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