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HKECIC Weekly Market News
11 June 2018
 
 

 
 
Market Snapshots
Asia and Australasia
China: Exports up 12.6% yr/yr in May
According to data released by the General Administration of Customs, China’s exports rose 12.6% yr/yr to US$212.87 billion in May, moderating from a 12.9% growth in April. Imports grew 26.0% yr/yr to US$187.95 billion from a 21.5% gain in April, on the back of firm domestic demand. As a result, China posted a trade surplus of US$24.92 billion in May, narrowing from US$28.78 billion a month earlier. In particular, China’s trade surplus with the US widened from US$22.15 billion in April to US$24.58 billion in May, leaving the surplus with US for the first five months of this year to US$104.85 billion. Separately, China’s foreign exchange reserves fell to US$3.111 trillion in May from US$3.125 trillion in April. The State Administration of Foreign Exchange attributed the decrease to weaker non-dollar currencies and rising global asset prices.
Indonesia: Inflation eases in May
Indonesia’s annual inflation rate eased to 3.23% in May from 3.41% in April, mainly due to softer prices rise in housing, food stuffs and transportation, data from the Central Statistics Agency showed. In late May, the Indonesia’s central bank raised its benchmark interest rate by 25 basis points to 4.75% at an off-cycle monetary policy meeting, the second rate hike in a fortnight to defend the Indonesian rupiah, which has fallen to its weakest level against the US dollar since 2015. The bank said that a pre-emptive policy rate response will be taken to stabilise the national currency’s exchange rate, while consistently controlling inflation within the 2018-2019 target range of 3.5±1%.
Europe
Eurozone: Retail trade up by 0.1% mth/mth in April
Eurozone’s volume of retail trade increased by 0.1% mth/mth in April, according to estimates from Eurostat. The increase was due to a rise of 1.7% in non-food products, while food, drinks and tobacco fell by 0.7% and automotive fuels by 0.8%. Among Member States for which data are available, the highest increases in the total retail trade volume were registered in Germany (+2.3%), Ireland and Lithuania (both +1.5%), while the largest decreases were observed in Portugal (-4.1%), Slovenia (-2.0%) and Estonia (-1.8%). Separately, as regards to US’s move to hit European steel and aluminum with punitive tariffs from 1 June, the European Commission plans to target EUR 2.8 billion worth of American goods with retaliatory tariffs that will go into effect in early July.
North America
US: Trade deficit narrows to lowest level since September 2017
Data from the Commerce Department showed that US’s goods and services deficit stood at US$46.2 billion in April, narrowing from US$47.2 billion in March and the lowest level since September 2017. Exports rose 0.3% mth/mth to hit a historic high of US$211.2 billion in April, while imports went down 0.2% mth/mth to US$257.4 billion. Remarkably, the goods trade deficit with China shrank to US$30.8 billion in April from US$34.2 billion in March. In an attempt to press China to reduce its trade surplus with US, the Trump administration has warned that it would impose tariffs on US$50 billion of Chinese imports, as well as impose restrictions on Chinese investments in US and tighter export controls.
      
 
 
  World News  
  World Bank: Forecast global economy to grow 3.1% in 2018 and 3.0% in 2019
In its latest Global Economic Prospects, the World Bank forecasts the global economy will grow 3.1% in 2018 (unchanged from its forecast in January) and 3.0% in 2019, supported by firming investment in advanced economies, a continued recovery in commodity-exporting emerging market and developing economies. However, global growth is projected to ease gradually over the next two years, to 2.9% by 2020. The World Bank views that the growth outlook is subject to significant downside risks, including the possibility of disorderly financial market movements, escalating trade protectionism, heightened policy uncertainty, and rising geopolitical tensions.


 
 
  Corporate News  
  ZTE Corporation (SZSE: 000063 and HKEX: 0763) has reached a deal with the US to remove ban on US suppliers selling parts to the company. The deal involved payment of US$1 billion, a US$400 million into a holding account to insure against future violation, replace management board within 30 days and hiring a compliance team chosen by the US. The fine was the largest penalty ever levied by the US Commerce’s Bureau of Industry and Security.  
 
 
 
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