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| HKECIC Weekly Market News |
| 8 October 2018 |
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| Market Snapshots |
| Asia and Australasia |
Indonesia: Rupiah reaches the weakest level in 20 years
Indonesia’s President Joko Widodo has called for international help following a 7.5 magnitude earthquake and subsequent tsunami that hit the Sulawesi island, sweeping away buildings, disrupting road traffic and cutting off electricity and communications. While rescue teams are gearing up to search for survivors, the national disaster agency said the casualties will keep increasing. The natural disaster devastated the country at a time when the Indonesian rupiah was weakened by nearly 10% against the US dollar year-to-date to a 20-year low, as the country struggles with a strong US dollar and higher oil prices. Earlier, the Indonesia’s central bank lifted its benchmark interest rate for the fifth time since May to 5.75% as it intensifies efforts to shield the rupiah from a global rout in emerging markets. |
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| Europe |
Eurozone: Retail trade remained soft despite a fall in unemployment
Eurozone’s volume of retail trade decreased by 0.2% mth/mth in August, following a 0.6% decline in July, according to estimates from Eurostat. The decrease was due to a 0.6% fell for automotive fuel and by 0.3% for food, drinks and tobacco, while non-food products remained stable. Among Member States for which data are available, the largest decreases were registered in Latvia (-1.2%), France (-0.7%) and Finland (-0.6%). The highest increases were observed in Portugal (+1.1%), as well as Ireland and Slovenia (both +1.0%). Separately, eurozone’s unemployment rate was 8.1% in August, down from 8.2% in July. This is the lowest rate recorded since the global financial crisis in November 2008. The lowest unemployment rates in August were recorded in the Germany (3.4%), while the highest were observed in Greece (19.1% in June 2018) and Spain (15.2%).
Turkey: Inflation hits 14-year high
Turkey’s consumer price inflation rose to 24.52% yr/yr in September from 17.9% in August, data from the Turkish Statistical Institute showed. The inflation hit its highest level in 15 years and the lira has lost nearly 40% of its value this year although the central bank has raised its benchmark interest rate to 24% from 17.75% in September. Prices rose faster for all main expenditure groups, including furnishing and household equipment (+37.28%), transportation (+36.61%) as well as miscellaneous goods and services (+30.61%). Last week, credit rating agency Fitch has downgraded the long-term foreign-currency issuer default ratings of 20 Turkish banks with a negative outlook, warning the mounting risks confronting the sector in the wake of a recent currency crisis. The downgraded banks included major private lenders as well as state banks, mostly with strong track records and moderate non-performing loans. |
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| Latin America |
Brazil: Bolsonaro and Haddad go to second round in presidential election
Brazil’s presidential election was held on 7 October. The far-right candidate Jair Bolsonaro maintained a lead over his major rival Fernando Haddad, but he failed to win the 50% of valid votes needed to win outright. A second round of voting between Bolsonaro and Haddad will be held on 28 October. Separately, according to the Ministry of Industry, Foreign Trade and Services, Brazil registered a trade surplus of US$4.97 billion in September, reduced from US$5.18 billion in the same month a year ago. The narrowed surplus was mainly driven by higher imports of fuels and lubricants. |
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American Tire Distributors Inc., the largest tire distributor in the US, has filed for Chapter 11 bankruptcy protection. The company's National Tire Distributors ("NTD") subsidiary and other Canadian subsidiaries are not part of bankruptcy. The privately owned company has reached a deal to slash over US$2.5 billion in total debt by US$1.1 billion and will hand over control of the company to bondholders. The company also intends to pay its suppliers and vendors in full under normal terms for goods and services provided on or after the Chapter 11 filing date.
Mattress Firm Inc., the largest specialty mattress retailer in the US, has filed for Chapter 11 bankruptcy protection. The company plans to close around 700 of its more than 3,300 stores nationwide. The company further stated that it should complete the restructuring process within the next 45 to 60 days. |
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Hong Kong Export Credit Insurance Corporation
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Copyright © 2018 Hong Kong Export Credit Insurance Corporation |
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Disclaimer
The information contained in the ‘Weekly Market News’ (WMN) is compiled by the Hong Kong Export Credit Insurance Corporation ("HKECIC") for general information only. Whilst HKECIC endeavours to ensure the accuracy of this general information, no statement, representation, warranty or guarantee, express or implied, is given as to its accuracy or appropriateness for use in any particular circumstances.
HKECIC is not responsible for any loss or damage whatsoever arising out of or in connection with any information including data or programmes on the WMN. HKECIC reserves the right to omit, suspend or edit all information compiled by HKECIC on the WMN at any time in its absolute discretion without giving any reason or prior notice. Users are responsible for making their own assessment of all information contained in this WMN and are advised to verify such information and obtain independent advice before acting upon it.
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