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| HKECIC Weekly Market News |
| 14 May 2019 |
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| Market Snapshots |
| Asia and Australasia |
China: Trade surplus falls in April
According to the General Administration of Customs (GAC), China’s exports declined 2.7% yr/yr to US$193.5 billion in April, reversing from a 14.2% gain in March. Imports, an indication of domestic demand rose 4.0% yr/yr to US$179.7 billion, compared to a 7.9% drop in March. Overall, China registered a total trade surplus of US$13.8 billion in April, below expectations and shrank from US$32.4 billion a month earlier. China's trade surplus with the US, meanwhile, rose to US$21.0 billion in April from US$20.5 billion in March. Separately, figures from the State Administration of Foreign Exchange (SAFE) showed that China’s foreign exchange reserves fell for the first time in six months in April. China’s reserves fell US$3.8 billion from March to US$3.094 trillion at the end of April. SAFE spokesperson Wang Chunying attributed the small drop to a firmer US dollar and changes in prices of global assets that China holds. Regarding the trade talks between US and Mainland China, China will raise tariff on US$60 billion in US goods in retaliation for the US decision to raise duties on US$200 billion in Chinese products to 25% from 10% with effective from 10 May 2019. The US goods will be subject to additional tariff of 5%, 10%, 20% and 25% starting on 1 June 2019.
Indonesia: Q1 GDP grows less than expected
Indonesia’s economy grew at a slower rate than expected in the first quarter as exports fell, official data showed. The Southeast Asia’s biggest economy expanded by 5.07% yr/yr in Q1 2019, the lowest rate since Q1 2018 and moderating from 5.18% in Q4 2018. The slowdown comes amid a slide in exports, which fell 2.08% yr/yr during the quarter. Last month, the Indonesian central bank left its benchmark interest rate unchanged at 6%. The central bank said its policy mix, the government and related authorities would continue to be strengthened in order to maintain the momentum of domestic economic growth which was predicted to be in the range of 5.0-5.4% in 2019. |
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| Europe |
Eurozone: European Commission cuts economic forecasts over trade uncertainty
The European Commission released its spring economic forecast, a seasonal outlook of the European economy’s expected performance over the next few years. The Commission has lowered Eurozone’s 2019 and 2020 GDP growth forecast to 1.2% and 1.5% from its February’s forecast of 1.3% and 1.6% respectively, citing slowing global trade, manufacturing sector weakness and Brexit uncertainty holds back output. In particular, the Commission cut growth forecasts for Germany for the second time this year, where the 2019 prediction was slashed to 0.5% from 1.1%, as trade tensions and a Chinese slowdown weigh on the traditional economic powerhouse of the region. Separately, Eurozone’s seasonally adjusted volume of retail trade remained unchanged month-over-month in April, compared to a 0.5% increase in February, according to estimates from Eurostat. The retail trade in food, drinks and tobacco increased 0.6%, while automotive fuel and non-food products decreased by 0.6% and 0.4% respectively. Among Member States for which data are available, the largest increases in the total retail trade volume were registered in Lithuania (+1.7%) and Portugal (+1.2%). The highest decreases were observed in Slovenia (-3.1%) and Austria (-0.8%). |
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| North America |
US: Additional tariff rate on $200 billion Chinese goods raised from 10% to 25% on 10 May
The US had earlier postponed its plans to increase the additional tariffs from 10% to 25% on certain Chinese products worth approximately US$200 billion under the Section 301 investigation. On 9 May, the Office of the United States Trade Representative (USTR), in response to new developments in negotiations with China and directions from President Trump, announced to raise the additional tariffs on US$200 billion in Chinese imports from 10% to 25% and effective 12:01 a.m. on 10 May. Besides, the USTR will seek public hearing on 17 June 2019 about raising additional tariffs on 3,805 lines of product covering approximately US$300 billion worth of Chinese imports. Trump said he has not made a decision to go ahead with that proposed tariffs and he planned to meet with Chinese President Xi Jinping at the G20 summit next month. |
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Taiwan-based electronics contract manufacturer Hon Hai Precision Industry Co., Ltd (TWSE: 2317), trading as Foxconn, plans to move some of production of its production lines from Shenzhen and Tianjin to Kaohsiung, Taiwan. The company’s chairman Terry Gou said in a magazine interview that they have become unable to manufacture some equipment in China owing to the US-China trade frictions. The tycoon also said his company was rearranging its supply chains in Houston, Indianapolis and Mexico, where it had 20,000 employees, to seek the best business advantages in response to changes brought on by the Trump Administration. |
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Copyright © 2019 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.
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