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| HKECIC Weekly Market News |
| 16 September 2019 |
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| Market Snapshots |
| Asia and Australasia |
Japan: Economy grows slower than expected in Q2
Second estimates from the Japan Cabinet Office showed that Japan’s economy grew at 0.3% qtr/qtr in Q2, compared with preliminary reading of a 0.4% growth. The economy grew an annualized 1.3% in Q2, weaker than the preliminary reading for 1.8% growth and in line with economists’ median forecast. The downward revision was attributed to increased caution on making fixed investments amid the ongoing trade disputes between US and China, Japan’s two biggest trading partners. On private consumption, which accounts for about 60% of Japan’s GDP and has been one of the bright spots for the economy, advancing 0.6% qtr/qtr in Q2, matching the preliminary reading. Separately, the government is preparing to raise the sales tax from 8% to 10% in October. Economy Minister Toshimitsu Motegi said they saw no sign of consumers front-loading their spending ahead of the planned sales tax hike. |
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| Europe |
Eurozone: European Central Bank unveils fresh stimulus
The European Central Bank (ECB) has lowered its interest rate on the deposit facility by 10 basis points to -0.5%, while keeping its main interest rate unchanged at 0%. The ECB now expects the key interest rates to remain at their present or lower levels until they have seen the inflation outlook close to, but below, 2% within its projection horizon. The ECB also planned to restart the asset purchase program (QE) at a monthly pace of EUR 20 billion starting from 1 November. Meanwhile, the ECB has slashed its growth forecast in the Eurozone from 1.2% to 1.1% for 2019 and from 1.4% to 1.2% for 2020, citing prevailing weakness of international trade in an environment of prolonged global uncertainties. |
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| North Amercia |
US: Trump postpones China tariffs hikes
US President Donald Trump said on social media last week that the US would delay a tariff hikes (from 25% to 30%) on US$250bn worth of Chinese goods. The effective day would delay by two weeks from 1 October to 15 October. Trump said the decision was “a gesture of good will” made at the request of Chinese Vice Premier Liu He and due to the fact that the China would celebrate their 70th anniversary on 1 October. The announcement came after China’s decision to exempt some US anti-cancer drugs and other goods from its first batch of tariff. The two countries are set to meet early next month led by US Trade Representative Robert Lighthizer and China Vice Premier Liu He. |
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| Latin America |
Argentina: Inflation rose to five-month high
National Institute of Statistics and Census of Argentina reported that Argentina’s inflation rose by 4.0% in August from the previous month, bringing annual inflation to 54.5%. The monthly increase has been the highest reading since March, as prices rose faster for food & non-alcoholic beverages (+4.5%), transport (+4.0%), clothing & footwear (+3.1%), and furnishings & household equipment (+6.1%), among other things. Separately, a spokesman of the IMF said that senior Argentine and IMF officials would meet later this month to discuss recent steps taken to stabilise the country's economy and shore up the currency, as Argentine peso plunged by more than 35% against the US dollar in August. The central bank of Argentina has spent about US$15 billion in foreign reserves over the last month to defend its currency, leaving international reserves down to US$50.6 billion. |
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Fred’s Inc. (NASDAQ: FRED), a US-based pharmacy and discount retailer, has filed for Chapter 11 bankruptcy protection in the US Bankruptcy Court as it failed to find a turnaround plan following yearly losses since 2015. The company said liquidation sales would take place at its stores and expected to close all of its roughly 300 retail stores in the coming 60 days. |
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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.
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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