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| HKECIC Weekly Market News |
| 11 May 2020 |
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| Market Snapshots |
| Asia and Australasia |
Hong Kong: Economy shrinks 8.9% in Q1
The Census and Statistics Department released the advance estimates on GDP for Q1 2020. Hong Kong real GDP decreased by 8.9% yr/yr in Q1, from a decrease of 3.0% in Q4 2019. This was the largest decline on record, mainly attributable to the continued weak performance in both domestic and external demand, as affected by the COVID-19 pandemic. Over the same period, total exports of goods fell 9.7% yr/yr in real terms compared with a decrease of 2.5% in Q4 2019. A Government spokesman said that the economic recession deepened in Hong Kong in Q1 2020, as the threat of COVID-19 seriously disrupted a wide range of local economic activities and supply chains in the region. Looking ahead, with the COVID-19 pandemic causing a severe contraction of global economic activity, Hong Kong's exports will remain under notable pressure in the near term. Besides, the developments in US-China economic and trade relations, geopolitical tensions and global financial market volatility continue to warrant attention. |
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| Europe |
Eurozone: March retail posts the largest decline on record
Eurozone’s seasonally adjusted volume of retail trade tumbled 11.2% in March compared with the preceding month, according to estimates from Eurostat. This posted the largest decline of retail trade in history. The report offered an early glimpse at the impact of COVID-19 containment measures on the retail sector. Double-digit declines were seen in textiles, clothing and footwear (-38.9%), electrical goods and furniture (-17.8%), computer equipment and books (-16.4%), among other things. Separately, the European Commission projected in its Spring 2020 Economic Forecast that Eurozone’s economy will contract by 7.7% in 2020, as the COVID-19 pandemic has severely affected consumer spending, industrial output, investment, trade, capital flows and supply chains.
UK: Bank of England warns GDP could contract by 25% in Q2
Last week, the Bank of England decided to leave its benchmark interest rate unchanged at 0.1% and maintained its bond purchase program at a total of GBP 645 billion. The central bank highlighted that the spread of COVID‑19 and the measures to contain it are having a significant impact on the UK and many countries around the world. Activity has fallen sharply since the beginning of the year and unemployment has risen markedly. The unprecedented situation means that the outlook for the UK and global economies is unusually uncertain. In its latest Monetary Policy Report, the bank now sees that UK GDP will contract by 25% in the current quarter before recovering later in the year to shrink by 14% for the whole year. Meanwhile, the unemployment rate is expected to rise to 9% and consumer inflation to fall markedly below 1% in the current quarter. |
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| North America |
US: Exports post record drop in March
The US Department of Commerce reported that US’s exports of goods and services deficit came in at US$44.4 billion in March, up from US$39.8 billion in February. Trade deficit widened in March as exports posted a record drop of 9.6% mth/mth to US$187.7 billion, which offset a softer decrease of 6.2% in imports. Exports of industrial supplies & materials, automotive vehicles, parts & engines as well as imports of cell phones, household goods and gem diamonds decreased. By contrast, imports of computers and semiconductors increased in March. The authority explained that the overall declines in exports and imports were partly due to the impact of COVID-19, as many businesses were operating at limited capacity or ceased operations completely, and the movement of travelers across borders was restricted. |
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Neiman Marcus, a US-based luxury department store chain, has filed for Chapter 11 bankruptcy protection, in an attempt to eliminate US$4 billion in debt. It becomes the second major retailer to declare bankruptcy since the outbreak of COVID-19. CEO Geoffroy Van Raemdonck stressed that the retailer chain had no plans to liquidate, adding that it would continue to honor gift cards & credits and operate the company's websites. Neiman Marcus has temporarily closed its 43 stores since mid-March.
US fashion retailer J. Crew's parent company Chino Holdings, Inc has filed for Chapter 11 bankruptcy protection, putting 13,000 jobs at risk. It has temporarily closed its stores due to the COVID-19 crisis. The company disclosed in a court filing that it had hired a real estate consultancy and liquidator to help it evaluate its leases and negotiate rent relief.
US menswear designer’s stores John Varvatos Enterprises Inc. has filed for Chapter 11 bankruptcy protection after it had failed to pay more than US$100 million in debts. All stores are currently closed and most employees were placed on furlough. Finance chief Joseph Zorda said in a court filing that the COVID-19 pandemic destroyed a successful effort to revitalize the ailing brand.
Skyworth Group Limited (SEHK: 751), a HK-listed multimedia and smart systems technology business, announced its Q1 2020 results ended 31 March 2020. Group revenue decreased 26.3% yr/yr to RMB6,752 million, reflecting a hit by the COVID-19 outbreak. Gross profit margin increased 4.0 percentage points to 22.8% as the group continued to refine operations management and some revenues were exempted from VAT. Faced with the COVID-19 outbreak and uncertainties in the development of the world economy, the Group said that it will seize new opportunities for changes in markets and continue to formulate adjustment plans in terms of product structure and business structure. |
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Hong Kong Export Credit Insurance Corporation
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Copyright © 2020 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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