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| HKECIC Weekly Market News |
| 6 Jul 2020 |
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| Market Snapshots |
| Asia and Australasia |
Hong Kong: Exports down by 7.4% in May
The Census and Statistics Department reported that the values of Hong Kong's total exports of goods decreased 7.4% yr/yr in May, after a decline of 3.7% in April. The enlarged year-on-year decrease in May was in tandem with subdued regional trade flows amid weak global demand. For the first five months of 2020 as a whole, the value of total exports of goods decreased by 8.0% over the same period in 2019. The decreases were registered to most major destinations, in particular the USA (-24.2%), India (-23.1%), Germany (-22.4%) and Singapore (-20.8%). However, year-on-year increases were registered in the values of total exports to Mainland China (+1.0%) and Taiwan (+8.6%). Looking ahead, a Government spokesman said Hong Kong's export performance will remain under pressure in the near term. The continued spread of COVID-19 in various places of the world is still a key threat to the global economy. The development of US-China political and economic relations also warrants concern.
Japan: May retail sales plunge amid state of emergency
Japan’s retail sales plunged 12.3% yr/yr in May, extending a 13.9% drop for April, the Ministry of Economy, Trade and Industry reported. Specifically, double-digit declines were seen in sales of motor vehicles (-35.2%), general merchandise (-34.9%), apparel & accessories (-34.3%) and fuel (-28.6%). This suggests that private consumption, which accounts for about half of the economy, has been severely hit by the national state of emergency in place between mid-April and the end of May to combat the spread of the COVID-19. The Japanese economy has slipped into recession in Q1, and is widely expected to continue the contraction in Q2. |
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| Europe |
Eurozone: Economic sentiment sees record gain in June
Data from the European Commission showed that Eurozone’s Economic Sentiment Indicator (ESI) rose for two consecutive months to 75.7 in June, from 64.8 points in April and 67.5 in May. This suggests that member states start to reopen their economy as containment measures to halt the spread of the COVID-19 pandemic lessen gradually. Remarkably, the ESI recovered in all of the largest Eurozone’s economies, namely in France (+9.4), the Netherlands (+8.3), Spain and Italy (both +8.2), as well as Germany (+6.6). The European Commission highlighted that the ESI has recovered some 30% of the combined losses of March and April, with optimism surrounding consumers and all business sectors improved in June. However, the ESI is still far below the pre-pandemic levels of around 100 points. |
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| North America |
US: Congress passes Hong Kong Autonomy Act
Last week, the US Senate and House of Representatives unanimously approved the Hong Kong Autonomy Act, which calls for the Secretary of State to report to Congress identifying foreign individuals and entities that materially contribute to China's failure to preserve Hong Kong's autonomy under the Sino-British Joint Declaration or Hong Kong Basic Law. Individuals and entities involved could also face visa-blocking sanctions and asset freezes. The Hong Kong national security law took effect on 30 June, which aims to prevent, curb and punish crimes to endanger national security, and to maintain prosperity and stability of Hong Kong. China has expressed condemnation of and opposition to the passage of the Hong Kong Autonomy Act, urging the US to stop interfering in China’s internal affairs. |
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Old Time Pottery, LLC, a US-based home décor retailer, has filed for Chapter 11 bankruptcy protection in order to restructure its debt. The company said in a press release that the filing was due to the unique and catastrophic event of the COVID-19 pandemic, which has severely impacted almost all retail businesses. The retailer chain will close 4 of its 43 stores in 11 states.
US-based NPC International Inc., the world's largest Pizza Hut franchisee, has filed for Chapter 11 bankruptcy protection in the US. In its filing, NPC listed estimated assets ranging from US$1 billion to US$10 billion and estimated liabilities in the same range. The company said in a statement that the industry has been in the midst of dynamic changes due to shifting consumer preferences and dining behavior, and challenges have been magnified recently by the impact and uncertainty of Covid-19. NPC operates 1,227 Pizza Hut restaurants in 27 states and 393 Wendy's restaurants in 8 states.
Modasuite Inc., trading as Frank & Oak, has filed for creditor’s protection under Canada’s Bankruptcy and Insolvency Act in a bid to restructure its business. Frank & Oak, emerging as an online clothing retailer which turned to brick-and-mortar, blamed its difficult decision to the significant impact brought by the COVID-19 pandemic and expected to focus its efforts on strengthening the company’s growing e-commerce operation. The retailer has 16 physical locations across Canada and employs around 220 employees. |
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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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