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| HKECIC Weekly Market News |
| 20 Jul 2020 |
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| Market Snapshots |
| Asia and Australasia |
China: Exports rebound in June
According to the General Administration of Customs (GAC), China’s exports rose 0.5% yr/yr to US$213.57 billion in June, rebounding from a 3.3% drop in May. Imports increased at a faster pace of 2.7% to US$167.15 billion, versus a 16.7% decrease in May. Overall, China registered a trade surplus of US$46.42 billion in June, narrowed from US$62.93 billion in the preceding month. While both imports and exports of June showed signs of recovery, a spokesman of the GAC commented that the uncertain and unstable elements faced by China's foreign trade are still increasing significantly, including the China-US trade friction, adding that the situation in the second half of the year is complicated. On a separate note, the National Bureau of Statistics (NBS) reported that China’s economy grew 3.2% yr/yr in Q2 2020, beating market expectation and recovering from a 6.8% contraction in Q1. The data confirmed that China will be probably the first major economy to achieve positive economic growth amid the COVID-19 outbreak, with the US, the EU as well as Japan still struggling to reopen their economies.
Singapore: Economy slips into recession
An advance estimate from the Ministry of Trade and Industry (MTI) revealed that Singapore’s economy contracted sharply by 41.2% qtr/qtr in Q2 2020, extending a decline of 3.3% in the previous quarter. This pushed the trade-reliant economy into a technical recession, which is defined as two consecutive quarter-on-quarter contractions. MTI said in a statement that the economy was impacted by the “Circuit Breaker” measures implemented from 7 April to 1 June to slow the spread of COVID-19, as well as weak external demand amidst a global economic downturn precipitated by the pandemic. Specifically, construction sector (-95.6%) was the worst hit in Q2, followed by services producing industries (-37.7%) and manufacturing sector (-23.1%). |
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| Europe |
UK: Retail sales rebound in June as lockdown eased
UK retail sales rose 3.4% yr/yr in June, compared with a 1.6% fall in the same month last year, according to a joint survey conducted by British Retail Consortium and advisory firm KPMG. It was the first rebound since COVID-19 lockdown and the biggest monthly growth since May 2018, primarily driven by online sales a result of lockdown measures being eased and pent up demand being released. In particular, online spending on non-food items rising 48.2% yr/yr in June, almost three times the yearly average. However, UK head of retail at KPMG Paul Martin pointed out that fashion sales and those from high street shops are still underperforming, despite reports of increased interest from those prepared to queue to enter stores. Meanwhile, official figures revealed that UK GDP fell by 19.1% over the three months to end of May, as government restrictions on movement dramatically reduced economic activity. |
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| North America |
US: Trump signs Hong Kong Autonomy Act
Last week, US President Donald Trump signed the Hong Kong Autonomy Act previously passed by both houses of Congress to impose sanctions against foreign individuals and banks for contributing to the erosion of Hong Kong’s autonomy. Trump also signed an executive order which ends the Hong Kong’s preferential treatment. Among other things, the order gives US government agencies 15 days to implement changes that will result in Hong Kong being treated the same as Mainland China, including eliminating the preference for Hong Kong passport holders, revoking license exceptions for exports and re-exports to Hong Kong, limiting export of sensitive technology. In a press conference, China’s Ministry of Foreign Affairs spokesperson Hua Chunying said US moves seriously violates international law and the basic norms underpinning international relations, adding that the US side should correct its mistakes and stop interfering in Hong Kong in any way. |
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The UK government has announced its decision to phase out the equipment of Huawei Technologies Co., Ltd. (Huawei) from UK 5G networks. Buying new Huawei 5G equipment is banned after 31 December 2020, while Huawei will be completely removed from the UK’s 5G networks by the end of 2027. The government took the decision following new advice produced by the National Cyber Security Centre (NCSC) on the impact of US sanctions against the telecommunications vendor. Meanwhile, the US will impose travel bans on employees of Huawei and other Chinese companies the US determines are assisting the Chinese government in cracking down on human rights.
RTW Retailwinds, Inc. (NYSE: RTW), the parent company of fashion retailer New York & Co., has filed for Chapter 11 bankruptcy protection in order to restructure its debt. RTW’s CEO & CFO Sheamus Toal attributed the filing to the significant financial distress caused by the combined effect of the challenging retail environment and the impact of the COVID-19 pandemic. The company has kicked off liquidation sales already, and will consider selling its e-commerce business and related intellectual property.
Dutch homewares retail chain HEMA said in a statement that it has started court proceedings on its debt restructuring in the UK due to the impact of COVID-19 lockdown. The first hearing is scheduled for 29 July. Taking into account the severe impact of the COVID-19 pandemic, HEMA now forecasts its net sales to decline by 12.6% yr/yr in the financial year ending January 2021, warning that has to be further revised if a second wave of COVID-19 emerges. HEMA will later file for a Chapter 15 in the US, a type of bankruptcy process that shields foreign companies from lawsuits by US creditors while they reorganize in another country. |
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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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