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| HKECIC Weekly Market News |
| 7 September 2020 |
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| Market Snapshots |
| Asia and Australasia |
China: PMI remains in expansion territory as economy rebounds
According to the National Bureau of Statistics (NBS), China’s Manufacturing Purchasing Managers' Index (PMI) stood at 51.0 in August, slightly down from the five-month high of 51.1 in July, with impacts from heavy floods in the south of the country A reading above 50 reflects expansion, while a reading below indicates contraction. The index has remained above 50 for six months in a row, reflecting factory activity in china continues to recover from the threat of COVID-19 outbreak. NBS senior statistician Zhao Qinghe said policies aimed at balancing epidemic control and economic development yield notable fruit, and the economy keeps recovering with good prospects. However, the PMI for small businesses went down 0.9 points to 47.7. Zhao explained that many small firms reported problems of insufficient demand and financial stress, adding that they were still faced with hardships in production and operation. |
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| Europe |
Turkey: Economy shrinks by 9.9% in Q2
The Turkish Statistical Institute reported that Turkey’s economy shrank by 9.9% yr/yr in Q2, reversing a 4.4% growth in Q1. The economy contracted for the first time since Q2 2019, as economic activity was severely hit by the COVID-19 containment measures since March this year. By expenditure approach, exports and imports of goods & services plunged 35.3% yr/yr and 6.3% yr/yr respectively in Q2, while household consumption dropped by 8.6%. Government spending was the least impacted sector, dipped 0.8% in Q2. Despite the fall, Turkey’s Finance Minister Berat Albayrak wrote on his social media that Turkey GDP rate was good compared to the rest of the world, adding that the foundations of Turkey's economy are robust and its dynamics are strong. |
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| North America |
US: Ongoing uncertainty related to COVID-19 clouds business outlook
According to the latest Beige Book published by the US Federal Reserve Board, economic activity increased among most districts, but gains were generally modest and activity remained well below levels prior to the COVID-19 pandemic. In particular, consumer spending continued to pick up, sparked by strong vehicle sales and some improvements in tourism and retail sectors. However, total spending was still far below pre-pandemic levels in some districts. Overall, firms were modestly optimistic about the business outlook, but uncertainty and volatility related to the pandemic, and its negative effect on consumer and business activity, continued to cloud the business outlook. On a separate note, Office of the US Trade Representative’s office announced that it has extended tariff waivers granted to a range of goods imported from China, including smart watches and certain pieces of medical equipment, through the end of 2020. |
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| Latin America |
Argentina: Government obtains overwhelming backing for debt restructuring
Last week, Argentina’s Economy Minister Martin Guzman announced that the country has obtained almost all creditor’s acceptance to restructure 99% of its US$65 billion in debt, a step closer to put an end to its ninth sovereign debt default. President Alberto Fernandez said in a speech that in ten year’s time, Argentina will owe US$38 billion less than what it owed last year. The news comes a month after the country reached an agreement with its major foreign private creditors to renegotiate the terms of the debt. Earlier, the government requested to start formal talks with the International Monetary Fund (IMF) for the US$44 billion in debt as part of a US$57 billion bailout programme extended during the 2018 currency crisis. |
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UK menswear retailer Moss Bros Group Limited has reportedly recruited KPMG for a possible company voluntary arrangement, which would result in stores closure, rent reduction as well as job cut as the retailer chain seeks to embark on a restructuring scheme. Moss Bros has temporarily closed all of its in-store and e-commerce operations due to the social distancing measures to curb the spread of COVID-19. The menswear chain has 125 stores across the country and employs around 1000 people.
UK coffeehouse chain Costa Coffee said it has started consultations to cut costs amid the threat of the COVID-19 outbreak, placing 1,650 jobs at risk. Costa Coffee said, while its business was boosted by the UK Government’s VAT reduction on food and non-alcoholic drinks and the Eat Out To Help Out scheme, there remained high levels of uncertainty as to when trade will recover to pre-pandemic levels. The move comes after sandwich chain Pret A Manger revealed it was slashing 2,800 jobs as part of a restructure of its UK business. |
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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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