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HKECIC Weekly Market News
14 September 2020
 
 
 
 
Market Snapshots
Asia and Australasia
China: Export growth accelerates in August
According to the General Administration of Customs (GAC), China’s exports jumped 9.5% yr/yr to US$235.3 billion in August, accelerating from a 7.2% rise in July, in a sign that global demand is on track to recovery as major trading partners continue to ease their COVID-19 containment measures. This also posts the highest monthly growth rate since March 2019, thanks to the robust demand for medical and electronic products. However, there is growing speculation that China’s exports are susceptible to the upcoming US presidential election in November as tensions between the US and China have escalated on various fronts. By contrast, China’s imports fell by 2.1% yr/yr to USD 176.3 billion in August, extending a 1.4% fall in the prior month. Overall, China saw its trade surplus standing at USD 58.9 billion in August, with its surplus with the US widened 5.5% mth/mth to USD 34.2 billion.
Europe
UK: Online orders drive August’s 3.9% retail sales growth
Total UK retail sales rose 3.9% yr/yr in August, reversing a decline of 0.4% in the same month last year, a joint survey conducted by industry body British Retail Consortium (BRC) and advisory firm KPMG reported. This was the highest monthly growth recorded since May 2018. High levels of home working have continued to drive growth in online sales, with online non-food sales soaring at an annual rate of 42.4%. However, bricks-and-mortar sales plunged 17.8% yr/yr in August. BRC’s Chief executive Helen Dickinson said remote working has continued to help sales in home goods, such as food, computing, furniture and TVs, but city centre retailers, particularly clothing, footwear and beauty ones, continued to be devastated by low footfall and poor sales.
Latin America
Argentina: Sovereign credit ratings upgraded after debt revamp
Last week, S&P Global Ratings raised its long-term foreign and local currency sovereign credit ratings on Argentina to 'CCC+' from 'SD', or selective default, effectively pulling the cash-strapped country out of default territory. The outlook on the long-term rating is stable. S&P made the announcement after Argentina’s government concluded its restructuring of over US$100 billion in debt, including US$66 billion in foreign bonds and over US$40 billion in foreign currency debt issued under local law. However, S&P warned that the ratings reflect Argentina’s weak fiscal and external profiles, monetary inflexibility and limited financing options, adding that the country's debt burden remains high with more than 70% of central government debt is in foreign currency. S&P expects the economy to contract by 12.5% this year and grow 4.8% in 2021.
Africa
South Africa: GDP collapses 51% in Q2
South Africa’s GDP contracted by an annualized 51.0% in Q2, data from Statistics South Africa (SSA) showed. This pushes the country even deeper into recession, after the economy registered a 1.8% decline in Q1. In a press release, SSA said the country operated under widespread lockdown restrictions in response to COVID-19 in Q2 which devastated economic activity. Nearly all industries experienced a massive drop in output in Q2, led by construction (-76.6%), manufacturing (-74.9%) and mining (-73.1%), while growth was only seen in agriculture (+15.1%). In July, the International Monetary Fund agreed to support South Africa with a US$4.3 billion emergency loan in a bid to cushion the economic fallout of the lockdown.
      
 
  Corporate News  
  LVMH Moet Hennessy Louis Vuitton (Euronext Paris: MC), the world’s leading luxury products manufacturer, said that it will not be able to complete its US$16.6 billion acquisition of US jeweler Tiffany & Co. (NYSE: TIF), ten months after the French conglomerate announced the largest deal in the luxury sector. LVMH said in a statement that the French government urged it to defer the takeover of Tiffany in response to the US threat of tariffs on French products. In response, Tiffany has filed a lawsuit against LVMH in Delaware, aiming to force the latter to complete the deal.

Canada-based clothing retailer Groupe Dynamite Inc. has filed for bankruptcy protection in the US and Canada amid the COVID-19 pandemic in order to restructure its debt. The company blamed its decision to the ongoing pressures of store closures, social distancing measures, closed borders adding to lack of tourism and global economic uncertainty. The company currently operates over 300 stores across North America, including 85 in the US.
 
 
 

 
 
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