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| HKECIC Weekly Market News |
| 21 September 2020 |
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| Market Snapshots |
| Asia and Australasia |
China: Retail sales return to growth
According to the National Bureau of Statistics (NBS), China’s total retail sales of consumer goods went up 0.5% yr/yr in August, rebounding from a 1.1% drop in the prior month. It is the first positive report since December 2019, in a sign of gradual economic recovery from the crisis of the COVID-19 pandemic. Sales rose for most categories, including telecommunication equipment (+25.1%), cosmetics (+19.0%) and jewelry (+15.3%), but continued to fall for oil & related products (-14.5%) as well as furniture (-4.2%). Separate data from the NBS showed that total industrial output also accelerated at the fastest rate this year during August, to 5.6% in August from a year ago. NBS spokesman Fu Linghui said during a press briefing that the current economic recovery remains unbalanced given the still-fragile consumption and heightened external risks.
Japan: Exports extend double-digit declines in August
Statistics from Japan’s Ministry of Finance showed that Japan’s exports slumped 14.8% yr/yr to JYP 5,233 billion in August, compared with a 19.2% plunge in July. Exports declined at a double-digit rate for the sixth month in a row, underscoring the threat caused by the ongoing COVID-19 outbreak and disrupted global supply chain. This also posts a key challenge to the new government of Yoshihide Suga’s ability to overcome the economic woes. Exports to the US fell 21.3% in August mainly due to declines in engine parts and construction machinery, while exports to China rose 5.1% thanks to higher demand for semiconductor machinery and nonferrous metals. Overall, Japan’s trade surplus stood at JYP 248 billion in August, reversing a trade deficit of JYP 152 billion from the same month last year. |
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| Europe |
UK: Parliament debates controversial Internal Market Bill
Last week, the UK government proposed a controversial Internal Market Bill in the House of Commons. While the bill is aimed at ensuring goods and services to flow freely across England, Scotland, Wales and Northern Ireland after the Brexit transition period ends on 31 December 2020, it gives the government the power to override part of the Brexit deal which came into effect on 31 January 2020 when it comes to movement of goods between Northern Ireland and Britain, among other things. UK’s Prime Minister Boris Johnson warned the legislation was necessary to protect the country’s economic and political integrity albeit there were widespread criticisms about its violation of the international law. The bill has passed a second reading by 340 to 263 in the House of Commons, and debates on the bill will rage on Monday and Tuesday before the final vote. |
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| North America |
US: Fed signals interest rates to stay near zero through 2023
The Federal Open Market Committee (FOMC) has maintained its target federal funds rate in the range of 0% to 0.25% in its September meeting, and will continue the asset purchases at least at the current pace of US$120 billion a month. In a press release, the FOMC said the path of the economy will depend significantly on the course of the COVID-19. The ongoing public health crisis will continue to weigh on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term. Meanwhile, a majority of the Fed policymakers sees no increase to borrowing costs through 2023, and predicts US economy to contract by 3.7% in 2020 and rebound 4.0% in 2021, compared to a 6.5% contraction for 2020 and 5.0% growth for 2021 in its June’s projection. |
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UK leather goods retailer Aspinal of London Limited has recruited KPMG to launch a CVA proposal as a result of COVID-19 pandemic, which would result in possible stores closure. Will Bright, the proposed nominee of the CVA, said the CVA proposal provides Aspinal with a platform from which it can refocus its business on its core online and premium concessions channels, providing a solid and sustainable grounding for the future. The retailer has 10 stores across the country and an online store, employing more than 300 people.
Ironic British fashion retailer New Look has secured landlords’ approval for a restructuring that could save thousands of jobs. Along with moving 402 of its stores over to turnover-based rent agreements of up to 12%, the passage of the CVA means that New Look has also completed a contingent debt-for-equity swap, reducing debt from over GBP 550mn to around GBP 100mn. The retailer has also agreed an extension on its primary working capital facilities with its lenders and a cash injection of GBP 40mn to support its turnaround plan. |
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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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