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| HKECIC Weekly Market News |
| 12 October 2020 |
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| Market Snapshots |
| Asia and Australasia |
Hong Kong: PMI improves in September
The IHS Markit Hong Kong Purchasing Manager’s Index (PMI) came in at 47.7 in September, up from 44.0 in August. The survey suggests that private sector downturn eases in September as some COVID-19 containment measures were relaxed. While PMI hits its three-month high in September, it remains well below the 50.0 no-change level. Firms continued to scale back purchasing activity in line with reduced output. In addition, supply chains remained under pressure as limited freight capacity reportedly contributed to delivery delays. IHS Markit’s Principal Economist Bernard Aw commented that the average PMI for Q3 at 45.4 was only modestly higher than Q2 at 43.5, hinting that the Hong Kong economy will continue to face formidable challenges in the months ahead. The uncertainty surrounding the pandemic trajectory remains a key concern in the absence of an effective vaccine. |
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| Europe |
UK: Central bank Governor says risks to the economy very much on the downside
Andrew Bailey, Bank of England (BoE) Governor, said in an online webinar hosted by the European Commission that UK’s gross domestic product in Q3 was probably 7-10% below its pre-pandemic levels. He warned that risks to the economy were very much on the downside due to a sudden spike in the COVID-19 cases across the country. On a separate note, BoE emphasized in its October’s Financial Policy Summary and Record that the recent increases in COVID-19 cases, and associated public health measures, have the potential to weigh further on economic activity. The number of daily COVID-19 cases is rapidly rising across the nation, especially since the beginning of September 2020. Official figures show that there have been more than 600,000 confirmed cases so far in the UK, costing more than 42,000 lives.
Eurozone: Retail sales rebound in August
Eurozone’s seasonally adjusted volume of retail trade increased by 4.4% mth/mth in August, switching from a drop of 1.8% in July, according to estimates from Eurostat. The authority attributed the facts to some relaxation of COVID-19 containment measures in many member states. Remarkably, sales rebounded for mail orders and internet sales (+12.4%), textiles, clothing and footwear (+7.7%) as well as pharmaceutical and medical goods (+3.2%). While a recovery in retail trade helps stimulating the weakened economy, it faces fresh uncertainties in near future due to a resurgence in COVID-19 infections in some larger member states, including France and Spain. |
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| North America |
US: Talks on stimulus bill continue
Last week, Federal Reserve Chairman Jerome Powell said in a speech that the recovery of US economy has progressed more quickly than generally expected, with unemployment rate running at 50-year lows and personal consumption expenditures (PCE) inflation running near its 2% target. While the passage of the Coronavirus Aid, Relief, and Economic Security (CARE) Act and three other bills in March and April are expected to provide roughly US$ 3 trillion in economic support overall, Powell called for further fiscal and monetary policy actions in order to spur growth and avoid household insolvencies as well as business bankruptcies. Few hours after Powell’s speech, US President Donald Trump announced that he has instructed his representatives to stop negotiating with the Democrats over the fresh fiscal stimulus bill until after the election. However, Trump said during an interview later that talks on the stimulus bill will continue, specifically pointing to airline assistance and US$1,200 stimulus checks. |
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US restaurant chain Ruby Tuesday Inc. has filed for Chapter 11 bankruptcy protection amid the COVID-19 outbreak in order to restructure its debt. CEO Shawn Lederman said in the company’s webpage that the company has reached an understanding with its secured lenders to support its restructuring through financing and an agreement regarding the terms of a plan that will provide a sustainable path forward for the restaurant chain. Ruby Tuesday has permanently closed 185 restaurants that had shut their doors during the pandemic.
Clarks, one of Britain's oldest shoe retailers, is reportedly planning to launch a company voluntary arrangement (CVA) proposal that features stores closure and job cuts as the retailer embarks on a major restructuring scheme. If a deal is completed, it would see the chain's founding family shareholder relinquish majority control for the first time in its 195-year history. Clarks trades from about 345 stores in the UK, employing thousands of people. |
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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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