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HKECIC Weekly Market News
4 January 2021
Market Snapshots
Asia and Australasia
China: PMI remains in expansion territory for 10 months in a row
According to the National Bureau of Statistics (NBS), China’s Manufacturing Purchasing Managers' Index (PMI) stood at 51.9 in December, edging down from 52.1 in November which was the highest level in 2020. A reading above 50 reflects expansion, while a reading below indicates contraction. December reading reflects that China’s PMI has remained in the expansion territory for 10 months in a row. NBS senior statistician Zhao Qinghe said despite the slight fall in the PMI, the overall manufacturing industry maintained a good momentum of steady recovery. However, the PMI for small businesses went down 1.3 points to 48.8. Mr. Zhao explained that small businesses were pressured by higher raw material, distribution and labour costs in December, which reduces their profitability to a certain extent.
Hong Kong: Exports up by 5.6% in November
The Census and Statistics Department reported that the values of Hong Kong's total exports of goods increased 5.6% yr/yr in November, reversing a decrease of 1.1% in October. A Government spokesman said that the value of merchandise exports resumed growth on a year-on-year basis in November, mainly reflecting an improved external trading environment. This was particularly evidenced by the strong performance in exports to the Mainland China (+8.0%). Looking ahead, while the continued strengthening of the Mainland economy should render support to Hong Kong's exports, the sharp deterioration of epidemic situations in many advanced economies of late may slow the pace of global economic recovery in the coming months and constrain Hong Kong's export performance. The development of China-US relations, geopolitical tensions, and the Brexit process also warrant attention.
South Korea: Consumer sentiment dips amid COVID-19 resurgence
The Bank of Korea reported that the Composite Consumer Sentiment Index (CCSI) decreased to 89.8 in December from a 10-month high of 97.9 in November. A CCSI above 100 indicates an improving outlook and below 100 a deteriorating outlook. In particular, both current domestic economic conditions (-16 points to 56) and prospective domestic economic conditions (-10 points to 81) recorded double-digit decreases in December. Consumer confidence deteriorated sharply as a drastic resurgence of the COVID-19 infections sparked tighter social distancing restrictions to curl the spread of the epidemic. The numbers of daily new cases have been hovering at record levels over the past few weeks.
EU: EU and China complete investment agreement negotiations
After rounds of talks, the European Union (EU) and China have concluded a business investment agreement that opens the Chinese market further to EU investors. According to the deal, China will open a variety of industries for EU companies, including automotive, private healthcare, cloud computing services and ancillary services for air transport. The European Commission said in a statement that the agreement is of major economic significance, adding that China has committed to an unprecedented level of market access for EU investors, giving European businesses certainty and predictability for their operations. On the other hand, Chinese President Xi Jinping emphasized that the agreement will provide greater market access, higher level of business environment, stronger institutional guarantees and brighter cooperation prospects for mutual investment. The agreement will also greatly boost world economic recovery in the post-pandemic era.
  Corporate News  
  River City Sports Inc, a Canada-based sporting goods retailers, has filed for bankruptcy protection in Canada for debt restructuring. President Ronald Winkler blamed the decision to the impact of the COVID-19 pandemic which has caused significant financial distress on the business. Creditors are set to vote on 13 January 2021 on a proposal for bankruptcy protection.  

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