Macro Asian Economics
abc Global Research
On top of the data
China’s June HSBC PMI and 2Q GDP show signs of a pick-up in activity
Following the flow in Asia
PMIs continue to improve across EM Asia, though new export orders lag Most central banks hold as BNM hikes
Good news from Beijing
17 July 2014 Frederic Neumann Economist The Hongkong and Shanghai Banking Corporation Limited +852 2822 4556
[email protected] Ronald Man Economist The Hongkong and Shanghai Banking Corporation Limited +852 2996 6743
[email protected] Joseph Incalcaterra Economist The Hongkong and Shanghai Banking Corporation Limited +852 2822 4687
[email protected] Rini Sen Economics Associate Bangalore
View HSBC Global Research at: http://www.research.hsbc.com
Issuer of report: The Hongkong and Shanghai Banking Corporation Limited
Disclaimer & Disclosures This report must be read with the disclosures and the analyst certifications in the Disclosure appendix, and with the Disclaimer, which forms part of it
After months of disappointing or hazy data, China seems to have turned a corner. The June HSBC PMI rebounded above the waterline for the first time in nine months, lending credence to the view that the Mainland economy is benefitting from the recent mini-stimulus. While further signs are still needed to ensure a more broad-based recovery (especially on the demand front, which would also provide a boost to the rest of the region), we have reason to believe that momentum will keep up. Recent credit data exceeded expectations; HSBC’s Chief China Economist Qu Hongbin believes that the pick-up in bank lending, coupled with accelerating fiscal expenditure, could keep the economic juices flowing for some time. Elsewhere in Asia, the PMIs show a relatively broad-based improvement – with the exception of Korea, where sentiment deteriorated for the second consecutive month. Unfortunately, EM Asia’s new export orders failed to mirror the pick-up in headline PMIs amid a stubbornly unconvincing global backdrop. Taiwan and India, however, are welcome exceptions, with both showing strong increases in new export orders. Though inflation remains a concern across the region, most central banks have held their key policy rates over the past month, among which: Sri Lanka, Indonesia, Korea, Taiwan, Thailand, The Philippines and Japan. In Malaysia, to the contrary, the BNM hiked rates for the first time in 3 years in order to contain rising financial imbalances (the country has highest household debt-to-GDP ratio in Asia). We expect the BSP in the Philippines to join Malaysia on the tightening cycle when it meets later this month, to combat sticky inflation. In Indonesia, though we don’t expect any imminent tightening, Bank Indonesia seems rather relaxed concerning the risks stemming from robust domestic demand and the potential for subsidy adjustments pledged by Joko Widowo (if he is confirmed as President, as suggested by unofficial polls). A hawkish adjustment of tone may accordingly be warranted in the coming months.
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Macro Asian Economics 17 July 2014
Contents What’s New PMI Heatmaps Indicators
3 5 11
Asia Major Events
25
Australia
26
China
27
Hong Kong
28
GDP
12
India
29
Industrial Production
13
Indonesia
30
Exports
14
Japan
31
Consumer Spending
15
Korea
32
Headline CPI
16
Malaysia
33
Core CPI
17
New Zealand
34
Asset Prices
18
Philippines
35
Money & Credit
19
Singapore
36
Rates
20
Sri Lanka
37
Foreign Exchange
21
Taiwan
38
Global indicators
22
Thailand
39
G7 Indicators
23
Vietnam
40
Asia Electronics
24
2
Asia Brief
41
Momentum Heatmaps
42
Best of Asian economics research
44
Disclosure appendix
54
Disclaimer
55
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Macro Asian Economics 17 July 2014
What’s New Change in forecast – change in growth bias Australia New Zealand China Hong Kong India Indonesia Japan Korea Malaysia Philippines Singapore Sri Lanka Taiwan Thailand Vietnam
BIAS BIAS BIAS CHANGE BIAS BIAS BIAS CHANGE BIAS BIAS BIAS BIAS BIAS BIAS BIAS
Retail sales fell and the trade deficit widened in May, although house price growth is picking up again Business surveys and housing market indicators have weakened recently 2Q growth will pick up sequentially on the back of stronger investment. We see stronger recovery in 3Q with overall growth at 7.4% in 2014 Based on lower than expected 1Q GDP and weak high frequency indicators, we have revised down our 2014 growth forecast to 2.9% y-o-y A stable majority government has lifted medium term growth prospects. Upside in the near term due to strong PMIs and factory output We retain our growth forecast of 5.2% for 2014, though upside risks are emerging amid signs of a rebound in domestic activity Both supply-side and demand-side data for May show that post-VAT hike household spending remains depressed Korea adopted the 2008 system of national accounts and we raised our 2014 GDP forecast from 3.2% to 3.4% on statistical grounds We maintain our 2014 growth forecast of 5.2% as domestic activity continues to power on above long-term trends Inflation slowed to 4.4% y-o-y in June from 4.5% y-o-y in May; Fiscal spending contracted in May and April There are downside risks to our 2014 GDP forecast of 3.6% following weak 2Q14 growth Upside risk to growth thanks to additional monetary policy stimulus and improving external demand We remain comfortable with our 2014 GDP forecast of 3.1% y-o-y based on supportive external demand and strong domestic environment Government’s measures and stronger private sentiment lift near-term growth outlook but sustaining the momentum will stay a challenge HSBC PMI expanded in June but the pace eased to 52.3 from 52.5; the manufacturing sector accelerated to 9.1% y-o-y in Q2
Source: HSBC
Data surprises Australia New Zealand China Hong Kong India Indonesia Japan Korea Malaysia Philippines Singapore Sri Lanka Taiwan Thailand Vietnam
Retail sales fell by 0.5% m-o-m in May (market expected flat) and trade deficit widened to -AUD1.9bn (market expected -AUD0.2bn) Housing prices have fallen in recent months, declining by 1.2% in May and 0.3% in June June CPI rose 2.3% y-o-y (vs. BBG consensus: 2.4%) Hong Kong retail sales continue to disappoint, with Jan-May sales values 0.2% lower compared with the same period last year May IP rose 4.7% y-o-y vs. consensus expectations of 3.6% y-o-y. June CPI came in lower than expected (7.3% y-o-y vs. 7.7% consensus) The May trade balance posted a modest surplus of USD70m, against market expectations for a USD100m deficit Real household spending plunged 8.0% y-o-y in May, much worse than the 2.3% y-o-y drop expected by markets Export growth in June increased 2.5% y-o-y and was below market expectations of 5.1% BNM hiked its Overnight Policy Rate by 25bps to 3.25%, the first hike in three years. Although we expected a hike, the market had been divided. Fiscal spending contracted in May and April; the supreme court ruling on the DAP suggests that expenditure will be slow in H2 2014 2Q14 GDP declined by 0.8% q-o-q saar (2.1% y-o-y) due to drag from the manufacturing sector, which declined by 19.4% sequentially during 2Q. June CPI inflation rose 2.8% y-o-y, below consensus expectation of 3.0 % y-o-y June trade surplus narrowed to USD1.9bn from USD5.3bn in May (Bbg consensus: USD3.7bn) as oil imports rebounded from a one-off disruption May export growth fell more than expected by 2.1% y-o-y and the current account ran a deficit of USD0.66bn due to income remittance and weak tourism Headline inflation accelerated in June but is still low at 5.0% y-o-y; we expect the SBV to hold policy rate steady at 5.0%
Source: Bloomberg, HSBC
Did you know? Catch me if you can: Korea’s average internet connection speed is the highest in Asia
Av g. Mbps 25
Av g. Mbps 25
20
20
15
15
10
10
5
5
0
0 IN
VN
PH
ID
BZ
CH
MA
TU
TH IT Q1'14 avg. Mbps
GE
SI
UK
US
HK
JN
SK
Source: Akamai’s State of the Internet, Q1 2014 Report, Volume 7, Number 1, HSBC
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Macro Asian Economics 17 July 2014
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Macro Asian Economics 17 July 2014
PMI Heatmaps June 2014 Manufacturing PMI
Japan China South Korea Taiwan India India
Hong Kong* Thailand Vietnam
Philippines
Malaysia Singapore
Sri Lanka Indonesia
PMI not reported Expanding and stronger Expanding but weaker Contracting and weaker Contracting but improving
Australia
New Zealand
Source: Markit, HSBC. * Whole Economy PMI.
5
6
Manufacturing PMIs
PMI May 14
Apr 14
Jun 14
Output May 14
Apr 14
Jun 14
Australia New Zealand China HSBC China NBS India Indonesia Japan Korea Singapore Taiwan Vietnam
48.9 53.3 50.7 51.0 51.5 52.7 51.5 48.4 50.5 54.0 52.3
49.2 52.6 49.4 50.8 51.4 52.4 49.9 49.5 50.8 52.4 52.5
44.8 54.3 48.1 50.4 51.3 51.1 49.4 50.2 51.1 52.3 53.1
49.4 55.9 51.8 53.0 52.4 52.5 52.4 46.6 50.3 56.0 52.0
51.6 55.1 49.8 52.8 51.7 52.8 48.9 49.2 51.5 54.3 52.4
42.6 55.1 47.9 52.5 51.7 49.8 46.2 49.8 52.3 54.0 53.7
51.2 50.9 51.8 52.8 53.0 54.2 52.3 48.2 51.0 56.6 53.3
55.1 51.3 50.0 52.3 53.2 54.2 49.6 49.4 52.0 53.5 54.2
41.8 54.2 47.4 51.2 52.5 52.7 47.4 50.0 52.4 54.5 54.9
44.8 49.7 48.1 47.3 51.3 49.1 49.2 46.6 51.7 51.0 47.8
46.1 52.3 49.8 47.1 51.0 50.3 51.5 49.7 49.9 50.8 49.5
49.3 49.5 50.7 47.3 52.7 49.5 50.0 49.6 50.5 48.8 50.3
6.4 1.3 3.8 5.5 1.7 5.1 3.1 1.6 -0.7 5.6 5.5
9.0 -1.0 0.1 5.2 2.2 3.9 -1.9 -0.3 2.1 2.7 4.7
-7.5 4.7 -3.3 3.9 -0.2 3.2 -2.6 0.4 1.9 5.7 4.5
Global US (ISM) US (Markit) UK Germany France Eurozone
52.7 55.3 57.3 57.5 52.0 48.2 51.8
52.1 55.4 56.4 57.0 52.3 49.6 52.2
51.9 54.9 55.4 57.3 54.1 51.2 53.4
54.1 60.0 61.0 59.4 52.8 47.6 52.8
53.4 61.0 59.6 61.0 54.7 50.3 54.3
52.9 55.7 58.2 61.6 58.8 51.7 56.5
54.1 58.9 61.2 61.1 52.2 47.1 51.9
53.1 56.9 58.8 59.5 52.6 48.7 52.3
52.6 55.1 58.9 59.9 54.5 51.8 53.9
49.6 46.5 45.2 47.4 49.0 48.8 48.8
49.8 46.5 47.9 48.4 48.7 47.6 48.6
49.1 53.0 49.1 49.3 47.2 50.4 47.9
4.5 12.4 15.9 13.7 3.3 -1.7 3.1
3.2 10.4 10.9 11.2 3.9 1.1 3.7
3.5 2.1 9.7 10.6 7.3 1.5 6.0
Output prices Jun 14 May 14 Apr 14 Australia New Zealand China HSBC China NBS India Indonesia Japan Korea Singapore Taiwan Vietnam
61.4
61.4
62.8
48.8 50.0 54.0 58.9 55.4 48.9 50.1 52.9 61.1
46.4 48.3 54.6 60.3 55.3 47.9 50.8 52.2 55.6
52.9 60.0 56.4 49.8 47.1 49.2 48.9
51.2 56.5 53.5 48.6 43.8 45.7 45.4
49.9
50.4
46.5
52.5 53.2 49.5 48.9
51.1 54.2 49.2 48.1
50.9 56.0 50.1 47.7
49.2 51.6
48.3 49.8
48.2 49.3
51.3 50.1 55.8 55.2 55.3 49.3 49.4 54.7 58.7
50.9 53.1 50.0 48.6 49.2
54.2 58.0 57.6 50.6 49.4 53.1 51.8
52.1 53.2 50.9 48.6 50.4
50.4 52.7 51.0 48.2 50.3
Notes: above 50 + rising Source: Markit, CEIC, HSBC
Input prices May 14 Apr 14
above 50 + falling
Output minus Input prices Jun 14 May 14 Apr 14
Inventories Jun 14 May 14 Apr 14
New export orders Jun 14 May 14 Apr 14 52.3
47.8
54.2
53.2 49.3 53.7 51.3 49.0 49.4 52.4 54.9 51.4 51.9 56.5 52.2 54.8 51.7 49.1 52.6
-1.4
1.6
0.1
-3.3 -2.0 -5.8 -0.4
-2.9 -4.7 -6.2 -0.9
-3.7 -4.3 -5.3 -0.2
-5.6 -7.1
-4.6 -11.3
-4.0 -6.3
50.7 50.3 55.9 48.1 49.5 49.8 51.2 56.5 50.9
-2.6 4.5 6.2 2.9 3.8
51.1 54.5 50.6 55.8 50.9 47.0 52.4
-5.5 2.6 1.5 -4.5 -1.5
-6.0 2.9 3.9 -1.1 1.4
below 50 + falling
below 50 + rising
New orders-Inventory Jun 14 May 14 Apr 14
Employment Jun 14 May 14 Apr 14
48.9 49.1 53.0 50.9 49.1 49.9 52.5 54.8 53.7
45.5 52.9 48.7 48.6 50.3 50.5 50.6 50.2 50.6 52.1 50.7
40.8 53.5 47.4 48.2 50.6 49.5 51.7 50.6 49.3 51.7 50.5
43.6 54.0 47.9 48.3 50.2 50.2 53.8 50.9 49.7 50.8 52.2
51.2 57.0 51.7 54.9 52.0 51.1 53.3
51.0 52.8 54.0 55.8 49.9 47.1 50.3
50.8 52.8 53.7 54.4 50.2 48.7 50.5
51.5 54.7 53.7 55.4 51.1 49.6 51.3
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Global US (ISM) US (Markit) UK Germany France Eurozone
Jun 14
New orders May 14 Apr 14
Macro Asian Economics 17 July 2014
Jun 14
Non-manufacturing/service PMIs
Australia China (HSBC) China (NBS) Hong Kong India Japan
Jun 14 46.4 51.4 50.4 49.3 50.1 49.5
Employment May 14 Apr 14 45.8 47.7 50.3 50.3 50.9 50.2 48.4 49.5 49.9 49.8 51.6 51.8
Jun 14 49.3 53.8 50.7 46.2 54.3 51.6
New Business May 14 Apr 14 52.0 49.8 51.2 51.4 52.7 50.8 46.0 47.2 50.5 48.4 49.2 48.8
Outstanding business Jun 14 May 14 Apr 14 50.4
49.6
49.7
53.8 48.8
53.6 50.2
52.1 50.2
Global Eurozone France Germany UK US (Markit)
55.8 52.8 48.2 54.6 57.7 61.0
54.5 53.2 49.1 56.0 58.6 58.1
52.7 53.1 50.4 54.7 58.7 55.0
53.2 50.9 48.3 52.8 58.8 56.1
51.8 50.9 48.4 53.0 56.2 52.8
51.2 50.5 49.0 52.4 56.0 51.2
56.5 53.6 49.9 54.4 60.5 60.8
54.7 52.8 48.0 54.7 58.1 58.7
53.0 52.3 49.4 52.4 58.2 55.1
50.6 49.9 49.4 49.2 54.4
51.2 50.1 49.8 48.6 52.7
48.9 50.0 51.5 48.5 50.2
US (ISM non-mfg)
57.5
62.1
60.9
54.4
52.4
51.3
61.2
60.5
58.2
53.0
54.0
49.0
Jun 14 57.3 52.2 56.0 53.8 54.5 53.2
Australia China (HSBC) China (NBS) Hong Kong India Japan Global Eurozone France Germany UK US (Markit) US (ISM non-mfg)
55.2 54.9 54.2 54.6 55.4 56.5 61.2
Input prices May 14 Apr 14 58.5 60.7 51.6 51.2 54.5 52.4 51.5 53.2 52.7 53.9 54.4 54.6 55.1 54.2 53.0 56.3 56.4 56.3 61.4
60
Serv ices PMI Business Activity
Index 60
50.4 5545.9 49.5 5053.8 48.8
49.6 47.1 49.3 53.6 50.2
49.7 47.2 50.6 52.1 50.2
55
50.6 49.9 3549.4 49.2 3054.4
51.2 50.1 49.8 48.6 52.7
48.9 50.0 51.5 48.5 50.2
40
45 40
53.0
CH
HK
54.0
IN
49.0
above 50 + falling below 50 + falling Unchanged above 50
50 45
35 30 JN
WD Latest
EU
FR
GE
UK
US (ISM) US (markit)
Long Term average
below 50 + rising Unchanged below 50
Source: Markit, HSBC; HK PMI services stands for whole economy PMI, business activity for output, New business for New orders and Outstanding business for backlogs of work, US data is ISM non-manufacturing
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Notes: above 50 + rising
54.6 52.6 52.1 54.0 54.0 55.9 60.8
Index Outstanding Business 65 14 Jun May 14 Apr 14
Macro Asian Economics 17 July 2014
Business activity Jun 14 May 14 Apr 14 47.6 49.9 48.6 53.1 50.7 51.4 55.0 55.5 54.8 50.1 49.1 49.7 54.4 50.2 48.5 49.0 49.3 46.4
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Macro Asian Economics 17 July 2014
PMI charts Chart 1: Global PMI and Asia ex Japan Business Index
Index 60
Index 60
55
55
50
50
45
45
40
40
35
35
30 Jun-00
Jun-02
Jun-04 Jun-06 Global manufacturing PMI
Jun-08 Jun-10 Jun-12 Asia Business Index (ex Japan)
30 Jun-14
NB: Asia Business Index is a composite of available PMI and similar surveys. Source: Markit, CEIC, HSBC
Chart 2: Asia ex Japan New orders minus Inventories and IP growth
Index 10 8 6 4 2 0 -2 -4 -6 -8 -10 Jun-07
Jun-08
Jun-09
Jun-10
Jun-11
Asia ex JP new orders minus inventories (LHS)
Jun-12
Jun-13
% 3m/3m 10 8 6 4 2 0 -2 -4 -6 -8 -10 Jun-14
IP %3m/3m, Asia simple avg. ex HK & JP (RHS)
Source: Markit, CEIC, HSBC
Chart 3: US ISM New orders minus Inventories and Asian export growth
Index 35 30 25 20 15 10 5 0 -5 -10 -15 -20 -25 Jun-00
% y -o-y
Jun-02
Jun-04
Jun-06
US ISM New orders minus Inventories (LHS) NB: Exports series is simple regional average. Source: Markit, CEIC, HSBC
8
Jun-08
Jun-10
Jun-12
Exports sa, Asia ex JP, simple, % 3m/3m (RHS)
35 30 25 20 15 10 5 0 -5 -10 -15 -20 -25 Jun-14
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Macro Asian Economics 17 July 2014
Chart 4: Asia ex Japan New Export orders and New orders
Index 65
Index 65
60
60
55
55
50
50
45
45
40
40
35
35
30 Jun-07
30 Jun-08
Jun-09
Jun-10
Jun-11
Asia ex JP: New Export Orders
Jun-12
Jun-13
Jun-14
Asia ex JP New Orders
Source: Markit, CEIC, HSBC
Chart 5: Asia ex Japan Input and Output prices
75
Index
Index 75
70
70
65
65
60
60
55
55
50
50
45
45
40
40
35
35
30 Jun-02
Jun-04
Jun-06
Jun-08
Asia ex JP: Output prices
Jun-10
30 Jun-14
Jun-12
Asia ex JP: Input prices
Source: Markit, CEIC, HSBC
Chart 6: Asia ex Japan employment measure and retail sales growth
Index 56 54 52 50 48 46 44 Jun-04
Jun-05
Jun-06
Jun-07
Jun-08
Asia ex Japan: PMI employment index
Jun-09
Jun-10
Jun-11
Jun-12
Jun-13
% y -o-y 24 20 16 12 8 4 0 -4 -8 -12 -16 -20 -24 Jun-14
Real retail sales for Asia ex JP (% y-o-y, simpl avg., RHS)
Source: Markit, CEIC, HSBC
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Macro Asian Economics 17 July 2014
Latest monthly CPI (% y-o-y)
Japan China South Korea Taiwan India India
Hong Kong* Thailand Vietnam
Philippines
Malaysia Sri Lanka Indonesia
Singapore
Australia
Above consensus At par with consensus Below consensus Source: CEIC, Bloomberg, HSBC. * Quarterly data
10
New Zealand
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Macro Asian Economics 17 July 2014
Indicators Latest export growth (% y-o-y)
Japan China South Korea Taiwan India India
Hong Kong* Thailand Vietnam
Philippines
Malaysia Singapore
Sri Lanka Indonesia
Australia
Consensus not available
New Zealand
Above consensus At par with consensus Below consensus Source: CEIC, Bloomberg, HSBC
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Macro Asian Economics 17 July 2014
GDP GDP (red denotes an improvement, grey denotes a deterioration or unchanged from previous reading; ▲,▼, ◄►denotes relative to consensus)
Jun-14 Australia New Zealand China Hong Kong India Indonesia Japan Korea Malay sia Philippines Singapore Sri Lanka Taiw an Thailand Vietnam
7.5
2.1
5.5
% y-o-y Mar-14 Dec-13 3.5 2.7 3.8 3.3 7.4 7.7 2.5 2.9 4.6 4.6 5.2 5.7 3.0 2.5 3.9 3.7 6.2 5.1 6.3 5.7 4.7 4.9 7.8 8.2 3.1 2.9 -0.6 0.6 4.8 6.0
% q-o-q sa Mar-14 Dec-13 1.1 0.8 1.3 0.7 1.5 2.0 0.2 0.9 1.2 1.1 1.2 1.4 1.6 0.1 0.9 0.9 1.1 1.8 1.2 1.7 0.4 1.7 1.8 2.0 0.5 1.8 -2.1 0.1 -0.9 2.2
Jun-14
Sep-13 2.3 3.4 7.8 3.0 5.2 5.6 2.3 3.4 5.0 7.0 5.0 7.8 1.3 2.7 5.5
2.0
-0.2
2.1
Sep-13 0.7 1.0 2.2 0.8 1.3 1.3 0.3 1.1 1.5 1.0 0.2 2.0 0.0 1.5 2.0
Source: Thomson Reuters Datastream, CEIC, HSBC; ▲,▼, ◄► denotes above, below or no-change from Bloomberg consensus respectively
Asia GDP (% y-o-y, weighted average)
Asia GDP (% y-o-y)
% y -o-y 12 9
9
6
6
3
3
0
0
-3 Mar-08
% y -o-y % y -o-y 8 7 6 5 4 3 2 1 0 -1 TH HK JN TA AU NZ SK IN SI VN ID PH MA CH SL
% y -o-y 12
-3 Mar-09
Mar-10
Mar-11
Mar-12
Asia ex JN ex CH
Mar-13
Mar-14
Mar-14
Asia ex JN
Source: CEIC, HSBC
% y-o-y Australia New Zealand China Hong Kong India Indonesia Japan Korea Malaysia Philippines Singapore Sri Lanka Taiwan Thailand Vietnam Asia Asia x JN Asia x JN x CH ASEAN
Jun-14
Source: Thomson Reuters Datastream, CEIC, HSBC
2013
2014f
2015f
1Q14
2Q14e
3Q14f
4Q14f
1Q15f
2Q15f
3Q15f
2.4 2.7 7.7 2.9 4.7 5.8 1.5 3.0 4.7 7.2 3.9 7.2 2.1 2.9 5.4 5.2 6.3 4.3 5.1
2.8 (3.1) 3.5 (3.6) 7.4 (7.3) 2.9 (3.3) 5.3 (5.4) 5.2 (5.3) 1.4 (1.5) 3.4 (3.6) 5.2 (5.3) 5.9 (6.4) 3.6 (3.8) 7.4 (7.3) 3.1 (3.2) 1.4 (1.3) 5.5 (5.6) 5.0 (5.0) 6.2 (6.2) 4.4 (4.5) 4.5 (4.6)
3.2 (3.0) 3.0 (3.0) 7.7 (7.1) 3.7 (3.5) 6.3 (6.2) 6.0 (5.7) 1.3 (1.2) 3.7 (3.7) 5.0 (5.1) 6.1 (6.3) 4.1 (4.0) 7.2 (7.1) 3.4 (3.6) 5.0 (4.2) 5.8 (5.9) 5.4 (5.0) 6.7 (6.3) 5.2 (5.0) 5.5 (5.3)
3.5 3.8 7.4 2.5 4.6 5.2 3.0 3.9 6.2 5.7 4.7 7.8 3.1 -0.6 4.8 5.4 6.1 4.2 4.4
2.7 3.9 7.5 3.0 5.0 5.2 0.5 3.6 5.7 5.6 2.1 7.6 2.9 0.7 5.5 4.7 6.1 4.3 4.3
2.6 3.5 7.3 2.9 4.8 5.2 0.7 3.0 5.0 6.2 3.7 7.3 3.0 2.5 5.6 4.7 6.0 4.2 4.7
2.5 3.2 7.6 3.1 5.4 5.2 1.2 3.0 4.1 6.2 2.8 6.9 3.2 2.9 6.0 5.0 6.3 4.4 4.6
2.4 3.1 7.8 3.1 5.9 5.7 0.2 2.8 4.8 6.1 3.4 7.2 3.2 7.3 5.5 5.1 6.6 4.8 5.6
3.1 3.0 7.8 3.9 5.9 5.9 2.1 3.7 4.7 6.0 4.0 7.2 3.7 5.3 5.7 5.6 6.7 5.0 5.4
3.5 2.9 7.6 3.8 6.0 6.2 1.9 3.9 5.1 6.3 4.4 7.3 3.7 4.9 5.9 5.5 6.6 5.2 5.6
NB: Numbers in parenthesis are consensus as of Jun 2014; Regional aggregates are nominal GDP USD weighted, Asia excludes Australia and New Zealand Source: Thomson Reuters Datastream, CEIC, HSBC, Consensus Economics
12
8 7 6 5 4 3 2 1 0 -1
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Macro Asian Economics 17 July 2014
Industrial Production IP (red denotes an improvement, grey denotes a deterioration or unchanged from previous reading; ▲,▼, ◄► denotes relative to consensus) % y-o-y China India Indonesia Japan Korea Malay sia Philippines Singapore Sri Lanka Taiw an Thailand Vietnam
Jun-14 9.2
Australia* New Zealand* Hong Kong*
May-14 8.8 4.7 2.9 0.8 -2.1 6.1 13.8 -2.5
12.4 1Q14 5.5 3.4 2.1
Apr-14 8.7 3.4 4.0 3.8 2.5 4.9 12.9 5.3 -0.3 5.3 -4.1 8.3 3Q13 2.1 0.7 -0.9
5.2 -4.1 6.4 4Q13 2.4 2.8 0.5
Jun-14 0.9
Mar-14 8.8 -0.5 4.9 7.4 2.8 4.3 2.0 12.1 5.1 3.2 -10.5 4.1 2Q13 5.1 0.3 0.3
3.7 1Q14 3.4 1.0 -0.9
% q-o-q, sa/ % m-o-m, sa May-14 Apr-14 0.7 0.6 0.0 1.5 0.2 0.1 -0.5 -0.7 -2.7 -0.1 1.7 1.4 2.8 12.4 -5.7 -4.0 -1.3 0.8 2.1 1.1 1.2 -0.9 3.2 4Q13 3Q13 0.9 0.9 2.4 0.6 -1.1 -0.2
Mar-14 -4.7 1.1 0.7 -0.1 1.1 -0.3 -6.2 5.8 0.2 -1.9 -2.8 1.7 2Q13 0.4 -0.7 0.3
Source: Thomson Reuters Datastream, CEIC, HSBC; * Australia, New Zealand and Hong Kong IP are available on a quarterly basis, rest are monthly data, ▲,▼, ◄► denotes above, below or no-change from Bloomberg consensus respectively
Asia IP (% y-o-y, weighted average)
% y -o-y 50 40 30 20 10 0 -10 -20 Apr-08 Apr-09
Asia IP (% y-o-y)
% y -o-y
Apr-10 Apr-11 Asia ex JN ex CH
Apr-12
Apr-13 Asia ex JN
% y -o-y % y -o-y 14 14 12 12 10 10 8 8 6 6 4 4 2 2 0 0 -2 -2 -4 -4 TH SI SK JN HK ID NZ IN TA AU MA VN CH PH
50 40 30 20 10 0 -10 -20
Apr-14
Apr-14/4Q13
Source: CEIC, HSBC
May-14/1Q14
Source: Thomson Reuters Datastream, CEIC, HSBC
% y-o-y
2013
2014f
2015f
1Q14
2Q14e
3Q14f
4Q14f
1Q15f
2Q15f
3Q15f
Australia New Zealand China Hong Kong India Indonesia Japan Korea Malaysia Philippines Singapore Sri Lanka Taiwan Thailand Asia Asia x JN Asia x JN x CH ASEAN
3.7 1.5 9.7 -0.3 -0.1 6.0 -0.8 0.1 3.3 10.3 1.7 0.9 0.7 -3.2 4.6 6.4 1.5 4.0
0.9 3.7 9.1 2.2 3.1 4.1 4.7 2.9 3.4 7.7 6.1 5.2 1.3 -3.2 6.2 6.6 3.0 3.5
0.5 1.1 9.4 0.5 6.4 5.0 0.9 4.5 5.0 8.0 4.2 7.3 1.6 7.8 6.1 7.7 5.2 5.8
5.7 3.8 9.1 2.1 -0.4 3.8 8.3 1.4 4.8 6.8 9.8 4.4 2.4 -7.1 6.6 6.1 1.7 3.2
-1.6 4.5 8.9 2.5 2.5 4.2 3.5 4.5 3.0 8.0 5.6 4.6 1.3 -1.7 5.8 6.6 3.3 3.7
-0.2 3.1 9.1 2.2 1.4 4.2 3.5 2.9 3.3 8.0 5.5 5.4 2.1 -2.0 5.8 6.5 2.7 3.7
-0.1 1.3 9.2 2.0 3.5 4.2 3.5 2.9 2.4 8.0 4.1 6.4 -0.4 -1.6 5.9 6.7 3.0 3.4
4.1 1.3 9.5 2.2 4.8 4.7 0.0 2.4 4.8 8.0 3.0 7.5 0.6 5.2 5.5 7.3 4.0 5.0
4.1 1.2 9.4 2.2 5.5 4.9 1.1 4.6 4.7 8.0 4.3 7.5 1.5 8.5 6.0 7.6 5.0 5.8
4.1 1.1 9.2 2.2 5.7 5.2 1.3 5.0 5.1 8.0 4.7 7.0 2.0 8.7 6.1 7.6 5.3 6.1
Source: Thomson Reuters Datastream, CEIC, HSBC *NB: regional aggregates are nominal GDP USD weighted, Asia excludes Australia and New Zealand; India annual numbers are fiscal year.
13
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Macro Asian Economics 17 July 2014
Exports Exports (red denotes an improvement, grey denotes a deterioration or unchanged from previous reading; ▲,▼, ◄►denotes relative to consensus)
% y-o-y Jun-14 Australia* New Zealand* China Hong Kong India Indonesia Japan* Korea Malay sia Philippines Singapore Sri Lanka Taiw an Thailand Vietnam
7.2
2.5
1.2
May-14 2.1 13.0 7.0 5.1 12.4 -8.1 -2.7 -1.0 11.6 6.9 3.8
9.9
1.4 -1.2 6.3
Apr-14 9.1 12.5 0.8 -1.5 9.6 -3.2 5.1 9.0 10.1 1.3 3.4 9.4 6.2 -0.9 30.3
Mar-14 13.1 14.2 -6.6 3.4 -4.8 1.1 1.8 3.7 2.3 12.4 -3.4 28.6 1.9 -2.7 11.3
Jun-14
-1.9
0.0
1.2 -3.6
% m-o-m, sa May-14 Apr-14 -5.7 -2.6 0.5 -6.9 2.1 4.6 2.1 -4.6 4.8 2.9 -2.0 -1.9 -1.2 0.0 -3.4 1.7 0.3 4.9 8.5 -5.0 -2.0 9.4 -8.3 -0.5 0.3 2.7 -2.6 -7.2 9.0
Mar-14 -3.6 0.4 5.9 12.4 0.1 -3.7 -1.7 2.5 -5.4 0.2 -11.3 16.2 1.1 1.4 1.1
Source: Thomson Reuters Datastream, CEIC, HSBC; ▲,▼, ◄► denotes above, below or no-change from Bloomberg consensus respectively. *Growth rates are calculated using the export series in local currency terms. Rest are calculated using the export series in USD terms.
Asia exports (% y-o-y, weighted average)
% y -o-y 50 40 30 20 10 0 -10 -20 -30 -40 Apr-08 Apr-09
Asia exports (% y-o-y)
% y -o-y 50 40 30 20 10 0 -10 -20 -30 -40 Apr-10
Apr-11
Asia ex JN
Apr-12
Apr-13
Apr-14
% y -o-y 30
% y -o-y 30
20
20
10
10
0
0
-10
-10 ID HK TH CH PH SI JN IN TA SK AU SL MA NZ VN
Asia ex JN ex CH
Apr-14
Source: CEIC, HSBC
May-14
Source: Thomson Reuters Datastream, CEIC, HSBC
% y-o-y
2013
2014f
2015f
1Q14
2Q14e
3Q14f
4Q14f
1Q15f
2Q15f
3Q15f
Australia* New Zealand* China Hong Kong India Indonesia Japan Korea Malaysia Philippines Singapore Sri Lanka Taiwan Thailand Vietnam Asia Asia x JN Asia x JN x CH ASEAN
5.9 3.1 7.8 15.5 3.9 -2.7 -10.5 2.3 -1.0 -3.6 0.2 7.4 1.4 -0.2 15.3 1.7 5.6 2.2 -1.7
10.8 8.4 6.2 3.4 7.4 -2.0 4.4 5.5 7.2 7.8 3.8 9.4 3.5 2.5 15.9 5.4 5.7 4.9 2.1
6.3 1.2 9.1 3.4 8.7 -0.7 8.8 8.6 7.8 8.0 8.6 11.2 4.8 6.8 14.8 8.3 8.1 6.7 4.1
14.9 0.5 -3.5 0.6 1.4 -1.8 -3.6 4.1 11.0 7.0 5.0 6.8 3.9 -0.8 12.0 -1.6 -0.9 2.7 2.2
10.3 5.3 7.0 3.7 7.2 -2.3 6.0 6.2 8.9 7.0 3.7 14.0 3.5 2.8 22.6 6.2 6.3 5.3 2.2
8.8 6.5 11.0 4.5 3.5 -0.6 3.8 5.3 5.6 8.0 4.0 16.0 4.5 5.5 16.7 7.2 8.3 4.3 3.1
8.2 4.4 12.0 4.6 7.5 -3.1 6.3 6.3 4.0 9.0 2.4 16.0 3.1 2.2 15.0 8.4 9.1 4.8 1.2
3.2 3.6 8.0 3.6 9.7 -4.9 6.5 7.3 4.7 8.0 8.3 14.0 3.5 5.0 20.4 7.0 7.2 6.0 1.6
6.7 3.4 9.0 3.3 9.5 -1.0 9.5 8.8 8.9 8.0 7.6 14.0 4.0 7.4 13.1 8.5 8.2 6.9 4.2
7.3 3.4 9.0 3.2 9.3 0.9 9.7 9.2 8.7 8.0 9.0 12.0 4.4 7.3 13.5 8.6 8.3 7.3 5.1
Source: Thomson Reuters Datastream, CEIC, HSBC, Australia and New Zealand data are exports of goods and services; Regional aggregates data are nominal GDP USD weighted, Asia excludes Australia and New Zealand
14
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Macro Asian Economics 17 July 2014
Consumer Spending Consumer spending (red denotes an improvement, grey denotes a deterioration or unchanged from previous reading Retail Sales
% y-o-y Jun-14
Australia China Hong Kong Indonesia Japan Korea Singapore Taiw an Thailand Vietnam
% q-o-q, sa/ % m-o-m, sa
May-14 4.9 12.5 -4.1 15.0 -0.4 2.3
12.4 11.9
Apr-14 6.5 11.9 -9.8 15.9 -4.2 1.3 -9.0 3.3 -6.2 11.5 3Q13 4.5
3.5 24.1 1Q14 3.4
New Zealand*
10.8 4Q13 3.9
Mar-14 4.4 12.2 -1.5 17.0 11.1 2.5 -3.8 3.4 -8.8 6.3 2Q13 3.2
Jun-14
May-14 -0.5 1.2 1.3 0.9 2.5 1.0
0.8 0.5
Apr-14 -0.1 0.9 -2.7 0.8 -7.8 -1.1 -0.7 1.0 0.1 3.6 3Q13 0.8
0.6 14.9 1Q14 0.6
0.6 4Q13 1.2
Mar-14 0.0 0.7 -3.3 0.0 3.8 2.0 -4.0 2.7 1.7 -2.2 2Q13 0.9
Source: Thomson Reuters Datastream, CEIC, HSBC; * New Zealand data available on quarterly basis, rest are monthly data
Asia Retail Sales (% y-o-y, weighted average)
Asia Retail Sales (% y-o-y)
% y -o-y 40
% y -o-y 40
% y -o-y 20
% y -o-y 20
30
30
15
15
20
20
10
10
10
10
0
0
5
5
0
0
-5
-5
-10
-10
-20 Apr-08
-20 Apr-09
Apr-10
Apr-11
Apr-12
Asia ex JN ex CH
Apr-13
Apr-14
HK
Asia ex JN
SI
TH
JN
KR
TA
Apr-14/4Q13
Source: CEIC, HSBC
NZ
AU
VN
CH
ID
May-14/1Q14
Source: Thomson Reuters Datastream, CEIC, HSBC
% y-o-y
Motor Vehicle Sales Jun-14 Australia China Hong Kong India Indonesia Japan Korea
-10
-10
5.2 12.8 0.4 -3.8
May-14 -2.0 8.5 15.3 15.7 -2.6 -1.2 -3.3
% y-o-y Apr-14 -1.8 8.8 15.7 7.8 4.5 -5.5 12.8
Mar-14 -3.0 6.6 -11.3 13.4 17.8 17.4 7.3
Jun-14 Malay sia Philippines Singapore Sri Lanka Taiw an Thailand Vietnam
37.8
16.2
May-14 14.9 23.6 -2.0
Apr-14 15.2 19.9 -6.6
22.3 -37.7 17.3
42.4 -33.2 26.4
Mar-14 3.1 25.4 14.5 2.7 14.6 -46.7 21.8
Source: Thomson Reuters Datastream, CEIC, HSBC
_______________________ Consumer Confidence ________________________ ______________________________ Index _______________________________ Jun-14/4Q13 May-14/ 3Q13 Apr-14/ 2Q13 Mar-14/ 1Q13 Australia New Zealand China Hong Kong* India Indonesia Japan Korea Malay sia Philippines Singapore Taiw an Thailand
93.2
92.9
99.7
99.5
75.6
102.3 75.3
104.8 75.0
107.9 78.9
116.3 38.9 109.2
116.9 38.8 107.2
113.9 39.0 110.2
118.2 39.3 110.2
87.6 75.1
85.6 70.7
83.7 67.8
81.0 68.8
________________________Private Consumption ________________________ ____________ % y-o-y _____________ __________ % q-o-q, sa ___________ 1Q14 4Q13 1Q14 4Q13 2.5 3.6
2.2 3.7
1.6 1.2
1.6 0.4
3.2 2.8 5.3 2.1 2.4 7.4 5.9 1.9 4.3 -4.1
2.4 2.8 5.5 1.6 2.3 8.0 6.2 2.7 1.5 -1.2
1.7 1.4 1.3 0.7 0.6 1.3 1.4 0.3 1.6 -0.1
-0.4 1.0 1.4 0.3 1.0 2.3 1.5 0.7 0.4 -1.0
Source: Thomson Reuters Datastream, CEIC, HSBC; * Hong Kong Consumer confidence is available on a quarterly basis (latest being 4Q-2013), rest are monthly data
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Macro Asian Economics 17 July 2014
Headline CPI Headline CPI (red denotes an improvement, grey denotes a deterioration or unchanged from previous reading; ▲,▼, ◄► denotes relative to consensus) % y-o-y Jun-14 2.3
China Hong Kong India (WPI) India (CPI) Indonesia Japan Korea Malay sia Philippines Singapore Sri Lanka Taiw an Thailand Vietnam
5.4 7.3 6.7
1.7
4.4
2.8 1.6 2.4 5.0 2Q14
Australia* New Zealand*
1.6
May-14 2.5 3.7 6.0 8.3 7.3 3.7 1.7 3.2 4.5 2.7 3.2 1.6 2.6 4.7 1Q14 2.9 1.5
Apr-14 1.8 3.7 5.5 8.6 7.3 3.4 1.5 3.4 4.1 2.5 4.9 1.7 2.4 4.4 4Q13 2.7 1.6
Mar-14 2.4 3.9 6.0 8.3 7.3 1.6 1.3 3.5 3.9 1.2 4.2 1.6 2.1 4.4 3Q13 2.2 1.4
% q-o-q, sa/ % m-o-m, sa May-14 Apr-14 0.7 -0.2 0.1 0.4 0.7 -0.3 0.5 0.6 0.4 0.4 0.5 1.9 0.2 0.1 0.0 0.1 0.7 0.1 0.5 -0.2 -0.1 0.5 0.0 0.2 0.2 0.1 0.4 0.2 1Q14 4Q13 0.5 0.9 0.2 0.4
Jun-14 0.2 0.4 0.2 0.2 0.1 0.1 0.3 0.2 0.0 0.6 2Q14 0.3
Mar-14 0.3 0.1 0.5 0.7 0.4 0.0 0.0 0.3 0.1 0.3 0.5 0.5 0.1 0.0 3Q13 1.0 0.7
Source: Thomson Reuters Datastream, CEIC, HSBC; * Australia and New Zealand CPI are available on a quarterly basis, rest are monthly data; ▲,▼, ◄► denotes above, below or no-change from Bloomberg consensus resp.
Asia CPI (% y-o-y, weighted average)
Asia CPI (% y-o-y)
% y -o-y 10
% y -o-y 10
8
8
6
6
4
4
2
2
0
0
-2 May-08
May-09
May-10 Asia ex JN
May-11
% y -o-y 9
Australia New Zealand China Hong Kong India (WPI) India (CPI) Indonesia Japan Korea Malaysia Philippines Singapore Sri Lanka Taiwan Thailand Vietnam Asia Asia x JN Asia x JN x CH ASEAN
6
6
3
3
0
-2 May-12 May-13 May-14 Asia ex JN ex CH
0 NZ TA KR CH TH AU SI MA SL HK JN PH VN ID IN May-14/1Q14
Source: CEIC, HSBC
% y-o-y
% y -o-y 9
Source: Thomson Reuters Datastream, CEIC, HSBC
2013
2014f
2015f
1Q14
2Q14e
3Q14f
4Q14f
1Q15f
2Q15f
3Q15f
2.4 1.1 2.6 4.3 5.9 9.5 6.4 0.4 1.3 2.1 2.9 2.4 6.9 0.8 2.2 6.6 2.8 3.6 5.0 4.3
2.8 (2.7) 1.9 (1.8) 2.4 (2.5) 3.8 (3.9) 5.2 (5.3) 8.1 (7.8) 5.9 (6.2) 2.9 (2.6) 1.9 (1.8) 3.0 (3.3) 4.4 (4.2) 2.2 (2.2) 5.8 (6.0) 1.5 (1.2) 2.4 (2.4) 5.1 (5.6) 3.3 (3.2) 3.4 (3.4) 4.8 (4.7) 4.3 (4.4)
2.9 (2.6) 2.5 (2.2) 2.9 (2.9) 3.9 (3.6) 6.2 (5.5) 7.7 (7.0) 4.8 (5.7) 2.0 (1.8) 2.9 (2.5) 3.2 (3.6) 4.2 (3.9) 3.1 (2.7) 7.2 (6.7) 1.6 (1.8) 2.6 (2.8) 5.9 (6.8) 3.3 (3.2) 3.7 (3.6) 4.8 (4.6) 4.0 (4.4)
2.9 1.5 2.3 4.1 5.4 8.4 7.8 1.5 1.1 3.5 4.1 1.0 4.2 0.8 2.0 4.8 2.6 3.0 3.9 4.8
3.0 1.6 2.4 3.6 5.7 8.1 7.0 3.4 1.7 3.3 4.4 2.8 3.6 1.6 2.5 4.7 3.1 3.1 4.0 4.8
2.7 1.9 2.4 4.3 4.4 8.4 4.1 3.4 2.1 3.0 4.7 2.5 6.6 1.9 2.5 5.4 3.0 2.9 3.5 3.5
2.7 2.2 2.5 3.3 4.7 7.4 5.1 3.3 2.5 2.3 4.2 2.5 8.9 1.6 2.6 5.6 3.1 3.0 3.7 3.8
2.8 2.5 2.8 3.5 6.2 8.3 4.3 3.3 2.8 1.8 4.1 3.1 8.9 1.6 2.5 5.5 3.3 3.4 4.1 3.4
3.0 2.5 2.9 3.9 6.9 8.0 4.8 1.1 3.1 3.5 4.1 3.2 8.3 1.7 2.5 6.2 3.0 3.6 4.5 3.9
2.9 2.4 2.7 4.0 6.0 7.6 5.0 1.1 2.9 3.8 4.3 3.2 6.2 1.6 2.6 6.5 2.8 3.4 4.2 4.1
NB: Numbers in parenthesis are consensus as of Jun 2014; Regional aggregates data are nominal GDP USD weighted, Asia excludes Australia and New Zealand Source: Thomson Reuters Datastream, CEIC, HSBC, Consensus Economics
16
Jun-14/2Q14
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Macro Asian Economics 17 July 2014
Core CPI Core CPI (red denotes an improvement, grey denotes a deterioration or unchanged from previous reading) % y-o-y China Hong Kong India (Core WPI) India (Core CPI) Indonesia Japan Korea Malay sia Philippines Singapore Sri Lanka Taiw an Thailand Vietnam Australia* New Zealand*
Jun-14 1.7 3.9 7.4 4.8 2.1 2.8 3.5 1.5 1.7 5.2 2Q14 1.6
May-14 1.7 3.7 3.8 7.7 4.8 2.2 2.2 2.3 3.1 1.6
Apr-14 1.6 3.9 3.4 7.7 4.7 2.2 2.3 2.5 2.9 1.9
Mar-14 1.7 3.9 4.0 7.8 4.6 0.6 2.1 2.6 2.8 1.9
Jun-14 0.1
3.3 1.5 1.7 5.0 1Q14 2.6 1.6
3.4 1.2 1.7 5.1 4Q13 2.6 1.6
3.4 1.0 1.3 5.7 3Q13 2.3 1.1
0.4 0.1 0.1 0.8 2Q14
% q-o-q, sa/ % m-o-m, sa May-14 Apr-14 0.2 0.0 0.2 0.2 0.7 -0.8 0.4 0.4 0.4 0.4 0.1 1.8 0.2 0.2 0.2 0.1 0.4 0.2 0.4 -0.3
0.2 0.3 0.3 0.1 0.0
0.3 0.2 0.1 0.5 1Q14 0.5 0.3
0.4
Mar-14 0.1 0.0 0.3 0.7 0.3 -0.1 0.2 0.2 0.0 0.2
0.3 0.2 0.3 0.2 4Q13 0.9 0.6
0.5 0.7 0.1 0.2 3Q13 0.7 0.4
Source: Thomson Reuters Datastream, CEIC, HSBC; * Australia and New Zealand CPI is available on quarterly basis, rest are monthly data; Australia data is trimmed mean inflation
Asia core CPI (% y-o-y, weighted average)
Asia core CPI (% y-o-y)
% y -o-y 8
% y -o-y % y -o-y 8 8 7 7 6 6 5 5 4 4 3 3 2 2 1 1 0 0 TA NZ SI CH TH JN KR MA AU PH SL HK ID VN IN
% y -o-y 8
6
6
4
4
2
2
0
0
-2 -2 May-07 May-08 May-09 May-10 May-11 May-12 May-13 May-14 Asia ex JN Asia ex JN ex CH
May-13/ 4Q13
Source: CEIC, HSBC
Jun-14/ 1Q14
Source: Thomson Reuters Datastream, CEIC, HSBC
% y-o-y
2013
2014f
2015f
1Q14
2Q14e
3Q14f
4Q14f
1Q15f
2Q15f
3Q15f
Australia New Zealand China Hong Kong India (WPI) Indonesia Japan Korea Malaysia Philippines Singapore Sri Lanka Taiwan Thailand Vietnam Asia Asia x JN Asia x JN x CH ASEAN
2.7 1.6 1.7 2.3 2.8 4.4 0.4 1.6 1.4 2.9 2.4 4.5 0.7 1.0 10.4 1.7 2.1 2.7 2.7
2.7 2.1 1.6 0.3 3.9 4.8 2.6 2.3 2.1 3.2 2.6 3.9 1.0 1.6 5.4 2.3 2.2 3.0 3.3
2.9 2.3 1.7 4.6 4.9 4.7 1.9 2.7 2.3 3.5 3.3 4.9 1.1 1.4 5.4 2.4 2.5 3.7 3.5
2.6 1.6 1.8 4.0 3.8 4.6 0.6 1.9 2.5 3.0 2.0 3.3 0.6 1.2 6.0 1.9 3.0 3.0 3.3
2.7 1.6 1.7 3.8 3.7 4.8 3.0 2.2 2.2 2.9 n/a 3.4 1.4 1.7 5.1 3.1 3.1 3.1 3.5
2.7 n/a n/a 4.3 3.8 4.7 3.1 2.6 2.1 3.5 n/a 4.2 1.5 1.8 n/a 3.2 3.3 3.3 3.5
2.6 n/a n/a 3.5 3.7 4.7 3.1 2.4 1.6 3.4 n/a 4.7 1.2 1.7 n/a 3.1 3.1 3.1 3.4
2.9 n/a n/a 3.7 4.2 4.5 3.1 2.8 1.2 3.3 n/a 3.9 1.2 1.5 n/a 3.2 3.3 3.3 3.2
2.9 n/a n/a 4.0 4.9 4.8 1.1 2.8 2.5 3.6 n/a 4.9 1.3 1.4 n/a 2.5 3.7 3.7 3.5
2.9 n/a n/a 3.9 4.9 4.8 1.1 2.6 2.8 3.5 n/a 5.3 1.2 1.5 n/a 2.5 3.6 3.6 3.6
Source: Thomson Reuters Datastream, CEIC, HSBC; Australia data is trimmed mean; Regional aggregates data are nominal GDP USD weighted, Asia excludes Australia and New Zealand
17
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Macro Asian Economics 17 July 2014
Asset Prices Real Estate Prices (red denotes an increase, grey denotes decrease or unchanged)
% y-o-y Jun-14
% m -o-m sa/% q-o-q sa
May-14
Apr-14
Mar-14
Jun-14
May-14
Apr-14
China
-0.7
-0.9
-1.5
0.0
-0.1
Mar-14 0.3
Hong Kong
2.5
2.3
1.6
0.8
0.5
-0.2
Korea
1.5
1.4
1.3
1.1
0.1
0.1
0.1
0.1
New Zealand
8.4
9.7
10.7
10.0
-0.7
-0.3
0.5
1.7
8.0
5.6
1Q14
4Q13
3Q13
Australia
11.4
10.1
India
3.8
3.4
Indonesia
7.9
Malay sia
8.0
Thailand 2Q14
Singapore
-2.8
Taiw an
1.6
0.6
1Q14
4Q13
3Q13
8.3
2.5
3.1
3.4
6.4
2.1
2.4
1.1
11.5
13.5
1.5
1.8
2.3
9.6
12.2
0.3
0.6
3.2
-0.8
1.1
3.9
-1.3
-0.9
0.4
12.2
15.1
15.0
1.5
2.0
0.8
2Q14
-1.1
NB: China: Property price ytd avg; New Zealand: median sales price of dwellings; Hong Kong: Property price index, domestic price; Korea, Malaysia, Thailand, Australia: Housing price Index; India: 15 city average of Housing Price Index, National Housing Bank; Taiwan: Sinyi Residential Property price Index for Taipei area; Indonesia and Singapore: Residential property price Index; India m-o-m data is nsa; Source: CEIC, HSBC, Thomson Reuters Datastream
Real Estate Prices (% y-o-y)
Real Policy Rates (%)
% y -o-y 15
%
% y -o-y 15
%
4
4
3
3
2
2
12
12
9
9
1
1
6
6
0
0
3
3
-1
-1
-2
-2
-3
-3
0
0
-3
-3 SI
CH
KR
HK
IN
ID
Latest
MA
TH
NZ
AU
TA
6 months ago
-4
-4 HK JN SI PH MA AU IN ID BD TH VN TA NZ SK CH SL Last Quarter (1Q-14)
Source: CEIC, Thomson Reuters Datastream, HSBC
2014f (period-end)
Source: CEIC, Thomson Reuters Datastream, HSBC
HSBC Real Policy Rates - (negative readings denoted in red)
Australia New Zealand Bangladesh China Hong Kong India Indonesia Japan Korea Malaysia Philippines Singapore Sri Lanka Taiwan Thailand Vietnam Source: Central Banks, CEIC, HSBC.
18
1Q 14
2Q 14f
3Q 14f
4Q 14f
1Q 15f
2Q 15f
3Q 15f
-0.43 1.25 -0.22 3.70 -3.60 -0.37 -0.26 -1.46 1.37 -0.46 -0.58 -0.58 3.76 1.08 0.02 0.17
-0.54 1.27 -0.25 3.60 -3.10 -0.34 0.48 -3.32 0.81 -0.28 -0.92 -2.40 4.37 0.23 -0.47 0.28
-0.17 1.61 -0.35 3.60 -3.80 -0.18 3.44 -3.37 0.35 0.50 -0.74 -2.10 1.37 -0.07 -0.54 -0.39
-0.20 1.53 -0.06 3.50 -2.80 0.88 2.42 -3.28 -0.01 1.20 -0.24 -2.10 -0.87 0.23 -0.57 -0.63
-0.08 1.48 0.05 3.16 -3.00 -0.01 3.22 -3.23 -0.05 1.73 -0.14 -2.70 -0.44 0.40 -0.48 0.47
-0.03 1.78 0.25 3.10 -3.40 0.24 2.67 -1.05 -0.06 -0.001 -0.13 -2.80 0.48 0.43 -0.26 -0.23
0.32 1.83 -0.03 3.30 -3.00 0.69 2.51 -1.03 0.33 -0.30 -0.28 -2.80 2.57 0.65 -0.15 -0.47
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Macro Asian Economics 17 July 2014
Money & Credit Private Credit (red denotes an improvement, grey denotes a deterioration or unchanged from previous reading) % y-o-y Jun-14 Australia China
14.0
Hong Kong India
13.1
Indonesia
% q-o-q, sa/ % m -o-m, sa
May-14
Apr-14
Mar-14
7.0
6.9
6.8
13.9
13.7
13.9
18.0
18.1
19.0
Jun-14
May-14
Apr-14
Mar-14
0.5
0.5
0.5
1.2
0.9
1.0
1.6
0.4
-1.2
1.1
12.9
13.6
16.6
1.1
-0.1
1.2
17.4
18.5
19.1
0.9
0.9
1.7
1.2
Japan
2.7
2.7
2.5
0.3
0.3
0.1
Korea
6.7
6.6
6.1
0.5
0.6
0.2
Malay sia
9.9
10.2
10.4
0.7
0.4
0.5
Philippines
19.6
19.4
18.3
0.6
1.3
2.3
Singapore
13.0
13.2
13.5
1.1
0.7
0.8
0.0
0.7
0.6
Sri Lanka Taiw an
5.3
Thailand New Zealand*
5.0
4.4
6.1
5.3
0.4
0.5
1Q14
4Q13
3Q13
2Q13
1Q14
4Q13
3Q13
2Q13
4.3
5.1
4.8
4.4
0.6
1.3
1.3
1.0
Source: Thomson Reuters Datastream, CEIC, HSBC; *New Zealand data available on quarterly basis, rest are monthly data
Private Credit Growth (% y-o-y)
Asia Money Supply (% y-o-y)
% y -o-y 25
% y -o-y 25 20
20
15
15
10
10
5
5
0
0 JN NZ TA TH SK AU SL MA SI Latest
IN CH ID HK PH
% y -o-y 30 25 20 15 10 5 0 -5 SI JN TH NZ MA TA KR AU ID
6 months ago
% y-o-y latest
Source: CEIC, HSBC, Thomson Reuters Datastream
% y -o-y 30 25 20 15 10 5 0 IN HK SL CH PH
% 3m/3m saar latest
Source: CEIC, HSBC, Thomson Reuters Datastream
Money Supply (red denotes an improvement, grey denotes a deterioration or unchanged from previous reading) % y-o-y Jun-14 Australia New Zealand China Hong Kong India Indonesia Japan Korea Malay sia Philippines Singapore Sri Lanka Taiw an Thailand
14.7 10.6 3.0
May-14
Apr-14
Mar-14
6.4 5.2 13.4 12.6 12.3 10.5 3.3 6.4 5.6 28.1 -0.2
6.7 5.3 13.2 12.5 11.3 10.9 3.5 5.4 6.3 32.1 1.4 13.9 6.2 5.9
6.6 5.0 12.1 12.1 8.3 10.0 3.6 5.0 6.3 34.7 2.0 15.1 5.9 6.4
6.0 4.4
Jun-14
17.6 14.4 1.3
% 3m/3m saar May-14 Apr-14 6.8 2.1 15.6 12.8 11.9 13.0 1.0 6.1 9.2 9.8 -0.2 6.7 2.1
7.4 4.8 14.3 13.1 9.8 10.3 1.7 6.2 6.9 13.8 2.5 11.8 5.4 3.8
Mar-14 7.3 7.2 13.4 12.1 9.8 7.7 3.1 7.3 3.1 23.0 4.8 12.2 4.4 5.7
Source: Thomson Reuters Datastream, CEIC, HSBC. NB: Australia money supply is M3, the rest is M2
19
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Macro Asian Economics 17 July 2014
Rates Asia Policy rate forecasts % pa, (red denotes rate hikes or HSBC above implied rate, grey denotes rate cuts or HSBC below implied rate) Current Australia New Zealand Bangladesh China Hong Kong India Repo Indonesia Japan Korea Malaysia Philippines Sri Lanka Taiwan Thailand Vietnam
2.50 3.25 7.25 6.00 0.50 8.00 7.50 0.0-0.10 2.50 3.25 3.50 8.00 1.875 2.00 5.00
Last Move/Date
Next MPC
2Q 14
3Q 14f
4Q 14f
1Q 15f
2Q 15f
3M FW
6M FW
12M FW
-25bp (Aug-2013) 5-Aug +25bp (Jun-2014) 24-Jul -50bp (Feb-2013) n/a -31bp (Jul-2012) n/a -100bp (Dec-2008) n/a +25bp (Jan-2014) 5-Aug +25bp (Nov-2013) 14-Aug (Oct-2010) 8-Aug -25bp (May-2013) 14-Aug +25bp (July-2014) 18-Sep -25bp (Oct-2012) 31-Jul -50bp (Jan-2014) 10-25 Aug +12.5bp (Jun-2011) 25-Sep -25bp (Mar-2014) 6-Aug -50bp (Mar-2014) n/a
2.50 3.25 7.25 6.00 0.50 8.00 7.50 0.05 2.50 3.00 3.50 8.00 1.875 2.00 5.00
2.50 3.50 7.25 6.00 0.50 8.25 7.50 0.05 2.50 3.50 4.00 8.00 1.875 2.00 5.00
2.50 3.75 7.25 6.00 0.50 8.25 7.50 0.05 2.50 3.50 4.00 8.00 1.875 2.00 5.00
2.75 4.00 7.25 6.00 0.50 8.25 7.50 0.05 2.75 3.50 4.00 8.50 2.000 2.00 6.00
3.00 4.25 7.25 6.00 0.50 8.25 7.50 0.05 3.00 3.50 4.00 8.75 2.125 2.25 6.00
2.38 3.65 n/a n/a n/a 7.94 n/a n/a 2.40 3.48 n/a n/a 1.980 2.42 n/a
2.34 3.84 n/a n/a n/a 7.93 n/a n/a 2.39 3.46 n/a n/a 2.000 2.08 n/a
2.35 3.66 n/a n/a n/a 7.27 n/a n/a 2.44 3.66 n/a n/a 2.100 2.37 n/a
NB: forecasts in italics; New Zealand and Australia implied rates are OIS swap rates. Singapore implied rates are calculated through 'the Bloomberg FWCM function'; Rest of the implied rates are based on recommendation from our local rates strategy team. For implied rates comparison, 3m compares to 2Q-2014, 6M to 3Q-2014 and 12 months to 1Q-2015; Source: Bloomberg, CEIC, HSBC
Asia nominal vs. core deflated real Policy rate (%)
8
Expected change in Policy rate (bps)
%
%
8
6
6
4
4
2
2
0
0
-2
-2
-4
-4 JN HK TA NZ AU KR MA TH PH VN CH ID Nominal Policy rate (latest)
IN SL
Real Policy rate (core deflated)
Source: Thomson Reuters Datastream, CEIC, HSBC
bps 100
bps 100
75
75
50
50
25
25
0
0 AU CH HK ID JN KR SL TA TH VN IN MA NZ PH Over 6 months Over 12 months
Source: Thomson Reuters Datastream, CEIC, HSBC
HSBC Asia bond yields forecast (% pa) ______________________ 5 yr ____________________ _____________________ 10 yr ____________________ Rates strategy comment Current + 3m + 6m + 9m Current + 3m + 6m + 9m 9m view US UK Euro Australia New Zealand China Hong Kong India Indonesia Japan Korea Malaysia Philippines Singapore Taiwan Thailand
1.7 2.0 0.3 2.8 4.1 3.9 1.4 8.7 7.7 0.1 2.8 3.7 3.5 1.1 1.2 3.2
1.4 2.4 0.2 3.1 4.2 3.8 1.4 8.4 7.7 0.1 3.2 4.2 4.0 1.2 1.1 3.2
1.0 2.4 0.2 3.2 4.4 3.9 1.3 8.1 7.8 0.1 3.3 4.2 4.1 1.1 1.1 3.4
1.5 2.4 0.5 3.7 4.8 4.0 1.5 8.0 7.8 0.1 3.7 4.3 4.1 1.4 1.3 3.7
2.6 2.6 1.2 3.4 4.4 4.1 2.0 8.8 8.0 0.5 3.1 4.0 3.9 2.3 1.6 3.8
2.3 2.9 1.1 3.7 4.5 4.0 2.0 9.0 8.5 0.6 3.3 4.5 4.4 2.3 1.6 3.8
2.1 3.0 1.1 3.8 4.7 4.1 1.9 8.6 8.2 0.7 3.5 4.4 4.5 2.1 1.6 3.9
2.5 2.8 1.4 4.3 5.2 4.3 2.3 8.6 8.1 0.7 3.8 4.6 4.5 2.5 1.8 4.2
Note: Rates strategy recommendations from HSBC: Asia-Pac Rates: When carry meets inflation as of 11 July 2014; forecasts in italics, 3m compares to 3Q-2014, 6M to 4Q-2014 and 12 months to 2Q-2015
20
n/a n/a n/a Steepening Flattening Steepening Neutral Steepening Flattening Flattening Flattening Steepening Flattening Flattening Neutral Steepening
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Macro Asian Economics 17 July 2014
Foreign Exchange HSBC Asia FX forecast (period end, vs. USD) (red denotes appreciation or HSBC above forward rate, grey denotes depreciation or HSBC below forward rate)
Australia New Zealand China Hong Kong India Indonesia Japan Korea Malaysia Philippines Singapore Sri Lanka Taiwan Thailand Vietnam Euro Sterling
Q1 14
Q2 14
Q3 14f
Q4 14f
Q1 15f
Q2 15f
% chg 2014
0.89 0.85 6.22 7.76 60.10 11,404 102.98 1,069 3.28 45.00 1.26 130.73 30.51 32.34 21,098 1.38 1.67
0.93 0.85 6.26 7.80 60.09 11,969 102.00 1,020 3.22 44.80 1.27 130.34 30.20 32.80 21,330 1.34 1.69
0.87 0.86 6.20 7.80 60.00 12,000 103.00 1,010 3.32 45.00 1.28 130.00 30.00 33.40 21,250 1.30 1.65
0.86 0.87 6.14 7.80 60.00 12,250 101.00 1,000 3.33 45.20 1.28 130.00 29.80 34.00 21,250 1.28 1.62
0.86 0.88 6.12 7.80 60.50 12,500 99.00 995 3.35 45.40 1.28 130.00 29.70 34.30 21,250 1.25 1.59
0.86 0.88 6.11 7.80 61.00 12,500 99.00 990 3.35 45.40 1.28 130.00 29.60 34.50 21,500 1.25 1.56
-8.51 -1.14 -0.16 0.65 -0.18 5.60 0.00 -1.96 4.39 3.67 3.23 -0.30 -0.67 5.59 0.24 -5.88 -3.57
3M FW 0.93 0.87 6.19 7.75 60.77 11,730 101.00 1,023 3.20 43.60 1.24 n/a 30.00 32.30 21,407 1.36 1.71
6M FW 0.93 0.87 6.21 7.75 61.73 11,914 101.00 1,026 3.22 43.60 1.24 n/a 29.90 32.40 21,675 1.36 1.71
12M FW 0.92 0.85 6.25 7.75 63.75 12,295 101.00 1,032 3.25 43.80 1.24 n/a 29.70 32.60 22,126 1.36 1.70
NB: forecasts in italics; % change from Jul 11, 2014 to end 4Q 14; FW rates are from Bloomberg FXFC function using forward rate; for forward rate comparison, 3M compares to 3Q-2014, 6M to 4Q-2014, and 12M to 2Q-2015; Source: HSBC, Bloomberg
Asia REER (% y-o-y)
10
Exchange rate- 2014 upside/downside vs. spot rates (%)
% y -o-y
% 8
% y -o-y 10
5
5
0
0
-5
-5
-10
%
8
6
6
4
4
-10
2
2
-15
-15
0
0
-20
-20
-2
ID TH AU MA IN PH CH TA JN SI HK NZ KR Latest 6 months ago
-2 SK TA SL IN CH JN VN HK NZ SG PH MA TH ID AU % change ytd
Source: BIS, HSBC
Source: Bloomberg, HSBC, Spot returns as of Jun 5, 2014
HSBC Asia FX policy sustainability dashboard — (negative readings denoted in red)
Australia New Zealand China Hong Kong India Indonesia Korea Malaysia Philippines Singapore Sri Lanka Taiwan Thailand Vietnam
S.T. ext debt (USD bn)
FX reserves (USD bn)
S.T. debt Cover (%)
C/A 2014f (% of GDP)
C/A 2015f (% of GDP)
n/a n/a 731 788 104 50 151 35 7 n/a 6 118 64 10
61 12 3,948 321 289 108 367 120 81 278 9 423 168 30
n/a n/a 18.5 n/a 36.2 46.3 41.1 29.0 8.6 n/a 64.0 27.9 37.8 33.0
-1.7 -2.8 1.9 3.4 -2.1 -2.8 5.3 5.2 3.0 19.0 -4.8 10.3 2.9 3.3
-1.0 -3.9 1.8 5.7 -2.5 -2.5 4.2 6.1 2.4 21.1 -5.2 7.7 2.6 0.9
______________ Exports % y-o-y _______________ 3mma (Latest) 2014f 2015f -2.2 17.3 5.0 2.4 5.7 -3.4 3.5 8.0 6.8 1.3 14.5 3.2 -1.6 15.5
10.8 8.4 6.2 3.4 7.4 -2.0 5.5 7.2 7.8 3.8 9.4 3.5 2.5 15.9
6.3 1.2 9.1 3.4 8.7 -0.7 8.6 7.8 8.0 8.6 11.2 4.8 6.8 14.8
NB: (1) short term debts are 2014 estimates and FX reserves are the latest released; forecasts in italics; (2) Re-exports are excluded from Taiwan’s export no.s; (3) USD export values are used. Source: HSBC, CEIC.
21
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Macro Asian Economics 17 July 2014
Global indicators Global High Frequency data (red denotes an improvement, grey denotes a deterioration or unchanged from previous reading) _________________________ GDP (% y-o-y) _______________________ 1Q14 4Q13 3Q13 2Q13 US (q-o-q saar) Eurozone Germany Japan Brazil Russia India China South Africa Turkey Mexico
-2.9 0.9 2.3 3.0 1.9 0.9 4.6 7.4 1.8 4.3 1.8
2.6 0.5 1.4 2.5 2.2 2.0 4.6 7.7 2.1 4.4 0.7
4.1 -0.3 0.6 2.3 2.4 1.3 5.2 7.8 1.8 4.4 1.4
2.5 -0.6 0.5 1.2 3.5 1.0 4.7 7.5 1.9 4.5 1.6
_______________________ Exports (% y-o-y) _____________________ Jun-14 May-14 Apr-14 Mar-14 US Eurozone Germany Japan Brazil Russia India China South Africa Turkey Mexico
________________________ IP (% y-o-y) _______________________ May-14 Apr-14 Mar-14 Feb-14 US Eurozone Germany Japan Brazil Russia India China South Africa Turkey Mexico
4.3
3.5
1.0 1.0 -3.1 2.8 4.7 8.8 -3.7 3.8 1.6
2.0 3.8 -5.9 2.4 3.4 8.7 -1.9 4.4 -0.8
4.3 1.2 2.3 7.4 -0.7 1.4 -0.5 8.8 1.0 3.8 3.8
3.8 0.5 4.7 7.0 4.5 2.1 -2.0 8.6 1.6 4.0 0.5
1.0 6.5 7.8 5.4 2.3 9.2 3.8
2.1 0.5 0.9 3.7 6.4 7.6 6.0 2.5 6.6 9.7 3.5
2.0 0.7 1.3 3.4 6.3 7.3 5.5 1.8 6.1 9.4 3.5
1.5 0.5 1.0 1.6 6.2 6.9 6.0 2.4 6.0 8.4 3.8
US Eurozone Germany Japan Brazil Russia India China South Africa Turkey Mexico
0-0.25 0.15
0-0.25 0.25
0-0.25 0.25
0-0.25 0.25
0.04 11.00 7.50 8.00 6.00 5.50 8.75 3.00
0.04 11.00 7.50 8.00 6.00 5.50 9.50 3.50
0.04 11.00 7.50 8.00 6.00 5.50 10.00 3.50
0.04 10.75 7.50 8.00 6.00 5.50 10.00 3.50
US Eurozone Germany Japan Brazil Russia India China South Africa Turkey Mexico
China South Africa
6.1 6.7
1Q14 4.1 17.8
6.3 11.6 6.7 3.5 4.9
6.3 11.6 6.7 3.6 4.9 5.3
4.9
4.8
6.7 11.7 6.7 3.6 5.0 5.4 9.7 4.8
4Q13 4.1 17.5
3Q13 4.0 17.6
2Q13 4.1 18.2
3.6 4.7
0.4 0.0 0.0 0.4 -1.2
3.0 2.8 1.2 -2.7
0.6 -0.2 0.3 -3.4 0.4 -9.0 1.6 0.8 0.0 5.6 1.2
2.0 0.8 6.8 9.6 3.9 1.7 9.6 3.1
2.2 6.5 9.6 3.8 1.7 5.5 9.6 3.0
1.8 1.1 0.7 2.2 6.4 9.4 3.4 1.6 5.5 9.4 3.1
US Eurozone Germany Japan Brazil Russia India China South Africa Turkey Mexico
100.6 101.1 98.7 100.4 98.7 99.3 98.2 99.2 99.6 98.7 98.8
100.5 101.1 98.8 100.7 98.8 99.2 98.1 99.1 99.8 98.5 98.7
100.4 101.1 98.8 100.9 98.8 99.2 98.0 99.0 100.0 98.4 98.8
1.7 0.8 1.4 0.6 6.4 6.0 4.0 1.7 5.5 8.9 2.9
100.4 101.0 98.9 101.1 98.9 99.2 98.0 99.1 100.2 98.5 98.8
__________________ Consumer Confidence Index_________________ Jun-14 May-14 Apr-14 Mar-14 US Eurozone Germany Japan Brazil China Turkey Mexico Russia South Africa
85.2 -7.5 8.6 40.5 103.8 73.7 91.0
82.2 -7.1 8.5 39.2 102.8 102.3 76.0 90.71
81.7 -8.6 8.5 36.6 106.3 104.8 78.5 90.26
83.9 -9.3 8.5 36.9 107.2 107.9 72.7 88.8
1Q14 -11.0 4.0
4Q13 -11.0 -5.7
3Q13 -7.0 -6.9
2Q13 -6.0 -7.8
Note: Japan exports is in local currency, rest are in USD terms; Eurozone retail sales is ex-motor vehicles, Eurozone IP is ex-construction, Germany Consumer confidence is Gfk consumer confidence index, South Africa unemployment rate is average of Black African, coloured, Indian and white, India inflation data is WPI; Source: CEIC, Thomson Reuters Datastream
22
1.5 0.2 0.5 1.1 -0.9 9.2 1.9 0.7 -1.1 -10.8 0.7
____________________ OECD Lead Indicator ___________________ May-14 Apr-14 Mar-14 Feb-14
____________________ Unemployment rate (%) ___________________ Jun-14 May-14 Apr-14 Mar-14 US Eurozone Germany Japan Brazil Russia Turkey Mexico
7.2
-2.7 -4.9 6.7 12.4 7.0
3.6 -0.9 9.8 1.8 -8.8 13.7 -4.8 -6.6 -12.7 12.1 4.4
_____________________ Core CPI (% y-o-y) ____________________ Jun-14 May-14 Apr-14 Mar-14
______________________ Policy rate (%) ______________________ Jun-14 May-14 Apr-14 Mar-14 US Eurozone Germany Japan Brazil Russia India China South Africa Turkey Mexico
-3.2 4.3
3.1 -2.1 5.8 5.1 -4.4 11.4 9.6 0.8 -3.2 7.6 4.1
__________________ Retail Sales (% m-o-m sa) _________________ Jun-14 May-14 Apr-14 Mar-14
________________________ CPI (% y-o-y) _______________________ Jun-14 May-14 Apr-14 Mar-14 US Eurozone Germany Japan Brazil Russia India China South Africa Turkey Mexico
6.0
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Macro Asian Economics 17 July 2014
G7 Indicators German IFO – current assessment versus expectations
G-3 Capital Goods Orders (% y-o-y, non-weighted)
Index 125
Index 125
115
115
105
105
95
95
85
85
75 Jun-04
Jun-06
Jun-08
Jun-10
75 Jun-14
Jun-12
IFO - Current Assessment (LHS)
% y -o-y 20 10 0 -10 -20 -30 -40 May-04
May-06
IFO - Expectation (RHS)
May-08
May-10
May-12
G-3 Capital Goods Orders
Source: CEIC, HSBC
Source: CEIC, HSBC
G-3 Retail Sales (% y-o-y, non-weighted)
G-7 OECD lead indicator vs. Asia ex Japan IP Growth (% y-o-y)
% y -o-y 8 6 4 2 0 -2 -4 -6 -8 -10 Mar-04
Mar-06
Mar-08 Mar-10 G-3 Retail Sales
% y -o-y 8 6 4 2 0 -2 -4 -6 -8 -10 Mar-14
Mar-12
Index
% y -o-y
103
25
101
15
99
5
97
-5
95 May-02
May-04
May-06 May-08 May-10 G7: OECD lead indicator (LHS)
Source: Thomson Reuters Datastream, HSBC
Brent crude oil and Gold prices
IMF Commodity price indices (2005 = 100)
USD/bbl 160
USD/Troy Ounce 2000
140
1800
120
1600
100
1400
80
1200
60 Jan-11
1000 Mar-12
Oct-12
May-13
Brent (LHS)
Dec-13
Jul-14
Index 300 250
250
200
200
150
150
100 100 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Jun-11 Jun-12 Jun-13 Jun-14 Food Price Index (LHS)
Gold (RHS) Source: IMF, HSBC
US and Germany 10 year bond yields
US and EU core CPI
% 4.0
% 4.0
3.5
3.5
3.0
3.0
2.5
2.5
2.0
2.0
1.5
1.5 1.0 Jul-11
Jan-12
Jul-12
US 10-yr bond yield (LHS) Source: Thomson Reuters Datastream, HSBC
Jan-13
-15 May-14
Index 300
Source: Thomson Reuters Datastream, HSBC
1.0 Jan-11
May-12
Asia ex JP (Sim ple) IP growth (RHS)
Source: CEIC, HSBC
Aug-11
% y -o-y 20 10 0 -10 -20 -30 -40 May-14
Jul-13
Jan-14
Jul-14
Germany 10-yr bond yield (RHS)
% y -o-y 2.60 2.35 2.10 1.85 1.60 1.35 1.10 0.85 0.60 Jun-06
Jun-08 Jun-10 US PCE Core CPI (LHS)
Metal Price Index (RHS)
% y -o-y 2.60 2.35 2.10 1.85 1.60 1.35 1.10 0.85 0.60 Jun-12 Jun-14 EU Core CPI (RHS)
Source: Thomson Reuters Datastream, HSBC
23
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Macro Asian Economics 17 July 2014
Asia Electronics The HSBC Asian Electronics Tracker (AET)
Number of standard dev iations from mean Number of standard dev iations from mean 10 10 8 8 6 6 4 4 2 2 0 0 -2 -2 -4 -4 -6 -6 -8 -8 2004 2004 2005 2005 2006 2006 2007 2007 2008 2008 2009 2009 2010 2010 2011 2011 2012 2012 2013 2013 2014 AET Source: CEIC, Markit, HSBC. Note the pink area represents +/- 1 standard error for the “nowcasted” June and July 2014 readings. The series starts from April 2004.
US Semiconductor Equipment book-to-bill ratio
Singapore Electronics PMI
Ratio 1.4
Ratio 1.4
1.2
1.2
1.0
1.0
0.8
0.8
0.6
0.6 0.4
0.4 05
06
07
08
09 10 11 US SEMI book-to-bill
12
13
Index 60
Index
55
55
50
50
45
45
40
40 05
14
06
07
08
09
10
Source: CEIC, HSBC
Philly Semiconductor Index
US Semiconductor shipments worldwide
Index 680 610 540 470 400 330 260 190 06
07
08
09
10
11
12
13
14
14
% y -o-y
40 30 20 10 0 -10 -20 -30 -40
40 30 20 10 0 -10 -20 -30 -40 05
06
07
08
09
10
11
12
13
14
Source: CEIC, HSBC
US electronic imports
24
13
US Semiconductor shipments, 3m rolling avg
Source: CEIC, HSBC
Source: CEIC, HSBC
12
% y -o-y
Philly Semiconductor Index
% y -o-y 40 30 20 10 0 -10 -20 -30 05 06
11
Singapore Electronics PMI
Source: CEIC, HSBC
Index 680 610 540 470 400 330 260 190 05
60
07
Japan, Korea and Taiwan electronic exports
08
09 10 11 US Electronics Imports
12
13
% y -o-y 40 30 20 10 0 -10 -20 -30 14
% y -o-y 90
% y -o-y 90
60
60
30
30
0
0
-30
-30
-60
-60 05
06 07 08 09 Korea Electronic Exports Japan Electronic Exports
Source: CEIC, HSBC
10
11
12 13 14 Taiwan Electronic Exports
abc
Macro Asian Economics 17 July 2014
Asia Major Events Major Events
Japan
BoJ cuts GDP forecast for 2014, holds inflation outlook
China South Korea Taiwan Hong Kong
India Thailand Vietnam
New government presented its maiden budget on July 10; fiscal deficit target maintained at 4.1% of GDP for FY2015
Philippines
'Occupy Central' protests gathered steam in Hong Kong
Malaysia Singapore Sri Lanka Indonesia
PDI-P’s Joko Widodo likely won 52-53% of the popular vote at the July 9 presidential election. The official count will be finalized by 22 July
Australia
New Zealand
Source: Various media resources, HSBC
25
abc
Macro Asian Economics 17 July 2014
Australia
Paul Bloxham, Economist HSBC Australia Limited +612 9255 2635
[email protected]
News Highlights
Indicator
Legislation to remove the carbon tax was introduced into the senate this month, although it has not yet passed. Removing the carbon tax was a key part of the government's election campaign last year. However, while they hold the majority of seats in the lower house, they do not have the balance of power in the senate and are beholden to independent parties. The senate also changed composition this month, with new senators as a result of last year's election. Minority party, the Palmer United Party, hold the balance of power in the senate and have blocked the carbon tax legislation. Amendments are expected which could see the carbon tax removed in coming weeks.
DoR*
Last 12 data points
Unit
RBA Cash Target 1-Jul
%
May Trade Balance 2-Jul
AUD m
May Retail Sales 3-Jul
Data Trends Following above trend GDP growth in Q1, timely indicators suggest some loss of growth momentum in Q2. Retail sales fell by -0.5% in May, to be +4.6% higher y-o-y, as weak consumer sentiment due to the tight Federal budget reduced household's willingness to spend. Falling iron ore prices and a rising AUD also saw Australia's trade balance blow out, with the deficit expanding to -$A1.9bn in May, from -$A0.8bn in April. Nonetheless, recent weeks have seen a lift in consumer sentiment, a pick-up in housing prices and continued positive readings of business conditions and confidence.
Australia GDP
%
2Q 2014 CPI 23-Jul
% y-o-y
* Date of Release
% q-o-q saar 8
58
Index , sa 58
6
6
54
54
4
4
50
50
2
2
46
46
42
42
38
38
34
34
0
0
-2
-2
-4 -4 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 GDP y-o-y (LHS)
GDP q-o-q saar (RHS)
Index , sa
30 30 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 PMI Manufacturing
Source: Thomson Reuters Datastream, HSBC
Source: Markit, HSBC
Australia Inflation v/s Policy rate
Australia NAB Business survey
% y -o-y 8 7 6 5 4 3 2 1 0 05 06
Index 30
20
20
10
10
0
0
Index
8 7 6 5 4 3 2 1 0 07 08 09 Inflation (LHS)
10 11 12 Policy rate (RHS)
13
14
New Orders Index
30
%
Source: Thomson Reuters Datastream, HSBC
26
10-Jul
Australia PMI Manufacturing
% y -o-y 8
`
% m-o-m
Jun Unemployment
-10
-10
-20
-20
-30
-30 01
02
03
04
05
06
Business conditions:actual Source: Thomson Reuters Datastream, HSBC
07
08
09
10
11
12
13
14
Business conditions:expected
abc
Macro Asian Economics 17 July 2014
China
Qu Hongbin, Economist The Hongkong and Shanghai Banking Corporation Limited +852 2822 2025
[email protected] Julia Wang, Economist The Hongkong and Shanghai Banking Corporation Limited +852 3604 3663
[email protected]
News Highlights
Indicator
The Shanghai municipal government released the 2014 Negative List for the SFTZ on July 2. It has brought down the list of sectors where foreign investment is restricted within the FTZ to 139 from 190 previously. Meanwhile, the PBoC announced support for China’s cross-border trade growth with greater export credit coverage and easier rebate process. The PBoC also announced that it will scrap controls over the bid-ask spread of USDCNY trading and allow banks to set rates based on market demand when dealing with retail customers. S Korea and China are holding the 12th round of the bilateral FTA negotiations and wrap up talks by end of the year.
DoR*
Last 12 data Unit
points
Jun HSBC PMI 1-Jul
Index
Jun CPI 9-Jul
% y-o-y
Jun Exports 10-Jul
Data Trends HSBC Manufacturing PMI rose to 50.7 in Jun, the first monthly expansion so far this year. Both output and new orders marked positive growth this month. At 53.1, the HSBC Services PMI also rose in Jun showing signs of a revival in the Chinese economy. Exports grew 7.2% y-o-y in Jun, slightly lower than market expectation. Consequently, trade surplus narrowed to USD31bn from USD35bn in May. Meanwhile, CPI pressures eased again in June to 2.3% y-o-y. This suggests there is little inflationary pressure in the economy. The contraction in PPI continued to ease, helped by favourable base effect.
China GDP
16-Jul
% y-o-y
Jun IP 16-Jul
% y-o-y
* Date of Release
China PMI
% y -o-y 15
% q-o-q saar 25
12
20
9
15
6
10
3
5
0 Dec-06
% y-o-y
2Q 2014 GDP
0 Jun-08
Dec-09
GDP y-o-y (LHS)
Jun-11
Dec-12
Jun-14
PMI Manufacturing
GDP q-o-q saar (RHS)
Source: CEIC, HSBC
Business Activity Index
China HSBC services PMI Jun-14 50.7 51.8 51.8 48.1 3.8 49.9 51.3 -1.4 50.7 48.7
May-14 49.4 49.8 50.0 49.8 0.1 50.4 48.8 1.6 53.2 47.4
>50 + rising >50 + falling <50 + rising unchanged above 50 Unchanged below 50 Source: Markit, HSBC
55 54 53 52 51 50 49 48 47
Source: Markit, HSBC
China HSBC manufacturing PMI PMI Manufacturing Output New Orders Inventories New Orders - Inventory Output Prices Input Prices Output Prices - Input Prices New export orders Employment
Index , sa Index , sa 55 54 53 52 51 50 49 48 47 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14
Apr-14 48.1 47.9 47.4 50.7 -3.3 46.5 46.4 0.1 48.9 47.9
Business Activity Employment New Business Input Prices Outstanding Business Business Expectations
Jun-14 53.1 51.4 53.8 52.2 50.4 59.8
May-14 50.7 50.3 51.2 51.6 49.6 58.1
>50 + rising >50 + falling <50 + rising unchanged above 50 Unchanged below 50
Apr-14 51.4 50.3 51.4 51.2 49.7 60.7
<50 + falling
<50 + falling
Source: Markit, HSBC
27
abc
Macro Asian Economics 17 July 2014
Hong Kong
John Zhu, Economist The Hongkong and Shanghai Banking Corporation Limited
[email protected] +852 2996 6621 Rini Sen, Economics Associate Bangalore
News Highlights
Indicator
HKMA chief Norman Chan reiterated his continued support to the HKD’s peg to the USD as he prepares to begin his second term in October. The HKMA’s quarterly bulletin also revealed that For the banking sector as a whole, total Mainland-related lending increased by 10.8% to HKD2.9bn (14.4% of total assets) at the end of Q1 2014 from HK$2,6bn (13.3% of total assets) at the end of 2013. Hong Kong will join talks with the WTO on the Environmental Goods Agreement, which will seek to eliminate tariffs on a variety of eco-friendly commodities. If implemented, this will likely brighten the city’s export prospects.
DoR*
Last 12 data Unit
points
May Retail Sales 3-Jul
% y-o-y
Jun HSBC PMI 4-Jul
Index
Jun CPI 21-Jul
Data Trends The HSBC Hong Kong PMI rose to 50.1 in Jun, following three consecutive months of contraction. The recovery comes in conjunction with the revival of Manufacturing PMIs in Mainland China. However, retail sales continued to weaken in May, contracting 4.1% y-o-y and 4.7% y-o-y in value and volume terms respectively as tourist arrivals continued to ease and due to base effects from a jump in jewelry sales last year. Price pressures remained stable, with May CPI unchanged at 3.7% y-o-y. The unemployment rate also remained unchanged at 3.1% for the three months ending May.
Hong Kong GDP
% q-o-q saar 16 12 8 4
0 0 -4 -3 -8 -6 -12 -9 -16 -12 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 GDP y-o-y (LHS) GDP q-o-q saar (RHS)
* Date of Release
56
54
54
52
52
50
50
48
48
46 46 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 PMI
HSBC Hong Kong PMI
% y -o-y
%
9
6
6
3
3
0
0
-3
-3 07
08
Inflation (LHS)
28
% y-o-y
56
Hong Kong Inflation v/s Policy rate
Source: CEIC, HSBC
24-Jul
Index , sa 58
Source: Markit, HSBC
06
% y-o-y
Jun Imports
Index , sa 58
Source: CEIC, HSBC
05
24-Jul
HSBC Hong Kong PMI
% y -o-y 12 9 6 3
9
% y-o-y
Jun Exports
09
10
11
12
13
HIBOR-3 months rate (RHS)
14
PMI Output New Orders Inventories New Orders - Inventory Output Prices Input Prices Output Prices - Input Prices New Business from China Employment
New Orders Index
Jun-14 50.1 48.9 49.7 53.6 -3.9 51.4 54.0 -2.6 46.2 49.3
May-14 49.1 49.0 48.7 53.2 -4.5 52.4 51.6 0.8 46.0 48.4
>50 + rising >50 + falling <50 + rising unchanged above 50 Unchanged below 50 Source: CEIC, HSBC
Apr-14 49.7 49.4 50.3 50.0 0.3 51.5 55.5 -3.9 47.2 49.5 <50 + falling
abc
Macro Asian Economics 17 July 2014
India
Frederic Neumann, Economist The Hongkong and Shanghai Banking Corporation Limited +852 2822 4556
[email protected] Prithviraj Srinivas, Economics Associate Bangalore
News Highlights
Indicator
In his maiden budget speech, Mr. Arun Jaitley, the new finance minister said that he will stick with the previous government’s ambitious fiscal deficit target of -4.1% of GDP for the current fiscal year. He also promised to lower the deficit to 3% of GDP by FY 2016/17. The government plans to spend a bit more this year, with additional funding raised through non-tax sources and buoyant indirect tax collections. The new government’s focus on infrastructure was a key highlight, with extra funds allocated for defence, roads and rural housing. Participation of the private sector through PPPs was encouraged in every project and FDI limits in defence and insurance sectors were increased to 49% from 26% currently.
DoR*
Last 12 data Unit
points
Jun Mfg PMI 1-Jul
Index
May IP 11-Jul
% y-o-y
Jun WPI 14-Jul
Data Trends HSBC manufacturing PMI rose marginally, helped by higher output and export orders. Meanwhile, activity in services shot up due to improved confidence and new business flows. May industrial production picked up in annual terms, but slowed sequentially. Manufacturing was the key driver of growth led by demand from consumer goods. CPI and WPI surprised on the downside led by weaker food and fuel. Core CPI slowed too, but core WPI rose slightly. A steep base from last year in food (vegetable price spike) and fuels (depreciation) should keep inflation trending lower visually in the coming months, but the poor progress of monsoon rains this year could halt this downtrend.
India GDP
15-18 Jul
% y-o-y
Jun Imports 15-18 Jul % y-o-y * Date of Release
India PMI
% y -o-y 15
% q-o-q saar 20
12
16
9
12
6
8
3
4
0
0
-3 -4 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 GDP y-o-y (LHS)
PMI Manufacturing
60 58 56 54 52 50 48 46 44
Business Activity Index
Source: Markit, HSBC
HSBC India manufacturing PMI PMI Manufacturing Output New Orders Inventories New Orders - Inventory Output Prices Input Prices Output Prices - Input Prices New export orders Employment
Index , sa Index , sa 60 58 56 54 52 50 48 46 44 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14
GDP q-o-q saar (RHS)
Source: CEIC, HSBC
HSBC India services PMI Jun-14 51.5 52.4 53.0 51.3 1.7 52.5 55.8 -3.3 55.9 50.3
May-14 51.4 51.7 53.2 51.0 2.2 51.1 54.0 -2.9 53.7 50.6
>50 + rising >50 + falling <50 + rising unchanged above 50 Unchanged below 50 Source: Markit, HSBC
% y-o-y
Jun Exports
Apr-14 51.3 51.7 52.5 52.7 -0.2 50.9 54.6 -3.7 53.0 50.2
Business Activity Employment New Business Input Prices Outstanding Business Business Expectations
Jun-14 54.4 50.1 54.3 54.5 53.8 69.8
May-14 50.2 49.9 50.5 52.7 53.6 65.8
>50 + rising >50 + falling <50 + rising unchanged above 50 Unchanged below 50
Apr-14 48.5 49.8 48.4 53.9 52.1 65.8
<50 + falling
<50 + falling
Source: Markit, HSBC
29
abc
Macro Asian Economics 17 July 2014
Indonesia
Su Sian Lim, Economist The Hongkong and Shanghai Banking Corporation Limited, Singapore Branch +65 6658 8963
[email protected] Abanti Bhaumik, Economics Associate Bangalore
News Highlights
Indicator
PDI-P’s Joko Widodo likely won 52-53% of the popular vote at the July 9 presidential election, versus 47-48% for Gerindra’s Prabowo Subianto, according to various quick counts by LSI, CSIS and Indikator Politik. The official count will be finalized by 22 July. Some members of Golkar, which is internally divided on its support for Prabowo, called for the party congress to be brought forward to replace current Chairman Aburizal Bakrie before his term expires in 2015. On the fiscal front, parliament approved a lower oil lifting target for this year of 818,000 barrels per day, from 870,000 previously. The government also pushed ahead with higher electricity tariffs from July 1.
DoR*
Last 12 data Unit
points
Jun Mfg PMI 1-Jul
Index
Jun CPI 1-Jul
% y-o-y
May Exports 1-Jul
Data Trends June CPI eased to an 11-month low of 6.7% y-o-y, as the effects of last June’s fuel price hike started to fade. But core inflation remained stable at 4.8% y-o-y. The merchandise trade balance posted a marginal surplus of USD70mn in May. Both exports and imports declined, by 8.1% y-o-y and 11.4% y-o-y respectively. The non -oil and gas balance returned to a surplus, but the gap in oil products stayed persistent and large at –USD2.4bn. BI held its policy rate at 7.50%, but sounded benign on growth despite better global data and signs of a domestic pickup - HSBC’s June PMI reached a new high, even as new export orders contracted for the first time in five months.
Indonesia GDP
% q-o-q saar 10
8
8
6
6
4
4
2
2
0 0 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 GDP y-o-y (LHS)
Indonesia Inflation v/s Policy rate
HSBC Indonesia manufacturing PMI
% y -o-y 20
%
15
15
12
10
9
5
6
0
3 07
08
09
Inflation (LHS)
30
10-Jul
%
* Date of Release
PMI Manufacturing
GDP q-o-q saar (RHS) Source: Markit, HSBC
Source: CEIC, HSBC
% y-o-y
Reference rate
Index , sa Index , sa 55 55 54 54 53 53 52 52 51 51 50 50 49 49 48 48 47 47 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14
Source: CEIC, HSBC
06
1-Jul
Indonesia PMI Manufacturing
% y -o-y 10
05
% y-o-y
May Imports
10
11
12
Policy rate (RHS)
13
14
PMI Output New Orders Inventories New Orders - Inventory Output Prices Input Prices Output Prices - Input Prices New export orders Employment
New Orders Index
Jun-14 52.7 52.5 54.2 49.1 5.1 53.2 55.2 -2.0 48.1 50.5
May-14 52.4 52.8 54.2 50.3 3.9 54.2 58.9 -4.7 51.3 49.5
>50 + rising >50 + falling <50 + rising unchanged above 50 Unchanged below 50 Source: Markit, HSBC
Apr-14 51.1 49.8 52.7 49.5 3.2 56.0 60.3 -4.3 50.9 50.2 <50 + falling
abc
Macro Asian Economics 17 July 2014
Japan
Izumi Devalier, Economist The Hongkong and Shanghai Banking Corporation Limited +852 2822 1647
[email protected]
News Highlights
Indicator
On 1 July, the Cabinet approved a limited re-interpretation of country’s Constitution to permit Japan’s Self Defence Forces (SDF) to participate for the first time in collective self-defence related activities in the aid of allies. The new interpretation would allow the SDF, in principle, assist other foreign forces in situations where “either the survival and security of Japan or that of its citizens is at risk.” Prime Minister Abe’s constitutional reform push has been controversial. A fresh poll published 4 July by the Yomiuri Shimbun saw the Abe Cabinet’s approval ratings fall to 48% from 57% a month earlier, dipping below 50% for the first time. Though the current level is still higher than the norm for modern Prime Ministers.
DoR*
Last 12 data
Unit
points
Jun Mfg PMI final 1-Jul
Index
May CI-prelim** 7-Jul
Index
Jun Mach Tool Orders 9-Jul
Data Trends Post-tax hike hard data continues to be murky. After plunging 13.6% m-o-m sa in April, the rebound in May retail sales was a weak 4.6%. Demand-side consumption data is similarly worrying: real household spending fell 8.0% y-o-y in May, after dipping 4.6% in April. At 0.5% m-o-m sa, May IP was disappointing. The real trade balance improved in May. But this was because a 2.2% m-o-m sa drop in real exports was offset by an even bigger 2.6% fall in real imports. Business surveys, however, have been more upbeat. Japan’s manufacturing PMI bounced back to 51.5 in June. At 49.0, the services PMI remained a touch below the watermark in June. But an expansion in new orders suggests that the downturn is easing.
Japan GDP
% y-o-y
May IP-final 14-Jul
% y-o-y
Jun Exports 24-Jul
% y-o-y
* Date of Release ** Coincident Index
Japan PMI
% y -o-y 9
% q-o-q saar 15
Index , sa 58
Index , sa
58
10
56
56
3
5
54
54
0
0
52
52
-3
-5
50
50
-6
-10
48
48
-9
-15
46
46
6
-12 -20 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 GDP y-o-y (LHS)
44 44 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 PMI Manufacturing
GDP q-o-q saar (RHS)
Source: CEIC, HSBC
Source: Markit, HSBC
Japan Inflation v/s Policy rate
Japan manufacturing PMI
% y -o-y 4
% 0.8
3
0.6
2
0.4
1
0.2
0
0.0
-1
-0.2
-2
-0.4 -0.6
-3 06
07
08
09
Inflation (LHS) Source: CEIC, HSBC
10
11
12
13
Policy rate (RHS)
14
PMI Output New Orders Inventories New Orders - Inventory Output Prices Input Prices Output Prices - Input Prices New export orders Employment
Business Activity Index
Jun-14 51.5 52.4 52.3 49.2 3.1 49.5 55.3 -5.8 49.5 50.6
May-14 49.9 48.9 49.6 51.5 -1.9 49.2 55.4 -6.2 49.0 51.7
>50 + rising >50 + falling <50 + rising unchanged above 50 Unchanged below 50
Apr-14 49.4 46.2 47.4 50.0 -2.6 50.1 55.3 -5.3 49.1 53.8 <50 + falling
Source: Markit, HSBC
31
abc
Macro Asian Economics 17 July 2014
Korea
Ronald Man, Economist The Hongkong and Shanghai Banking Corporation Limited +852 2996 6743
[email protected]
News Highlights
Indicator
The Bank of Korea held its policy rate at 2.50% for the fourteenth consecutive month on 10 July. But the monetary policy committee made its first non-unanimous decision since May 2013, as one member dissented against the policy rate hold. On the same day, the central bank lowered its 2014 GDP growth forecast from 4.0% to 3.8%, driven by lower projections for private consumption. It also lowered its 2014 CPI forecast from 2.1% to 1.9%. To support the recovery, we expect the Bank of Korea to hold its policy rate at 2.50% for the rest of the year and raise it by 25bp in Q1 2015.
DoR*
Last 12 data Unit
points
Jun Exports 1-Jul
% y-o-y
Jun HSBC PMI 2-Jul
Index
Jun CPI 3-Jul
Data Trends Economic data in Korea stayed weak, with export and industrial production falling below market expectations for the second consecutive month. The HSBC Korea PMI also fell to a ten-month low. We expect real GDP growth to slow from 0.9% q-o-q sa to 0.7% in Q2 2014, primarily on the back of negative shocks from the Sewol ferry incident. While the temporary shocks will weigh on the speed of the domestic recovery, our baseline view remains for the negative output gap in Korea to gradually narrow over the rest of the year as external demand recovers.
% y-o-y
7-Day Repo Rate 5-Jul
%
2Q-14 GDP prelim 12-Jul
% y-o-y
* Date of Release
Korea GDP
Korea PMI Manufacturing
% y -o-y 9
% q-o-q saar 18
6
9
3
0
0 -3
-9
-6 -9 Sep-06
Mar-08
Sep-09
Mar-11
GDP y-o-y (LHS)
-18 Mar-14
Sep-12
56
Index , sa
Index , sa
54
52
52
50
50
48
48
46
46
44
44
42 42 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 PMI Manufacturing
GDP q-o-q saar (RHS)
Source: CEIC, HSBC
Source: Markit, HSBC
Korea Inflation v/s Policy rate
HSBC Korea manufacturing PMI
% y -o-y 7
%
6
6
5
5
4
4
3
3
2
2
1
1 0
0 05
06
07
08
09
Inflation (LHS) Source: CEIC, HSBC
32
7
10
11
12
13
14
56
54
PMI Output New Orders Inventories New Orders - Inventory Output Prices Input Prices Output Prices - Input Prices New export orders Employment
New Orders Index
Jun-14 48.4 46.6 48.2 46.6 1.6 48.9 49.3 -0.4 49.8 50.2
May-14 49.5 49.2 49.4 49.7 -0.3 48.1 48.9 -0.9 49.4 50.6
>50 + rising >50 + falling <50 + rising unchanged above 50 Unchanged below 50
Policy rate (RHS) Source: Markit, HSBC
Apr-14 50.2 49.8 50.0 49.6 0.4 47.7 47.9 -0.2 49.9 50.9 <50 + falling
abc
Macro Asian Economics 17 July 2014
Malaysia
Su Sian Lim, Economist The Hongkong and Shanghai Banking Corporation Limited, Singapore Branch +65 6658 8963
[email protected] Abanti Bhaumik, Economics Associate Bangalore
News Highlights
Indicator
Three Malaysian banks - CIMB Group Holdings, RHB Capital and Malaysia Building Society – on July 10 entered into a 90-day exclusivity agreement to discuss a possible merger. If successful, the CIMB-led entity would have total assets of USD183.1bn, surpassing Malayan Banking as Malaysia’s biggest bank. Elsewhere, state investment fund 1MDB said it would launch a USD3bn IPO in 4Q14. The MOF said details on a new scheme to restrict fuel subsidies based on income and car size will be released in the next six months, with implementation targeted for this year. It also expects the GST to boost its revenues by MYR2.5bn and MYR8bn in 2015 and 2016 respectively.
DoR*
Last 12 data points
Unit
May Exports 4-Jul
% y-o-y
May Imports 4-Jul
% y-o-y
May IP 10-Jul
Data Trends BNM lifted its policy rate by 25bps to 3.25%, the first hike in three years. While it did not sound particularly hawkish, it left the door open for further tightening. Meanwhile, inflation slowed to a six-month low of 3.2% y-o-y in May from 3.4% in April, but remained above BNM’s comfort range. Both food and non-food inflation eased. Exports grew by 16.4% y-o-y in May, primarily owing to strong shipments of electronics, petroleum, palm oil and liquefied natural gas. But imports surged by 11.9% y-o-y, due to increased imports of petroleum products. This narrowed the trade surplus to MYR5.7bn.
Malaysia GDP
10-Jul
%
Jun CPI 16-Jul
% y-o-y
* Date of Release
Malaysia Commodity Prices
% y -o-y 12
% q-o-q saar 15
8
10
4
5
0
0
-4
-5
-8
-10
-15 -12 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 GDP y-o-y (LHS)
MYR/ton 4000
MYR/kg 18
3500
15
3000
12
2500
9
2000 Jun-11
6 Dec-11
Jun-12
Dec-12
Palm Oil Price (LHS)
GDP q-o-q saar (RHS)
Source: CEIC, HSBC
Source: CEIC, HSBC
Malaysia Inflation v/s Policy rate
Malaysia Exports v/s IP
Jun-13
Dec-13
%
10 8 6 4 2 0 -2 -4
06
07
08
09
Inflation (LHS) Source: CEIC, HSBC
10
11
12
13
14
4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0
Jun-14
Rubber Price (RHS)
% y -o-y
% y -o-y
05
% y-o-y
BNM Policy Rate
% y -o-y
20
20
15
15
10
10
5
5
0
0
-5
-5
-10 May-11
-10 Nov-11
Policy rate (RHS)
May-12
Nov-12 Exports
May-13
Nov-13 IP
May-14
Source: CEIC, HSBC
33
abc
Macro Asian Economics 17 July 2014
New Zealand
Paul Bloxham, Economist HSBC Bank Australia Limited +612 9255 2635
[email protected]
News Highlights
Indicator
New Zealand's election is due to be held on 20 September. At this stage, the centre-right incumbent National party, led by prime minister John Key, is ahead of the centre-left Labour party, led by David Cunliffe, and the Greens, in the polls. The latest Roy Morgan Research poll (16-29 June) suggests that 48% of the vote would go to the National party, while Labour would have 28% and the Greens would get 12%. The latest Herald-Digipoll poll (6-16 June) puts the Nationals at 50.4% of the vote, with Labour getting 30.5% and the Greens with 10.7%. The HeraldDigipoll poll also suggests that John Key is seen as preferred prime minister ahead of David Cunliffe.
DoR*
Last 12 data Unit
points
Jun PMI 10-Jul
Index
2Q-2014 CPI 16-Jul
% y-o-y
Jun Net Migration 21-Jul
Data Trends Q1 GDP grew by +1.0% q-o-q to be +3.8% higher y-o-y (market had +3.7%). The key driver of growth in the quarter was construction activity which was supported the post-earthquake rebuild in the Canterbury region as well as strong residential building in Auckland. Exports also rose strongly, while household consumption was flat, which was somewhat surprising given very high consumer sentiment. Timely indicators suggest strong growth in activity continues into Q2, although some measures have eased late in the quarter. Business sentiment declined in June and housing prices fell in May and June, as higher interest rates began to bite.
New Zealand GDP
% y -o-y 10 8 6 4 2 0 -2 -4 -6 Sep-06
Mar-08
Sep-09
Mar-11
Sep-12
% q-o-q saar 10 8 6 4 2 0 -2 -4 -6 Mar-14
24-Jul
NZD m
* Date of Release
Index , sa 65
60
60
55
55
50
50
45 45 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 PMI Manufacturing
GDP q-o-q saar (RHS) Source: Markit, HSBC
New Zealand Inflation v/s Policy rate inflation
New Zealand Manufacturing PMI
% y -o-y 10
%
10
8
8
6
6
4
4
2
2
0
PMI Output New Orders Inventories New Orders-Inventory Employment
10
11 12 13 Policy rate (RHS)
New Orders Index
Jun-14 53.3 55.9 50.9 0.0 50.9 0.0
May-14 52.6 55.1 51.3 52.6 -1.3 53.8
>50 + rising >50 + falling <50 + rising unchanged above 50 Unchanged below 50
0 07 08 09 Inflation (LHS)
Source: Thomson Reuters Datastream, HSBC
34
%
Jun Trade Balance
Index , sa 65
Source: Thomson Reuters Datastream, HSBC
06
24-Jul
New Zealand PMI
GDP y-o-y (LHS)
05
‘000s
RBNZ Cash Rate
14 Source: Markit, HSBC
Apr-14 54.3 55.1 54.2 49.8 4.4 54.3 <50 + falling
abc
Macro Asian Economics 17 July 2014
Philippines
Trinh Nguyen, Economist The Hongkong and Shanghai Banking Corporation Limited +852 2996 6975
[email protected]
News Highlights
Indicator
On 1 July, the supreme court unanimously voted that the Disbursement Acceleration Program (DAP) unconstitutional. The DAP involves funds in President Aquino's hands and they have two limitations: a) the president can only transfer savings and b) the transfers can only be to augment items in the President's budget. Allegations are emerging that the government misappropriated DAP funds. The President addressed the nation stating that the funds help accelerate implementation of projects and offset underspending as well as help education and electrification programs. Aquino's ratings have declined amid spending controversies.
DoR*
Last 12 data Unit
points
Jun CPI 4-Jul
% y-o-y
May Exports 10-Jul
% y-o-y
May Remittances 15-Jul
Data Trends May headline inflation accelerated to 4.5% y-o-y (Bbg: 4.2%; HSBC: 4.2%; Prior: 4.1%). On a month-on-month basis, May inflation rose 0.5% m-o-m from 0.4% in April. Food inflation accelerated to 6.7% y-o-y from 6.2% in April. Sequentially, it rose 0.7% m-o-m from 0.5% in April. Negative supply shocks from Typhoon Haiyan are still lingering, causing food and housing prices to increase. With the impact of the positive output gap still filtering through and food and energy prices expected to spike over the summer, headline inflation will approach the upper end of the BSP's 2014 3-5% target range. We expect the BSP to tighten monetary conditions further.
Philippines GDP
Philippines Trade
% y -o-y % q-o-q saar 15 15 12 12 9 9 6 6 3 3 0 0 -3 -3 -6 -6 -9 -9 -12 -12 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14
% y -o-y 40
GDP y-o-y (LHS)
25-Jul
% y-o-y
BSP Policy Rate 31-Jul
%
* Date of Release
USD m 500
30
0
20
-500
10
-1000
0
-1500
-10
-2000 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Balance of Trade (RHS)
GDP q-o-q saar (RHS)
Source: CEIC, HSBC
Source: CEIC, HSBC
Philippines Inflation v/s Policy rate
Philippines Overseas Remittances
% y -o-y 12
% y-o-y
May Imports
Exports (LHS)
Imports (LHS)
% m-o-m sa
%
% y -o-y 12
9
6
10
8
4
8
8
7
2
4
6
6
0
0
4
5
-2
-4
2
4
-4
-8
3
-6
0 05
06
07
08
Inflation (LHS) Source: CEIC, HSBC
09
10
11
12
13
14
-12 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14
Policy rate (RHS)
% y-o-y (RHS)
% m-o-m sa (LHS)
Source: CEIC, HSBC
35
abc
Macro Asian Economics 17 July 2014
Singapore
Joseph Incalcaterra, Economist The Hongkong and Shanghai Banking Corporation Limited +852 2822 4687
[email protected] Prithviraj Srinivas, Economics Associate Bangalore
News Highlights
Indicator
Singapore’s first national jobs bank was officially launched this month by the Ministry of Manpower (MOM) in order to better match Singaporeans with job market opportunities. The job bank was mandated by the Fair Consideration Framework, which takes effect on August 1st, and companies looking to hire skilled foreign workers must post vacancies for 14 days in order to fairly consider Singaporeans. In a study released earlier this month, Temasek Holdings, as well as other government-linked corporations (GLCs) were found to have a superior total shareholder return when compared with the market average of firms from the Singapore MSCI index (the study looked at 20-year return as of 2012).
DoR*
Last 12 data Unit
points
Jun PMI 2-Jul
Index
2Q GDP advanced 14-Jul
% y-o-y
May Retail Sales 15-Jul
Data Trends Advance 2Q GDP unexpectedly contracted due to strong drag from the manufacturing sector. The GDP estimate, based on April and May data, showed a contraction of 0.8% q-o-q saar (2.1% y-o-y) due to a -19.4% sequential decline in manufacturing. Services and construction grew sequentially, but momentum is slowing in these sectors as well. Meanwhile, retail sales in May declined by 6.0% y-o-y, slightly better than consensus of -8.2%, on the back of a decline in motor vehicle sales, which declined 26.8%. This was attributable to the high base effect, seeing that motor vehicle sales last year were very high due to the temporary lifting of loan restrictions on the purchases of used cars.
Singapore GDP
% y -o-y 36 30 24 18 12 6 0 -6 -12 -18 Dec-06
Jun-08
Dec-09
Jun-11
Dec-12
% q-o-q saar 36 30 24 18 12 6 0 -6 -12 -18 Jun-14
Singapore Inflation v/s Policy rate
Singapore PMI
% y -o-y
36
%
4 3 2 1 0 -1
Source: CEIC, HSBC
23-Jul
% y-o-y
* Date of Release
PMI Manufacturing
GDP q-o-q saar (RHS) Source: Markit, HSBC
06
% y-o-y
Jun CPI
Index , sa Index , sa 54 54 53 53 52 52 51 51 50 50 49 49 48 48 47 47 46 46 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14
Source: CEIC, HSBC
05
17-Jul
Singapore PMI
GDP y-o-y (LHS)
8 7 6 5 4 3 2 1 0 -1 -2
% y-o-y
Jun NODX
07 08 09 Inflation (LHS)
10
11 12 13 Policy rate (RHS)
14
PMI Output New Orders Inventories New Orders - Inventory Output Prices Input Prices Output Prices - Input Prices New export orders Employment
New Orders Index
Jun-14 50.5 50.3 51.0 51.7 -0.7
May-14 50.8 51.5 52.0 49.9 2.1
Apr-14 51.1 52.3 52.4 50.5 1.9
49.4
50.1
50.8
51.2 50.6
52.4 49.3
52.5 49.7
>50 + rising >50 + falling <50 + rising unchanged above 50 Unchanged below 50 Source: Markit, HSBC
<50 + falling
abc
Macro Asian Economics 17 July 2014
Sri Lanka
Frederic Neumann, Economist The Hongkong and Shanghai Banking Corporation Limited +852 2822 4556
[email protected] Prithviraj Srinivas, Economics Associate Bangalore
News Highlights
Indicator
Sri Lanka and China are likely to begin negotiations on a proposed free trade agreement. China has permitted more direct flights to Sri Lanka and the Maldives, as the two South-East Asian countries plan to woo a bigger chunk of the 90 million plus Chinese who holidayed abroad last year. UAE lifted a ban on import of Sri Lanka meat products, which gives the country an opportunity to gain market share in the Middle East. The government aims to reduce the unemployment rate to 3.2% from 3.7% last year. It expects at least 30% of new jobs to be created by the private sector. S&P reaffirmed its B+ rating for Sri Lanka sovereign credit with a stable outlook.
DoR*
Last 12 data points
Unit
Deposit Rate 14-Jul
%
Lending Rate 14-Jul
%
May Exports 14-Jul
Data Trends The Central Bank of Sri Lanka kept policy rates on hold as expected, despite CPI inflation in June falling to its lowest since February 2012. A strong base from last year caused by a steep hike in administered tariffs for utilities helped the decline. The trade deficit fell notably in May, led by industrial and agricultural export growth. Meanwhile, imports continued to decline in annual terms due to weak intermediate and investment goods imports. The narrower trade deficit was bolstered by higher remittances and tourism receipts, with the latter growing at over 35% y-o-y year to date. 1Q GDP growth slowed slightly in line with expectations. Growth in industry and services improved, but agriculture was weaker than expected.
Sri Lanka GDP
% y -o-y 16 14 12 10 8 6 4 2 0 -2 Dec-07
14-Jul
Dec-08
31-Jul
Dec-09
Dec-10
Dec-11
% q-o-q saar 16 14 12 10 8 6 4 2 0 -2 Dec-12 Dec-13
% y -o-y 60
LKR bn 150
30
75
0
0
-30
-75
-60
-150 Apr-12
Oct-12
Balance of Trade (RHS)
GDP q-o-q saar (RHS)
Apr-13
Oct-13
Sri Lanka Inflation v/s Policy rate
Sri Lanka Domestic credit v/s Money supply
% y -o-y 30
13
25
30
20
15
15 10
12
20
11
15
10
10
9
5
8
0
7
-15
08
Inflation (LHS)
09
10
11
12
13
14
% y -o-y
45
25
07
Exports (LHS)
% y -o-y
%
0
Apr-14
Imports (LHS)
Source: CEIC, HSBC
Source: CEIC, HSBC
% y-o-y
* Date of Release
Source: CEIC, HSBC
06
% y-o-y
Jul CPI
Sri Lanka Trade
GDP y-o-y (LHS)
05
% y-o-y
May Imports
5 05
06
Policy rate (RHS)
07 08 09 10 Domestic credit: Private (LHS)
11
12
13 14 M2 (RHS)
Source: CEIC, HSBC
37
abc
Macro Asian Economics 17 July 2014
Taiwan
John Zhu, Economist The Hongkong and Shanghai Banking Corporation Limited
[email protected] +852 2996 6621 Rini Sen, Economics Associate Bangalore
News Highlights
Indicator
The CBC held its benchmark interest rate unchanged at 1.875% at its June monetary policy meeting as expected. However, it also introduced a number of macroprudential policies aimed at cooling the property market. The CBC introduced a maximum loan-to-value (LTV) ratio cap of 50% on new mortgages on third homes and also lowered the cap on purchases on more expensive homes and in areas around the New Taipei City region. Meanwhile, Minister of Transportation Kuang-shih refused to raise the number of Chinese tourists allowed to visit Taiwan on daily group tours. However, the limit for independent tourists could still be raised.
DoR*
Last 12 data Unit
points
Jun Mfg PMI 1-Jul
Index
Jun Exports 7-Jul
% y-o-y
Jun CPI 8-Jul
Data Trends The HSBC Taiwan PMI rose further to 54.0 in June led by increasing output and new orders sub-components. Export orders rose 4.7% y-o-y in May, up from 8.9% in April. Unemployment remained stable at 4.0%. May industrial was better than consensus, growing 5.2% y-o-y and the level of output reached the highest on record. Trade however was still disappointing in June—imports rose sharply whereas export growth eased from May. This led to the trade surplus shrinking to USD1.9bn from USD5.3bn in the previous month. Meanwhile, CPI inflation remained stable at 1.6% y-o-y in June.
Taiwan GDP
% y -o-y 25 20 15 10 5 0 -5 -10 -15 -20 Sep-06
Mar-08 Sep-09 GDP y-o-y (LHS)
% q-o-q saar 25 20 15 10 5 0 -5 -10 -15 -20 Mar-11 Sep-12 Mar-14 GDP q-o-q saar (RHS)
% y-o-y
2Q 2014 GDP 31-Jul
% y-o-y
* Date of Release
Index , sa Index , sa 58 58 56 56 54 54 52 52 50 50 48 48 46 46 44 44 42 42 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 PMI Manufacturing Source: Markit, HSBC
Taiwan Inflation v/s Policy rate
HSBC Taiwan manufacturing PMI
% y -o-y
% 4
6 5 4 3 2 1 0 -1 -2 -3
3 2 1 06
07
08
Inflation (LHS) Source: CEIC, HSBC
38
23-Jul
Taiwan PMI Manufacturing
Source: CEIC, HSBC
05
% y-o-y
Jun IP
09
10
11
12
Policy rate (RHS)
13
14
PMI Output New Orders Inventories New Orders - Inventory Output Prices Input Prices Output Prices - Input Prices New export orders Employment
New Export Orders Index
Jun-14 54.0 56.0 56.6 51.0 5.6 49.2 54.7 -5.6 56.5 52.1
May-14 52.4 54.3 53.5 50.8 2.7 48.3 52.9 -4.6 54.9 51.7
>50 + rising >50 + falling <50 + rising unchanged above 50 Unchanged below 50 Source: Markit, HSBC
Apr-14 52.3 54.0 54.5 48.8 5.7 48.2 52.2 -4.0 54.8 50.8 <50 + falling
abc
Macro Asian Economics 17 July 2014
Thailand
Nalin Chutchotitham, Economist The Hongkong and Shanghai Banking Corporation Limited, Bangkok Branch +66 26144887
[email protected]
News Highlights
Indicator
The government introduced various stimulus measures to bolster near-term growth, especially in the areas of tourism, exports, and investment. Since mid-June, the Board of Investment have resumed approval of investment privileges for large private-sector projects, paving the way for an increase in domestic demand. Additionally, the government aims to conclude its infrastructure investment plan in July. Such investments will support growth as well as raise Thailand’s competitiveness. Given improved growth outlook and private sentiment, the MPC kept the policy rate at 2.0% in June while raising growth forecast for 2015 to 5.5% despite pencilling in 1.5% growth in 2014.
DoR*
Last 12 data Unit
points
Jun CPI 1-Jul
% y-o-y
Jun Core CPI 1-Jul
% y-o-y
Jun Exports 24-28 Jul
Data Trends Headline CPI growth eased to 2.4% y-o-y in June from 2.6% y-o-y in May while core CPI growth was slightly lower at 1.7% y-o-y. This was mainly due to the government’s measure to freeze prices of household necessities and the decline in energy prices. Meanwhile, the current account recorded the second straight month of deficit in May, at $0.66bn, due to income remittance abroad and a drop in tourism revenue. Exports fell more than expected by 2.1% y-o-y in May, inducing the Commerce Ministry to lower its export growth forecast to 3.5% from the previous 5.0%. The pace of imports contraction had slowed down to 9.3% y-o-y but continued to reflect weak domestic demand.
% y-o-y
Jun Imports 24-28 Jul
% y-o-y
Jun Mfg Prod 28-Jul
% y-o-y
* Date of Release
Thailand GDP
BoT Investment and Consumption Indicators (%3m/3m saar)
% y -o-y % q-o-q saar 30 60 25 50 20 40 15 30 10 20 5 10 0 0 -5 -10 -10 -20 -15 -30 -20 -40 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14
% 3m/3m saar 100
GDP y-o-y (LHS)
% 3m/3m saar 40
75
30
50
20
25
10
0
0
-25 -50 May-08
-10 May-09
May-10
May-11
Investment Index (LHS)
GDP q-o-q saar (RHS)
Source: CEIC, HSBC
Source: CEIC, HSBC
Thailand Inflation v/s Policy rate
Thailand Business Sentiment Index
% y -o-y 10 8 6 4 2 0 -2 -4 -6 05 06
%
07
08
09
Inflation (LHS) Source: CEIC, HSBC
10
11
12
13
6.00 5.25 4.50 3.75 3.00 2.25 1.50 0.75 0.00
Business Sentiment Index New Orders Inventories New Orders - Inventory Output Prices Input Prices Output Prices - Input Prices Employment
May-12
May-13
-20 May-14
Consumption Index (RHS)
May-14 46.8 50.9 47.5 3.4 45.9 39.6 6.3 49.7
Apr-14 47.1 47.3 44.3 3.0 44.6 37.5 7.1 50.1
>50 + rising >50 + falling <50 + rising unchanged above 50 Unchanged below 50
Mar-14 46.6 45.6 46.4 -0.8 45.0 38.0 7.0 51.3 <50 + falling
14
Policy rate (RHS) Source: CEIC, HSBC
39
abc
Macro Asian Economics 17 July 2014
Vietnam
Trinh Nguyen, Economist The Hongkong and Shanghai Banking Corporation Limited +852 2996 6975
[email protected]
News Highlights
Indicator
Vietnam National Administration for Tourism asks the government to grant visa exemptions to visitors from the EU, Australia, North America, Taiwan and Hong Kong. The administration also asks for 15- to 30-day visa extensions for visitors from Russia, Japan, South Korea, Norway, Finland, Denmark and Switzerland as part of efforts to counter the drop of Chinese tourists due to the geopolitical tensions. Vietnam Food Association reported that yearto-date rice exports reached 3.18 million tons as of 10 July, about half of its annual target. Officials from Vietnam ministries stated that Vietnam Oil and Gas Group and Exxon are preparing for a high-capacity power plant launch.
DoR*
Last 12 data Unit
points
Jun Mfg PMI 1-Jul
Index
Jul CPI 24-Jul
% y-o-y
Jul Exports-ytd 25-31 Jul
Data Trends HSBC PMI expanded in June but the pace eased to 52.3 from 52.5 due to weaker external demand; the manufacturing sector accelerated to 9.1% y-o-y in Q2 from 6.5% in Q1 2014. Manufacturing boosted GDP growth to 5.5% y-o-y in Q2 2014 from 4.8% in Q1. We expect output to continue to rise in H2 2014, supported by a rebound of external demand and new investment commencing operations. We expect headline inflation to accelerate marginally from June's 5.0% y-o-y in Q3 on higher energy and social service costs. However, we expect Q4 CPI to decelerate and end the year at 5.5% y-o-y in 2014. The OMO rate should be steady at 5% for the rest of the year. Th OMO h ld b d %f h f h bd d d i d di l Vietnam GDP
% y -o-y
10
8
8
6
6
4
4 2 Jun-08
Dec-09
Jun-11
Dec-12
Jun-14
25-31 Jul
% y-o-y
* Date of Release **ytd
PMI Manufacturing
Source: CEIC, HSBC
Source: Markit, HSBC
Vietnam Inflation v/s Refinancing rate
HSBC Vietnam PMI
% y -o-y 30
%
16
25
14
20
12
15
10
10
8
5
6
0
4 09
10 Inflation (LHS)
Source: CEIC, HSBC
40
% y-o-y
Jul IP
Index , sa Index , sa 56 54 52 50 48 46 44 42 40 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14
GDP y-o-y
08
25-31 Jul
Vietnam PMI Manufacturing
% y -o-y 10
2 Dec-06
% y-o-y
Jul Retail Sales**
11
12
13
Refinancing rate (RHS)
14
PMI Output New Orders Inventories New Orders - Inventory Output Prices Input Prices Output Prices - Input Prices New export orders Employment
New Orders Index
Jun-14 52.3 52.0 53.3 47.8 5.5 51.6 58.7 -7.1 50.9 50.7
May-14 52.5 52.4 54.2 49.5 4.7 49.8 61.1 -11.3 51.4 50.5
>50 + rising >50 + falling <50 + rising unchanged above 50 Unchanged below 50 Source: Markit, HSBC
56 54 52 50 48 46 44 42 40
Apr-14 53.1 53.7 54.9 50.3 4.5 49.3 55.6 -6.3 53.7 52.2 <50 + falling
abc
Macro Asian Economics 17 July 2014
Asia Brief
Frederic Neumann, Economist The Hongkong and Shanghai Banking Corporation Limited +852 2822 4556
[email protected] Rupali Sarkar, Economics Associate Bangalore
Property in Asia: Not too bad Loose monetary policy in the West helped Asian economies sail through the Global Financial Crisis, though not without inflicting economic imbalances like ballooning property prices. This prompted countries in the region like China, Singapore and Hong Kong to adopt macro-prudential measures. These steps have yielded results, with chart 1 showing that latest annual gains in property prices across the region have been lower than the five quarter average. Real estate prices in China in particular have slowed sharply. But when seen relative to nominal GDP growth (a proxy for income growth), there is a wide variation between economies. The red bars represent countries where, property price increases were below nominal GDP growth, which suggest improving affordability. In contrast, the grey bars denote countries where growth in property prices has outpaced income (nominal GDP) growth that valuations may have become more stretched. Not that in China the increase in property prices has merely kept pace with nominal GDP growth. While there are measurement problems, this implies that valuations may not be quite as elevated as often feared. In China; however, regulators are attempting to engineer a soft landing in the property market, an important engine of growth for the Asian giant. The latest boom left some parts of the country with too much floor-space and other parts with too little, giving way to a demand-supply mismatch (Chart 3). Further, regulators may have pressed the brakes too hard as property prices declined in the 1Q, forcing potential buyers to postpone their property purchases in anticipation of a further decline. To counter this, some local governments have eased home-buying restrictions in April and made it easier for buyers to borrow funds for home purchases. So, we think the risk of an outright price tumble (like the subprime mortgage crisis that hit the US) is limited. The risks around Asia’s property markets are better analysed together with the level of household debt in the region (Chart 4). It is comforting to note that Malaysia, which is the most burdened with household debt faces limited pressure from property prices. The authorities stand guard to control and abate the vulnerabilities in the sector. However, real estate values are still climbing briskly in Taiwan and Thailand. The former is, in fact, considering to levy a tax on non-owner home properties. In Thailand, reduced liquidity and lower risk appetite of banks are expected to check demand in the property market. Overall, regulators in most Asian markets continue to appear inclined to tighten conditions further via macroprudential measures if real estate prices again spike. N.B: Where headline property price is not available, a simple average of price of property types has been considered.
Chart 1: Growth in property prices has moderated in the region
% y -o-y 25
Chart 2: Property price increases relative to nominal GDP growth
% y -o-y 25
20
20
15
15
10
10
5
5
0
0
-5
-5 CH
SK
SI
Latest quarter
HK
TH
MA
TA
IN
ID
4 3
2
2
1
1
0
0
-1
-1
-2
-2 SK
CH
TH MA SI IN* Average since 1Q - 2008
HK
TA
Source: CEIC, HSBC. *India data is from June 2011 to Sep 2013
Chart 4: High household debt in Asia
No. of cities w here
No. of cities w here 70
70
60
60
50
50
40
40
30
30
20
20
10
10
0
0 Sep-12
MoM increased Source: CEIC, HSBC
5
3
Average of last 5 quarters
Chart 3: China: Property price changes in number of by cities
May-12
Ratio
4
ID
Source: CEIC, HSBC
Jan-12
Ratio
5
Jan-13
May-13
MoM no change
Sep-13
Jan-14
May-14
100
% of GDP
% of GDP
100
80
80
60
60
40
40
20
20
0
0 IN
MoM decreased
ID
CH
SI HK SK 2012 2013
TH
TA
MA
Source: CEIC, HSBC
41
abc
Macro Asian Economics 17 July 2014
Momentum Heatmaps Exports to the world Jul-13
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Jun-14
China Hong Kong India Indonesia Japan Korea Malaysia Philippines Singapore Sri Lanka Taiwan Thailand Vietnam Asia Asia ex JN Asia ex JN & CH Below average & falling
Below average but rising
Above average but falling
Above average and rising
Source: CEIC, HSBC. Colour codes are based on the z-score of the year-on-year figures on a rolling 36 months basis.
Exports by destination World Apr-14
May-14
US Jun-14
Apr-14
May-14
EU Jun-14
Apr-14
May-14
China Jun-14
Apr-14
May-14
Jun-14
China Hong Kong India Indonesia Japan Korea Malaysia Philippines Singapore Sri Lanka Taiwan Thailand Vietnam Asia Asia ex Japan Asia ex Japan & China Below average & falling
Below average but rising
Above average but falling
Above average and rising
Source: CEIC, HSBC. Colour codes are based on the z-score of the year-on-year figures on a rolling 36 months basis.
Industrial Production Jul-13
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
China Hong Kong India Indonesia Japan Korea Malaysia Philippines Singapore Sri Lanka Taiwan Thailand Vietnam Asia ex JN & HK (simple) Asia ex JN & HK (weighted) Below average & falling
Below average but rising
Above average but falling
Source: CEIC, HSBC. Colour codes are based on the z-score of the year-on-year figures on a rolling 36 months basis.
42
Above average and rising
Jun-14
abc
Macro Asian Economics 17 July 2014
China Data Dashboard 2012
2013
2014
A-12 M-12 J-12 J-12 A-12 S-12 O-12 N-12 D-12 J-13 F-13 M-13 A-13 M-13 J-13 J-13 A-13 ### O-13 N-13 D-13 J-14 F-14 M-14 A-14 M-14 J-14 Outstanding Loan Growth -0.6 -0.34 -0.1
-0.1 0.05
0.2
0.09 0.05 -0.6 0.08 -0.4
-0.6 -0.5
-1.1
-1.4
-1.1
-1.3 -1.1 -1.2
-1.2
-1.3
n/a
n/a
n/a
0.8
-0.5
-1.3
-0.7 0.55 -0.1 -0.8
-0.3
-0.6 1.56 -1.3 0.01 -0.2
n/a
n/a
-0.8 -0.1
-1.7
-1.7
-1.1
-0.1
-0.6
-0.4
-1.6
0.7
0.45 -0.2
-0.2
-0.2 -1.5 -0.8
-0.7
-0.7 3.34 -1.6
Total Social Finance/GDP -1.1 -0.21 1.26 0.31 0.19 1.31 1.04 0.03 1.08 2.04 -0.4 1.74 Financing
Growth
Real 7D Repo Rate
-0.7
-1.7
-1.3
-1.2 -1.07
M0 Real Growth
-0.5 -0.42 -0.1
-0.2
-0.2
-0.6
-0.6 -0.06 -0.2
-1.1
-0.8
0.32
-1
-0.8
-1.2
-0.8
-0.6
-0.1
-0
-0.5
-1.9 2.16
-0.3
-0
0.3
-0
n/a
-1.2 0.84 -0.3 -0.8 1.34 -0.7
-1 n/a
-1.2
2.63 0.67 1.71
1.6
1.41 0.58 0.75
-0.1
-0.7 -0.5
-0.8
n/a
-0.6 -0.27 0.23 0.53 0.37 1.06 0.97 0.82 0.71 2.02 0.93 1.63
1.5
1.39 0.27 0.44 0.54 -0.1 -0.2
-0.2
-0.7
-0.3
-1.7 -0.4
-0.9
n/a
GDP Growth
-2.2 -1.94 -1.8
-0.1 0.07 -1.5
-1.4
-1.3
n/a
n/a
n/a
Non-M PMI
-1.1
-1.3
0.2 0.25 0.53 1.13 0.81 1.01 0.81
0.4
0.6
0.82
-1.8
-1.6 -1.44 -0.8
-0.8
-0.7
-0.9
-0.8
-0.7 -0.9
-0.9
-0.8
-0.3
-0.2 -0.1 -0.2
-2
-1.7 -2.34 -2.9
-1.7
-2.2
-2.4
-2.2
-1.2 -0.8
-0.9
-1.1
-0.6
-0.4
-0.4
-0.4
-0.5
-0.6 0.11 -0.1 0.18 -0.5
-1.5
M PMI
0.7
-1.01 -1.1
-1.1
-1.5 -1.04 -0.7
HSBC M PMI
-0.8 -1.14 -1.2
-0.7
-1.3 -1.08 -0.3 0.26 0.96 1.75 0.49 1.38
0.5
-0.3
PMI M Output
-0.7
-0.2
-0.9 -1.08 -0.8 0.37
1.62 0.47 1.66
0.7
0.49 -0.6
-0.6
0.8
New Orders
-0.5 -0.94 -1.1
-0.7
-1.3 -0.89 0.24 0.27 1.08 1.61 0.69 1.42
New Orders-Inventory
-0.5 -1.17 -1.4
-0.9
-1.9 -0.88
0.3
IP
-1.9 -1.61 -1.5
-1.5
-1.4 -1.23
-1
Electricity consump
-1.3 -0.96
-0.9
-1
-1
0.3 0.28 0.44 0.51 -1.8
-1.2 -0.9
M1 Real Growth
-0.5
0.8
-1.1
M2 Real Growth
Freight
Investment
0.15
-1
-1
-1.03 -0.5
-0.96 -1.6
-0.6
-2.2 -1.53 -1.2
-1.3
-1
-0.3 0.43
0.5
0.74 0.27 -0.3
-0.6
-0.4 -0.2 0.59 0.91
-1.3 0.51
0.6 1.12 0.96 0.62 -0.1
0.8
-0.8
-1.2
-0.9 0.62
0.2 0.73 1.26 0.76 0.36 -0.8
n/a
0.07
0.8
0.2
1.28
n/a
-16
0.6
-0.4
-0.8
-1.1 0.59
0.6 0.88 0.93
0.8
0.1
-0.6
-1.5
-0.9
-0.8
-0.5 0.77
0.6 0.67
0.8
-0.1
-0.4
-1.3 -0.9
-0.8
-0.2
-0.3
-0.6
-1.4
-1.3 -1.3
0.2
0.12 -1.3 1.09 0.09
-0.7
-0.8
-0.7
-0.9 -0.8
-0.7
-0.7
-0.5
-0.8 -0.1
-0.3
-0.1
0.23 0.84
-0.7
-0.7
-1.5 -2.4
-2.2
-0.8
2.07 -0.4 -0.3 0.35 1.29 0.36 -0.6
-0.8
-1.7
-0.2 -0.2 -0.2 0.4 0.32
-1.2
n/a
-0.2 0.89
0.28 0.61 1.05 0.46 0.72 -0.3
-0.3 0.45 2.28 -2.7
n/a
-1.8 -1.3 -1
n/a
n/a
n/a
-0.6
n/a
n/a
n/a
Business Climate
-1.3
-1.3
-1.6
-1.6
-1
-1
-0.6
-0.6
-0.6 -1.5
-1.5
-1.5
-1.2
-1.2 -1.2 -1.5
-1.5
-1.5
n/a
n/a
n/a
n/a
n/a
n/a
Fixed Asset Investment
-2.6 -2.25 -1.8
-1.6
-1.6 -1.29 -1.1
-1
-1
-0.7
-0.6
-0.7 -0.7
-0.8
-0.9
-0.8
-0.6 -0.6 -0.7
-1
-1.9
-3.6
-2.9
-2.6 -2.4
-2.1
n/a
-1.8
-0.1
-0.1 -0.1
-0.1
0
0.3 0.13 -0.1 0.59
0.4
0.44 0.03 -0.5
-1.1
n/a
-1.9
-1.5
n/a
n/a
Real Estate Climate
-2.3 -2.19
-1.6 -1.54 -1.4
-0.9
-0.9
-0.1
Property Price
-0.9 -0.46 -0.1
0.08 0.08 0.15 0.14
0.1
0.3
2.13 1.94 1.62
Retail sales
-1.6
-1.5
-1.6
-1.4 -0.89 -0.7
-0.4
-0.2
-1.6
-1.7
-1.4 -1.2
-1
-0.7
-0.7
-0.6 -0.6 -0.5
-0.1
-0.1
-1.9
-1.7
-1.2 -1.4
n/a
n/a
Employment*
-2.4 -2.13 -1.5
-1.9
-1.7 -1.01 -0.8
-0.4 0.56 1.29
0.7
0.54 -0.1
-0.7
-1.5
-1.4
-0.2 -0.2 1.27 -0.1
-0.2
-1.4
-1.4
n/a
n/a
n/a
Consumption CPI
-1.1 -1.41
-2
-2.1
-1.8 -1.69 -1.6
-1.3
-0.9
-1.1
-0.4
-0.7
-0.8
-0.4
-0.3
-0.3
0.3 0.55 0.39 -0.2
-0.1
-0.9
PPI
-2.1 -2.01
-2
-1.9
-1.8 -1.67 -1.3
-1.1
-0.9
-0.8
-0.7
-0.7 -0.8
-0.9
-0.7
-0.6
-0.3
-0
-1.1
-1.2
-1.2
-1.5
-1.4
-1.4 -1.3
-1.2
-1.2
-0.7
-0.7 -0.7
-1.1
-0
-0.4 -1.3 -0.5 0.52 -0.6 0.23 -2.9
-1.5 -0.6 0.08 0.12
-1.3
-0.9
-0.1 -1.3 0.29 -0.2
Wage
Trade
1
-1.6
0.92
-2
-1.6
-1
-0.3
0.84 0.69 0.63 0.57
Export
-1.4 -0.51 -0.8
-1.6
-1.3 -0.62 -0.4
Import
-1.1 -1.41
-1.8 -1.69 -1.6
New Export Orders Terms of Trade
-2
-2.1
0
-0.9
-2.3
-1.6
-1.95
-1
-0.4
0.94
1.1
0.76 0.35 0.73
1.2
-2
-1
1.2
0.14 0.18
0.74 0.52 0.29 0.22
0.2 0.16 0.09 0.02 -1.8
0.01 0.22 0.39 0.34 n/a
n/a
n/a
1.18 0.77 -0.5
0.2
-1.5
-1.8
-0.7
-1.1
-0.7
-0.8
-0.4
-0.3
-0.3
0.3 0.55 0.39 -0.2
1.35 0.12 0.76 0.66 0.73 -0.2 0.04 -1.8
-0.5
-0.6
0.9 1.19
1
-0.4
0.82 0.22 0.49
-1
0.4
1
1.09 1.46 0.14 -0.9
Deceleration
* Employment is from HSBC PMI Employment
0.8
n/a
-0.1 -1.3 0.29 -0.2 -0.3
0.2
2.18 1.96 1.78
n/a
-0.1
-0
n/a
-0.9
0.25
-0
0.03 1.26
0.1
0.1 0.34 0.24 -0.2
0.8
0.26 0.17
1
Acceleration
1.09 1.41 n/a
n/a
1.93 0.76 1.71
1.7
n/a Data n/a
Source: Markit, CEIC, HSBC. Colour codes are based on the z-score of the year-on-year figures on a rolling 24 months basis, black denotes z-score less than -1.0, light grey denotes z-score between -1.0 and -0.5, white denotes zscore between -0.5 and 0.5, pink denotes z-score between 0.5 and 1.0, and red denotes z-score greater than 1.0.
Headline CPI Jul-13
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Jun-14
China Hong Kong India Indonesia Japan Korea Malaysia Philippines Singapore Sri Lanka Taiwan Thailand Vietnam Asia ex JN (simple) Asia ex JN (weighted) Below av erage & falling
Below av erage but rising
Abov e av erage but falling
Abov e av erage and rising
Source: CEIC, HSBC. Colour codes are based on the z-score of the year-on-year figures on a rolling 36 months basis.
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Macro Asian Economics 17 July 2014
Best of Asian economics research Chart of the Week: Modi’s dilemma Click here for PDF
India’s Prime Minister Modi is now firmly in the saddle. And so the work begins. First up: raising India’s dismal growth rate. Investors and voters have evidently high hopes on this. But the task isn’t as easy as it may appear. In a normal, cyclical downturn, investment is usually depressed and a simple boost to confidence will thus do the trick and accelerate growth. However, in India, investment isn’t the problem, it’s efficiency. In fact, if the former rises without a pick-up in the latter, things could get quite challenging. Inflation would rebound, possibly forcing the RBI to hike again, and the trade deficit could widen dangerously once more. Modi’s dilemma is thus that too much investor confidence might endanger India’s revival. To limit the risks, the new government will thus have to focus first on productivity-enhancing measures, such as power sector reform and cutting “red tape”. Budget cuts would also be helpful to offset a jump in pent-up spending that the economy is illprepared to accommodate. A slow recovery, in short, would be in India’s best interest.
fortunes. As much as investors cheer the prospect of faster growth, however, many of the proposed measures will take time to implement. Reforms high on the wish list of businesses, such as looser labour market regulation, less restrictive land acquisition rules for investment, and an improved tax system, require the consent of states. The haggling has only just begun. – Frederic Neumann
Asia's dilemma: how to reform if pressure is off?: Latest op-ed published by the Wall Street Journal Click here for PDF
By any measure, the region has had an extraordinary run these past few years. Despite wobbly demand elsewhere, emerging Asia continued to power ahead. Output is now over fifty percent higher than at its peak before the Global Financial Crisis, while it has barely made up lost ground in the US and Europe. Much of this extraordinary resilience is due to the region’s ability to leverage up, spurred on by global interest rates at record lows and local central banks not shy to add extra stimulus either.
– Frederic Neumann & Prithviraj Srinivas
– Frederic Neumann
Mr. Modi's first big test: Latest op-ed published by Nikkei
India Economics Comment: And now oil
Click here for PDF
Click here for PDF
India is riding high. Justifiably so. The election delivered a stunning mandate to Prime Minister Modi and his party, the Bharatiya Janata Party, or BJP, to implement far-reaching reforms. These are urgently needed to restore the country’s
India potentially faces a double whammy. For weeks already, weather experts have pointed to the risk of a dry summer, which could raise the cost of food. And now, to top it off, the trouble in Iraq has pushed up the price of oil. Well, it’s all a
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Macro Asian Economics 17 July 2014
bit theoretical at the moment: rain may still prove plentiful and the global oil markets unimpressed by the growing tensions in the Middle East. Still, India’s economy is highly sensitive to developments on both fronts. A prolonged rise in the cost of crude would pose headaches for the government and RBI alike. – Frederic Neumann
Chart of the Week: Household splurge Click here for PDF
It’s easy to point the finger at the West and blame its travails on consumers once all too willing to take out debt to finance lifestyles they could illafford. Well, that’s only half the truth. But household leverage certainly contributed to the consumer spending boom in places like the US and the UK in the runup to the Global Financial Crisis, and rendered financial systems vulnerable to a sharp “correction”. Such developments, optimists argue, are unlikely to occur in Asia, where households tend to be more prudent and save more of their monthly income. Not quite. In the last several years, consumer debt has surged across the region, financing not only purchases of new, flashy condos, but also of cars, motorcycles, and everything else the heart desires. In Taiwan, Malaysia, and Thailand, household debt as a share of GDP is now higher than in the US. Korea and Singapore have a higher ratio than the UK, which, in fact, has itself risen since 2007. The pace of increase in household debt, arguably a better measure of potential stress than its level, in Singapore and Thailand exceeds that of the United States during its boom, with Malaysia, China, Hong Kong and Korea having seen a bigger rise of late than the UK between 2001 and 2007. Plenty to ponder. – Frederic Neumann
Don't give up on Abe just yet: Latest op-ed published by Nikkei Click here for PDF
Abe’s first two arrows of fiscal and monetary easing have hit their mark. It’s now all about the third: structural reforms are needed and the pressure is on to roll out something more meaningful than the initial proposal issued last year. The contours of the latest strategy were already leaked and are likely to be adopted this week by the Cabinet. In a nutshell: there’s nothing earth shattering in there. But it would be too short-sighted to dismiss the document entirely. In fact, by Japanese standards, the proposals are quite bold. – Frederic Neumann
India Economics Comment: Coal, at the center of it all Click here for PDF
Few issues so neatly exemplify Modi’s challenges as coal. The country has plenty of it, but it mostly remains stuck in the ground. Costly imports swell the trade deficit. Its frequent unavailability cuts power supply. Fixing this will present a first test to the new administration. Reforms comprise three things: extra infrastructure, cooperation by state governments with New Delhi, and restructuring of a public company. In short, all the challenges Mr. Modi faces are neatly rolled up into one when it comes to coal. Here’s a good yardstick, then, to gauge progress. – Frederic Neumann
Thailand Economics Comment: A month after the coup Click here for PDF
A month has passed since the military took power on May 22. The “excitement” over the coup has subsided and financial markets calmed down: foreign selling in the stock market has abated, the Thai baht has stabilized, and Thailand’s 5Y credit default swap returned to pre-protest levels of
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Macro Asian Economics 17 July 2014
around 112bps. Find it challenging to keep up with events and all the latest policy announcements? Here’s a quick rundown of what’s happened. – Frederic Neumann & Nalin Chutchotitham
Korea, though: the country’s PMI continues to slide, in marked contrast to Taiwan’s. It’s important to keep things in perspective though: overall, activity remains subdued and new exports orders still lag the recovery in the West. Cooling Eurozone growth won’t help.
Chart of the Week: Here come the Chinese
– Frederic Neumann
Click here for PDF
Modi’s moment: The reforms India needs to tackle
For all the worries about China’s growth, and the impact of a slowdown on the rest of the region, there is at least one sector that is booming: tourism. The Chinese are taking to the skies and beaches across Asia in record numbers. This helps to offset, at least in part, slowing exports to the Mainland. What’s more, there is no end in sight: we’ve barely scratched the surface, with the equivalent of 7.1% of the population traveling overseas last year, roughly the same share as Japanese in 1989 and Koreans in 1995. Even if construction and industry cool further, this trend will likely stay uninterrupted. Strong income gains and the unquenched desire to explore the world will lead many more Chinese to book trips. We estimate that the total number of overseas travellers will rise from 98 million in 2013 to 202 million over the next ten years (or even 235 million if growth doesn’t begin to ease). Thailand, Taiwan, Singapore, Indonesia, and the Philippines will probably experience especially robust growth in arrivals, with an attendant boost to their current account balances. If you are planning to head for an Asian beach this summer, better book early. – Frederic Neumann & Rupali Sarkar
Summer bounce: What the latest PMIs mean for Asia Click here for PDF
Not too shabby. After a disappointing run, PMIs across Asia are heading up. China’s manufacturing sector is expanding again, helping to lift activity more broadly across the region. Japan, too, pummeled by the consumption tax hike in April is bouncing back. No-one told
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Click here for PDF
Stuck in the rough, India needs a hefty jolt of economic reforms to raise growth. Here’s a roadmap for the key issues that the new government will have to address. Modi’s strong mandate helps, but many reforms could take years to gain traction. – Frederic Neumann & Prithviraj Srinivas
India PMI Chartbook: Services outpaces manufacturing Click here for PDF
Manufacturing rose marginally, helped by higher output and export orders. Meanwhile, services shoots up due to improved confidence and new business. Price pressures pick up in tandem with growth, which is a worry for the RBI. – Frederic Neumann & Prithviraj Srinivas
Chart of the Week: Asia ‘n’ oil Click here for PDF
We’ve been fairly relaxed about this topic of late. Sure, growing tensions in the Middle East and lingering risks in Eastern Europe raise the possibility that crude prices could jump at some point. But, so far, oil markets seem to be unimpressed by political developments. Brent, after having barely risen to begin with, eased again over the past week. Still, it’s worth to review Asia’s sensitivity to higher oil prices. These work via three channels: trade, inflation, and subsidies. The overall exposure varies across countries. India remains the most vulnerable
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Macro Asian Economics 17 July 2014
followed by Indonesia, Thailand and Korea. However, in general, oil prices would have to climb a lot further to present a major inflation problem. The main worry, therefore, is growth and government budgets. Where not subsidised, a rising import bill would weigh on local demand. Elsewhere, expect wider fiscal deficits. In all, the issue seems manageable… well, as long as oil markets stay as nonchalant about politics as they have been of late.
2015 India Budget: Our multi-asset view
– Frederic Neumann & Rupali Sarkar
Chart of the Week: Corporate splurge
Asia's winds of change are really picking up: Latest op-ed published by Nikkei
Click here for PDF
Click here for PDF
Something is stirring. Politicians are talking about reform. Of course, that’s standard fare for anyone seeking or occupying higher office. But, this time, it feels as if real action might follow. That the region’s economies are in dire need of an overhaul is plain to see. Growth, while steady, remains well below the lofty rates Asia has long grown accustomed to. Leverage, in many places, has risen sharply, with debt masking a deterioration in growth fundamentals. Productivity – the ultimate key to lasting prosperity – has stumbled. – Frederic Neumann
Asian Economics Quarterly: It’ll only stretch so far Click here for PDF
Growth across Asia has settled into a comfortable range over the last several years. Much of the region’s resilience, however, can be explained by a steady extension in leverage. Yet credit-driven growth will eventually reach its limits, rendering structural reforms imperative.
Click here for PDF
India’s new government unveils its maiden budget. Government sticks to ambitious fiscal deficit targets. Positive overall tone should keep the country’s feel-good factor going. – Frederic Neumann, Jitendra Sriram, Paul Mackel, Andre de Silva & Devendran Mahendran
A couple of weeks ago, we noted that Asian households have leveraged up in the last several years. A number of clients then approached us, wondering if the same can also be said of corporations. Well, yes. But the issue needs to be kept in perspective: while overall corporate debt has risen sharply since the Global Financial Crisis, debt-to-equity ratios among listed firms are still much lower today than in 1996 (well, in most markets). Thus, in aggregate, corporate leverage doesn’t appear to be anywhere near the level seen at the onset of the Asian Financial Crisis. Not yet, anyways. Still, a closer look reveals that there may have been a more substantial build-up of debt among smaller, non-listed companies. But it is difficult to say what the exact leverage ratios in the sector are. In part, this is because smaller firms still fund themselves overwhelmingly from banks, rather than the bond market, with detailed data on balance sheets therefore not available. What complicates the matter as well is that some of this borrowing may carry explicit or implicit sovereign guarantees, which makes it harder to assess the true risk profile of this borrowing. Either way, there is no doubt that recent corporate activity was partly fuelled by rising leverage. – Frederic Neumann & Rupali Sarkar
– Qu Hongbin and Frederic Neumann
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Macro Asian Economics 17 July 2014
Back in positive territory: Asian electronics lead indicator points up
Downunder Digest: Australia’s different view on ‘macropru’
Click here for PDF
Click here for PDF
The June 2014 reading for our headline Asian electronics lead indicator (AELI) was 0.07, up from -0.04 in the previous month.
Australian authorities have, so far, decided macroprudential tools are not needed to manage the credit cycle. They have taken the view that if they get the microprudential and interest rate settings right, counter-cyclical macroprudential tools are superfluous. Australia’s prudential regulator has recently published guidelines to tighten up mortgage lending standards, but these fall well short of macroprudential tools.
– Ronald Man
The Asian Electronics Tracker: Allow for change Click here for PDF
Our new Asian Electronics Tracker (AET) plots the electronics production cycle in emerging Asia since 2004. We examine key drivers of electronics production over time and find that US indicators are now more important again. Monthly updates of the AET will be provided on how Asia’s key industry continues to evolve. – Ronald Man
Commodity prices snapshot: Higher in June due to rising oil prices Click here for PDF
Global commodity prices rose solidly in June, driven mostly by an increase in oil prices. Our indicator of the IMF commodity price index increased by +1.0% in June in USD terms, to be +6.1% higher y-o-y. In the first half of the year commodity prices have risen by +2.5% and while they are still -12% lower than their peak in 2011, they remain structurally high at +117% above their 1990s average level (in real terms). The rise in oil prices in the month reflects concerns about global supply as unrest in Syria spilled over to Iraq in the past month. Natural gas prices also rose, although other energy products generally saw price falls. Grain prices generally fell during the month although meat prices rose. Metals prices have mostly declined due to weaker demand from China and rising supply. – Paul Bloxham
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– Paul Bloxham
The RBA Observer: On hold for some time yet Click here for PDF
Lower commodity prices and a persistently high AUD are squeezing local income. The rebalancing of growth in the local economy has also lost some momentum recently. We still expect the cash rate’s low point to be 2.50%, but now expect the next hike to be in Q1 2015 not in Q4 2014; the cash rate is still expected to be 3.50% by end-2015. – Paul Bloxham
Australia's soft landing: Paul Bloxham's Oped in The Australian Click here for PDF
Australia is at the end of the largest mining investment boom in its history. In the next couple of years mining investment is expected to fall more sharply than ever before, so there is considerable uncertainty about the economic outlook. Some observers expect living standards to decline as a result. We are more optimistic and expect a soft landing. – Paul Bloxham
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Macro Asian Economics 17 July 2014
China Economic Spotlight: Rebalancing – a dangerous obsession Click here for PDF
China’s high national savings and investment ratios are leading to calls for a switch to consumption-led growth. But there is little in theory or empirical evidence to suggest that consumption-led growth would be more sustainable. We believe that rather than investing too much, China, at its current stage of development, is not investing enough. – Qu Hongbin & John Zhu
China rebalancing is a dangerous obsession: Qu Hongbin's and John Zhu's guest post in FT Beyondbrics Click here for PDF
For many, China’s growth model, which has delivered average annual GDP growth of 10 per cent over the past three decades, simply looks wrong: a national savings rate of around 50 per cent is unheard of in a large, modern economy. A typical diagnosis states that China invests too much and consumes too little. The prescription is “rebalancing” – moving the economy away from investment towards consumption-led growth. However, a consumption-led growth model has little in theory or evidence to support it. – Qu Hongbin & John Zhu
Indonesia elections - Widodo vs Prabowo: The heat is on Click here for PDF
Widodo, seen as a reformer, is still the favourite, but Prabowo is catching up. Their platforms are quite similar and contain some economic positives, but also have limitations. Even if Widodo wins, investors will need to temper their expectations.
2014 Indonesia election: Our multiasset view Click here for PDF
Based on a quick count of votes, Jokowi may be declared winner on 21 or 22 July. This raises market hopes that key economic issues will be dealt with. Yet any new administration will have its work cut out in the years ahead. – Su Sian Lim, Paul Mackel, Andre de Silva, Herald van der Linde, Devendran Mahendran & Pin Ru Tan
Bank of Japan Watch: Shaking off the post-tax hike blues Click here for PDF
Inflation is expected to slow over the summer; but the BoJ is likely to stick to its upbeat 2% FY2015 CPI forecast. Recent data have been weak, suggesting that the post-tax hike slowdown may be sharper than policymakers expected. The BoJ, however, remains optimistic on the 3Q 2014 growth outlook and is likely to keep policy on hold through FY2014. – Izumi Devalier
Korea Economics Comment: Export prices and the won Click here for PDF
Korean exporters have chosen to support export volumes in a strong-won environment by keeping export prices in contract currency terms unchanged over the past two years. But the negative impact on KRW profits is cushioned by lower import costs. As Korea's export growth trends up, the economy's output gap is projected to close by year-end. We expect the Bank of Korea's next move to be a 25bp hike in Q3 2014, most likely September. – Ronald Man
– Su Sian Lim
49
abc
Macro Asian Economics 17 July 2014
Korea central bank watch: Pushing back the rate hikes
be considering productivityenhancing reform and policies to boost savings.
Click here for PDF
– Paul Bloxham
A softer tone from Governor Lee, weak domestic data, and tougher external outlook suggest rates in Korea will stay low. But we believe the Bank of Korea will not cut its policy rate again as monetary conditions are sufficiently accommodative. We expect the policy rate to stay at 2.50% on 10 July and have pushed back the timing of a 25bp hike from Q3 2014 to Q1 2015.
Philippines central bank watch: What would it take for the BSP to raise rates?
– Ronald Man
Malaysia Central Bank Watch: Time for an ‘adjustment’ Click here for PDF
It will be a close call, but comments from BNM in May that policy ‘may need to be adjusted’ suggest a 25bp hike to 3.25%. Despite macro-prudential measures, loan growth particularly in mortgages remains relatively robust, adding to high household debt levels. The surge in the 3mth KLIBOR since late 2013 suggests onshore investors fully expect further tightening this week. – Su Sian Lim & Abanti Bhaumik
New Zealand Economics Comment: Managing a 'Rock Star' Click here for PDF
New Zealand's economy is booming. This week's GDP print is expected to show that it is outperforming almost all other OECD economies. In response the RBNZ has been the first developed world central bank to lift interest rates this cycle. The high NZD is also helping to contain inflation. But if New Zealand is to see sustained economic growth more needs to be done. Weaning New Zealand off cheap credit is a commendable move, but steps should also be taken to ensure that its ‘rock star’ economy does not turn out to be a 'one hit wonder'. In the lead up the 20 September election, policymakers should
50
Click here for PDF
Headline inflation picked up to 4.5% y-o-y in May from 4.1% in April; higher transport fare and food prices should push CPI closer to the upper bound of the BSP’s 3-5% target. GDP slowed to 5.7% y-o-y in Q1 2014 from 6.3% in Q4 2013; already, April government spending and exports performance show that the economy is slowing further into Q2. To temper inflationary pressures, the BSP will likely hike the RRR by another 1ppt; growth concerns, however, would cause the BSP to delay the policy and SDA rate hike until the July meeting. – Trinh D Nguyen
Thailand’s prospects: Beyond politics Click here for PDF
Military intervention on May 22 ended the political impasse and the government recovered its full power over fiscal spending. We cut our 2014 GDP forecast to 1.4% from 3.0% due to weak demand in Q1, but expect substantially faster growth in 2015. With private sector sentiment improving and domestic demand stabilizing, we expect the Bank of Thailand to remain on hold. – Nalin Chutchotitham
Thailand: BOT keeps policy rate at 2% Click here for PDF
MPC voted unanimously today to keep the policy rate at 2.0%, saying this was sufficiently accommodative. It expects the economic outlook to improve, given the significant reduction in political uncertainty. 2015 GDP growth is now
Macro Asian Economics 17 July 2014
abc
projected at over 5.0%, though the BOT revised down its 2014 GDP forecast to 1.5%. – Nalin Chutchotitham
Vietnam at a glance - Privatization: Time to blossom? Click here for PDF
HSBC PMI expanded in June but the pace eased to 52.3 from 52.5 due to weaker external demand; the manufacturing sector accelerated to 9.1% y-oy in Q2 from 6.5% in Q1 2014. Manufacturing and exports will likely grow faster, but domestic demand will probably stay sluggish; we track banking, public investment and SOE reforms to determine Vietnam's outlook. Key reforms were passed in 2013 and 2014, including laws to speed up privatization; the state's share of output and investment is declining but it will remain dominant. – Trinh D Nguyen
51
Asian Economics Desk Reference
14 July 2014
HSBC US and Europe policy rate outlook (% pa) — (rate hikes/increases denoted in red, grey denotes rate cuts)
United States Eurozone UK
2Q 2014
3Q 2014f
4Q 2014f
1Q 2015f
2Q 2015f
3Q 2015f
4Q 2015f
0.00-0.25 0.25 0.50
0.00-0.25 0.15 0.50
0.00-0.25 0.15 0.50
0.00-0.25 0.15 0.50
0.00-0.25 0.15 0.75
0.00-0.25 0.15 1.00
0.50 0.15 1.25
0.75 0.15 1.25
NB: Forecast in italics. Source: HSBC
HSBC Asia FX policy sustainability dashboard — (negative readings denoted in red) FX reserves (USD bn)
S.T. debt Cover (%)
C/A 2014f (% of GDP)
C/A 2015f (% of GDP)
n/a n/a 731 788 104 50 151 35 7 n/a 6 118 64 10
61 12 3,948 321 289 108 367 120 81 278 9 423 168 30
n/a n/a 18.5 n/a 36.2 46.3 41.1 29.0 8.6 n/a 64.0 27.9 37.8 33.0
-1.7 -2.8 1.9 3.4 -2.1 -2.8 5.3 5.2 3.0 19.0 -4.8 10.3 2.9 3.3
-1.0 -3.9 1.8 5.7 -2.5 -2.5 4.2 6.1 2.4 21.1 -5.2 7.7 2.6 0.9
Australia New Zealand China Hong Kong India Indonesia Korea Malaysia Philippines Singapore Sri Lanka Taiwan Thailand Vietnam
___________ Exports % yr ____________ 3mma (Latest) 2014f 2015f -2.2 17.3 5.0 2.4 5.7 -3.4 3.5 8.0 6.8 1.3 14.5 3.2 -1.6 15.5
14 July 2014
HSBC Global real GDP growth forecast (% yr) — (red denotes above consensus, grey denotes below consensus)
1Q 2014
S.T. ext debt (USD bn)
Asian Economics Desk Reference
10.8 8.4 6.2 3.4 7.4 -2.0 5.5 7.2 7.8 3.8 9.4 3.5 2.5 15.9
6.3 1.2 9.1 3.4 8.7 -0.7 8.6 7.8 8.0 8.6 11.2 4.8 6.8 14.8
NB: (1) short-term debts are 2014 forecasts and FX reserves are the latest released; forecasts in italics; (2) Re-exports are excluded from Taiwan’s export numbers; (3) USD export values are used. (4) BoP exports: goods only. Source: CEIC, HSBC
1Q 14 2Q 14e 3Q 14f 4Q 14f 1Q 15f 2012 2013 US UK Eurozone Australia New Zealand Bangladesh China Hong Kong India Indonesia Japan Korea Malaysia Mongolia Philippines Singapore Sri Lanka Taiwan Thailand Vietnam Asia Asia x C Asia. x J Asia. x. J & C
-2.9 3.2 0.9 3.5 3.5 n/a 7.4 2.5 4.6 5.2 3.0 3.9 6.2 n/a 5.7 4.7 7.8 3.1 -0.6 4.8 5.4 3.7 6.1 4.2
4.2 3.3 0.8 2.7 3.9 n/a 7.3 3.0 5.0 5.2 0.5 3.6 5.7 n/a 5.6 2.1 7.6 2.9 0.7 5.5 4.7 2.6 6.1 4.3
3.0 3.1 1.0 2.6 3.5 n/a 7.3 2.9 4.8 5.2 0.7 3.0 5.0 n/a 6.2 3.7 7.3 3.0 2.5 5.6 4.7 2.7 6.0 4.2
2.7 3.0 1.0 2.5 3.2 n/a 7.6 3.1 5.4 5.2 1.2 3.0 4.1 n/a 6.2 2.8 6.9 3.2 2.9 6.0 5.0 3.0 6.3 4.4
2.5 2.8 1.0 2.4 3.1 n/a 7.8 3.1 5.9 5.7 0.2 2.8 4.8 n/a 6.1 3.4 7.2 3.2 7.3 5.5 5.1 2.8 6.6 4.8
2.8 0.2 -0.6 3.6 2.6 6.0 7.7 1.5 4.5 6.3 1.4 2.3 5.6 12.2 6.8 2.5 6.4 1.5 6.5 5.2 5.1 3.0 6.3 4.2
1.9 1.7 -0.4 2.4 2.7 6.1 7.7 2.9 4.7 5.8 1.5 3.0 4.7 12.0 7.2 3.9 7.2 2.1 2.9 5.4 5.2 3.1 6.3 4.3
2014f Consensus 1.7 3.2 0.9 2.8 3.5 6.2 7.4 2.9 5.3 5.2 1.4 3.4 5.2 10.0 5.9 3.6 7.4 3.1 1.4 5.5 5.0 3.1 6.2 4.4
2.5 2.9 1.1 3.1 3.6 5.9 7.3 3.3 5.4 5.3 1.5 3.6 5.3 n/a 6.4 3.8 7.3 3.2 1.3 5.6 5.0 3.2 6.2 4.5
2015f
Consensus Trend Forecasts
2.7 2.5 1.1 3.2 3.0 6.6 7.7 3.7 6.3 6.0 1.3 3.7 5.0 12.0 6.1 4.1 7.2 3.4 5.0 5.8 5.4 3.5 6.7 5.2
3.1 2.5 1.4 3.0 3.0 6.2 7.1 3.5 6.2 5.7 1.2 3.7 5.1 n/a 6.3 4.0 7.1 3.6 4.2 5.9 5.1 3.4 6.3 5.1
n/a n/a n/a 3.0 2.5 6.1 8.5 3.9 8.0 7.0 0.7 3.4 5.0 n/a 4.9 4.3 7.1 4.7 4.5 5.8 5.3 3.2 7.3 5.8
NB: Consensus as of June 2014; India and Bangladesh annual data are for fiscal year; Asia aggregate data are nominal GDP USD weighted; US quarterly data are q-o-q annualised; forecasts in italics, actual in normal font. Regional Consensus forecasts are calculated using Consensus Economics country forecasts re-weighted on Nominal GDP basis in order to make them comparable to HSBC Asia aggregate forecasts. Source: HSBC, CEIC, Consensus Economics
HSBC Asia inflation forecast (headline CPI, avg.% yr) — (red denotes above consensus, grey denotes below consensus) PMI Manufacturing — (Red denotes above 50 & stronger; pink denotes above 50 & falling, or unchanged; light grey denotes below 50 & rising, or unchanged; dark grey denotes below 50 & falling) ______ PMI- Manufacturing ______ Jun May Apr Australia New Zealand China HSBC China NBS India Indonesia Japan Korea Singapore Taiwan Vietnam
48.9 53.3 50.7 51.0 51.5 52.7 51.5 48.4 50.5 54.0 52.3
49.2 52.6 49.4 50.8 51.4 52.4 49.9 49.5 50.8 52.4 52.5
44.8 54.3 48.1 50.4 51.3 51.1 49.4 50.2 51.1 52.3 53.1
___________ Output ____________ __________New Orders __________ Jun May Apr Jun May Apr 49.4 55.9 51.8 53.0 52.4 52.5 52.4 46.6 50.3 56.0 52.0
51.6 55.1 49.8 52.8 51.7 52.8 48.9 49.2 51.5 54.3 52.4
42.6 55.1 47.9 52.5 51.7 49.8 46.2 49.8 52.3 54.0 53.7
51.2 50.9 51.8 52.8 53.0 54.2 52.3 48.2 51.0 56.6 53.3
55.1 51.3 50.0 52.3 53.2 54.2 49.6 49.4 52.0 53.5 54.2
41.8 54.2 47.4 51.2 52.5 52.7 47.4 50.0 52.4 54.5 54.9
Source: Markit, HSBC
1Q14 2Q14e 3Q14f 4Q14f 1Q15f 2012 2013 2014f Consensus Australia New Zealand Bangladesh China Hong Kong India Indonesia Japan Korea Malaysia Mongolia Philippines Singapore Sri Lanka Taiwan Thailand Vietnam
2.9 1.5 7.5 2.3 4.1 8.4 7.8 1.5 1.1 3.5 n/a 4.1 1.0 4.2 0.8 2.0 4.8
3.0 2.0 7.5 2.4 3.6 8.3 7.0 3.4 1.7 3.3 n/a 4.4 2.8 3.6 1.6 2.5 4.7
2.7 1.9 7.6 2.4 4.3 8.4 4.1 3.4 2.1 3.0 n/a 4.7 2.5 6.6 1.9 2.5 5.4
2.7 2.2 7.3 2.5 3.3 7.4 5.1 3.3 2.5 2.3 n/a 4.2 2.5 8.9 1.6 2.6 5.6
2.8 1.8 2.4 2.5 1.1 1.1 7.2 7.2 7.5 2.8 2.7 2.6 3.5 4.1 4.3 8.3 10.2 9.5 4.3 4.0 6.4 3.3 0.0 0.4 2.8 2.2 1.3 1.8 1.7 2.1 n/a 14.3 10.5 4.1 3.2 2.9 3.1 4.6 2.4 8.9 7.5 6.9 1.6 1.9 0.8 2.5 3.0 2.2 5.5 9.1 6.6
2.8 1.9 7.5 2.4 3.8 8.1 5.9 2.9 1.9 3.0 10.0 4.4 2.2 5.8 1.5 2.4 5.1
2.7 1.8 7.3 2.5 3.9 7.8 6.2 2.6 1.8 3.3 n/a 4.2 2.2 6.0 1.2 2.4 5.6
Target* 2 to 3 1 to 3 7.0 3.5 4.6 8.0 3.5-5.5 2.0 2.5 to 3.5 2.0 to 3.0 n/a 3 to 5 1.5 to 2.5 5 to 7 1.5 0.5 to 3.0 less than 10
2015f Consensus Trend Forecasts 2.9 2.5 7.5 2.9 3.9 7.7 4.8 2.0 2.9 3.2 11.0 4.2 3.1 7.2 1.6 2.6 5.9
2.6 2.2 7.2 2.9 3.6 7.0 5.7 1.8 2.5 3.6 n/a 3.9 2.7 6.7 1.8 2.8 6.8
2.5 2.0 6.9 3.0 3.2 5.5 5.0 0.1 3.4 2.5 n/a 5.0 3.0 7.2 1.6 3.5 5.9
NB: Australia and New Zealand are quarterly data; India annual data are for fiscal year and target refers to end 2014 target as per new monetary policy framework transition path; *Thailand target for core inflation; Sri Lanka targets money supply; Malaysia has implicit preference; Hong Kong government forecasts underlying CPI for 2014 at 3.7%; and composite CPI at 4.6%; Taiwanese directorate general of budget’s forecasts for 2014 is 1.5%; forecasts in italics; Singapore CPI estimate by MAS; JP: 2014 CPI forecast includes the effects of the April 2014 consumption tax hike. Source: HSBC, CEIC, Various central banks
For inquiries please contact Asian Economics Team:
[email protected], Phone: +852 2822 4556
abc
For inquiries please contact Asian Economics Team:
[email protected], Phone: +852 2822 4556
abc
Asian Economics Desk Reference
14 July 2014
HSBC Asia policy rate forecast % pa (red denotes rate hikes or HSBC above implied rate, grey denotes rate cuts or HSBC below implied rate) Current Australia New Zealand Bangladesh China Hong Kong India Repo Indonesia Japan Korea Malaysia Philippines Sri Lanka Taiwan Thailand Vietnam
Last Move/Date
Next MPC
2Q 14
3Q 14f
4Q 14f
1Q 15f
2.50 -25bp (Aug-2013) 3.25 +25bp (Jun-2014) 7.25 -50bp (Feb-2013) 6.00 -31bp (Jul-2012) 0.50 -100bp (Dec-2008) 8.00 +25bp (Jan-2014) 7.50 +25bp (Nov-2013) 0.0-0.10 (Oct-2010) 2.50 -25bp (May-2013) 3.25 +25bp (July-2014) 3.50 -25bp (Oct-2012) 8.00 -50bp (Jan-2014) 1.875 +12.5bp (Jun-2011) 2.00 -25bp (Mar-2014) 5.00 -50bp (Mar-2014)
5-Aug 24-Jul n/a n/a n/a 5-Aug 14-Aug 15-Jul 14-Aug 18-Sep 31-Jul 14-Jul 25-Sep 6-Aug n/a
2.50 3.25 7.25 6.00 0.50 8.00 7.50 0.05 2.50 3.00 3.50 8.00 1.875 2.00 5.00
2.50 3.50 7.25 6.00 0.50 8.25 7.50 0.05 2.50 3.50 4.00 8.00 1.875 2.00 5.00
2.50 3.75 7.25 6.00 0.50 8.25 7.50 0.05 2.50 3.50 4.00 8.00 1.875 2.00 5.00
2.75 4.00 7.25 6.00 0.50 8.25 7.50 0.05 2.75 3.50 4.00 8.50 2.000 2.00 6.00
2.38 3.65 n/a n/a n/a 7.94 n/a n/a 2.40 3.48 n/a n/a 1.980 2.42 n/a
2.34 3.84 n/a n/a n/a 7.93 n/a n/a 2.39 3.46 n/a n/a 2.000 2.08 n/a
2.35 3.66 n/a n/a n/a 7.27 n/a n/a 2.44 3.66 n/a n/a 2.100 2.37 n/a
Pre-crisis level (15 Sep 2008)
Cumulative change to date
Current
HSBC forecast
17.5/16.5
+250/150 bps
20.0/18.0
9.0
-500 bps
4.00
RRR likely to be unchanged, but there is room for cuts if needed Expect CRR to be on hold
NB: Two RRR rates for China refer to the ratio for large banks and the ratio for small banks, respectively. Source: HSBC & Bloomberg
HSBC Asia public debt forecast — (grey denotes improvement, red denotes deterioration) Budget balance (Local currency bn) 2013e 2014f 2015f Australia New Zealand Bangladesh China Hong Kong India Indonesia Japan Korea Malaysia Mongolia Philippines Singapore Sri Lanka Taiwan Thailand Vietnam
-18 -3 -675 -1,060 22 -5,245 -225,036 -39,008 14,200 -39 -297 -164 4 -519 -221 -239 -205,540
-51 -2 -759 -1,350 32 -5,197 -251,504 -35,788 13,500 -39 -1,616 -214 3 -540 -203 -342 -269,354
US UK Euro Australia New Zealand China Hong Kong India Indonesia Japan Korea Malaysia Philippines Singapore Taiwan Thailand
1.7 2.0 0.3 2.8 4.1 3.9 1.4 8.7 7.7 0.1 2.8 3.7 3.5 1.1 1.2 3.2
1.4 2.4 0.2 3.1 4.2 3.8 1.4 8.4 7.7 0.1 3.2 4.2 4.0 1.2 1.1 3.2
1.0 2.4 0.2 3.2 4.4 3.9 1.3 8.1 7.8 0.1 3.3 4.2 4.1 1.1 1.1 3.4
1.5 2.4 0.5 3.7 4.8 4.0 1.5 8.0 7.8 0.1 3.7 4.3 4.1 1.4 1.3 3.7
2.6 2.6 1.2 3.4 4.4 4.1 2.0 8.8 8.0 0.5 3.1 4.0 3.9 2.3 1.6 3.8
2.3 2.9 1.1 3.7 4.5 4.0 2.0 9.0 8.5 0.6 3.3 4.5 4.4 2.3 1.6 3.8
2.1 3.0 1.1 3.8 4.7 4.1 1.9 8.6 8.2 0.7 3.5 4.4 4.5 2.1 1.6 3.9
Rates strategy comment 12m view
2.5 2.8 1.4 4.3 5.2 4.3 2.3 8.6 8.1 0.7 3.8 4.6 4.5 2.5 1.8 4.2
n/a n/a n/a Steepening Flattening Steepening Neutral Steepening Flattening Flattening Flattening Steepening Flattening Flattening Neutral Steepening
Note: Rates strategy recommendations from HSBC: Asia-Pac Rates: When carry meets inflation as of 26 June 2014; forecasts in italics, 3m compares to 3Q-2014, 6M to 4Q-2014 and 12 months to 2Q-2015. Source: HSBC, CEIC & Bloomberg
HSBC Asia reserve requirement outlook (%)
India
_______________ 5yr ________________ ______________ 10yr _______________ current +3m +6m +12m current +3m +6m +12m
2Q 15f 3M FW 6M FW 12M FW 3.00 4.25 7.25 6.00 0.50 8.25 7.50 0.05 3.00 3.50 4.00 8.75 2.125 2.25 6.00
14 July 2014
HSBC Asia bond yields forecast (% pa)
NB: New Zealand and Australia implied rates are OIS swap rates; the rest implied rates are based on recommendation from our local rates strategy team. Source: Bloomberg, CEIC, HSBC
China
Asian Economics Desk Reference
-31 0 -823 -1,400 18 -5,099 -245,889 -32,149 16,240 -36 -1,589 -278 4 -561 -185 -271 -272,227
___ Budget balance (% of GDP) ____ _____ Public debt (% of GDP) ______ 2013e 2014f 2015f 2013e 2014f 2015f -1.2 -2.1 -5.0 -1.9 1.0 -4.5 -2.5 -8.3 1.1 -3.9 -1.7 -1.4 1.1 -5.9 -1.5 -2.0 -5.7
-3.1 -1.0 -5.0 -2.2 1.4 -4.5 -2.5 -7.3 0.9 -3.6 -7.5 -1.7 0.7 -5.5 -1.3 -2.8 -6.7
-1.8 0.0 -4.8 -2.0 1.0 -4.0 -2.2 -6.4 1.0 -2.9 -6.0 -2.0 0.9 -5.0 -1.2 -2.0 -6.0
27.9 36.7 42.8 39.5 33.0 71.9 26.2 243.4 32.5 54.7 n/a 49.2 103.7 74.7 41.3 44.0 55.0
30.0 35.8 43.2 38.4 32.0 73.1 30.0 245.2 31.4 53.4 n/a 43.9 100.2 74.2 40.8 46.9 59.1
32.0 33.3 43.5 36.9 31.0 72.3 30.5 247.9 29.4 49.8 n/a 41.7 100.1 71.5 39.9 46.4 59.9
HSBC Asia FX forecast (period end, vs. USD) (red denotes appreciation or HSBC above forward rate, grey denotes depreciation or HSBC below forward rate)
Australia New Zealand China Hong Kong India Indonesia Japan Korea Malaysia Philippines Singapore Sri Lanka Taiwan Thailand Vietnam Euro Sterling
1Q 14
2Q 14
3Q 14f
4Q 14f
1Q 15f
2Q 15f
% chg 2014
3M FW
6M FW
12M FW
0.89 0.85 6.22 7.76 60.10 11,404 102.98 1,069 3.28 45.00 1.26 130.73 30.51 32.34 21,098 1.38 1.67
0.93 0.85 6.26 7.80 60.09 11,969 102.00 1,020 3.22 44.80 1.27 130.34 30.20 32.80 21,330 1.34 1.69
0.87 0.86 6.20 7.80 60.00 12,000 103.00 1,010 3.32 45.00 1.28 130.00 30.00 33.40 21,250 1.30 1.65
0.86 0.87 6.14 7.80 60.00 12,250 101.00 1,000 3.33 45.20 1.28 130.00 29.80 34.00 21,250 1.28 1.62
0.86 0.88 6.12 7.80 60.50 12,500 99.00 995 3.35 45.40 1.28 130.00 29.70 34.30 21,250 1.25 1.59
0.86 0.88 6.11 7.80 61.00 12,500 99.00 990 3.35 45.40 1.28 130.00 29.60 34.50 21,500 1.25 1.56
-8.51 -1.14 -0.16 0.65 -0.18 5.60 0.00 -1.96 4.39 3.67 3.23 -0.30 -0.67 5.59 0.24 -5.88 -3.57
0.93 0.87 6.19 7.75 60.77 11,730 101.00 1,023 3.20 43.60 1.24 n/a 30.00 32.30 21,407 1.36 1.71
0.93 0.87 6.21 7.75 61.73 11,914 101.00 1,026 3.22 43.60 1.24 n/a 29.90 32.40 21,675 1.36 1.71
0.92 0.85 6.25 7.75 63.75 12,295 101.00 1,032 3.25 43.80 1.24 n/a 29.70 32.60 22,126 1.36 1.70
NB: forecasts in italics;% change from July 11, 2014 to end 4Q 2014; FW rates are from Bloomberg FXFC function using forward rate; for forward rate comparison, 3M compares to 3Q-2014, 6M to 4Q-2014, and 12M to 2Q-2015. Source: HSBC, Bloomberg
NB: India figures are in fiscal year, forecasts in italics, Japan and Malaysia are gross central government debt; HK budget balance data is the government’s revised estimate for 2013-14 fiscal year, released in February 2014; HK public debt figures are sourced from IMF, WEO October 2013. Source: HSBC, CEIC, IMF
For inquiries please contact Asian Economics Team:
[email protected], Phone: +852 2822 4556
abc
For inquiries please contact Asian Economics Team:
[email protected], Phone: +852 2822 4556
abc
Economic Calendar – EM Asia
July 2014
Main EM Asia economic indicators calendar Date
Location
1-Jul 1-Jul 1-Jul 1-Jul 1-Jul 1-Jul 1-Jul 1-Jul 1-Jul 1-Jul 1-Jul 1-Jul 1-Jul 2-Jul 3-Jul 3-Jul 3-Jul 3-Jul 3-Jul 3-Jul 4-Jul 4-Jul 7-Jul 7-Jul 8-Jul 9-Jul 9-Jul 10-Jul 10-Jul 10-Jul 10-Jul 10-Jul 10-Jul 10-Jul
Korea Korea Korea Korea China China Taiwan Vietnam Indonesia Thailand Indonesia Thailand India Singapore China China China India India Hong Kong Philippines Hong Kong Taiwan Taiwan Taiwan China China China China Korea China China Malaysia Indonesia
Local time 07:00 08:00 08:00 08:00 09:00 09:45 10:00 10:00 11:00 12:00 12:00 12:00 13:00 21:30 09:00 09:45 09:45 13:00 13:00 16:30 09:00 10:30 16:00 16:00 08:30 09:30 09:30 n/a n/a 09:00 10:00 10:00 18:00 n/a
Economic Calendar – EM Asia
July 2014
Main EM Asia economic indicators calendar Subject CPI Exports Imports PMI-Manufacturing PMI-Manufacturing HSBC PMI-Manufacturing final PMI-Manufacturing PMI-Manufacturing PMI-Manufacturing CPI CPI CPI Core PMI-Manufacturing PMI-Composite PMI: Non-manufacturing HSBC PMI-Services HSBC PMI-Composite PMI-Services PMI-Composite Retail Sales Value CPI PMI-Composite Exports Imports CPI PPI CPI Aggregate Financing RMB M2 7-Day Repo Rate Exports Imports Overnight Policy Rate Reference Rate
Unit
Period of data
Previous
% y-o-y % y-o-y % y-o-y Index Index Index Index Index Index % y-o-y % y-o-y % y-o-y Index Index Index Index Index Index Index % y-o-y % y-o-y Index % y-o-y % y-o-y % y-o-y % y-o-y % y-o-y RMB bn % y-o-y % % y-o-y % y-o-y % %
Jun Jun Jun Jun Jun Jun Jun Jun Jun Jun Jun Jun Jun Jun Jun Jun Jun Jun Jun May Jun Jun Jun Jun Jun Jun Jun Jun Jun 10-Jul Jun Jun 10-Jul 10-Jul
1.7 -1.0 0.3 49.5 50.8 50.8 52.4 52.5 52.4 2.6 7.3 1.8 51.4 50.8 55.5 50.7 50.2 50.2 50.7 -9.9 4.5 49.1 1.4 -2.3 1.6 -1.4 2.5 1404.5 13.4 2.50 7.0 -1.6 3.00 7.50
Date
Location
11-Jul 14-Jul 14-Jul 14-Jul 14-Jul 14-Jul 14-Jul 15-Jul 16-Jul 16-Jul 16-Jul 16-Jul 16-Jul 16-Jul 17-Jul 18-Jul 18-Jul 21-Jul 21-Jul 22-Jul 23-Jul 23-Jul 24-Jul 24-Jul 24-Jul 24-Jul 27-Jul 30-Jul 30-Jul 31-Jul 31-Jul 31-Jul 31-Jul
India Singapore Singapore Sri Lanka Sri Lanka India Singapore Philippines China China China China China Malaysia Singapore China China Taiwan Hong Kong China Singapore Taiwan Korea Korea China Vietnam China Korea Korea Taiwan Philippines Hong Kong Sri Lanka
Local time 20:00 08:00 08:00 10:00 10:00 14:30 n/a n/a 10:00 10:00 10:00 10:00 10:00 17:00 08:30 09:30 09:45 16:00 16:30 10:00 13:00 16:00 07:00 07:00 09:45 n/a 09:30 07:00 07:00 08:30 16:00 16:30 17:30
Subject Industrial Production GDP advance GDP, saar advance CBSL Standing Deposit Rate CBSL Standing Lending Rate WPI Retail Sales Overseas Workers Remittances Fixed Assets Ex Rural - ytd Retail Sales Industrial Production GDP-sa GDP CPI Non-oil Domestic Exports Property Prices MNI Business Indicator Export Orders CPI Conference Board Leading Economic Index CPI Industrial Production GDP-sa advance GDP advance HSBC PMI-Manufacturing flash CPI Industrial Profits Industrial Production sa Industrial Production GDP Overnight Borrowing Rate Retail Sales Value CPI
Unit
Period of data
Previous
% y-o-y % y-o-y % q-o-q % % % y-o-y % y-o-y % y-o-y % y-o-y % y-o-y % y-o-y % q-o-q % y-o-y % y-o-y % y-o-y % Index % y-o-y % y-o-y Index % y-o-y % y-o-y % q-o-q % y-o-y Index % y-o-y % y-o-y % m-o-m % y-o-y % y-o-y % % y-o-y % y-o-y
May 2Q-2014 2Q-2014 14-Jul 14-Jul Jun May May Jun Jun Jun 2Q-2014 2Q-2014 Jun Jun Jun Jul Jun Jun Jun Jun Jun 2Q-2014 2Q-2014 Jul Jul Jun Jun Jun 2Q-2014 31-Jul Jun Jul
3.4 4.9 2.3 6.50 8.00 6.0 -9.0 5.2 17.2 12.5 8.8 1.4 7.4 3.2 -6.6 4.7 3.7 2.7 5.2 0.9 3.9 50.7 5.0 8.9 -2.7 -2.1 3.1 3.50 -4.1 2.8
Source: Bloomberg
Source: Bloomberg
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For inquiries please contact Asian Economics Team:
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Economic Calendar – DM
July 2014
Main DM economic indicators calendar Date
Location
1-Jul 1-Jul 1-Jul 1-Jul 1-Jul 2-Jul 2-Jul 2-Jul 3-Jul 3-Jul 3-Jul 3-Jul 3-Jul 3-Jul 3-Jul 3-Jul 3-Jul 3-Jul 3-Jul 4-Jul 7-Jul 10-Jul 10-Jul 10-Jul 10-Jul 10-Jul 10-Jul 10-Jul 14-Jul 15-Jul 15-Jul 15-Jul 15-Jul 15-Jul 15-Jul 15-Jul 16-Jul 16-Jul 16-Jul 17-Jul 17-Jul 17-Jul 17-Jul
Australia EMU EMU US US EMU EMU US Australia EMU EMU EMU EMU EMU EMU EMU US US US Germany Germany US Japan Japan Australia Australia EMU US Japan Australia Germany Germany US US Japan Japan New Zealand New Zealand US US EMU EMU US
Local time 12:30 16:00 17:00 22:00 22:00 17:00 17:00 22:00 09:30 16:00 16:00 17:00 17:00 19:45 19:45 19:45 20:30 20:30 20:30 14:00 14:00 02:00 07:50 07:50 09:30 09:30 16:00 20:30 12:30 09:30 17:00 17:00 20:30 20:30 n/a n/a 06:45 06:45 21:15 02:00 17:00 17:00 20:30
Economic Calendar – DM
July 2014
Main DM economic indicators calendar Subject Cash Rate Target Manufacturing PMI final Unemployment Rate ISM Manufacturing Construction Spending annual revisions PPI PPI Factory Orders Building Approvals Services PMI final Composite PMI final Retail Sales Retail Sales ECB Main Refinancing Rate Marginal Lending Facility ECB Deposit Facility Rate Nonfarm Payrolls Unemployment Rate Initial Jobless Claims Factory Orders Industrial Production sa Fed releases Meeting Minutes Machine Orders Machine Orders Employment Change Unemployment Rate ECB Monthly Report Initial Jobless Claims Industrial Production final RBA releases Meeting Minutes ZEW Survey Current Situation ZEW Survey Expectations Retail Sales Empire Manufacturing 2014 Monetary Base Target BoJ Monetary Policy Statement CPI CPI Industrial Production U.S. Federal Reserve Releases Beige Book CPI CPI final Housing Starts
Unit
Period of data
Previous
% Index % Index % m-o-m % y-o-y % % m-o-m Index Index % m-o-m % y-o-y % % % 000s 000s 000s % m-o-m % m-o-m % m-o-m % y-o-y 000s % 000s % m-o-m Index Index % m-o-m Index JPY trn % y-o-y % q-o-q % m-o-m % m-o-m % y-o-y 000s
1-Jul Jun May Jun May May May May Jun Jun May May 3-Jul 3-Jul 3-Jul Jun Jun Wk Jun 28 May May Jul May May Jun Jun Jul Wk Jul 5 May Jul Jul Jul Jun Jul 15-Jul Jul 2Q-2014 2Q-2014 Jun Jul Jun Jun Jun
2.50 51.9 11.6 55.4 -0.1 -1.2 0.8 -5.8 52.8 52.8 -0.2 1.8 0.15 0.4 -0.1 224.0 6.3 313.0 3.4 -0.3 -9.1 17.6 -4.8 5.8 315.0 0.5 67.7 29.8 0.3 19.3 270.0 1.5 0.3 0.6 -0.1 0.5 1001.0
Date
Location
17-Jul 17-Jul 18-Jul 22-Jul 22-Jul 22-Jul 22-Jul 22-Jul 22-Jul 22-Jul 23-Jul 23-Jul 23-Jul 23-Jul 24-Jul 24-Jul 24-Jul 24-Jul 24-Jul 24-Jul 24-Jul 24-Jul 24-Jul 25-Jul 25-Jul 25-Jul 25-Jul 25-Jul 25-Jul 25-Jul 28-Jul 29-Jul 30-Jul 30-Jul 30-Jul 31-Jul 31-Jul 31-Jul 31-Jul 31-Jul 31-Jul 31-Jul
US US US EMU US US US US US US Australia Australia EMU EMU New Zealand Japan Japan Japan EMU EMU EMU US US Japan Japan Germany US US US US US US Japan EMU US US US US Australia EMU US US
Local time 20:30 22:00 21:55 17:00 20:30 20:30 20:30 20:30 22:00 22:00 09:30 09:30 17:00 22:00 05:00 07:50 07:50 07:50 16:00 16:00 16:00 20:30 22:00 07:30 07:30 16:00 20:30 20:30 20:30 20:30 22:00 22:00 07:50 17:00 20:30 02:00 02:00 02:00 09:30 17:00 20:30 21:45
Subject Initial Jobless Claims Philadelphia Fed Business Outlook Univ. of Michigan Confidence prelim Government Debt CPI CPI Ex Food and Energy CPI CPI Ex Food and Energy Richmond Fed Manufact. Index Existing Home Sales CPI CPI Government Deficit Consumer Confidence advance RBNZ Official Cash Rate Trade Balance Exports Imports Manufacturing PMI prelim Services PMI prelim Composite PMI prelim Initial Jobless Claims New Home Sales National CPI Tokyo CPI Ex-Fresh Food IFO Business Climate Durable Goods Orders Durables ex transportation Cap Goods Ship Nondef Ex Air Cap Goods Orders Nondef Ex Air Pending Home Sales Consumer Confidence Industrial Production prelim Consumer Confidence final GDP Annualized advance Fed Pace of Treasury Purchases Fed Pace of MBS Purchases FOMC Rate Decision Building Approvals Unemployment Rate Initial Jobless Claims Chicago PMI
Unit
Period of data
Previous
000s Index Index % m-o-m % m-o-m % y-o-y % y-o-y Index M % q-o-q % y-o-y Index % JPY bn % y-o-y % y-o-y Index Index Index 000s 000s % y-o-y % y-o-y Index % m-o-m % m-o-m % % m-o-m % m-o-m Index % m-o-m Index % q-o-q USD bn USD bn % % m-o-m % 000s Index
Wk Jul 12 Jul Jul 1Q-2014 Jun Jun Jun Jun Jul Jun 2Q-2014 2Q-2014 1Q-2014 Jul 24-Jul Jun Jun Jun Jul Jul Jul Wk Jul 19 Jun Jun Jul Jul Jun Jun Jun Jun Jun Jul Jun Jul 2Q-2014 Jul Jul 31-Jul Jun Jun Wk Jul 26 Jul
17.8 82.5 0.4 0.3 2.1 2.0 3.0 4.9 0.6 2.9 -7.5 3.25 -910.8 -2.7 -3.5 51.8 52.8 52.8 504.0 3.7 2.8 109.7 -0.9 0.0 0.5 0.7 6.1 85.2 -2.9 20.0 15.0 0.3 9.9 11.6 62.6
Source: Bloomberg
Source: Bloomberg
For inquiries please contact Asian Economics Team:
[email protected], Phone: +852 2822 4556
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For inquiries please contact Asian Economics Team:
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Macro Asian Economics 17 July 2014
Notes
52
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Macro Asian Economics 17 July 2014
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Notes
53
Macro Asian Economics 17 July 2014
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Disclosure appendix Analyst Certification The following analyst(s), economist(s), and/or strategist(s) who is(are) primarily responsible for this report, certifies(y) that the opinion(s) on the subject security(ies) or issuer(s) and/or any other views or forecasts expressed herein accurately reflect their personal view(s) and that no part of their compensation was, is or will be directly or indirectly related to the specific recommendation(s) or views contained in this research report: Frederic Neumann, Hongbin Qu, Ronald Man, Paul Bloxham, Trinh Nguyen, John Zhu, Su Sian Lim, Julia Wang, Izumi Devalier, Joseph Incalcaterra and Nalin Chutchotitham
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This report is dated as at 17 July 2014. All market data included in this report are dated as at close 15 July 2014, unless otherwise indicated in the report. HSBC has procedures in place to identify and manage any potential conflicts of interest that arise in connection with its Research business. HSBC's analysts and its other staff who are involved in the preparation and dissemination of Research operate and have a management reporting line independent of HSBC's Investment Banking business. Information Barrier procedures are in place between the Investment Banking and Research businesses to ensure that any confidential and/or price sensitive information is handled in an appropriate manner.
Macro Asian Economics 17 July 2014
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