Archive forOctober, 2013

UK consumer confidence declines in October

UK consumer confidence dropped to -11 in October from -10 in September (a six-year high), as per GfK. The measure of prospects for the broader economy over the next 12 months declined five points to -2. However, the measure of the general economic situation over the last 12 months remained constant at -25.

Japan’s industrial output rises in September

Japan’s industrial output increased 1.5% m-o-m in September, reversing a 0.9% decline last month, on stronger production of vehicles and electronic components. Production is forecast to jump 4.7% m-o-m in October, as per the Ministry of Economy, Trade and Industry.

Japanese retail sales rise 3.1% in September

As per reports from the Ministry of Economy, Trade and Industry, retail sales in Japan surged 3.1% y-o-y to ¥11trln in September, after gaining 1.1% in August. The reading surpassed the market forecast of a 1.8% rise. Sales from large retailers increased 0.7% to ¥1.5trln. On m-o-m basis, retail sales were up 1.8% after rising 0.9% in the previous month.

Euro area out of danger zone: ECB Board

Today, the European Central Bank (ECB)’s Executive Board member Benoit Coeure, while speaking at a forum in Beijing, stated that the Euro area was out of the danger zone. However, he emphasised on restructuring the financial sector, bringing about new business models and avoiding protectionism as the key measures to ensure growth. He also took note of the unused capacity in the region.

Japan’s consumer prices advance in September

Today, the Japanese Ministry of Internal Affairs and Communications reported the core consumer price index (CPI) edged up 0.1% m-o-m in September. On y-o-y basis, prices gained 0.7% after increasing 0.8% in August. Overall prices were up 0.3% m-o-m and 1.1% y-o-y. On m-o-m basis, prices in the clothing segment rose 6%, followed by food (+1%), fuel (+0.8%) and furniture (+0.3%), while recreation prices fell 1.6%. On y-o-y basis, fuel prices grew 5.4%. Other sectors that registered gains were transportation (+2.5%), food (+1.7%), clothing (+0.7%) and education (+0.7%). Furniture and housing prices dipped 1.3% and 0.4%, respectively.

China’s manufacturing expands in October

The preliminary reading of China’s Purchasing Managers’ Index (PMI) released by HSBC and Markit Economics indicated that factory activity in the country gained further momentum in October. The PMI reading came in at 50.9 in October, up from 50.2 in September. Actual reading surpassed market expectation of 50.4. Growth in output, new orders and export orders accelerated during the month, while the pace of decline in employment slowed down. The index of manufacturing output jumped to 51 from 50.2 in September.

UK economy back on growth path

Yesterday, at a conference in London, the Deputy Governor of the Bank of England (BOE) expressed confidence in an economic rebound. He stated the economy was finally on the path of sustainable growth, albeit at a slower pace vis-à-vis historical readings. This could be ascribed to easing of ongoing concerns over lack of credit from the region’s troubled banks and the Eurozone crisis, he said.

China’s house prices rally in September

Today, the National Bureau of Statistics revealed that China’s house prices increased in 69 of 70 cities surveyed by it compared to last year, with a 20% price rise each in Shenzhen and Guangzhou. Prices in Beijing soared 16% y-o-y, while that in Shanghai surged 17%. On m-o-m basis, new home prices were up in 65 cities, dropped in two and remained unchanged in the remaining three cities.

UK housing sector rebounds in October: Rightmove

Based on a survey, Rightmove reported today that UK house prices rebounded in October, driven by a sharp increase in London house prices. Average property asking prices in the UK advanced 2.8% m-o-m to £252,418 after dropping 1.5% in September. On y-o-y basis, prices were up 3.8% compared to 4.5% in the prior month. In London, asking prices jumped 10.2% m-o-m to £544,232, moving up 13.8% from last year.

China’s economic growth accelerates in third quarter

The National Bureau of Statistics today reported upbeat economic data for China. During Q3 2013, the country’s GDP growth accelerated to 7.8% y-o-y from 7.5% y-o-y in the previous quarter. On q-o-q- basis, the GDP rose 2.2% following an upwardly revised 1.9% in Q2 2013.

China reports 4.9% growth in FDI

Data from the Ministry of Commerce indicated China’s foreign direct investment (FDI) increased 4.9% y-o-y to US$8.8bn in September. In August, FDI had risen merely 0.6%. However, economists were expecting a higher reading for the month. From the beginning of the year till September, China’s FDI stood at US$88.6bn, recording a 6.2% gain during the period. Additionally, the ministry warned of a tough trading environment in the country in coming months due to sluggish demand from emerging markets.

Fitch warns of downgrade of US credit rating

Fitch yesterday put the US credit rating on negative watch due to the government’s failure to increase the debt limit even as the deadline for the same came closer. The rating agency warned that the ‘political brinkmanship’ and ‘reduced financing flexibility’ could elevate the risk of a default. Fitch is expected to complete its review by the first quarter of next year. Meanwhile, Asian giants Japan and China are persuading the US to reach a solution on the ongoing issue. Currently, the two countries hold more than US$2.4bn of US Treasuries.

Japan’s industrial output drops in August

According to data released by the Ministry of Economy, Trade and Industry today, final reading of Japan’s industrial output for August indicated a 0.9% m-o-m decline compared to an initial reading of 0.7%. In July, production rose 3.4% m-o-m, while shipments and inventory dropped 0.1% and 0.2%, respectively. On y-o-y basis, industrial production decreased 0.4% in August. Capacity utilisation fell 2.1% m-o-m during the month after increasing 3.7% in the prior month.

China CPI jumps to 3.1% in August

According to data released by the National Bureau of Statistics today, consumer prices in China rallied 3.1% y-o-y in September after a 2.6% increase the previous month. The reading was higher than the general market expectation of a modest improvement to 2.8%. Food prices inflation was pegged at 6.1% compared to 4.7% in August, whereas non-food price inflation eased to 1.3% from 1.6%. Producer prices declined 1.3% y-o-y in September after a 1.6% drop in the prior month. Trade surplus contracted to US$15.2bn from US$28.5bn in August due to a 2.6% m-o-m decline in exports and a 5.1% jump in imports.

ECB chief says rate cuts possible if market volatility resumes

Yesterday, Mario Draghi, Chairman of the European Central Bank (ECB), stated key interest rates could be reduced further if volatility in the money market returns to the levels observed in early summer. The policy rate decision would be conditional upon the inflation outlook, he added.

Japan’s core machine orders jump 5.4% in August

Today, the Cabinet Office of Japan reported that the core machine orders, a key measure of capital spending, climbed 5.4% m-o-m to ¥819.3bn in August, after a flat reading the previous month. Orders were up 10.3% y-o-y, following a 6.5% rise in July. Separately, activity in Japan’s tertiary industry inched up 0.7% on a seasonally adjusted basis in August after a 0.4% drop in July.

IMF presents weak outlook on global growth

Yesterday, the International Monetary Fund (IMF) cut the global growth forecast for the current year to 2.9% from 3.1% earlier. Also, the 2014 forecast was revised downwards to 3.6% from 3.8%. For the US, growth was lowered to 1.6% from 1.7% in 2013, while that for Europe was upgraded to -0.4% from -0.6%. UK’s growth forecast was revised upward to 1.4% from the earlier estimate of 0.9%.

UK house price index grows at highest rate in 11 years

The Royal Institute of Chartered Surveyors reported that the house price index in the UK climbed to +54 in September, up from a revised +41 in August, surpassing market estimate of a reading of +45.

‘Shunning Bonds as Rates Are Set to Rise’ – Mike Franklin on Bloomberg’s “On the Move”, 7th October 2013

Michael Franklin, Investment Strategist at Beaufort Securities, offers his investment strategy on bonds, opportunities in China and the Royal Mail IPO. He speaks on Bloomberg Television’s “On The Move.”

‘GOP House Representatives are Terrorists’ – Mike Franklin on Bloomberg’s “On the Move”, 7th October 2013

Michael Franklin, Investment Strategist at Beaufort Securities, discusses the markets’ reaction to the U.S. government shutdown and his view of GOP Representatives holding economies ‘hostage’. He speaks on Bloomberg Television’s “On The Move.”

World Bank cuts China’s growth forecasts

The World Bank lowered its 2013 and 2014 economic growth forecast for China considering weaker global commodity prices, lower-than-expected growth in exports and rising local government debt. It added that the massive, investment-heavy stimulus program supported by credit expansion had run its course. The World Bank expects China to expand 7.5% this year and 7.7% in 2014 vis-à-vis its estimate of 8.3% and 8%, respectively, in April.

Bank of Japan maintains stimulus; says economy strong enough to weather the sales tax increase

After a two-day review, the Bank of Japan kept its monetary policy unchanged and said that Japan’s economy could withstand the hit of the sales tax hike effective next April. The bank mentioned that the economy is recovering moderately and no further expansion in the stimulus package is required. The bank also upgraded view on capital expenditure and said capital spending was showing signs of a pick-up.

China official services PMI reaches a six-month high

China’s official services Purchasing Managers Index (PMI) rose to a six-month high of 55.4 in September from 53.9 in August, the National Bureau of Statistics (NBS) said today. The sub-index measuring new orders rose to 53.4 from 50.9, while the sub-index for new export orders climbed to 50.5 from 49.6 over the same period.

Japan’s auto sales rise 12.4% in September

Vehicle sales in Japan rose 12.4% to 324,315 units in September from 288,479 units a year earlier, according to the data released by the Japan Automobile Dealers Association. Honda posted the largest rise, up 50.5% y-o-y to 39,400 vehicles. It was followed by Toyota, which registered a 12.5% rise in vehicle sales. Honda’s redesigned Fit compact car and Toyota’s hybrid cars registered robust growth. The new hybrid version of the Fit compact car is touted to be the most fuel-efficient car in Japan. The vehicle sales figures do not include sales of mini cars and trucks.

Japan decides to raise sales tax

Prime Minister Shinzo Abe announced that the national sales tax would be raised to 8% from 5% next April. Building the case that raising the tax was necessary, Abe said the government has designed a package to minimise the impact of the tax. The sales tax was last increased in 1997.