For the week ended 10 February 2017, global equities, as represented by the MSCI AC World Index, rose 0.96%, as equities broadly ended the week in the black. In the past week, equity investor sentiments were supported by the possibility of business-friendly tax adjustments over in the US in the near term, as signalled by the economy’s newly elected president. Furthermore, upbeat corporate earnings over in the US and Europe had further supported the equity markets in the said economies, while the stabilisation in China’s economy continued to support sentiments over in the Asian equity markets.
Amongst developed markets, Japan’s Nikkei 225 Index and US’s S&P 500 Index rose 2.07% and 1.19% respectively, while Europe’s Stoxx 600 Index fell by -0.12% over the week. Over in Asia and emerging markets, the MSCI Asia ex Japan and the MSCI Emerging Markets Indices saw weekly gains of 1.89% and 1.61% respectively. Amongst East Asian equities, China’s offshore equity market, as represented by the HSML 100 Index, ended the week as the top performing of markets under our coverage with a 3.67% weekly gain. Meanwhile, China’s onshore equity markets, as represented by the Shanghai Composite Index and the Shenzhen CSI 300 Index, rose 1.43% and 1.09% over the week respectively. Hong Kong’s HSI and Taiwan’s TWSE Index posted strong weekly returns as well, as they gained 2.29% and 2.17% respectively. Meanwhile, Korea’s KOSPI Index slided by -0.55% for the week ended 10 February 2017. In Southeast Asia, Singapore’s STI led the pack with a 1.34% weekly gain, while Malaysia, Indonesia, and Thailand gained 0.83%, 0.57% and 0.40% respectively when the week ended. Amongst other emerging markets, performances were less similar to one another, as Brazil’s Bovespa Index gained 2.21% while India’s SENSEX Index gained 1.10% and Russia’s equity market, as represented by the RTSI$ Index, ended the week with a -1.84% decline.
Yesterday, Eurozone’s 4Q 2016 GDP YoY growth came in at 1.7%, lower than consensus forecast and prior value of 1.8%. Meanwhile, China’s CPI data for January 2017 came in at 6.9%, above consensus forecast of 6.6% and prior’s 5.5%, in part due to the Lunar New Year which occurred in January this year as compared February last year. In the days to follow, the US will be releasing her inflation data, retail sales numbers, housing starts data and industrial production data for the month of January 2017. While CPI (on a month-on-month basis) and housing starts are widely expected to come in on par with prior month’s data, retail sales and industrial production are expected see a dip from that recorded in the month before. Closer to home, Singapore will be releasing the final estimates of her 4Q 2016’s GDP growth on Friday, which market participants are expecting to come in at 2.4% year-on-year, up from the advance estimates of a 1.8% year-on-year growth.
[All returns in MYR terms unless otherwise stated]
Investors may refer to Market Valuation As Of 10 February 2017 for more details.
Germany: December 2016’s Industrial Production Fell Short Of Estimates
The German Federal Statistics Office in Wiesbaden reported that industrial production in Germany fell -0.7% year-on-year in December 2016, down from an upward-revised 2.3% year-on-year increase in November and falling short of consensus estimates of a 2.5% year-on-year increase. On a month-on-month basis, industrial production fell -3.0%, down from November 2016’s 0.5% gain. The decline was broad-based, with the decrease in capital goods detracting the most from the headline data. Despite the latest decrease, the overall trend is still healthy, with Germany still contributing positively to the monetary union’s overall industrial production.
China: Caixin Services PMI Dipped In January 2017
The Caixin China Services PMI came in at a 53.1 reading in January 2017, dipping slightly from the 53.4 reading in December 2016, but still coming in amongst the highest readings seen in the past two years. While the year has started with a pickup rate in business activity that is lower than that seen in the prior month in view of the Lunar New Year, the pick-up rate still stands high. China’s services sector has become more optimistic about business prospects in the near term with perceptions of lower business risks as well as a stabilising Chinese economy. Businesses have started to expand their manpower and this can be witnessed in the latest unemployment data, which showed unemployment rate for 4Q 2016 to be the lowest in more than 2 years. Additionally, input costs have recently reached a high in about 49 months.
Taiwan: Exports Grew 7.0% Year-On-Year In January 2017
Taiwan’s exports grew 7.0% year-on-year in January 2017, lower than expectations of an 8.0% increase. Semiconductor exports, which are a component of the vital electronics export sector, continued to be the main driver of the growth in exports, as it registered a 10.0% year-on-year increase. The increased demand for China’s low cost mobile phones had continued to drive semiconductors exports, particularly that to China. Taiwan's exports to China rose 12.7% year-on-year in January, to mark the fourth month that registered double-digit growth of exports. Comparatively, exports to the US grew 3.8% year-on-year.
Indonesia: 4Q 2016 GDP Growth Missed Expectations
Indonesia’s economy expanded by 4.94% year-on-year in 4Q 2016, narrowly missing consensus forecasts of a 5.00% year-on-year growth and the downward-revised 5.01% year-on-year growth in the previous quarter. While the economy’s exports and private investments had increased on a year-on-year basis, private consumption had moderated in 4Q 2016, growing a smaller 4.99% year-on-year, compared to prior quarter’s 5.01% year-on-year growth. For the whole of 2016, Indonesia grew 5.02%, in line with consensus expectations, and outperforming the previous year’s 4.88% growth. Looking ahead, the nation’s economic growth seems positioned to remain resilient in the coming quarters as it looks likely to be supported by the gradual increase in exports and private investment in the near term.
Malaysia: December 2016’s Exports Improved For Second Consecutive Month
Malaysia’s exports grew 10.7% year-on-year in December 2016, outperforming prior month’s 7.8% year-on-year growth and the consensus estimates of a 9.6% year-on-year increase. The higher exports were largely attributed by that to China, Singapore and the European Union, which registered a surge of 22.0%, 13.5% and 5.8% year-on-year respectively. In terms of product type, growth in exports was led by the refined petroleum products (accounts for around 6.5% of the total exports) which grew 71.9% year-on-year to RM 4.9 billion. Additionally, the exports of palm oil and palm-based products (which form around 8.5% of total exports) grew 24.5% year-on-year to RM 6.4 billion. Electrical and electronic products, which form the largest component of total exports (around 35.8%), grew a smaller 9% year-on-year to RM 27 billion. Liquefied natural gas was the only export component which registered a drop of -0.5% year-on-year, largely due to the fall in its average unit value. We expect Malaysia’s exports to pick up moving forward amid improvement in the global economy and in view of the stabilisation in commodity prices.