Emerging Markets Radar (December 16, 2013)
- China’s mid-December Central Economic Work Conference closed today. The government believes that economic growth will stabilize and improve, although downside risk continues to persist. The annual conference did not provide a GDP target in its general news release, leaving the economy to decide. Environmental risks and protections were addressed in the meeting.
- China’s November exports accelerated by 12.7 percent year-over-year, handily beating the market consensus of 7 percent. For November, China’s consumer price index (CPI) was 3 percent, slightly better than the market consensus of 3.1 percent. The producer price index (PPI) was -1.4 percent versus the consensus of -1.5 percent, showing slight easing of deflation in the mid-stream product price.
- China’s new bank loans for November were Rmb 624.6 billion versus the consensus of Rmb 580 billion. Total social financing was Rmb 1.23 trillion versus Rmb 920 billion. Money supply (M2) was up 14.2 percent and in line with the consensus.
- China’s industrial production was up 10 percent in November, slightly lower than estimate of 10.1 percent and 10.3 percent in October. Fixed asset investment rose 19.9 percent year-to-date, while the November fixed asset investment growth slowed to 18.2 percent, mainly due to de-capacity in the manufacturing sector. Property investments in China rose 19.5 percent in the first 11 months of 2013, up 0.3 percent from October, but investments in November increased 22.1 percent year-over-year (7.1 percent month-over-month) primarily driven by new housing starts growth, which was up 58.6 percent in November. Retail sales were up 13.7 percent in November, beating the market consensus of 13.2 percent. China’s macro data shows that the growth momentum continues, though it eased a bit in November.
- China introduced its own 401(k)-style tax-deferred corporate annuity system, with the individual contribution being up to 4 percent of a person’s monthly salary in the previous year (capped at 300 percent of the average salary in the local city). Investment income will be tax deferred, and at retirement when individuals start to withdraw their retirement annuity, income tax will be assessed. Corporate pension plans are using insurance companies as their trustees.
- China’s locally-made passenger car retail volume (excluding exports and minivans) was up by 17.7 percent year-over-year in November, and up 8.3 percent month-over-month.
- Korea’s November jobless rate declined to 2.9 percent, and Bank of Korea, the central bank, kept its benchmark rate unchanged this week.
- Malaysia’s industrial production in October was up 1.7 percent, above the consensus of 0.8 percent, and 1 percent in September.
- Bank of Indonesia kept interest rates unchanged this week, in line with the market expectation. A weak currency actually helped the foreign reserve account go up by $2 billion as businesses and individuals are saving foreign currencies.
- Turkey's economic growth rose 4.4 percent in the third quarter from the prior year, according to the Turkish Statistical Institute. The rate was below the second quarter's 4.5 percent rise, but above the expected 4.2 percent increase. Household consumption rose 5.1 percent, construction rose by 8.7 percent and manufacturing rose by 4.9 percent, while private sector investment increased for the first time in almost two years. Exports rose by 2.2 percent for the quarter, but may be set for a bigger boost as Western nations loosen trade sanctions with Iran, which has traditionally been a strong market for Turkish exports.