Emerging Markets Radar (May 12, 2014)

Emerging Markets Radar (May 12, 2014)


  • The latest Greek unemployment reading provides more evidence that suggests the dire jobs situation in Greece is stabilizing. The country’s unemployment rate improved in February to 26.5 percent, easing to its lowest in more than a year, and having fallen for the fifth-straight month. It is another sign that the Greek economy, and peripheral Europe in general, is emerging from a six-year slump, during which the unemployment rate has more than tripled.

Unemployment Rate in Greece Has Peaked
click to enlarge

  • Hungary’s manufacturing purchasing manager index (PMI) rose to 54.6 points in April from 53.7 in March, according to the Hungarian Association of Logistics, Purchasing and Inventory Management. The production quantity sub-index rose relative to March and is now signaling an expansion for the sixth-consecutive month.
  • The Philippines won a credit rating upgrade, to BBB from BBB-, from Standard & Poor’s. The upgrade comes a year after the country was raised to investment grade, aided by President Benigno Aquino’s ongoing reforms to address shortcomings in structural, administrative, institutional, and governance areas.


  • Expansion in China's services industry slowed slightly in April, with employment growth slipping to a seven-month low, according to the Markit Services PMI survey. Markit’s manufacturing PMI showed that activity contracted for a fourth-consecutive month in April, with the index at 48.1. The consumer price index, which fell to an 18-month low, and the producer price index both continue to show weakness in the domestic economy leading to speculation that the government may implement more easing measures in the coming weeks.

Unemployment Rate in Greece Has Peaked
click to enlarge

  • Germany's industrial output dropped unexpectedly in March, largely driven by contraction in construction activity. Industrial production fell 0.5 percent in March from February, the first decrease in five months. Similarly, German factory orders fell 2.8 percent in March, missing economists’ expectations for a 0.3 percent rise, signaling that growth in Europe’s largest economy remains uneven.
  • Czech retail sales grew at a slower than expected pace in March, after posting the fastest gain in more than five years in the previous month. Retail sales rose a working-day-adjusted 5.2 percent from last year, while economists predicted a 7.3 percent growth. The measure rose 8.1 percent in February.


  • China’s exports and imports unexpectedly rose in April, with overseas shipments increasing 0.9 percent from a year earlier, beating analysts’ estimates for a 3 percent drop. Imports gained 0.8 percent, bringing the trade surplus to $18.46 billion. The trade figures may prove to be even stronger considering last year’s April trade numbers were reportedly inflated by fraudulent invoicing. The Chinese economy is benefitting from the strength of its main trading partners, as export growth to the U.S. and EU rose 12.0 percent and 15.1 percent from last year.
  • Indian stocks rallied to a record on speculation that election results next week may show a victory by the main opposition party. The index has climbed 8.6 percent this year supported by a $5.6 billion inflow by foreign buyers, as investors bet a win from Bharatiya Janata Party’s Narendra Modi will allow him to boost economic growth from the lowest level in a decade.
  • Dubai banks are reportedly seeking Islamic bank acquisitions overseas as new capital rules limit their opportunities at home. Domestic loan growth is constrained by central bank rules limiting exposure to a rapidly rising property market. For Islamic banks, markets including Turkey and Indonesia are especially attractive because they have predominantly Muslim populations with double-digit loan growth.


  • Thai Prime Minister Yingluck Shinawatra was removed from office by the Constitutional Court, accused of violating the constitution and abusing power in the appointment of the secretary-general of the National Security Council. The government’s supporters have called for marches into Bangkok to oppose the ruling, increasing the risk of political instability ahead of the July elections.
  • Macau casinos dropped heavily in Hong Kong trading amid concern that a crackdown on illegal money transfers will pare demand. China is cracking down on the use of hand-held card-swipers within casino resorts amid concerns that tens of billions of yuan in illicit funds are being taken out of the mainland and into Macau. China may tighten rules for visitors to Macau which could translate into lesser visitor demand to the casinos.
  • Russia's private sector output shrunk for a second-straight month in April and at the fastest pace in nearly five years, according to HSBC. The Markit Russia composite PMI fell to 47.6 in April from 47.8 in March and the lowest since May 2009. Total new orders, both manufacturing and services, fell at the quickest rate in nearly five years. As a result, private sector employment fell for the tenth month in a row and at a near-record pace. Russia may already be in a technical recession according to the IMF.
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