Over the week ended June 20, 2014, the MSCI AC World Index posted a gain of 0.95 per cent, with developed markets leading the way. European equities (represented by the benchmark Stoxx 600 index) climbed by 0.66 per cent when the week ended June 20, 2014.
The US equity market greeted the news of the Fed taper with optimism, with the benchmark S&P 500 index rallying by 1.33 per cent over the week. Meanwhile across the Pacific, the Japanese equity market (as represented by the Nikkei 225 index) posted a gain of 1.48 per cent over the week, making it the top performer among the developed equity markets under our coverage.
Emerging and Asian markets generally underperformed their developed markets peers, with the MSCI Emerging Markets index falling by 0.42 per cent and the MSCI Asia ex Japan index falling by 0.71 per cent respectively over the week. Among the East Asian equity markets under our coverage, only the Taiwanese equity market was in the black over the week, with the TWSE index increasing by 0.79 per cent when the week ended. The Korean equity market (represented by the Kospi index) incurred a loss of 1.31 per cent over the week, while the Hong Kong equity market (represented by the Hang Seng index) declined by 0.33 per cent. The local Chinese equity market incurred losses as well, with the CSI 300 index falling by 1.53 per cent and the Shanghai Composite index falling by 1.86 per cent over the week. Indonesia was the bottom performing equity market under our coverage, with the JCI index incurring a loss of 3.08 per cent over the week – partially contributed by the weakening of the rupiah against the ringgit (an approximate 1.58 per cent decline). Gold prices rallied over the week as well, gaining US$38 per ounce on geopolitical tensions in the Middle East.
Thailand: Central bank holds rates
Over in Southeast Asia, the Bank of Thailand (BoT) maintained its benchmark interest rate at two per cent, a move which was in line with consensus expectations. The central bank mentioned that “the economic recovery should pick up pace given reduced political uncertainties and a resumption of functioning public policy management.”
Ever since the Thai military took control of the government, the junta has made payments due to hundreds of thousands of rice farmers, cut diesel prices and sped up budget spending to boost expansion and pressed for renewal of stalled infrastructure development plans. The BoT added that a slow recovery in exports and tourism remain as downside risks to growth, but that “a significant reduction of political uncertainties” should consequently lead to “improving public and private spending that should benefit the economy.”
Singapore: Non-oil domestic exports declined in May
South of Thailand, Singapore’s non-oil domestic exports posted an unexpected 6.6 per cent year-on-year decline in May 2014, after a 0.9 per cent increase in April. The consensus had forecast a 0.5 per cent gain in the measure. Exports were weighed down by weakness in both electronic and non-electronic exports, with the former posting a hefty 15.3 per cent y-o-y decline on weakness in consumer electronics. Pharmaceuticals also weighed on overall non-oil domestic exports, although the segment tends to be fairly volatile and can cause big monthly swings in export and industrial production data. With the latest data point, non-oil domestic exports are running at a 1.3 per cent y-o-y rate so far in 2014, a far cry from IE Singapore’s one to three per cent forecast for the year – exports will need to grow by an average of 2.6 per cent for the rest of 2014 in order to meet the low end of the government’s forecast.
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