Equity markets around the world continued their decline over the week ended October 10, 2014, with the MSCI AC World index incurring a 3.22 per cent loss. With risk aversion gripping the markets, developed markets generally led the losses – all of them were in the red when the week ended. Headline US equity indexes like the S&P 500 index and the Nasdaq 100 index fell by 3.69 and 4.43 per cent respectively, while the European equity market (represented by the Stoxx 600 index) fell by 3.63 per cent over the week. Over across in Japan, Japanese equities (as represented by the Nikkei 225 index) declined 1.43 per cent.
Emerging and Asian markets as a whole held up slightly better than their developed counterparts, with the MSCI Emerging Markets index and the MSCI Asia ex Japan index falling by 1.31 and 1.44 per cent respectively over the week. In East Asia, the Korean equity market (represented by the Kospi index) incurred a 2.63 per cent loss, while Taiwanese equities fell by 1.54 per cent over the week. Meanwhile, Hong Kong’s Hang Seng index declined slightly by 0.48 per cent, while China’s HSML 100 index declined by 0.71 per cent. Continuing its recent resilience over the past few weeks, the local Chinese equity market held up amidst the decline in global equity markets worldwide, with the CSI 300 index and the Shanghai Composite index inching up by 0.64 and 0.45 per cent respectively in local currency terms (0.14 and minus 0.05 per cent in ringgit terms, due to the depreciation of Chinese yen against ringgit). In Southeast Asia, Malaysian, Thai and Indonesian equities incurred losses of 1.74, 1.03 and 0.53 per cent respectively, while the Lion City’s STI index incurred a 0.86 per cent loss.
Brazil was the top performing equity market under our coverage over the week, with the Bovespa index rallying by 3.58 per cent over the week. Gold prices inched up by US$32 per ounce, posting a gain of 2.08 per cent in ringgit terms over the week.
Southeast Asia: Malaysia’s exports improved in August
Over in Southeast Asia, Malaysia’s exports improved in August, posting a 1.7 per cent year-on-year (y-o-y) gain, higher than the upward revised 0.8 per cent y-o-y gain in the preceding month. The export data also came in significantly better than the 1.4 per cent y-o-y decline forecasted by consensus. Exports were boosted mainly due to the expansion of the exports growth for liquefied natural gas and electrical and electronic products, with the former posting a 3.8 per cent y-o-y growth in August after a hefty 22.9 per cent contraction in the previous month. Exports growth for electrical and electronic products (which accounted for 33.7 per cent of total exports) also posted a 3.7 per cent y-o-y gain, after a one per cent slump in the preceding month. Moving forward, while exports growth is unlikely to register results as seen in in the first half of 2014 (1H14), exports growth is expected to remain sustainable and supported with the gradual recovery of global economy.
Australia: RBA leaves benchmark interest rate unchanged
The Reserve Bank of Australia (RBA) left its benchmark interest rate unchanged at 2.5 per cent, a move which was largely in line with market consensus. The central bank also confirmed its current guidance that “on present indications, the most prudent course is likely to be a period of stability in interest rates.” In its statement, the central bank commented that the decline in the exchange rate (the Australian dollar) partly reflects the strengthening US dollar, but reiterated that the currency “remains high by historical standard, particularly given the further declines in key commodity prices in recent months.”
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