Equities Weekly: Global equity markets continue to correct

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Global equity markets around the world continued their decline (albeit to a lesser extent) over the week ended October 17, 2014, with the MSCI AC World index incurring a 0.5 per cent loss.

Risk aversion generally continued to prevail in financial markets, and declines were seen in both developed and emerging markets.

US equities (as represented by the S&P 500 index) declined by 0.65 per cent over the week, while the European equity market (represented by the Stoxx 600 index) recorded a slight 0.49 per cent gain over the week (largely due to the appreciation of the euro against the ringgit).

Japanese equities (as represented by the Nikkei 225 index) fell 3.6 per cent over the week, making it the bottom performing developed market under our coverage.

The MSCI Emerging Markets Index fell by 1.17 per cent over the week, while the MSCI Asia ex Japan Index declined by 0.62 per cent.

Most of the markets in East Asia was in the red, with Taiwanese equities leading in terms of losses (the TWSE index fell by 4.58 per cent over the week), while markets like South Korea and China (using the HSML 100 index) incurred losses of 0.92 and 0.69 per cent respectively.

In contrast, Hong Kong equity market, as represented by Hang Seng Index, delivered a tepid return of 0.09 per cent owing to the appreciation of the Hong Kong dollar against the ringgit.

The local Chinese equity market, which has been rallying over the past few weeks despite a correction in global equity markets, underwent a slight correction over the week, with the Shanghai Composite index declining by -0.87 per cent and the CSI 300 index declining by 0.48 per cent.

Over in Southeast Asia, both Thailand and Malaysia declined by 1.14 per cent, while the Lion City’s STI index fell by 1.45 per cent over the week.

Indonesia stood brightly among the markets under our coverage, with the JCI index’s 2.45 per cent gain over the week enabling the market to be top performer this time around.

Oil prices (using the WTI Crude) continue its plunge, falling USD 3.07 per barrel and declining by 3.22 per cent in ringgit terms over the week, as concerns of oversupply and lowered global growth prospects weighed on prices in energy markets.

 

Southeast Asia: Singapore’s economy grew in 3Q14

According to advance estimates, Singapore’s economy posted a 1.2 per cent quarter-on-quarter annualised growth rate in the third quarter of 2014 (3Q14), up from the 0.1 per cent contraction in 2Q14.

On a year-on-year (y-o-y) basis, this amounted to a 2.4 per cent growth rate, matching that of the previous quarter.

Weighing on gross domestic product (GDP) growth in 3Q14 was the 2.7 per cent annualised rate of contraction for Construction, representing a second consecutive quarter of decline in output from the sector; weakness was attributed to slower private sector construction activity, possibly due to a more muted residential property market.

Offsetting this weakness was a rebound in Manufacturing, which logged a 1.2 per cent annualised quarterly growth rate after a contraction in 2Q14 on strength in biomedical manufacturing and electronics, as well as continued growth in Services, albeit at a slower 1.3 per cent rate.

Based on the latest GDP reading, Singapore’s GDP growth has averaged a 3.2 per cent rate in 2014 so far, placing it near the upper band of the government’s 2.5 to 3.5 per cent range of estimates for the current year.

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