Global equity markets rebounded over the week endedMarch 20, 2015, with the MSCI AC World index increasing by 3.12 per cent. Developed markets were all in the black over the week, with US equities (represented by the S&P 500 index) and European equities (as represented by the Stoxx 600 index) recording gains of 2.6 and 5.25 per cent respectively. Meanwhile, the Japanese equity market (as represented by the Nikkei 225 index) posted a gain of 2.64 per cent over the week.
Similarly to its developed peers, emerging markets and Asian markets posted gains as well, with the MSCI Emerging Markets index and the MSCI Asia ex Japan index increasing by 3.13 per cent and 2.08 per cent respectively over the week. Emerging markets like Brazil rebounded strongly, with its Bovespa index rallying by 7.98 per cent over the week, while Russia (as represented by the RTSI$ index) recorded a 3.37 per cent gain over the week. Asian markets like South Korea, China and Taiwan saw the strongest gains among the region, with their respective equity markets increasing by 4.82, 3.04 and 2.92 per cent respectively over the week. Meanwhile, the local Chinese equity market continued to post gains over the week as well, with the Shanghai Composite index surging by 8.16 per cent.
The bottom performing markets under our coverage over the week are Thailand and India, with the SET index and the Sensex index posting marginal gains of 0.32 and 0.48 per cent respectively over the week. Crude oil prices, using the WTI crude price, hung around US$45 per barrel when the week ended.
Southeast Asia: Indonesia’s exports disappoint again, Singapore’s NODX NODS off
Over in Southeast Asia, Indonesia’s exports contracted 16.02 per cent year-on-year (y-o-y) in February, below consensus estimate of a 10.4 per cent y-o-y decrease. In the previous month, exports contracted by an upward revised 7.71 per cent y-o-y. This is the fifth month in a row that exports have shrunk. Non-oil and gas exports, which account for the majority of Indonesian total exports, fell 12.68 per cent y-o-y as compared to the -5.78 per cent y-o-y contraction in the previous month. Imports also contracted by 16.24 per cent y-o-y, worse than the 9.6 per cent y-o-y contraction that consensus forecast. Consequently, the trade balance recorded a US$738 million surplus in February, compared to the US$744 million surplus in the previous month.
Nearby, Singapore’s Non-oil domestic exports fell off a cliff in the month of February, declining by -9.7 per cent on a y-o-y basis following a growth rate of 4.3 per cent in January, marking its worst reading since February 2013. On a month-on-month (m-o-m) basis, non-oil domestic exports fell by -9.4 per cent after a 1.6 per cent growth rate in January. Both the y-o-y and m-o-m measures missed consensus estimates, which were at 0.9 and 1.6 per cent respectively. Amongst the major categories, the volatile pharmaceuticals sector fell -22.4 per cent on a y-o-y basis while petrochemicals dropped 30.9 per cent and the electronics segment fell 12.5 per cent. On a geographical basis, the largest declines came from Japan (24.6 per cent), China (22.7 per cent), Taiwan (22.3 per cent) and Indonesia (21.3 per cent). While the Monetary Authority of Singapore has eased monetary policy slightly, it remains to be seen if Singapore’s Non-oil domestic exports will get a boost from a lower currency.
Japan: BoJ maintains stance on monetary policy
Over in Asia, the Bank of Japan (BoJ) maintained its current stance on monetary policy, and reiterated that Japan’s economy is continuing its “moderate recovery.” However, the Japanese central bank downgraded its view about inflation and acknowledged the impact of falling energy prices. Whereas in its previous statement the BoJ stated that “the y-o-y rate of increase in the CPI is likely to slow for the time being”, the BoJ now stated that “the y-o-y rate of increase in the CPI is likely to be about zero per cent for the time being, due to the effects of the decline in energy prices.” BoJ Governor Kuroda has also acknowledged that for the time being, no increase in the amount of stimulus would be implemented.
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