Escalating tensions between the US and North Korea weighed heavily on investment sentiment, as the MSCI AC World Index erased its gains from the previous week to end the week down by 1.24 per cent. The US and European equity markets, represented by the S&P 500 Index and the Stoxx 600 Index respectively, tumbled 1.05 and 1.78 per cent respectively. Japan was the only developed equity market to clock gains over the week, with the Nikkei 225 Index inching up 0.56 per cent. Meanwhile, Asia and emerging equity markets plunged 2.3 and 1.91 per cent respectively.
Over in East Asia, Hong Kong and Taiwan saw their respective equity indices incur losses of 2.09 and 1.78 per cent. Korea was the worst performing market this week, with the KOSPI Index plunging 3.8 per cent. China’s HSML100 Index lost 1.77 per cent, while its onshore equity markets also saw declines, with the Shanghai Composite Index and the CSI300 Index falling 0.38 and 0.37 per cent respectively. Southeast Asian markets were not spared the bloodbath either, with Singapore, Malaysia, Thailand and Indonesia slipping one, 0.43, 0.4 and 0.08 per cent respectively.
In other emerging markets, Brazil’s Bovespa Index and Russia’s RTSI$ Index fell 0.19 per cent and 0.04 per cent respectively, while India’s SENSEX Index took a hefty 3.55 per cent tumble over the week. Crude oil prices fell 1.15 per cent on lingering concerns of a global supply glut to end the week at US$48.82 per barrel, while safe haven buying over the week has buoyed gold prices, which rose 2.82 per cent as perceived geopolitical risks rise in the markets.
Indonesia: Second quarter economic growth misses market expectations
Indonesia’s 2Q17 GDP expanded 5.01 per cent year-on-year, lower than market expectations of a 5.08 per cent growth, but on par with growth in the previous quarter. Breaking down growth by sectors, it is evident that a pickup in the mining, construction, financial and insurance sectors, had offset a slowdown in agriculture and fishery related sectors. In terms of growth broken down by expenditure, government spending has picked up favourably amid the disbursement of the government budget on infrastructure projects and various rural development plans, compensating a tepid recovery in private consumption. Exports had continued to positively contribute to growth on the back of a recovery in the global economy. In the coming months, we believe private spending will continue on its gradual path of recovery, and government spending would likely be more supportive to economic growth. Exports growth may moderate further as the prices of the country’s main commodity exports such as coal and palm oil are expected to ease further in the face of increased supply, on top of the waning of low-base effect from oil and gas exports.
Singapore: 2Q17 GDP growth final estimates better than advance estimates
On August 11, 2017, the Ministry of Trade and Industry (MTI) released its final estimates of the city’s 2Q17 GDP growth, which came in at 2.9 per cent year-on-year, higher than advance estimates of a 2.5 per cent year-on-year growth. In 2Q17, the primary driver of growth, the manufacturing sector, grew 8.1 per cent year-on-year on the back on continued robust semiconductor demand while other externally-oriented sectors such as the transportation & storage (grew 3.5 per cent year-on-year) and wholesale & retail trade (grew 1.5 per cent year-on-year) sectors had benefitted from supported global trade activity. In contrast, the construction (contracted 5.7 per cent year-on-year) and accommodation & food services (contracted 2.2 per cent year-on-year) sectors remained laggards in the economy on the back of a continued weak property sector and sluggish sales volume at restaurants respectively. While growth would likely continue to be uneven amongst sectors in 2H 2017, it remains likely that the city’s manufacturing sector would continue to be a primary driver of growth over the coming quarters. Apart from releasing its final estimates of 2Q17 GDP growth, the MTI also narrowed its growth forecast for the whole of 2017 from one to three per cent to two to three per cent whilst expressing its view that the full year’s GDP growth is likely to come in around 2.5 per cent.
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