Equities Weekly: Global equities in the black yet again

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Equity markets around the world on aggregate continued to record gains for investors, with the MSCI AC World Index 0.8 per cent higher from the previous week.

The developed markets of Europe, Japan and the US climbed higher, with the latter’s S&P 500 Index recording new all-time highs and posting a 1.1 per cent gain over the week.

Emerging markets as a whole also had another decent week, following suit of their developed counterparts, with the MSCI Emerging Markets Index posting a 0.2 per cent increase.

The MSCI Asia ex Japan Index rose 0.2 per cent, driven by strong performance from a few East Asian markets. The Chinese equity markets led the way in Asia, with the HSML 100 Index climbing 1.6 per cent higher from the previous week, while the onshore market (as gauged by the CSI 300 Index) did better with a 2.1 per cent gain.

Hong Kong’s Hang Seng Index rose 1.4 per cent, while South Korea to the north saw a slight -0.6 per cent loss over the week. In Southeast Asia, the Lion City and Malaysia saw gains in their equity markets of 0.4 per cent and 0.3 per cent respectively, while Thailand was the strongest performer, with its benchmark SET Index higher by 1.2 per cent by end of the week (January 12, 2018).

Russia’s equity market was the strongest performer among the markets under our coverage, with the RTSI$ Index rallying 3.4 per cent over the week, buoyed by rising crude oil prices (which ended the week at US$64.30 per barrel).

 

Japan: Consumer confidence readings remain robust

In Northeast Asia, Japan’s consumer confidence index in December 2017 came in at 44.7, down slightly from a prior 44.9 and falling short of the consensus forecast of a 45 reading. Japanese consumers’ confidence regarding their outlook for employment over the next six months declined in the month, weighing on the index’s headline reading.

However, given the improving domestic conditions and growth momentum in Japan and a robust labour market (as the official unemployment rate fell to the lowest levels since November 1993), the prospects of rising wages could contribute to a further increase in the index this year.

 

Greater China: China’s CPI rose in December 2017, Taiwan’s exports increase for the fifteenth consecutive month

Inflation in China rose 1.8 per cent year-on-year in December 2017, up 10 basis points from a prior 1.7 per cent year-on-year increase but falling short of the consensus forecast of a 1.9 per cent year-on-year rise.

A breakdown of the data’s components revealed that food prices fell 0.4 per cent year-on-year, affecting the headline number by 0.08 points, whereas non-food related articles saw prices rise by 2.4 per cent year-on-year, 10 basis points from November’s number.

Recently, due to the effects of the winter conditions in the north-eastern regions, it is possible that food prices could rise, consequently leading to a rise in the headline CPI number in the near-term.

Across the Straits of Taiwan, Taiwan’s exports rose 14.8 per cent year-on-year in December 2017, up from a prior 14.0 per cent year-on-year increase and beating the consensus forecast of a 10.9 per cent year-on-year increase.

December’s data marked the fifteenth consecutive month of year-on-year increases in the island’s exports growth, and was driven by the increase in electronics and machine tools, with semiconductors’ exports actually recording a new all-time high.

Exports to major trading partners continued to expand, with exports to both the Chinese mainland as well as to Hong Kong recording the highest single-month increases in the calendar year of 2017. With global economic momentum picking up, we expect industrial production and electronic goods production to continue expanding, supporting the outlook of Taiwan’s exports.

 

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