After a strong run-up over the previous week, equity markets were generally weaker over the week ended January 11, 2013. The Indonesian market posted a minus 2.85 per cent return, while Brazil and China declined by 2.42 per cent and 1.85 per cent respectively, leading losses for Emerging Market equities.
On the other hand, Russian equities staged a strong rebound after markets were closed over the first week of 2013 for the week-long ‘New Year Holiday Week’ holiday period.
Noticeably, Japanese equities had another strong week of returns, although the depreciation of the yen turned a 1.1 per cent week-on-week return (in Japanese yen terms) to a minus 0.65 per cent loss (in ringgit terms).
China: exports surge in december, inflation rises
China’s December 2012 exports surged to 14.1 per cent year-on-year, outpacing expectations of a five per cent increase, as well as accelerating from the 2.9 per cent growth rate in November 2012, suggesting that China’s economy is on a path of re-acceleration.
Negating some of the ‘good news’ out of China was the acceleration in consumer prices, with December’s Consumer Price Index (CPI) gaining by 2.5 per cent year-on-year, more than the two per cent inflation rate in November 2012, which may impair the People’s Bank of China’s ability to ease monetary policy further.
Japan: stimulus announced
Japan’s recently-elected Prime Minister unveiled measures amounting to 10.3 trillion yen to boost the beleaguered Japanese economy, targeting both private investment as well as reconstruction activity.
Abe’s aggressive approach to monetary easing has clearly been perceived as a negative for the yen, which has declined by more than 10 per cent against the Singaporean dollar since November 2012 (as of January 14, 2013).
Longer-dated Japanese sovereign bond yields have ticked up marginally, suggesting that inflation expectations are beginning to rise, albeit marginally, although it remains to be seen if Japan will be able to stem deflation over a longer period going forward.
Singapore: more ‘cooling measures’ for the property market
Singapore’s latest round of ‘cooling measures’ in the domestic property market marks the seventh round of measures since its property market rebounded in 2009 following the global financial crisis, and provides further leeway for the Monetary Authority of Singapore to embark on looser monetary policy, if deemed necessary.
The Ministry of National Development announced a broad-based series of measures affecting both the private and public segments of the residential market (restrictions on PRs, additional stamp duty, more stringent loan-to-value limits), as well as measures to curb speculation in the industrial property segment, which has seen rapid price increases over the past few quarters.