After climbing higher into the new year, global equity markets corrected over the week ended January 24, 2014, with the MSCI AC World index falling by 1.1 per cent. Developed markets as a whole declined, with the US equity market (as represented by the S&P 500 index) declining by 1.4 per cent, and European equities (as represented by the Stoxx 600 index) incurring losses of one per cent.
Japanese equities (Nikkei index) rose by one per cent, but actually declined by 2.2 per cent in local currency (Japanese yen) terms, with the appreciation of the yen against many currencies (including the ringgit) skewing returns over the week.
Performance of emerging and Asian equity markets on aggregate followed their developed counterparts, with the MSCI Emerging Markets index and the MSCI Asia ex Japan index declining by 1.1 and 0.6 per cent, respectively.
Amongst the single country markets under coverage, Chinese equities were the best performers over the week. The CSI300 index surged 4.4 per cent over the week, while the Shanghai Composite index recorded gains of 3.8 per cent. Their Hong Kong counterpart did not follow suit, with the HSI index incurring losses of 1.8 per cent.
In Southeast Asia, the Singaporean and Malaysian equity market incurred losses as well, mirroring the decline in global equity markets, with the STI index declining by 1.4 per cent and the Kuala Lumpur Composite Index (KLCI) declining by 0.7 per cent.
Thai equities (represented by the SET index) rallied by 2.3 per cent over the week, as the Thai constitutional court ruled that a postponement of the February elections was possible.
The weakest performing single country equity market for the week was the Brazilian equity market, slumping by 3.8 per cent in ringgit terms but by minus 2.8 per cent in Brazilian real terms, as the Brazilian real weakened against the ringgit over the week.
Gold prices climbed over the week by 1.5 per cent to US dollar 1,270 per ounce, on risk aversion in equity markets following the minor declines in equity markets seen last week.
East Asia: China’s economy grew in 4Q13, Taiwan’s December export orders better than expected
The Chinese economy grew by 7.7 per cent year-on-year (y-o-y) in the fourth quarter (4Q) last year, beating consensus estimates of a 7.6 per cent y-o-y increase but slowing down from a 7.8 per cent y-o-y increase in the previous quarter.
In addition, China’s 2013 gross domestic product (GDP) grew by 7.7 per cent, slightly higher than the 7.5 per cent targeted growth rate by the Chinese authorities, and similar to GDP growth in 2012.
On a quarter-on-quarter basis, China’s economy grew by 1.8 per cent in 4Q13, missing consensus expectations of a two per cent increase and down from a 2.2 per cent increase in 3Q13. Economic data in the previous quarters were better than expected, but the recent data reveals that the local economy is still unable to resume the growth momentum as of those of the previous years.
China’s HSBC Manufacturing Purchasing Managers Index (PMI) for January was released last week, recording a reading of 49.6, missing consensus estimates of a 50.3 reading, and down from a prior 50.5 reading. The data provided is preliminary in nature, and the final reading will be released later in January.
While equity markets reacted strongly to the latest disappointing data, the figures could have been distorted by workers’ holidays ahead of the Lunar New Year celebrations. This latest data and slowing gains in factory outputs along with credit clampdowns has added concerns to recent economic growth in the mainland.
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