Equity markets worldwide declined over the week ended September 12, 2014, with the MSCI AC World index declining by 0.65 per cent.
Developed markets like the US (using the S&P 500 index) fell by 0.31 per cent over the week, while European equities (represented by the Stoxx 600 index) remained almost unchanged, declining slightly by 0.03 per cent.
Japan was in the black, with the Nikkei 225 index increasing by 0.53 per cent over the week.
Emerging and Asian markets generally did not hold up as well as their developed peers, with the MSCI Emerging Markets index and the MSCI Asia ex Japan index declining by 2.43 and 0.98 per cent respectively.
Most of the markets in East Asia fell over the week, with markets like Hong Kong, Taiwan and South Korea incurring losses of 1.66, 1.68 and 0.99 per cent respectively.
With regards to China, the HSML 100 index fell by 1.91 per cent over the week, but the local Chinese equity market actually posted gains, with the Shanghai Composite index increasing by 1.05 per cent.
Southeast Asian markets also followed their northern counterparts, with Indonesia, Malaysia and Thailand incurring losses of 1.22, 0.65 and 0.1 per cent respectively over the week.
The Lion City held on, with the benchmark STI index posting a slight gain of 0.13 per cent over the week.
Over across in South America, Brazil’s Bovespa index declined by 8.99 per cent over the week (with the weakening of the Brazillian real against the ringgit adding to the damage) as pre-election polls reveal that the country’s incumbent president, Dilma Rousseff, has recently gained support and caught up with rival candidate, Marina Silva.
The share prices of Petrobras and Brazilian banks declined sharply on negative investor sentiment, contributing to the correction in the benchmark index and making Brazil the bottom performing equity market under our coverage over the week.
Indonesia: Bank Indonesia retains benchmark interest rate
Over in Southeast Asia, Bank Indonesia (BI) held its interest rate steady at 7.5 per cent for the tenth consecutive monetary policy committee meeting.
The decision to keep its benchmark rate steady despite inflation halving from eight to four per cent this year lies in the targeted recovery of its current account balance.
Inflation in the world’s largest muslim population has halved following the one-off effect of a reduction in fuel subsidies previously in 2013 which has now dissipated and remains within the central bank’s targeted range of 3.5 to 4.5 per cent.
China: August’s exports beats estimates
China’s exports rose by 9.4 per cent year-on-year (y-o-y) in August, increasing more than consensus forecasts of a nine per cent y-o-y increase and down from a prior 14.5 per cent y-o-y increase.
The deceleration from the previous month is mainly due to a slowdown in demand for high-tech products and integrated circuits, which constitute a high proportion of all export items.
However, other major export products such as crude oil and agricultural products rose 9.3 and 10.2 per cent respectively, supporting the growth momentum in exports.
Once the free trade agreement between China and South Korea is signed, exports to South Korea are expected to increase, providing an impetus to further growth in exports
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