China’s economic woes spread across Asia with more pain seen

China’s economic woes spread across Asia with more pain seen

By: 
Bloomberg
31/01/19, 07:15 am

SINGAPORE (Jan 31): China’s weakening economy is roiling export markets in the rest of Asia – and there’s more pain to come.

From Hong Kong to Japan, exports data for December showed a marked downturn as supply-chain disruptions triggered by US-China tensions and a cyclical slowdown in the world economy, led by China, hit the trade-reliant region.

More bad news is in store for January: Bloomberg Economics’ early indicator shows China’s economy slowed further this month, while Thursday’s purchasing managers index is set to show another decline in factory output.

Nikkei PMIs for seven of the region’s economies are due Friday, with four of them already in contraction or less than half a point from contraction. A separate business survey on Wednesday showed South Korea manufacturers’ confidence for February at the most depressed level since the global financial crisis a decade ago.

Hong Kong’s worse-than-expected plunge in exports was telling for its broadly subdued demand from the rest of Asia, especially mainland China. Trade-dependent Singapore posted its biggest fall in exports in more than two years, while in Indonesia, the biggest economy in Southeast Asia, the drop in shipments was the worst since mid-2017.

South Korea and Taiwan had a pair of ugly exports reports last week, and Japan followed with the second decline in four months. January data for Vietnam, where trade accounts for twice the nation’s gross domestic product, showed a 1.3% contraction in exports from a year ago, the worst performance in five years.

Deeper Slowdown

Even in Malaysia, where export growth surprisingly picked up in December, shipments to China fell 0.5% from a year ago.

China’s growth has been steadily weakening over the years, reaching 6.6% last year, the slowest pace since 1990. As the world’s second-largest economy, it contributes about a third of global growth.

Beyond China, exports in the region are also being hit by a cooling technology sector, which had buoyed powerhouses like Taiwan and Singapore for much of the past couple of years.

Bloomberg Intelligence analysts point to other economic data showing worsening conditions. Smaller dry bulk ships, which are “workhorses of global trade and not just China-dependent,” are signaling an unprecedented decline in activity, which probably means a deepening global industrial slowdown, according to BI analysts Rahul Kapoor and Chris Muckensturm.

From Apple Inc. to Caterpillar Inc., companies are feeling the pain. Caterpillar, the bulldozer manufacturer, posted its biggest quarterly profit shortfall in a decade on Monday, while Nvidia Corp., the largest maker of chips for computer graphics cards, cited deteriorating conditions in China for weaker consumer demand for its products.

A Bloomberg dashboard of 10 critical global trade indicators now shows two flashing red, with a couple more – expectations of German businesses and of China’s exporters – poised to slip into below-average territory.

Other third-party gauges also offer warning signs for the world’s exporters. An Asia exports index created by analysts at Nomura Holdings Inc., which is meant to give a three-months-ahead read on export growth in Asia ex-Japan, is at its worst level since October 2016.

2019 GDP growth to ease to 'slightly above midpoint' of 1.3-3.5% forecast: MAS

SINGAPORE (Apr 26): MAS expects GDP growth to come in slightly above the mid-point of 1.3-3.5% forecast range in 2019, as growth momentum of the global economy has moderated at the turn of the year amid sluggish trade. This was according to the Guide to the Macroeconomic Review April 2019, released by the Monetary Authority of Singapore’s (MAS) Economic Policy Group on Friday morning. On the back of easing GDP growth, MAS has decided to maintain the current rate of appreciation of the SGD NEER policy band. This policy stance is consistent with a modest and gradual appreciation path of ....
Read More >>

CapitaLand Mall Trust kept at 'hold' by OCBC and Maybank on higher mall supply, soft retail sector

SINGAPORE (Apr 26): OCBC Investment Research says CapitaLand Mall Trust’s (CMT) 1Q19 results met its expectations. Gross revenue rose 10.0% y-o-y to $192.7 million while NPI jumped 11.5% to $140.1 million, forming 25.1% of its FY19 forecast. See: CapitaLand Mall Trust declares 3.6% higher DPU of 2.88 cents on higher income OCBC says Funan has already achieved high pre-commitment levels of 90%, and is on track to open in the middle of 2019 and will thus contribute to CMT’s earnings progressively from 2H19. However, the near-term outlook remains cautious given the higher supply, ....
Read More >>

Singapore's GLP plans US$3 billion IPO for its US warehouses

(Apr 26): Singapore-based GLP is planning an initial public offering (IPO) for its US operations that could raise about US$3 billion ($4.09 billion). GLP may seek to value the operations at more than US$20 billion, and the firm is said to have confidentially filed with securities regulators for the planned offering. Much of GLP’s US business stems from a 2014 deal to acquire IndCor Properties from Blackstone Group for US$8.1 billion. The offering could help GLP recoup funds after it was taken private by a management-backed consortium from the Singapore stock exchange last year. GLP ....
Read More >>