MSCI AC World Index ended the week by a tepid gain of 0.03 per cent, despite a sharp sell-off in technology shares. After touching new highs over the week, the S&P 500 Index declined 0.08 per cent from the previous week, with the gains in energy and financial stocks offset by the technology sell-off. Meanwhile, the Nikkei 225 Index took a tumble by 0.55 per cent, while the Stoxx 600 Index up by 0.1 per cent. Despite the mixed performance in Developed market, Asian and emerging markets closed higher over the week, with the MSCI Asia ex-Japan Index and the MSCI Emerging Markets Index surging 0.27 and 0.2 per cent respectively.
Over in East Asia, South Korea’s equity index incurred losses of 2.49 per cent, while Hong Kong and Taiwan’s equity markets managed to climb 0.95 and 0.28 per cent respectively over the week. China’s HSML100 Index advanced 0.43 per cent, in line with its onshore equity markets performances, as the Shanghai Composite Index gained 0.66 per cent, while the CSI 300 Index up 0.01 per cent over the week. Southeast Asian markets were the bright spots this week, with Indonesia, Thailand, Singapore and Malaysia all notching gains of 1.05, 0.65, 0.82 and 0.45 per cent respectively. In other emerging markets, India’s SENSEX Index and Brazil’s Bovespa Index gained 1.24 and 0.69 per cent respectively, while Russia’s RTSI$ Index fell 1.08 per cent. Crude oil prices staged an 8.54 per cent rebound to end the week at US$49.71 per barrel.
Singapore: June’s manufacturing output better than expected, headline inflation slows significantly
In June, Singapore’s industrial production grew 13.1 per cent year-on-year surpassing the market expectations of a 8.5 per cent growth and up from prior month’s downward revised 4.4 per cent growth. The surge in growth was largely due to the 18.3 per cent growth in the biomedical manufacturing cluster (25 per cent decline in May) as well as the 4.6 per cent growth in the transport engineering manufacturing cluster (12.8 per cent decline in May). All other manufacturing clusters, except the general manufacturing cluster, saw positive growth in June. While expansion of the electronics cluster has moderated slightly, as revealed by both recent industrial production and electronics PMI data, it remains likely that the cluster would continue to be the primary driver of manufacturing output in the remaining quarters of the year. Singapore’s economic growth for the whole of 2017 is likely to come in above 2016’s two per cent.
Consumer prices in Singapore slowed significantly to 0.5 per cent year-on-year in June 2017, down from 1.4 per cent in the previous month and undershot market expectations for a 0.7 per cent increase, due mainly to the timing of service and conservancy charges rebate disbursements, which contributed to a 3.9 per cent decline in accommodation costs. The MAS core inflation, which excludes the costs of accommodation and private road transport, moderated slightly to 1.5 per cent year-on-year from 1.6 per cent in May, reflecting lower services and food inflation, which eased to 1.3 per cent (down from 1.4 per cent in May) and 1.4 per cent (down from 1.5 per cent in May) respectively. While external inflationary pressures have picked up amidst a recovery in commodity prices, domestic sources of inflation remain muted. The MAS and MTI have maintained their inflation forecast at one to two per cent for 2017, up from 0.9 per cent in 2016, while core inflation is expected to rise to 0.5 to 1.5 per cent from minus 0.5 per cent last year.
China: Construction boom fuels industrial profits
China’s industrial firms saw their earnings surge 19.1 per cent year-on-year in June 2017, accelerating from the 16.7 per cent growth seen in the previous month, and pointed towards solid economic momentum for the country even as a regulatory crackdown on financial risks have led to concerns over margin pressures due to higher borrowing costs. The robust growth in industrials earnings were driven in large part by materials-related companies as a construction boom in China has led to increases in demand and prices of commodities such as iron ore. The data release coincided with China’s 2Q17 GDP report, which suggest solid economic growth with a better-than-expected 6.9 per cent year-on-year expansion. While market watchers remained concerns over a potential tapering off of China’s economic momentum, it remains on track to achieve its GDP target of 6.5 per cent this year.
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