18th June 2014 - Asian Market Focus - Economic Update
Asian Market Data as of 18th June 2014
Moscow MCIEX 1,485.25 (-0.92%) Sydney ASX 5,368.20 (-0.23%)
Nikkei 225 15,138.70 (+1.09%) Hang Seng 23,201.99 (-0.01%)
Shang SSE Comp 2,056.37 (-0.53%)
Markets in Asia were relatively mute today expect for the Nikkei. The Japanese index posted good gains due to a weaker Yen benefitting for poorer than forecast inflation data from the US. Trade deficit figures released also helped the market as the deficit was seen to be reduced by 8.3% down to $8,9bn almost $1bn lower than April's. This is the 23rd month in a row that the country has run at a deficit and this month's figures were helped by a reduction in both Imports and Exports. Exports fell 2.7% from 2013's figures, its first drop since February and Imports fell 3.6% over the same time period showing that consumer spending was reducing, likely due to the increased sales tax imposed earlier this year. The Japanese PM is expected to announce further economic stimulus later this month. Targeting corporations, the country's huge corporation tax is looking to be reduced in an attempt to increase corporate activity in Tokyo. Corporation Tax for Japans largest companies is 36%, making one of the highest in the world.
Chinese markets remained flat as Foreign Investment data was released that confirmed FDI had dropped to its lowest in 16 months. May saw $8.6bn enter China, down 6.7% on May 2013 and the worst month for FDI since January 2013. Recently the Chinese government has extended or introduced a range of small scale stimulus packages that are aimed at keeping economic growth expanding. Concessions on business tax for SME's were extended and additional infrastructure projects have been introduced, most recently in the Yangtze River Province where they plan to expand road, rail and airport networks to the 11 municipalities that provide over 40% of the country's GDP. Yesterday, the Chinese PM signed a £14bn trade deal with the UK in an effort to boost bi-lateral trade and engineer further finance relations with London. Several projects have been planned including joint ventures on a High Speed Rail network and next generation nuclear power plants. CNOOC, the China Natural Offshore Oil Corporation signed a 20 year, $20bn deal to be supplied LNG by British Petroleum and ZN Solar Shine has signed a 3 year, £400mn agreement with MAP Environment to expand solar power options in the UK. Most notably, there are several currency agreements, allowing the renminbi to be traded on the London exchanges.
Asia will remain in focus as both the 2nd and 3rd largest economies look to stabilize their finances and China in particular will look to continue their economic growth whilst protecting their own economy from outside factors and influences.
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