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10th September 2014 - Asian Economic Update
Asian markets started to reverse their strong run of gains earlier today as a new report on the next Federal Reserve meeting due on 16-17 September implied interest rates may be increasing sooner rather than later.
Chinese indexes, particularly the Hang Seng saw a steep decline by over 1.5% as positive data was eclipsed by the concerns over a rate increase in the US.
Exports in China rose by 9.4% compared to August 2013 and have helped created a record trade deficit of $49bn. Imports were seen down by 2.4% for the same period and reflect a lack of domestic demand starting to be seen more recently. The government has been implementing several forms of stimulus of late including major infrastructure projects looking to connect the country and monetary policies looking to speed up lending to small businesses and private households.
China's GDP is expected to expand between 7-7.5% for 2014 yet many feel that may be a hard target to reach.
The Japanese economy saw a contraction of 1.8% in the second quarter of 2014 after an expansion of 1.5% in the first quarter. Largely blamed on the Sales Tax increase the world's third largest economy has been stagnating of late and many believe could be closer to recession than the BoJ would admit.
The Sales Tax increase which took place in April that took the tax from 5% to 8% is the first of 2 planned increases and many businesses and individuals managed to buy their large purchases for the year before the raise took effect. This saw a significant drop in domestic demand which drives almost 60% of GDP.
The second phase is currently being discussed. An increase from 8% to 10% is planned for October however the Bank of Japan has stated that they will look closely as to whether this will be beneficial at this time.
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DISCLAIMER The views, opinions, findings, and conclusions or recommendations expressed on this service are those of the author(s) and do not necessarily reflect the views of the Triumph Financial Advisors.All market data within this release is for your general information and enjoys indicative status only. Triumph Financial Advisors does not accept any responsibility for its accuracy or for any use to which it may be put. All share prices and market indexes delayed at least 15 minutes. 52 week high and low values are calculated from close price data.
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