World Economy Watch

Japan Economic Daily (17 March 2010)

17 March 2010

As the consensus in the rate markets expected, the Bank of Japan (BoJ) decided to increase the size of liquidity provision under the framework of the new fund-supplying operation (which provides 3-month funding with a fixed rate of 0.1% against various collateral including JGB, and was introduced on December 1) from the current 10 trillion yen to around 20 trillion yen.

Taiwan CBC Rate Meeting Preview: Selective Credit Tightening Will Be The Major Policy Move

17 March 2010

Governor Pergn said that inflation is still at the accepted range to downplay the likelihood of a rate hike on 25 March. He also mentioned that rising housing prices are only happening in specific areas and are not an overall phenomenon, such that selective measures are enough to deal with this issue. Third, Perng pointed out that there was NT$78bn (US$2.45bn) of foreign portfolio inflow money, that either invested in treasuries or built covered short positions in stocks, despite a net selling of only NT$38.0bn in the stock markets in the near-term. This is to show that the CBC continued to monitor hot money very closely.

Singapore: Broad Based Upside Surprise in Feb NODX

17 March 2010

NODX rose 23.4% YoY In Feb, accelerating from Jan’s 20.5% YoY, outperforming consensus and our expectations of 18.0% and 19.8%, respectively. On a month-on-month seasonally adjusted basis, NODX leapt by 14.8%, after its decline of 9.1% in Jan, reflective of a stronger demand for the domestic manufacturing base. In contrast, non-oil re-exports (NORX) rose modestly by 3.9% YoY vs. its sharp 31% rise in Jan, whilst on a MoM sa basis NORX fell by 5.4%, partly reversing its 7.4% rise in Jan reflecting slightly weaker regional trade.

Emerging Markets Daily – Asia Edition (16 March 2010)

16 March 2010

Korea — The new BOK governor could be more dovish than his predecessor; Feb’s labour market condition is likely to have improved; Thailand— Removal of government subsidies from low income groups in April is likely to lead to a rise in core inflation; Philippines — Despite 2009’s hefty fiscal slippage, Dec’s national government debt rose by 4.2% YoY; Singapore — NODX is likely to have continued its double-digit YoY growth;

Korea: New BOK Governor Could Be More Dovish Than His Predecessor

16 March 2010

President Lee named Kim Choong-Soo, who is an ambassador to the OECD, as a new governor of the BOK. He was the economic secretary of the president Lee in 2008. He had also served the government to support research institutes, such as KDI (Korea Development Institute, Aug 2002~Aug 2005) and KIPF (Korea Institute of Public Finance, Aug 1997~Jun 1998). These institutes are closely related to the Ministry of Strategy and Finance and provide support for macroeconomic policy (e.g. on taxation and long-run development plans).

Philippines: Creation Of 1.7mn Jobs Cuts Jobless Rate To 7.3%

16 March 2010

According to the labor survey, the jobless rate edged down to 7.3% in Jan, from 7.7% at the height of the global crisis a year-ago. Despite the drought effects on the farm sector and upcoming elections, 1.7mn new jobs were reported for employment growth of 5%yoy. A higher participation rate of 64.5%, compared to 63.3% a year-ago, suggests more members of the labor force sought jobs as labor conditions improved. A cut in the onshore jobless rate coupled with sustained overseas job deployment that upheld OFW remittance flows bode well for FY10 consumption prospects.

Emerging Markets Daily – Asia Edition (15 March 2010)

16 March 2010

Malaysia — MYR has rallied sharply since early March on cyclical catch-up and rate hikes; Philippines — The price effects from higher electricity tariff should play a crucial role in rate tightening in 2H 2010; OFW remittance growth likely to ease back to the 4%-5% range; China — Premier Wan re-emphasized the concerns about China’s inflation and a global double-dip; India — WPI inflation rose further to 9.9%yoy in Feb; Singapore — The upside surprise in Jan retail sales growth (2.3%yoy)

Singapore: Upside Surprise in Jan Retail Sales on Broad-based Improvement

15 March 2010

Retail sales reverted to positive growth of +2.3% yoy (prior, revised: -4.9%; prior, unrevised: -5.0% yoy), outperforming consensus expectation for a 1.1% increase. On a month-on-month, seasonally adjusted (mom SA) basis, retail sales rose 5.8%, reversing a 1.2% fall in December (revised number, prior unrevised: -0.9%). The upside surprise reflects both improving Motor Vehicles sales and YoY growth in small-ticket items.

India: Feb Inflation Inches Towards Double-Digits; Up 9.89%YoY

15 March 2010

Inflation as measured by the WPI rose 9.89%YoY in Feb10, from 8.6% in Jan09 and marginally higher than expectations (Citi and Consensus: 9.7%YoY). On a seasonally adjusted MoM basis, the WPI was up 1% vs. 0.7% in Jan09. Moreover, Dec09 numbers were revised upward from 7.3% to 8.1%YoY. Given that inflation is now way above the RBI’s 8.5% target, coupled with consistently strong industrial production numbers since Oct, we expect the RBI to begin tightening policy rates in April.

Japan Economic Daily (15 March 2010)

15 March 2010

According to the Monthly Consumer Confidence Survey, the Consumer Confidence Index (excluding one-person households, original series), which indicates consumers’ sentiment, was 39.8 in February, increasing for the second consecutive month. This movement is consistent with the Economy Watchers Survey. All indexes such as “overall livelihood,” “income growth,” “employment”, and “willingness to buy durable goods” improved from January. Government revised up the assessment from “weakening” to “remaining roughly flat.”

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