ANZ Greater China Economic Insight Incl Regional Chartbook - 16 July 2013
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7/28/2019 ANZ Greater China Economic Insight Incl Regional Chartbook - 16 July 2013
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ANZ Greater China Economics Weekly Insight / 16 July 2013 / 2 of 23
DATA PREVIEW & REVIEW
GREATER CHINA ECONOMIC DATA CALENDAR
DATE COUNTRY DATA/EVENT PERIOD CONSENSUS LASTTIME
(HK/SG)17 July China Actual FDI (y/y) Jun 0.7% --
18 July Hong Kong Composite Interest Rate Jun -- 0.26%
18 July China Unemployment Rate sa Jun 3.4% 3.4% 16:30
22 July Taiwan Unemployment Rate - sa Jun -- 4.19% 8:30
22 July Taiwan Export Orders (y/y) Jun -- -0.4% 16:00
22 July Hong Kong CPI - Composite Index (y/y) Jun -- 3.9% 16:30
23 July Taiwan Industrial Production (y/y) Jun -- -0.07% 16:00
23 July Taiwan Commercial Sales (y/y) Jun -- -1.85% 16:00
Source: Bloomberg
WEEK IN REVIEW
DATE COUNTRY DATA/EVENT PERIOD CONSENSUS ACTUAL LAST
9 July China CPI (y/y) Jun 2.5% 2.7% 2.10%
9 July China Producer Price Index (y/y) Jun -2.6% -2.7% -2.90%
10 July China Trade Balance (USD) Jun $27.80bn $27.12bn $20.42bn
10 July China Exports (y/y) Jun 3.7% -3.1% 1.0%
10 July China Imports (y/y) Jun 6.0% -0.7% -0.3%
12 July China Foreign Reserves Jun $3470.0bn $3500.0bn $3442.6bn
12 July China New Yuan Loans Jun 800.0bn 860.5bn 667.4bn
12 July China Money Supply - M0 (y/y) Jun 10.5% 9.9% 10.8%
12 July China Money Supply - M1 (y/y) Jun 10.7% 9.1% 11.3%
12 July China Money Supply - M2 (y/y) Jun 15.2% 14.0% 15.8%
12 July China Aggregate Financing Jun 1275.0bn 1040.0bn 1185.6bn
15 July China Real GDP YTD (y/y) Q2 7.7% 7.6% 7.7%
15 July China GDP (y/y) Q2 7.5% 7.5% 7.7%
15 July China GDP (q/q) Q2 1.8% 1.7% 1.6%
15 July China Industrial Production YTD (y/y) Jun 9.3% 9.3% 9.4%
15 July China Industrial Production (y/y) Jun 9.1% 8.9% 9.2%
15 July China Fixed Assets Investment YTD (y/y) Jun 20.2% 20.1% 20.4%
15 July China Retail Sales YTD (y/y) Jun 12.7% 12.7% 12.6%
15 July China Retail Sales (y/y) Jun 12.9% 13.3% 12.9%
15 July China Business Climate Index Q2 --- 120.6 125.6
15 July China Entrepreneur Confidence Index Q2 --- 117.0 122.4
Source: Bloomberg
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ANZ Greater China Economics Weekly Insight / 16 July 2013 / 3 of 23
GREATER CHINA CHARTBOOK
OVERVIEW: CHINA’S GDP SLOWED FURTHER IN Q2
• China: China’s Q2 GDP growth slowed further to 7.5% y/y, down from Q1’s 7.7%, putting at risk the 7.5%
growth target set this year. The slowing growth was mainly dragged by declining industrial production(8.9% y/y in June vs 9.2% in May) and worsening export conditions (-3.1% y/y in June vs +1.0% in May).We believe monetary policy inaction and even policy mistakes in handling the surging interbank rates,have also contributed to cooling economic growth.
• Looking forward, some downside risks remain: First, the unemployment pressure will rise significantlybecause of lost trade competitiveness and a record number of new graduates entering the job market thisyear. Second, high money market rates and deleveraging by commercial banks will spill over to the real
sector. The small and medium enterprises will feel most of the brunt, further increasing the volatility of thissector. Third, local government financing platforms could quickly become a lot more fragile.
• To head off such risks, the government will need to take prompt policy actions. Monetary policy mustchange to reflect the rapidly changing domestic and external conditions. An interest rate cut is longoverdue, and a reserve requirement ratio cut should not be excluded if capital flight were to occur. China’sfiscal policy is still effective as the country still has plenty of room to invest: urban infrastructure,technology upgrading, and human capital. Finally, reforms and opening up of the financial sector will alsohelp instil confidence on China’s future growth prospects.
• We believe these policy reactions should allow China to grow at around 7.6% this year with CPI inflationfalling to a range of 2.5 to 3.0%.
• These policies will have major implications for domestic rates and the RMB exchange rate. Market ratesshould see a general downward trend and the RMB should continue to weaken in the second half, not onlyagainst the USD but also its Asian crosses.
• Taiwan: Exports grew by a surprisingly large margin in June on the back of strong demand from ASEANand Mainland China. The electronics sector stayed resilient although household consumption remainedweak. GDP is forecasted to have grown modestly by 1.89% y/y in Q2. Our recent client visits also suggestthat the electronic sector remains upbeat. Taiwan’s external demand will likely recover in the second half.
• Hong Kong: As China has tightened over-invoicing and round tripping in trade, goods flow in Hong Konghas started to decline. Fortunately, domestic consumption holds up well as high property prices continue topreserve household wealth. HKD HIBOR barely rose despite the US tapering concern.
China - GDP Growth
0
2
4
6
8
10
12
14
16
18
20
2005 2006 2007 2008 2009 2010 2011 2012 2013
y/y q/q , saar
China - Contribution to GDP Growth
-5
0
5
10
15
20
02 03 04 05 06 07 08 09 10 11 12 13H1
Consumption Investment Net Exports GDP, y/y
Taiwan - Trade Developments
-20
-10
0
10
20
30
40
50
Jun
11
Aug
11
Oct
11
Dec
11
Feb
12
Apr
12
Jun
12
Aug
12
Oct
12
Dec
12
Feb
13
Apr
13
Jun
13
-2
-1
0
1
2
3
4
5
Trade Balance, $bn (RHS) Exports, y/y Imports, y/y
Hong Kong - 1-month HKD HIBOR
0.20
0.22
0.24
0.26
0.28
0.30
0.32
Mar
12
May
12
Jul
12
Sep
12
Nov
12
Jan
13
Mar
13
May
13
Jul
13
1m HKD HIBOR
Sources: Bloomberg, CEIC, ANZ
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ANZ Greater China Economics Weekly Insight / 16 July 2013 / 4 of 23
CHINA
REAL ACTIVITY: GDP SLOWED TO 7.5%, BARELY MEETING THE GOVERNMENT’S ANNUAL TARGET
• Q2 GDP slowed to 7.5% y/y, down from Q1’s 7.7%, in line with market expectations. In the first half of
the year, GDP grew 7.6% y/y. The primary, secondary and tertiary industries grew by 3.0%, 7.6% and8.3% respectively in H1. By expenditure, consumption and investment contributed 3.4ppts and 4.1pptsrespectively to overall growth in H1, while net exports contributed 0.1ppt. On a q/q basis, the economyrose 1.7%, 0.1ppt higher than in Q1.
• Industrial production growth slowed to 8.9% y/y in June, compared with 9.2% in May. However,electricity production growth rebounded to 6.0%, from 4.1% in the previous month. In H1, industrialproduction grew 9.3% y/y while electricity production increased 4.4%.
• Fixed asset investment eased slightly to 20.1% y/y in H1, compared with 20.4% in January-May.
• Retail sales grew 13.3% y/y in June, from 12.9% in May. For H1, retail sales increased 12.7%.
China - GDP Growth
0
2
4
6
8
10
12
14
16
18
20
2005 2006 2007 2008 2009 2010 2011 2012 2013
y/y q/q, saar
China - Contribution to GDP Growth
-5
0
5
10
15
20
02 03 04 05 06 07 08 09 10 11 12 13H1
Consumption Investment Net Exports GDP, y/y
China - Industrial Production and Electricity
Production (y/y)
-5
0
5
10
15
20
25
Jun
10
Sep
10
Dec
10
Mar
11
Jun
11
Sep
11
Dec
11
Mar
12
Jun
12
Sep
12
Dec
12
Mar
13
Jun
13
5
7
9
11
13
15
17
19
2123
Electricity Production Industrial Production (RHS)
China - Fixed Asset Investment
(ytd, y/y)
0
5
10
15
20
25
30
35
40
Dec
10
Mar
11
Jun
11
Sep
11
Dec
11
Mar
12
Jun
12
Sep
12
Dec
12
Mar
13
Jun
13
To ta l FAI SOE Priva te
China - Retail Sales(y/y)
5
10
15
20
Dec
10
Mar
11
Jun
11
Sep
11
Dec
11
Mar
12
Jun
12
Sep
12
Dec
12
Mar
13
Jun
13
Nomina l Real
China - Housing and Auto Sales Volume(y/y)
-40
-30
-20
-10
0
10
20
30
40
50
60
Dec
10
Mar
11
Jun
11
Sep
11
Dec
11
Mar
12
Jun
12
Sep
12
Dec
12
Mar
13
Jun
13
Auto Sales Housing Sales
Sources: NBS, CEIC, ANZ
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ANZ Greater China Economics Weekly Insight / 16 July 2013 / 5 of 23
CHINA
EXTERNAL TRADE: TRADE FIGURES REFLECT REALITY
• After the crackdown on over-invoicing and round tripping trade figures since May, the Chinese tradefigures are beginning to reflect reality. June trade figures continued to trend down, reflecting thatChina’s external demand remains weak. Export contracted by 3.1% y/y and imports extended thenegative growth at -0.7% y/y in June, compared with May’s 1.0% and -0.3%, respectively. The tradesurplus widened to USD27.1bn.
• By destination, exports to the US fell 5.4% y/y in June, from a 1.6% decline in May. Exports to the EUcontracted 8.3%, from -9.7% in the previous month. Exports to Japan declined 5.1%, from -5.7%.Exports to Hong Kong fell sharply to -7.0%, from a 7.7% increase in the previous month. Exports toASEAN rose 10.2%, while shipments to Taiwan fell 2.2%.
China - Trade Developments
-40
-30
-20
-10
0
10
2030
40
50
Dec
10
Mar
11
Jun
11
Sep
11
Dec
11
Mar
12
Jun
12
Sep
12
Dec
12
Mar
13
Jun
13
-40
-30
-20
-10
0
10
2030
40
50
Trade Balance, $bn (RHS) Exports, y/y Imports, y/y
China's exports vs regional exports
(y/y)
-30
-20
-10
0
10
20
30
40
50
Dec
10
Mar
11
Jun
11
Sep
11
Dec
11
Mar
12
Jun
12
Sep
12
Dec
12
Mar
13
Jun
13
China Hong Kong Korea Taiw an
China - Exports by Destination
(y/y, 3mma)
-20
-10
0
10
20
30
40
50
60
Dec
10
Mar
11
Jun
11
Sep
11
Dec
11
Mar
12
Jun
12
Sep
12
Dec
12
Mar
13
Jun
13
US EU NIE ASEAN
China - Imports by Origin
(y/y, 3mma)
-10
0
10
20
30
40
50
Dec
10
Mar
11
Jun
11
Sep
11
Dec
11
Mar
12
Jun
12
Sep
12
Dec
12
Mar
13
Jun
13
US EU NIE ASEAN
China - Trade Balance
($bn 12m rolling sum)
100
120
140
160
180
200
220
240
Dec
10
Mar
11
Jun
11
Sep
11
Dec
11
Mar
12
Jun
12
Sep
12
Dec
12
Mar
13
Jun
13
-70
-60
-50
-40
-30
-20
-10
0
EU US Japan (RHS)
China - Trade Balance
($bn 12m rolling sum)
-200
-150
-100
-50
0
50
Dec
10
Mar
11
Jun
11
Sep
11
Dec
11
Mar
12
Jun
12
Sep
12
Dec
12
Mar
13
Jun
13
ASEAN-5 AU+NZ NIE ex HK
Sources: Bloomberg, CEIC, ANZ
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ANZ Greater China Economics Weekly Insight / 16 July 2013 / 6 of 23
CHINA
PRICES: REBOUNDING INFLATION DUE TO A LOW BASE COMPARISON
• China’s CPI inflation rebounded to 2.7% in June, from May’s 2.1%, largely due to a low base last year.
Food and rental costs rose 4.9% and 3.1% respectively in June, from 3.2% and 3.0% in the priormonth. Meanwhile, on a m/m basis, CPI remained unchanged in June, compared with a 0.6% declinethe prior month. On a sequential basis, CPI inflation in June remained unchanged from May.
• PPI inflation remained negative for 16 consecutive months, indicating firms have little power to raiseprices due to the lack of demand. As there is a pass-through effect from PPI inflation to CPI inflation, aweak PPI inflation result also suggests that the CPI is unlikely to pick up in the next 1-2 quarters.
• We maintain our forecast that average CPI inflation will be around 2.5% for the whole of 2013, muchlower than the government target of 3.5%.
China - Inflation
(y/y)
-6
-4
-2
0
2
46
8
10
Dec
10
Mar
11
Jun
11
Sep
11
Dec
11
Mar
12
Jun
12
Sep
12
Dec
12
Mar
13
Jun
13
CPI PPI
China - Contribution to Inflation
(y/y)
-1
0
1
2
3
45
6
7
Dec
10
Mar
11
Jun
11
Sep
11
Dec
11
Mar
12
Jun
12
Sep
12
Dec
12
Mar
13
Jun
13
Food Housing Medical Other CPI
China - CPI Inflation
-4
-2
0
2
4
6
8
Dec
10
Mar
11
Jun
11
Sep
11
Dec
11
Mar
12
Jun
12
Sep
12
Dec
12
Mar
13
Jun
13
-1
0
1
2
m/m (RHS) y/y
China - PPI Inflation
-10
-8
-5
-3
0
3
5
8
10
Dec
10
Mar
11
Jun
11
Sep
11
Dec
11
Mar
12
Jun
12
Sep
12
Dec
12
Mar
13
Jun
13
-2
-1
0
1
2
m/m (RHS) y/y
China - Real Interest Rate
-4
-2
0
2
4
6
8
Jun
10
Sep
10
Dec
10
Mar
11
Jun
11
Sep
11
Dec
11
Mar
12
Jun
12
Sep
12
Dec
12
Mar
13
Jun
13
CPI, y/y Deposit Rate Rea l Interest Rate
China Food Price Index
140
150
160
170
180
190
200
210
220
230
Sep
09
Dec
09
Mar
10
Jun
10
Sep
10
Dec
10
Mar
11
Jun
11
Sep
11
Dec
11
Mar
12
Jun
12
Sep
12
Dec
12
Mar
13
Jun
13
Sources: CEIC, ANZ
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ANZ Greater China Economics Weekly Insight / 16 July 2013 / 7 of 23
CHINA
MONETARY POLICY: POLICY CHANGES ARE URGENTLY NEEDED TO INSTIL CONFIDENCE
• New yuan loans came in at RMB860.5bn in June, slightly above market consensus. However, total
social financing eased to RMB1.04trn, from RMB1.19bn in the previous month. M2 growth moderated to14.0% y/y in June, from 15.8% in May, reflecting slower deposit growth.
• While liquidity conditions have eased significantly in the past few weeks, the 7-day repo rate, the most
important gauge of the liquidity environment, continued to trade above 3.5%, much higher than thenormal level of 3%. This suggests that the PBoC is maintaining an overall tight liquidity condition inChina’s onshore market despite soft growth and inflation outlooks, which has increased theuncertainties of the policy outlook in the next 1-2 quarters.
• We reiterate our view that the monetary authority should anchor its monetary policy based on forward-looking inflation, growth and employment dynamics. This requires the PBoC to first cut interest rates tolower both interbank rates and cost of funding in the real economy. If China were to experience largecapital outflows with the expectation of QE tapering in the US, the PBoC could act accordingly bycutting the reserve requirement ratio.
China - PBoC 1-year Lending Rate
4.0
4.5
5.0
5.5
6.0
6.5
7.0
7.5
8.0
2006 2007 2008 2009 2010 2011 2012 2013
China - Reserve Requirement Ratio
4
6
8
10
12
14
16
18
20
22
24
2006 2007 2008 2009 2010 2011 2012 2013
China - M2 and Credit
10
15
20
25
Dec10
Mar11
Jun11
Sep11
Dec11
Mar12
Jun12
Sep12
Dec12
Mar13
Jun13
M2, y/y Credit, y/y
China - Total Social Financing
(RMB bn)
0
2,000
4,000
6,000
8,000
10,000
12,000
T o t a l S o c i a l
F i n a
n c i n g
R M
B L o a n
F o r e i g n
C u
r r e n c y
L o a n
E n t r u s t e d
L o a n
T r u s t L o a n
B a n k e r ' s
A c c e
p t a n c e
D
r a f t
N e
t C o r p
B o n d
N o n -
F i n a n c i a l
E q u i t y
H1 2012 H1 2013
China - New Yuan Loans
(RMB bn)
0
200
400
600
800
1,000
1,200
Jun
10
Sep
10
Dec
10
Mar
11
Jun
11
Sep
11
Dec
11
Mar
12
Jun
12
Sep
12
Dec
12
Mar
13
Jun
13
China - PBoC Weekly Open Market Operations
(RMB bn)
-200-150
-100
-50
0
50
100
150
200
250
25
Mar
08
Apr
22
Apr
06
May
20
May
03
Jun
17
Jun
01
JulC B Bill Matured Repo Matured Reverse Repo
CB Bill Repo Rev. Repo Matured
Net
Liquidity Injection
Liquidity Withdrawal
Sources: Bloomberg, CEIC, PBoC, ANZ
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ANZ Greater China Economics Weekly Insight / 16 July 2013 / 8 of 23
CHINA
EXCHANGE RATE: RMB SHOULD START TO DEPRECIATE IN THE SECOND HALF
• The strong yuan is a major culprit behind the loss of export competitiveness. We believe that the
Chinese authorities should re-visit their exchange rate policy amid the weakness of the Asian peers. Infact, the RMB strengthening since last June is largely driven by Mainland-Hong Kong cross border trademasking capital inflows induced by the onshore and offshore interest rate differentials, rather than realtrade. As a weaker RMB is in China’s interest to help the export sector and regain China’s tradecompetitiveness, we believe the RMB should depreciate in the second half of the year, and year-endrates should be around 6.20 or even weaker. Slower capital inflows or even capital outflows due toexpectations of US QE tapering will help alleviate the pressures on the RMB as well.
• Given a strong yuan relative to other Asian currencies, export competitiveness will continue to erode.With this in mind, we see a downside risk for the RMB exchange rate. In the long term, we believe thenew political leadership should roll out a clear strategy to re-position China’s products within the globalsupply chain.
USD/CNY
6.05
6.10
6.15
6.20
6.25
6.30
6.35
6.40
6.45
Jun
12
Jul
12
Aug
12
Sep
12
Oct
12
Nov
12
Dec
12
Jan
13
Feb
13
Mar
13
Apr
13
May
13
Jun
13
Jul
13
Spot Trading band Fixing
China - CNY and CNH Spot
6.10
6.14
6.18
6.22
6.26
Jan 13 Feb 13 Mar 13 Apr 13 May 13 Jun 13 Jul 13
-300
-200
-100
0
100
200
300
400500
Spread (pips, RHS) USD/CNY USD/CNH
USD/CNY Spot and NDF
6.1
6.2
6.3
6.4
6.5
Jul12
Aug12
Sep12
Oct12
Nov12
Dec12
Jan13
Feb13
Mar13
Apr13
May13
Jun13
Jul13
-4
-3
-2
-1
0
1
2
3
NDF Implied Appreciation, % (RHS) USD/CNY 1y NDF
USD/CNY Spot and DF
6.1
6.2
6.3
6.4
6.5
Jul
12
Aug
12
Sep
12
Oct
12
Nov
12
Dec
12
Jan
13
Feb
13
Mar
13
Apr
13
May
13
Jun
13
Jul
13
-4
-3
-2
-1
0
1
2
3
DF Implied Appreciation, % (RHS) USD/CNY 1y DF
China - Monthly Change of Financial Institutions
FX Position (RMB bn)
-200-100
0
100
200
300
400
500
600
700
800
Jan
09
May
09
Sep
09
Jan
10
May
10
Sep
10
Jan
11
May
11
Sep
11
Jan
12
May
12
Sep
12
Jan
13
May
13
CNY Exchange Rate
(Index: 1 Jan 2012 = 100)
90
95
100
105
110
115
120
125
130
135
140
Jan
12
Mar
12
May
12
Jul
12
Sep
12
Nov
12
Jan
13
Mar
13
May
13
Jul
13
CNY/EUR CNY/JPY CNY/AUD CNY/USD
CNY Appreciation
Sources: Bloomberg, CEIC, ANZ
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ANZ Greater China Economics Weekly Insight / 16 July 2013 / 9 of 23
CHINA
PROPERTY MARKET: PRICES SURGED IN FIRST TIER CITIES
• Property prices continued to heat up in May. Our calculation showed that property prices picked up to
6.5% y/y in May, compared with 5.3% in April. Notably, the average prices in first tier cities surged 14.2%in May, compared with an average 5.1% in the rest of the 70 cities. Housing prices in Beijing, Shanghai,Guangzhou and Shenzhen increased 15.2%, 12.2%, 15.5% and 14.0% respectively.
• By number of cities, the prices rose in 65 of 70 cities m/m in May, down from 67 in April. On a y/y basis,prices increased in 69 cities, Wenzhou was the only city that saw prices decline. Meanwhile, transactions in
major cities continued to slow down in May.
China - Property Price Index
(y/y)
-4
-2
0
2
4
6
8
10
12
14
16
18
2005 2006 2007 2008 2009 2010 2011 2012 2013
Official Property Price Index ANZ Property Price Index
China - First Tier City New Residential Property
Prices (y/y)
-4
-2
0
2
4
6
8
10
12
14
16
18
May
11
Jul
11
Sep
11
Nov
11
Jan
12
Mar
12
May
12
Jul
12
Sep
12
Nov
12
Jan
13
Mar
13
May
13
Beijing Shanghai Guangzhou Shenzhen
China - 70 City New Residential Property Price
(number of cit ies m/m change)
0
10
20
30
40
50
60
70
May
11
Jul
11
Sep
11
Nov
11
Jan
12
Mar
12
May
12
Jul
12
Sep
12
Nov
12
Jan
13
Mar
13
May
13
Decrease No Change Increase
N u m b e r o f C i t i e s
China - 70 City New Residential Property Price
(number of cities y/y change)
0
10
20
30
40
50
60
70
May
11
Jul
11
Sep
11
Nov
11
Jan
12
Mar
12
May
12
Jul
12
Sep
12
Nov
12
Jan
13
Mar
13
May
13
Decrease No Change Increase
N u m b e r o f C i t i e s
China - First Tier City Property Transactions
(thousand sq m, 30-day moving sum)
0
500
1,000
1,500
2,000
2,500
3,000
Sep
11
Nov
11
Jan
12
Mar
12
May
12
Jul
12
Sep
12
Nov
12
Jan
13
Mar
13
May
13
Jul
13
0
100
200
300
400
500
600
700
Beijing Shanghai Guangzhou Shenzhen (RHS)
China - Floor Space Started and Sold
(y/y)
-40
-30
-20
-10
0
10
20
30
40
5060
Nov
10
Feb
11
May
11
Aug
11
Nov
11
Feb
12
May
12
Aug
12
Nov
12
Feb
13
May
13
Floor Space Started Floor Space Sold
Sources: Bloomberg, CEIC, ANZ
7/28/2019 ANZ Greater China Economic Insight Incl Regional Chartbook - 16 July 2013
http://slidepdf.com/reader/full/anz-greater-china-economic-insight-incl-regional-chartbook-16-july-2013 10/23
ANZ Greater China Economics Weekly Insight / 16 July 2013 / 10 of 23
CHINA
STEEL INDUSTRY: IRON ORE PRICES REBOUNDED SLIGHTLY
• The Tianjin Port imported iron ore prices rebounded to above USD125 per ton at mid-July. Iron ore
inventory also started to climb slowly, but remained well below the average level of the past 5 years.• Steel prices, however, continued to decline. Steel inventories held by traders also continued the
downward trend, consistent with past seasonality paterns.
China - Import Iron Ore Price 62% Fe
(USD/ton)
8090
100
110
120
130
140
150
160
170
Dec
11
Feb
12
Apr
12
Jun
12
Aug
12
Oct
12
Dec
12
Feb
13
Apr
13
Jun
13
CFR Tianjin Port
China - Iron Ore Inventory at Ports
(mn tons)
50
55
60
65
70
75
80
85
90
95
100
105
Dec
09
Mar
10
Jun
10
Sep
10
Dec
10
Mar
11
Jun
11
Sep
11
Dec
11
Mar
12
Jun
12
Sep
12
Dec
12
Mar
13
Jun
13
Iron Ore Inventory 5 year average
China - Steel Inventory and Rebar Price
3
4
5
6
7
8
9
10
Jun
09
Oct
09
Feb
10
Jun
10
Oct
10
Feb
11
Jun
11
Oct
11
Feb
12
Jun
12
Oct
12
Feb
13
Jun
13
2,000
2,500
3,000
3,500
4,000
4,500
5,000
5,500
Steel inventories held by traders in major cities, m ton
Domestic rebar price, RMB/ton (RHS)
China - Steel Product Prices
(th RMB/ton)
3.0
3.5
4.0
4.5
5.0
5.5
6.0
6.5
Dec
10
Mar
11
Jun
11
Sep
11
Dec
11
Mar
12
Jun
12
Sep
12
Dec
12
Mar
13
Jun
13
Rebar Hot Rolled Sheet Steel P late Cold Rolled Sheet
China - Industrial Production Growth vs Ferrous
Metal Smelting & Pressing (y/y)
0
5
10
15
20
25
Jan
11
Mar
11
May
11
Jul
11
Sep
11
Nov
11
Jan
12
Mar
12
May
12
Jul
12
Sep
12
Nov
12
Jan
13
Mar
13
May
13Headline Industrial Production
Smelting & Pressing of Ferrous Metals
China - Domestic Demand of Imported Ore
(m tons)
0
10
20
30
40
5060
70
80
90
Nov
09
Feb
10
May
10
Aug
10
Nov
10
Feb
11
May
11
Aug
11
Nov
11
Feb
12
May
12
Aug
12
Nov
12
Feb
13
May
13
*Defined as monthly imports less monthly change of inventories
Sources: Bloomberg, CEIC, ANZ
7/28/2019 ANZ Greater China Economic Insight Incl Regional Chartbook - 16 July 2013
http://slidepdf.com/reader/full/anz-greater-china-economic-insight-incl-regional-chartbook-16-july-2013 11/23
ANZ Greater China Economics Weekly Insight / 16 July 2013 / 11 of 23
TAIWAN
REAL ACTIVITY: INDUSTRIAL PRODUCTION IMPROVED DUE TO ELECTRONICS
• Industrial production inched down 0.07% y/y in May, compared with -0.80% in the previous month.
Sequentially, industrial production gained 0.98% m/m after seasonal adjustments. The improvementwas driven by the robust semiconductors sector as electronics manufacturing expanded 3.47% y/y inMay. The base metal industry contracted 7.37% while chemicals declined 3.66%, suggesting that theeconomic conditions for “conventional industries” remain challenging.
• Domestic demand performed poorly. Commercial sales contracted 1.85% y/y in May, from a 1.01% gainin April, mainly due to a 2.63% decline in wholesale sales. Meanwhile, retail sales increased marginallyby 0.11%.
• Given continued sluggish domestic demand and stable exports, Taiwan’s GDP is forecast to have grownby 1.89% y/y in Q2. Going forward, the improving US economy likely helped lift the pace of recovery inH2, given that the global electronics industry remains upbeat.
Taiwan - Real GDP Growth
-10
-5
0
5
10
15
20
25
Mar
09
Jul
09
Nov
09
Mar
10
Jul
10
Nov
10
Mar
11
Jul
11
Nov
11
Mar
12
Jul
12
Nov
12
Mar
13
y/y q/q, saar
Taiwan - Contributions to GDP Growth
(ppt)
-6
-4
-20
2
4
6
81012
14
Jun
10
Sep
10
Dec
10
Mar
11
Jun
11
Sep
11
Dec
11
Mar
12
Jun
12
Sep
12
Dec
12
Mar
13
Private Consumption Government Consumption
Investment Change in Stocks
Net Exports y/y
Taiwan - Economic Activities
(y/y)
-25
-20
-15
-10
-5
0
5
10
15
20
25
Aug
11
Oct
11
Dec
11
Feb
12
Apr
12
Jun
12
Aug
12
Oct
12
Dec
12
Feb
13
Apr
13
Jun
13
Commercial sales Industrial production
Exports Imports of Machineries
Export orders
Taiwan - Commercial Sales
(y/y)
-15
-10
-5
0
5
10
15
20
25
Nov
10
Feb
11
May
11
Aug
11
Nov
11
Feb
12
May
12
Aug
12
Nov
12
Feb
13
May
13
Commercial Sales Wholesale Trade Retail Trade
Taiwan - Industrial Production Index
-20
-15
-10
-5
0
5
10
15
20
25
Nov10
Feb11
May11
Aug11
Nov11
Feb12
May12
Aug12
Nov12
Feb13
May13
40
50
60
70
80
90
100
110
120
y/y Index (RHS)
Taiwan - Industrial Production
of Major Sectors
(y/y)
-40
-20
0
20
40
60
80
Nov10 Feb11 May11 Aug11 Nov11 Feb12 May12 Aug12 Nov12 Feb13 May13
Electronic Parts Basic Metal
Chemical Materials Tech Products
Sources: CEIC, ANZ
7/28/2019 ANZ Greater China Economic Insight Incl Regional Chartbook - 16 July 2013
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ANZ Greater China Economics Weekly Insight / 16 July 2013 / 12 of 23
TAIWAN
EXTERNAL TRADE: EXPORTS SURPRISED ON THE UPSIDE IN JUNE
• Taiwan’s exports surprised on the upside with a 8.6% y/y gain in June, mainly driven by strongshipments to ASEAN (+20.3%) and Mainland China (8.6%). By product, electronics continued to buffer
Taiwan’s trade performance, growing 10.9% y/y. Meanwhile, mineral exports, which include oil fuels,surged 39.4%. On a sequential basis, exports rose by 0.5% m/m.
• Imports increased 6.1%, from -8.0% in May, also beating market consensus. Notably, imports of capitalequipment increased 7.5%, reflecting a robust investment demand. The trade surplus narrowed toUSD3.25bn in June, from a record high of USD4.46bn in May.
• On the other hand, export orders declined 0.4% y/y in May, from a 1.1% contraction in April, slightlybetter than market expectations. The declining demand from China, ASEAN and the US appears to havestabilized with some markets starting to restock. Excluding the change of export orders from Japan,which has suffered from a currency valuation effect, the headline growth should have been 1.3% y/y.
Taiwan - Trade Developments
-20
-10
0
10
20
30
40
50
Jun
11
Aug
11
Oct
11
Dec
11
Feb
12
Apr
12
Jun
12
Aug
12
Oct
12
Dec
12
Feb
13
Apr
13
Jun
13
-2
-1
0
1
2
3
4
5
Trade Balance, $bn (RHS) Exports, y/y Imports, y/y
Taiwan - Exports Comparison with South Korea
(y/y)
-20
-15
-10
-5
0
5
10
1520
25
30
Jun
11
Aug
11
Oct
11
Dec
11
Feb
12
Apr
12
Jun
12
Aug
12
Oct
12
Dec
12
Feb
13
Apr
13
Jun
13
Taiwan South Korea
Taiwan - Exports by Destination
(y/y)
-40
-30
-20
-10
0
10
20
30
40
50
Jun11
Aug11
Oct11
Dec11
Feb12
Apr12
Jun12
Aug12
Oct12
Dec12
Feb13
Apr13
Jun13
Asia ex Ma inland & HK HK Ma inland Europe US
Taiwan - Imports by Origin
(y/y)
-40
-30
-20
-10
0
10
20
30
40
50
60
Jun
11
Aug
11
Oct
11
Dec
11
Feb
12
Apr
12
Jun
12
Aug
12
Oct
12
Dec
12
Feb
13
Apr
13
Jun
13
-90
-60
-30
0
30
60
90
120
150
180
Asia ex Ma inland & HK Ma inlandEurope US
HK (RHS)
Taiwan - Export Orders
-20
-10
0
10
20
30
40
May
10
Aug
10
Nov
10
Feb
11
May
11
Aug
11
Nov
11
Feb
12
May
12
Aug
12
Nov
12
Feb
13
May
13
20,000
23,000
26,000
29,000
32,000
35,000
38,000
41,000
44,000
y/y Export Orders in USD (RHS)
Export Orders 12mma
Taiwan - Export Orders by Market
(y/y)
-30
-20
-10
0
10
20
30
40
Jul11
Sep11
Nov11
Jan12
Mar12
May12
Jul12
Sep12
Nov12
Jan13
Mar13
May13
China/HK Europe Japan ASEAN6 US
Sources: CEIC, ANZ
7/28/2019 ANZ Greater China Economic Insight Incl Regional Chartbook - 16 July 2013
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ANZ Greater China Economics Weekly Insight / 16 July 2013 / 13 of 23
TAIWAN
PRICES: INFLATIONARY PRESSURES CONTINUED TO EASE IN JUNE
• Headline CPI inflation eased further to 0.60% y/y in June, compared with 0.74% in May, largely due tolower food inflation, which has eased to 0.48% y/y. Core inflation, which excludes food and energy, rose
to 0.33% in June, from 0.28%.
• WPI fell 1.90% y/y in June, compared with -3.33% in the previous month and the market consensus of a 2.35% decline. Overall, WPI continued to be negative as prices of base metals, electronic componentsand other minerals remained depressed. However, sequentially, WPI gained 0.75% m/m sa.
• Going forward, the strength of TWD against USD and JPY will contine to help fend off imported inflation.Inflation is unlikely to be a major risk factor for the rest of the year.
Taiwan - CPI Momentum & Output Gap
-10
-8
-6
-4
-2
0
2
4
6
2006 2007 2008 2009 2010 2011 2012
GDP Actual-Potential Gap, % CPI
Taiwan - Contribution to CPI Inflation
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
Aug
12
Sep
12
Oct
12
Nov
12
Dec
12
Jan
13
Feb
13
Mar
13
Apr
13
May
13
Jun
13
Food Rental
Hous ing ex. Renta l Transporta tion
Education & Entertainment Other
CPI, y/y
Taiwan - Headline and Core CPI
-1.0
-0.5
0.0
0.5
1.0
1.5
2.02.5
3.0
3.5
4.0
Dec10
Mar11
Jun11
Sep11
Dec11
Mar12
Jun12
Sep12
Dec12
Mar13
Jun13
CPI
CPI ex Food & Energy
CPI ex Fruits, Vegetables, Fish, Shellfish & Energy
Taiwan - CPI and Real Interest Rate
-2.0
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
Dec
10
Mar
11
Jun
11
Sep
11
Dec
11
Mar
12
Jun
12
Sep
12
Dec
12
Mar
13
Jun
13
Real interest rate: 1-year Term Deposits minus CPI Inflation 3mma
CPI y/y 3mma
Taiwan - WPI
-6
-4
-2
0
2
4
6
8
10
Dec10
Mar11
Jun11
Sep11
Dec11
Mar12
Jun12
Sep12
Dec12
Mar13
Jun13
-3
-2
-1
0
1
2
3
4
5
m/m sa (RHS) y/y
Taiwan - Import Price Index
(y/y)
-10
-5
0
5
10
15
20
25
Dec10
Mar11
Jun11
Sep11
Dec11
Mar12
Jun12
Sep12
Dec12
Mar13
Jun13
ImPI in TWD ImPI in USD
Sources: CEIC, ANZ
7/28/2019 ANZ Greater China Economic Insight Incl Regional Chartbook - 16 July 2013
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ANZ Greater China Economics Weekly Insight / 16 July 2013 / 14 of 23
TAIWAN
MONETARY AND RATE POLICIES: CBC HELD INTEREST RATE AT 1.875% AS EXPECTED
• Taiwan’s central bank (CBC) held the policy rate at 1.875% in June, in line with market expectations.
Low inflation and sluggish growth continue to prompt the CBC to remain accommodative as the currentinterest rate level has been considered appropriate. Furthermore, the central bank is also watchingclosely the highly uncertain financial markets. The changing monetary policy stance of other majorcentral banks is also on the radar. Against this global backdrop, we believe the CBC will continue to actprudentially and maintain a stable monetary policy stance.
• Taiwan’s bond yield has risen sharply on the back of rising US Treasury yields. Thus, given the taperingbias of US monetary policy going forward, Taiwan’s interest rates will also be subject to an upward bias.On the exchange rate front, the CBC will continue to strive for a balance between exportcompetitiveness and the risk of imported inflation when formulating its view on TWD exchange rates.
• RMB deposits rose 7.4% m/m to RMB71.2bn in June.
Taiwan - Money Supply
(y/y)
0
1
2
3
4
5
6
7
8
910
Nov10
Feb11
May11
Aug11
Nov11
Feb12
May12
Aug12
Nov12
Feb13
May13
M1b M2
Taiwan - Money Market Interest Rates (bps)
0
20
40
60
80
100
120
140
160
180200
Oct10
Jan11
Apr11
Jul11
Oct11
Jan12
Apr12
Jul12
Oct12
Jan13
Apr13
Jul13
90-day Commercial Paper Interbank Overnight Rate
Rediscount Rate 10 yr Gov't Bond Yie ld
Taiwan - TWD Exchange Rates
95
97
99
101
103
105
107
Apr
11
Jun
11
Aug
11
Oct
11
Dec
11
Feb
12
Apr
12
Jun
12
Aug
12
Oct
12
Dec
12
Feb
13
Apr
13
Jun
13
28
28
29
29
30
30
31
BIS NEER BIS REER TWD/USD Spot (RHS, inverted)
Taiwan - USDTWD vs USDKRW
(One year rolling index)
90
92
94
96
98
100
102
Jul
12
Aug
12
Sep
12
Oct
12
Nov
12
Dec
12
Jan
13
Feb
13
Mar
13
Apr
13
May
13
Jun
13
Jul
13
USDTWD USDKRW
Taiwan - RMB Deposits
(RMB mn)
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
Aug
11
Oct
11
Dec
11
Feb
12
Apr
12
Jun
12
Aug
12
Oct
12
Dec
12
Feb
13
Apr
13
Jun
13
OBU DBU
Taiwan - Real Estate Loans
-30
-20
-10
0
10
20
30
40
50
60
70
80
Nov
10
Feb
11
May
11
Aug
11
Nov
11
Feb
12
May
12
Aug
12
Nov
12
Feb
13
May
13
42.0
42.5
43.0
43.5
44.0
44.5
Real Estate Loan, TWD bn
RE Loan as % of Banks' Loan Book (RHS)
Sources: CEIC, ANZ
7/28/2019 ANZ Greater China Economic Insight Incl Regional Chartbook - 16 July 2013
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ANZ Greater China Economics Weekly Insight / 16 July 2013 / 15 of 23
HONG KONG
REAL ACTIVITY: GROWTH MOMENTUM OF DOMESTIC ACTIVITY REMAINED MODEST
• Retail sales grew 12.8% y/y in May, compared with 20.7% in April and market expectations of 19.4%.Sales of jewellery, watches and valuable gifts grew 34.5%, much slower than the 68.5% gain in April, asthe first wave of gold-buying occurred in April after gold prices slumped. In addition, consumer durablegoods also declined 9.5% y/y, from a 0.8% gain the previous month, driven by slow sales of motorvehicles.
• Seaborne cargo remained depressed, despite the resumption of port workers after a long strike.Container throughput by seas contracted 10.5% y/y in May, from the previous contraction of 12.2% inApril. Meanwhile, air cargo throughput rose 10.7% y/y in June, from 12.4% the previous month.
Hong Kong - Contributions to GDP Growth
(ppt)
-10
-5
0
5
10
15
Sep
10
Dec
10
Mar
11
Jun
11
Sep
11
Dec
11
Mar
12
Jun
12
Sep
12
Dec
12
Mar
13
Private Consumption Government Consumption
Investment Changes in Inventories
Net Exports Total, y/y
Hong Kong - GDP
-4
-2
0
2
4
6
8
10
12
Mar10
Jun10
Sep10
Dec10
Mar11
Jun11
Sep11
Dec11
Mar12
Jun12
Sep12
Dec12
Mar13
y/y q/q, saar
Hong Kong - Retail Sales
(y/y)
0
5
10
15
20
25
30
35
Nov10
Feb11
May11
Aug11
Nov11
Feb12
May12
Aug12
Nov12
Feb13
May13
Value Volume
Hong Kong - Retail Sales Components
(y/y)
-40
-20
0
20
40
60
80
May11
Jul11
Sep11
Nov11
Jan12
Mar12
May12
Jul12
Sep12
Nov12
Jan13
Mar13
May13
C lothing & Footwear Motor Vehicles
Jewellery, Watches & Clocks
Hong Kong - Unemployment Rate
0
2
4
6
8
10
12
14
May
09
Sep
09
Jan
10
May
10
Sep
10
Jan
11
May
11
Sep
11
Jan
12
May
12
Sep
12
Jan
13
May
13
Construction Overall economy Finance & Bus. Services
Hong Kong - Logistics Activities
(y/y)
-20
-15
-10
-5
0
5
10
15
20
25
Aug11
Oct11
Dec11
Feb12
Apr12
Jun12
Aug12
Oct12
Dec12
Feb13
Apr13
Jun13
Container Throughput (Sea) Passenger Movement (Air)
Air Cargo Throughput
Sources: CEIC, ANZ
7/28/2019 ANZ Greater China Economic Insight Incl Regional Chartbook - 16 July 2013
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ANZ Greater China Economics Weekly Insight / 16 July 2013 / 16 of 23
HONG KONG
EXTERNAL SECTOR: TRADE SLOWED SIGNIFICANTLY AS CHINA CLAMPS DOWN ON FALSE TRADE
• Exports dropped by 1.0% y/y in May, compared with a 9.0% gain in April, consistent with the declining
pattern of China’s trade. The large drop in exports growth was primarily due to exports to Mainland,which declined significantly due to the Mainland’s cracking down of over-invoicing. Exports to Chinagrew a mere 0.7%, compared with 15.7% in April. Additionally, exports to the US and EU also declinedby 7.9% and 7.0% respectively, from -3.6% and -0.6%.
• Imports increased by 1.7% y/y in May, from 7.7% in April, and also lower than market expectations. Asthe cross-border financially-driven trades started to slow, imports from China also declined. The tradedeficit widened by HKD1.6bn to HKD44.3bn in May.
Hong Kong - Trade Developments
-50
-40
-30
-20
-10
0
10
20
30
40
Nov
10
Feb
11
May
11
Aug
11
Nov
11
Feb
12
May
12
Aug
12
Nov
12
Feb
13
May
13
Trade Balance, HKD bn Exports, y/y Imports, y/y
Hong Kong - Exports by Destination
(y/y)
-30
-20
-10
0
10
20
30
40
May11
Jul11
Sep11
Nov11
Jan12
Mar12
May12
Jul12
Sep12
Nov12
Jan13
Mar13
May13
US EU NIE ASEAN China
Hong Kong - Regional Contributions to Export
Growth (ppt)
-20
-15
-10
-5
0
5
1015
20
May
12
Jun
12
Jul
12
Aug
12
Sep
12
Oct
12
Nov
12
Dec
12
Jan
13
Feb
13
Mar
13
Apr
13
May
13
ASEAN EU US China
Japan NIEs Other Total, y/y
Hong Kong - Regional Contributions to Import
Growth (ppt)
-25
-20
-15
-10
-5
0
5
10
1520
25
30
Jun
12
Jul
12
Aug
12
Sep
12
Oct
12
Nov
12
Dec
12
Jan
13
Feb
13
Mar
13
Apr
13
May
13
ASEAN EU US China
Japan NIEs Other Total, y/y
Hong Kong - Product Contributions to ExportGrowth (ppt)
-20
-15
-10
-5
0
5
10
15
20
Jun
12
Jul
12
Aug
12
Sep
12
Oct
12
Nov
12
Dec
12
Jan
13
Feb
13
Mar
13
Apr
13
May
13
C hemicals Manufactures by Materials
Machinery, Transport Equip Misc Manufactures
Other Total, y/y
Hong Kong - Product Contributions to ImportGrowth (ppt)
-25-20
-15-10-50
5101520
2530
Jun
12
Jul
12
Aug
12
Sep
12
Oct
12
Nov
12
Dec
12
Jan
13
Feb
13
Mar
13
Apr
13
May
13
C hemicals Manufactures by Materials
Machinery, Transport Equip Misc Manufactures
Other Total, y/y
Sources: CEIC, ANZ
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HONG KONG
PRICES: CPI INFLATION EASED SLIGHTLY IN MAY
• Headline CPI eased to 3.9% y/y in May, slightly below the previous reading of 4.0%. Food inflation
eased to 4.0% in May, from 5.2% in April as vegetable prices rose slower. On the other hand, housingprices accelerated to 6.2% from 5.9% on the back of rising private rentals.
• Going forward, Hong Kong’s inflation still has upward pressure. With public services including MTR(Hong Kong’s subway) raising its fares and the government inclined to pledge the relief measures nomore than the previous, Hong Kong will likely run an inflation scenario unless there is a substantialreduction in economic activities triggered by a crisis-like event.
Hong Kong - CPI Inflation
0
1
2
3
4
5
6
7
8
9
Nov
10
Feb
11
May
11
Aug
11
Nov
11
Feb
12
May
12
Aug
12
Nov
12
Feb
13
May
13
Headline, y/y Excl. Gov't Relief, y/y
Hong Kong - Contribution to Inflation
-2
-1
0
1
2
3
4
5
Jul
12
Aug
12
Sep
12
Oct
12
Nov
12
Dec
12
Jan
13
Feb
13
Mar
13
Apr
13
May
13
Food Housing
Electricity, Gas & Water Transport
Misc services Others
y/y
Hong Kong - Inflation
(y/y)
-10
-5
0
5
10
15
20
Nov
10
Feb
11
May
11
Aug
11
Nov
11
Feb
12
May
12
Aug
12
Nov
12
Feb
13
May
13
-40
-30
-20
-10
0
10
20
30
Food Housing Transport E lect ., Gas & Water (RHS)
Hong Kong - CPI and CNY
0
1
2
3
4
5
6
7
8
9
Nov
10
Feb
11
May
11
Aug
11
Nov
11
Feb
12
May
12
Aug
12
Nov
12
Feb
13
May
13
1.12
1.14
1.16
1.18
1.20
1.22
1.24
1.26
1.28
CPI, y/y HKD/CNY (RHS)
Hong Kong - CPI and Liquidity
0
2
4
6
8
10
12
14
1618
1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013
-8
-4
0
4
8
12
16
3m HIBOR CPI, y/y (RHS)
Hong Kong - CPI and Unemployment Rate
0
1
2
3
4
5
6
7
89
Nov
10
Feb
11
May
11
Aug
11
Nov
11
Feb
12
May
12
Aug
12
Nov
12
Feb
13
May
13
3.0
3.2
3.4
3.6
3.8
4.0
4.2
CPI, y/y Unemployment Rate, sa (RHS)
Sources: CEIC, ANZ
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HONG KONG
MONEY AND BANKING: CNH HIBOR AFFECTED BY THE ONSHORE LIQUIDITY SQUEEZE
• Broad money M2 growth accelerated to 13.4% y/y in May, from 10.3% in April, driven by the stronggrowth of foreign currency deposits that reported a 14.8% gain (April: 9.8%). Sequentially, M2increased by 1.2% m/m.
• Hong Kong’s RMB deposit increased by 3.1% y/y in May, reaching RMB698.5bn at the end of the month.Cross border trade settlement also rose to RMB318.1bn in May, from RMB275.4bn in April, partlyreflecting the strong cross border trade that took place in previous months.
• The onshore liquidity crunch that started in June has had a large impact on Hong Kong’s CNH interestrates. In late June, the CNH HIBOR fixing curve, released by the TMA in June, became inverted as shortterm interest rates surged on the back of tightening liquidity conditions onshore, which caused onshore
market interest rates to surge. As onshore rates declined in July, the offshore CNH HIBOR also declinedand the curve is no longer inverted. This shows that despite capital controls, the onshore CNY marketstill heavily influences the offshore CNH market. (See ANZ CNH Market Monitor 3 July 2013)
Hong Kong - Money Supply
-5
0
5
10
15
20
Nov
10
Feb
11
May
11
Aug
11
Nov
11
Feb
12
May
12
Aug
12
Nov
12
Feb
13
May
13
M2, y/y M2, m/m
Hong Kong - HKMA Aggregate Balance
(HKD bn)
0
50
100
150
200
250
300
350
2007 2008 2009 2010 2011 2012 2013
0
5
10
15
20
25
30
Daily Change (RHS) HKMA Aggregate Balance
Hong Kong - HKD Loan and Deposits
74
76
78
80
82
84
86
88
May
11
Jul
11
Sep
11
Nov
11
Jan
12
Mar
12
May
12
Jul
12
Sep
12
Nov
12
Jan
13
Mar
13
May
13
0
5
10
15
20
25
Loan-to-deposit Ratio Loans, y/y (RHS)
Hong Kong - CNH HIBOR Fixing Curve
0
1
2
3
4
5
6
7
8
ON 1W 2W 1M 2M 3M 6M 1Y
24/06/2013 15/07/2013
Hong Kong - RMB Trade Settlement
0
50
100
150
200
250
300
350
400
Oct
10
Jan
11
Apr
11
Jul
11
Oct
11
Jan
12
Apr
12
Jul
12
Oct
12
Jan
13
Apr
13
0
20
40
60
80
100
120
140
Ratio to HK-China Trade (RHS)
Ratio to Total HK Trade (RHS)
Ratio to China Total Trade (RHS)
Trade settlement amount (3mma), RMBbn
Hong Kong - RMB Deposits and Cross-Border
Trade Settlement
0
100
200
300
400
500
600
700
800
May09
Sep09
Jan10
May10
Sep10
Jan11
May11
Sep11
Jan12
May12
Sep12
Jan13
May13
0
2
4
6
8
10
12
Deposit, RMBbn
Trade se ttlement amount, RMBbn
RMB as % of Total Deposits (RHS)
Sources: CEIC, ANZ
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HONG KONG
REAL ESTATE: HKMA WARNS BANKS OF POTENTIAL MORTGAGE RISK
• Hong Kong’s property prices held up well, despite a large decline in transaction volumes. The Centa City
Leading Index was little changed from a month ago on 7 July 2013, and property prices held firm after amodest correction that started in Q2. Meanwhile, residential property transactions remained depressed,declining by 22.2% m/m in June in value terms.
• It has been reported by the local media that banks in Hong Kong have recently started to offer lowerHIBOR-linked mortgage rates and packages to attract new loans. However, the Hong Kong MonetaryAuthority (HKMA) has warned banks of mortgage risks and reportedly provided window guidance.
• The upside risk of the US interest rate will continue to cloud Hong Kong’s property outlook whilegovernment measures to curb transactions may start to prevent the price adjustment process.Policymakers are advised to act pre-emptively and flexibly in view of changing market conditions.
Hong Kong - Centa City Leading Index
50
60
70
80
90
100
110
120
130
Jan
09
May
09
Sep
09
Jan
10
May
10
Sep
10
Jan
11
May
11
Sep
11
Jan
12
May
12
Sep
12
Jan
13
May
13
Hong Kong - Residential Property Transactions
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
Jun
10
Oct
10
Feb
11
Jun
11
Oct
11
Feb
12
Jun
12
Oct
12
Feb
13
Jun
13
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
Number of Transactions (RHS) Value, HKD mn
Hong Kong - Housing Market
140
160
180
200
220
240
260
Nov
10
Feb
11
May
11
Aug
11
Nov
11
Feb
12
May
12
Aug
12
Nov
12
Feb
13
May
13
30
32
34
36
38
40
42
44
46
4850
Property Price Index (1999=100)
Centaline Affordability Ratio, A ll Households (RHS)
Hong Kong - Property Price and Unemployment
0
50
100
150
200
250
300
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
01
2
3
4
5
6
7
8
Property Price Index (1990=100)
Unemployment Rate (Reverse Scale) (RHS)
Hong Kong - Real Property Price Index
Actual vs. Fair Values
(Jul 97 = 100, CPI adjusted)
20
30
40
50
60
70
80
90
100
110
120
1994 1997 2000 2003 2006 2009 2012
Actual Fair Value
Hong Kong - Consumption and Property Price
(y/y)
-10
-5
0
5
10
15
1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
-50
-40
-30
-20
-10
0
10
20
30
40
50
60
Private Consumption Residential Property Price (RHS)
Sources: CEIC, ANZ
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ANZ Greater China Economics Weekly Insight / 16 July 2013 / 20 of 23
CHINA LIQUIDITY REPORT
China - PBoC Weekly Open Market Operations
(RMB bn)
-200
-150
-100
-50
0
50
100
150
200
250
25
Mar
08
Apr
22
Apr
06
May
20
May
03
Jun
17
Jun
01
JulC B Bill Matured Repo Matured Reverse Repo
CB Bill Repo Rev. Repo Matured
Net
Liquidity Injection
Liquidity Withdrawal
China - Weekly Maturing Repo and CB Bills
(RMB bn)
0
20
40
60
80
100
120
140
160
180
15
Jul
22
Jul
29
Jul
5
Aug
12
Aug
19
Aug
26
Aug
2
Sep
9
Sep
16
Sep
23
Sep
30
Sep
7
Oct
14
Oct
CB B ill Matured Repo Matured
China - 7-day Repo Rate
0
2
4
6
8
10
12
Jun
11
Aug
11
Oct
11
Dec
11
Feb
12
Apr
12
Jun
12
Aug
12
Oct
12
Dec
12
Feb
13
Apr
13
Jun
13
China - SHIBOR Fixing
0
2
4
6
8
10
12
Jul
11
Sep
11
Nov
11
Jan
12
Mar
12
May
12
Jul
12
Sep
12
Nov
12
Jan
13
Mar
13
May
13
Jul
13
1-month 3-month 6-month
Sources: CEIC, Bloomberg, ANZ
Overall tightness will persist for a while
There were no matured funds in the open market last week, PBOC did not conduct any open market operations
(OMOs) as well. In the meantime, RMB50bn fiscal deposit was auctioned off last Thursday.
Generally speaking, the market interest rates should be relatively stable, with overnight and 7-day trading at
3.0-3.3% and 3.5-3.8% respectively, reflecting that overall tightness will persist for a while.
China’s M2 growth and new loans slowed in June
• China's new yuan-denominated lending in June stood at RMB860.5bn, up from RMB667.4bn in May.
The June figure was down RMB59.3bn from the same period last year.
• The country's social financing, a measure of funds raised by entities through bank credit and other
ways, amounted to RMB1.04 trn in June, down RMB742.7bn from last year.
• M2, a broad measure of money supply that covers cash in circulation and all deposits, increased
14% y/y, from 15.8% in May.
• The growth rate was down 1.8ppt from the level in May but remained 0.2ppt higher than that seen at
the end of 2012.
A slower M2 growth suggests that the PBoC’s liquidity tightness since mid-May has started to crack down on
shadow banking activities. As the central bank has set a 13% M2 growth target for this year, the liquidity
conditions are unlikely to improve significantly in the second half of the year.
Li-Gang Liu, Hao Zhou
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FORECASTS
y/y, unless otherwise noted
Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 2013
Real GDP
China 8.9 8.1 7.6 7.4 7.9 7.7 7.5* 7.6Taiwan 1.21 0.59 -0.12 0.73 3.97 1.67 1.89 2.
Hong Kong 3.0 0.7 0.9 1.5 2.8 2.8 2.0 2.5
Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13
Consumer Price Index
China 2.5 2.0 3.2 2.1 2.4 2.1 2.7* 2.7
Taiwan 1.61 1.12 2.96 1.36 1.05 0.74 0.60* 0.26
Hong Kong 3.8 3.0 4.4 3.6 4.1 3.9 4.4 3.4
Producer Price Index
China -1.9 -1.6 -1.6 -1.9 -2.6 -2.9 -2.7* -
Unemployment Rate, %
Taiwan 4.21 4.20 4.16 4.18 4.19 4.19 4.18 4.17
Hong Kong 3.3 3.4 3.4 3.5 3.5 3.4 3.6 3.7
Exports
China 14.8 25.2 21.8 10.0 14.7 1.0 4.8 12.4
Taiwan 8.9 21.6 -15.8 3.2 -1.9 0.9 8.6* 4.0
Hong Kong 14.4 17.6 -16.9 11.2 9.0 -1.0 -4.8 -2.2Imports
China 6.0 28.8 -15.2 14.1 16.8 -0.3 9.6 8.4
Taiwan 1.6 22.2 -8.5 0.2 -8.2 -8.0 6.8* 3.0
Hong Kong 11.9 23.9 -18.3 11.3 7.7 1.7 -5.2 -1.7
Trade Balance
China, USD bn 31.6 29.1 15.2 -0.8 18.2 20.4 27.1* 34.3
Taiwan, USD bn 4.11 0.51 0.92 3.19 2.27 4.46 3.25* 3.30
Hong Kong, HKD bn -48.0 -27.5 -34.0 -49.1 -42.7 -44.3 -41.3 -40.9
PMI and Export Orders
China Manufacturing PMI 50.6 50.4 50.1 50.9 50.6 50.8 50.1* 50.5
Taiwan Export Orders 8.51 17.95 -14.47 -6.60 -1.11 -0.40 0.47 1.76
Industrial Product ion
China 10.3 - - 8.9 9.3 9.2 8.9* 9.2
Taiwan 5.96 2.10 19.30 -11.70 -3.00 -0.80 2.62 -0.66
Electricity Production
China 7.6 - 3.4 2.1 3.1 4.1 5.1* -
Retail SalesChina 15.2 - - 12.6 12.8 12.9 13.3* 13.2
Taiwan (Commercial Sales) 1.49 7.80 -6.00 -1.00 1.01 -1.85 -1.63 -3.19
Hong Kong 9.1 10.5 22.7 9.8 20.7 12.9 7.8 5.4
M1 Growth
China 6.5 15.3 9.5 11.8 11.9 11.3 9.1* -
Taiwan (M1 B) 4.91 3.97 5.66 6.03 5.72 7.04 - -
Hong Kong 15.9 20.2 13.6 17.6 15.5 18.9 - -
M2 Growth
China 13.8 15.9 15.2 15.7 16.1 15.8 14.0* 15.4
Taiwan 3.67 2.99 3.53 3.78 3.71 4.32 - -
Hong Kong 12.1 14.1 8.5 9.2 9.3 11.1 - -
2007 2008 2009 2010 2011 2012 2013
Current Account, % of GDP
China 10.1 9.3 4.9 4.0 1.9 2.3 -
Taiwan 8.9 6.9 11.4 9.3 8.9 10.5 -
Hong Kong 13.0 15.0 9.5 6.6 4.8 1.3 -
Foreign Reserves, USD bn
China 1,528 1,946 2,399 2,847 3,181 3,312 3500*
Taiwan 270 292 348 382 386 403 407*
Hong Kong 153 183 256 269 285 317 304*
Government Fiscal Surplus/Deficit, % of GDP
China 0.2 -0.8 -2.8 -2.5 -1.8 -1.5 2.0
Taiwan 0.9 0.9 -2.2 -1.2 -1.1 - -
Hong Kong (FY ending in March) 3.8 7.3 0.1 1.5 4.1 3.8 -
16 Jul-13 Sep-13 Dec-13 Mar-14 Jun-14
Foreign Exchange Rate
USD/CNY 6.137 6.17 6.20 6.23 6.25
USD/TWD 29.885 - - -
USD/HKD 7.758 - - -
Policy Interest Rate
China PBOC 1-year Lending Rate 6.00 5.75 5.75 5.75 5.75
Taiwan CBC Discount Rate 1.875 1.875 2.000 2.125 2.250Hong Kong Base Rate 0.50 0.50 0.50 0.50 0.50
Shaded cells and column refer to forecast; *Indicates actual released data.
Sources: CEIC, Bloomberg, ANZ
Forecasts
Forecast
36
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ANZ Greater China Economics Weekly Insight / 16 July 2013 / 23 of 23
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