Asean round-up: Bad news abounds
(Update: Related post https://atans1.wordpress.com/2013/08/22/why-regional-mkts-are-tanking-why-its-a-risky-moment/)
Indonesia’s benchmark Jakarta Composite Index – the biggest loser among emerging markets – has plunged over 20% in the past three months, putting it in bear market territory. Neighboring Thailand and the Philippines are not far behind, with losses amounting to over 17 and 11%
Thailand has fallen into recession after the economy shrank unexpectedly in the second quarter of the year.
The 0.3% contraction in gross domestic product between April and June followed a previous fall of 1.7% during the first quarter of 2013.
Previously, Thailand had been recording strong economic growth, outpacing other economies in the region, with expansion of more than 6% during 2012.
Many analysts had expected this performance to continue.
Sanjay Mathur, head of economics research at RBS, told the BBC that weak exports and domestic demand, plus fading business confidence, were to blame for the downturn.
I’m not only guy critical of Indon’s way of fighting inflation
— And on 19th August: Indonesia’s rupiah fell to 10,500 per US dollar for the first time since 2009, stocks dropped by the most in 22 months and government bonds plunged after the current-account deficit widened to a record last quarter.
The Jakarta Composite Index of shares has fallen 8 per cent in two days, and is now the world’s worst performer this quarter.
The yield on 10-year notes surged to the highest since March 2011 after Bank Indonesia (BI) said late on Aug 16 the current-account shortfall was US$9.8 billion, the largest in data compiled by Bloomberg going back to 1989. Inflation quickened to a four-year high and economic growth slowed to the least since 2010, figures showed last week.
As at Wednesday, the Indon market entered its bear phase after falling 20% since May http://www.bbc.co.uk/news/business-23763829
A fund manager with local investment bank Lautandhana Securindo. “The measures taken by the government and the central bank [to fix the current-account deficit] haven’t brought about the desired results.”
Indonesia’s July consumer confidence index fell to the lowest level since May last year, and follows a sharp rise in fuel prices in late June, a Bank Indonesia survey showed on Monday.
The July index was 108.4, down from 117.1 the previous month and compared to 109.0 in May last year.
A reading above 100 indicates that consumers in general are optimistic
The survey of 4,600 households in 18 major cities in the archipelago showed that consumers were pessimistic over the current economic environment, particularly related to jobs and wages.
Concern over fewer jobs and lower wages is expected to be a feature of coming months.
However, the survey said price pressure is expected to decrease in January 2014, as demand ease after Christmas and New Year.
The central bank according to a recent report has lost 13.6% of its central bank reserves from the end of April until the end of July defending the currency. Well August would have added to the losses. And as the chart shows, it hasn’t that much money in the first place.
Malaysia’s growth was below expectations and the central bank, lowered its forecast for the year to 4.5-5%, from 5-6%. A sharp fall in the current account surplus highlighted fears that the country could be vulnerable to market turmoil.
Gross domestic product grew 4.3% in the second quarter of 2013 from the same period a year earlier, data showed yesterday, well below economists’ expectations of 4.9 per cent in a Reuters poll.
Forecasts had ranged from 4.2 to 5.2%, following growth of 4.1% in the first three months of the year.
Still, while the Thai, Indon and S’pore equity markets were in local currency terms below their 31Dec 2012 levels, M’sia is juz ahead by about 3%. All are down in US$ terms.
Vietnam was the country that was viewed as the “next China” due to its stable transition has started to generate concerns about a looming debt crisis.
Update: Related post https://atans1.wordpress.com/2013/08/22/why-regional-mkts-are-tanking-why-its-a-risky-moment/