China Reopens After Week-Long Lunar New Year Celebration but Global Market Depth Still Not Back to Full Strength
February 19, 2024
The Shanghai Composite equity index rose 1.6% on its first post-holiday session, but Hong Kong’s Hang Seng closed down 1.1% and Taiwan only edged 0.2% higher. In other Pacific Rim markets, share prices remained unchanged in Japan, fell 0.6% in New Zealand, and rose 0.4% in India, 0.2% in Taiwan and 0.1% in Singapore. European stock markets are narrowly mixed.
China’s balance of payments deteriorated last year. The current account surplus fell from $103.1 billion in the final quarter of 2022 to $55.2 billion last quarter and to a 4-year low of $264 billion in 2023 from $a 14-year high of $402 billion in 2022. More worrisome, the $33.1 billion net inflow of foreign direct investment last year was the least in three decades and down from $175 billion in 2022 and $341 billion in 2023. That slump is hardly surprising in light of the in light of the sharply authoritarian tilt of Beijing policies that make doing business in China very difficult and uncertain for foreign corporations.
The reopening of China after holiday saw the yuan rebound 1.1% against the dollar, no doubt orchestrated by the government. The dollar has edged down 0.1-0.2% against other key currencies. While Chinese markets are back in the game, holidays today in the United States (Presidents Day) and Canada (Family Day) will deprive world financial markets from their normal measure of oxygen, and data releases around the world have been few.
Ten-year sovereign debt yields in Germany, France, Italy and Spain ticked a basis point higher, while their Japanese counterpart held unchanged at 0.72% this Monday. Movement in commodity prices was also limited, with WTI oil down 0.1% and gold up 0.3%. Bitcoin’s uptrend was extended another 0.6%, putting the benchmark above $52,000, up from $16,000 in late 2022 and just $16,700 south of the all-time peak in November 2021.
Japanese core domestic machinery orders rose 2.7% in December, more or less aligned with analyst expectations but were 0.7% lower than in the final month of 2022. Foreign machinery orders edged 0.3% lower and recorded an 11.1% December-over-December drop.
New Zealand’s service sector purchasing managers index improved 3.3 index points to an 8-month high of 52.1 in January.
Consumer confidence in Spain climbed a full index point in January to its best level in a half year. Spain’s trade deficit fell 43% last year to EUR 40.6 billion.
Great Britain’s Rightmove house price index posted back-to-back monthly increases of 1.3% in January followed by 0.9% this month, which swung the 12-month change into the black but just barely.
Israel’s economic shock after the October 7 attack from loss of available workers, destroyed property, and sheer psychological trauma was reflected in a 16.4% plunge in real GDP last quarter when expressed at an annualized rate. The pace of implosion was much greater than thought and scaled by 2023 calendar year growth to +2.0% after 6.5% in 2022.
Thailand GDP also contracted in 4Q 2023, falling by 0.6% versus the third quarter’s level, but year-on-year growth 0f 1.7% was higher than in 3Q.
Among price data releases, Swedish consumer price inflation accelerated a full percentage point to a 2-month high of 5.4% in January, having peaked 13 months earlier at a 382-month high of 12.3%. But Finnish CPI inflation returned to November’s 25-month low of 3.3% from 3.6% in December. Such had peaked at 9.1% in the final two months of 2022.
Serbian consumer price inflation, which hit a record peak of 16.2% last March, decelerated further to a 28-month low of 6.4% last month, and Portuguese producer price inflation remained below zero percent for a tenth time in a row, printing at -4.3% in January. Such has ranged from a record high of 26.5% in March 2022 to -6.6% last July.
Copyright 2024, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Chinese current account and net foreign direct investment inflows, Japanese machinery orders, Swedish CPI
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