7 December 2018
ASEAN morning bytes

General market tone: Risk-off.

Market players will remain defensive on Friday with investors looking to the final OPEC decision on output curbs while digesting signals of a more dovish Fed

International theme: An arrest, a deferred output cut, and a dovish Fed

  • Investors will be digesting the recent developments with the outlook on the US-China trade negotiations clouded by the arrest of a top Chinese business leader. 
  • OPEC decided to defer definitive output cuts until after speaking with Russia, while traders will also likely be cautious after gauging the veracity of a report signaling a more dovish Fed.
Asia week ahead: A big week in China and India

The Asian calendar is packed with economic releases from China and India, which will make for an exciting week ahead. State legislative assembly elections in India and the central bank meeting in the Philippines should add to the fun  

China: Will exports continue to downplay the trade war impact?

Since the outbreak of the trade war, China’s economic data has been under the spotlight for any noticeable impact as the protectionist sentiment increases.

Next week, we'll get all the activity data for November starting with trade data over the weekend. The tariffs on more than half of China’s exports to the US went into effect in September, and so while overseas orders for Chinese goods have been shrinking since June, there has been no let-up in export shipments which have maintained their double-digit pace of growth throughout October, as the graph below shows. 

The strength seen in recent months could be front-loading before higher tariffs strike at the beginning of 2019 as the consensus estimates 10% annual export growth, which will put monthly exports at an all-time high of $237 billion. Hopes remained pinned on the latest trade truce talks giving way to the so-called 'real deal' after the 90-day negotiation period ends. But all markets need now is more clarity on what exactly transpired at the Trump-Xi meeting at G-20 summit last week.

The rest of the China data including inflation, retail sales, fixed asset investment, industrial production, and bank lending should tell us about the effectiveness of domestic policies which have been trying to cushion the economy from the effect of the trade war.

Reading time around 2 minutes

Good MornING Asia - 7 December 2018

Market players will remain defensive on Friday with investors looking to the final OPEC decision on output curbs while digesting signals of a more dovish Fed

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