|2017/07/11||Conservative Monetary Policy to Remain in the Mainland despite Low Inflation|
Although inflationary pressure was modest in the Mainland during the first half of 2017, policymakers will likely keep the monetary policy stance relatively tight to contain the highly leveraged state of the Mainland Chinese economy.
|2017/06/16||The Fed to Taper Its Balance Sheet|
U.S. Fed Chairman Janet Yellen announced after the Federal Open Market Committee (FOMC) meeting that the benchmark interest rate target range would be lifted a notch to 1-1.25%, effective 15 June.
|2017/05/19||Local Economy Continued to Improve|
The Hong Kong economy expanded by 4.3% YoY in the first quarter of 2017, the fastest quarterly growth in six years since 2Q2011 (see Chart 1). After bottoming out from its trough in 1Q2016, growth momentum continued its upswing in the last quarter, supported by both domestic and external economic conditions.
|2017/04/13||Easing Concerns on Trade|
The U.S. Treasury Department will submit before 15 April a semi-annual Report to Congress, which is expected to contain criticisms on its major trading partners’ foreign exchange policies. This may happen if and when the Trump Administration could identify currency manipulators that exploit exchange rates for their benefits in trade. Among such economies, observers are most concerned about the possibility that – given President Trump’s campaign rhetoric – the Mainland could be named a currency manipulator and trade activities between the world’s two largest economies would in turn be disrupted.
|2017/04/10||Manufacturing Activities Making Headway|
The recent release of the official Manufacturing Purchasing Managers’ Index (PMI) in Mainland China showed that sentiment among frontline managers has been improving. Broadly recognised as one of the most symptomatic leading indicators to gauge the performance of the Chinese economy, this result confirms our view that we should see stable growth in 2017.
|2017/03/16||Thoughts on the Second Interest Rate Hike in Three Months|
As we had anticipated, the U.S. Federal Reserve (Fed) raised the Fed funds target range up by a notch, i.e. 25bps, overnight. This change means the upper and lower boundaries of the Fed funds target rate are 1% and 0.75% respectively (see Chart 1). At the same time, the Fed funds rate will likely reach around 0.8% in the near term, which will be the highest level since October 2008. As the Fed has raised the interest rate twice in the last three months, does this signal a faster pace of rate hike? Does this justify a change to our call of two rate hikes in 2017?
|2017/03/01||An Early Stage of Turnaround in the Mainland’s Credit Environment|
After going through years of eruption, the growth of non-performing loans (NPLs) in Mainland commercial banks is showing signs of winding down (see Chart 1). In the fourth quarter of 2016, NPLs only grew 18.7% YoY, the slowest growth rate since 3Q2013. The slower growth of NPL could be attributable to an observably higher comparable base and the improving economic environment.
|2017/02/27||Faster Pace of Rate Hikes in the Pipeline? |
In the Semi-annual Monetary Policy Report submitted to Congress and the U.S. House of Representatives, Federal Reserve (Fed) Chairman Janet Yellen hinted that “several” interest rate hikes would be increasingly likely in 2017.
|2017/02/01||Warm Winter Weather Melting Businesses|
The news that a few of my favourite restaurants will be going out of business soon made me disheartened. Afterwards, when I took a stroll in some key commercial districts on the Island and saw sparse customer traffic in popular stores despite the deep discounts on offer, our conservative forecast about the Hong Kong economy seems to be turning out to be true.
|2017/01/13||Less Expansionary Monetary Policy Expected In the Mainland|
After ending a streak of year-on-year (YoY) declines in September 2016 (see Chart 1), produce prices continued to pick up at an accelerated pace in December 2016 in the Mainland. Producer Price Index (PPI) jumped 5.5% YoY in December, compared to 3.3% in November and the 1.5% average over the past three months. During the period, prices of materials (e.g. steel, rubber, copper) all saw double-digit YoY increases (see Chart 2), explaining the notable up-swing of the PPI.