Weekly Outlook 06 - 10 July 2020 - UOB
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Friday, 03 July 2020
Alvin Liew Lee Sue Ann Peter Chia
Alvin.LiewTS@uobgroup.com
ee.SueAnnobgroup.com
Global Economics & Markets Research
Email: GlobalEcoMktResearch@uobgroup.com
URL: www.uob.com.sg/research
Weekly Outlook
06 - 10 July 2020
SINGAPORE
General Election 2020: Polling Day On Friday 10 July
1) Singapore will be gearing up for its 13th General Election 2020, with Polling Day on Friday, (10 July, 8am to 8pm SGT) which is
a designated public holiday. There will be four more elected MPs in Parliament, increasing the number of elected officials from
89 to 93 in the upcoming election. Note that votes will be tallied by counting machines this time instead of being manually
processed (due to COVID-19), and counting will reportedly be three times faster with the use of the machines, implying that
polling results, can be ready about an hour earlier than in past elections.
2) Amidst the early part of the week dedicated to campaigning under COVID-19 conditions followed by Cooling Off Day on Thursday
(9 Jul), the key data is just the June official reserves data (7 Jul). Singapore will release its advance 2Q 2020 GDP data (after
the elections), most likely on 13 or 14 July.
KEY ASIA-PACIFIC ECONOMIES
China’s Reserves and Price Data, Taiwan June Trade Data, RBA & BNM Decisions On 7 July, China-US Relations
1) Key Asian data will be;
a. China’s official reserves (7 Jul) and CPI & PPI for June (10 Jul). According to the Bloomberg poll (as of 3 Jul), reserves
may rise further to US$3.112 trillion (from US$3.102 trillion) while June CPI inflation may edge up to 2.5% y/y from 2.4% in
May, while the decline in PPI may improve to -3.2% y/y from -3.7% in May.
b. Taiwan June trade data (7 Jul) and both imports and exports are expected to contract 4.7% y/y and 2.2% y/y (slightly
worse from -3.5% and -2.0% in May respectively).
2) The Reserve Bank of Australia (RBA) will announce its monetary policy decision on Tuesday (7 July, 12:30pm SG time). The
RBA decided to maintain the OCR at 0.25% and the 3-year Australian Government securities (AGS) yield target of 0.25% in
June. We do not see further reductions in the OCR. In fact, it is likely the RBA will keep it on hold for an extended period. The
focus will thus remain firmly on end-user rates via the yield curve target, as well as ensuring sufficient liquidity in bond markets
and the free flow of credit to households and business. According to the Bloomberg poll, all 27 analysts expect no change to the
OCR as well (as of 3 Jul).
3) The Bank Negara Malaysia (BNM) will announce its July policy decision on Tuesday (7 Jul, 3pm SGT) too. BNM cut the OPR
by 50bps to 2.00% in May. This brings cumulative rate cuts to 100bpsbetween Jan-May. We expect policy rates to stay
unchanged at 2.00% for rest of the year based on projections for a modest recovery in2H20 supported by reopening of the
economy since May and sizeable MYR295bn (or 20% of GDP) fiscal package. However, based on the latest Bloomberg poll (as
of 3 Jul), expectations are for another rate cut. Of the 15 analysts surveyed, five expect a 25bps cut to 1.75%, four expect a more
aggressive 50bps cut to 1.5% while six (including UOB) expect no change at 2%. Please see Central Bank Watch.
4) The US Senate gave its overwhelming approval on Thursday (1 Jul) to the Hong Kong Autonomy Act. After having cleared both
chambers of the US Congress, the bill now goes to US President Trump who will have 10 days to either enact or reject it.
US AND DEVELOPED ECONOMIES
US Long Weekend With COVID-19, Quiet Start To Corporate Earnings Week, Spanish Regional Elections On 12 July
1) US celebrates Independence Day on 4th July (Saturday) and US markets will be closed on Friday (3 Jul) in observance.
2) US COVID-19 Watch: In the week of 29 Jun to 3 Jul, the resurgence of COVID-19 infections worsened in several states in the
US with the country seeing record jumps in infection cases. US COVID-19 infections crossed 50,000 in a single day on
Wednesday (1 Jul) and White House health advisor Dr. Anthony Fauci warned (30 Jun) daily new cases could surpass 100,000
per day if the outbreak continues at its current pace. Fauci added (2 Jul) that COVID-19 is showing some signs of mutating in a
way that may make it easier for the pathogen to spread. The Centers for Disease Control said (2 Jul) fatalities in the US could
reach 160,000 by late July. The spike in the US COVID-19 cases can be traced to the US Memorial Day long weekend (25 May)
as several states reopened their economies. With the US about to enjoy another Independence Day long weekend (3-5 Jul), will
this be another recipe for another COVID-19 resurgence?
3) There is again no G7 central bank policy decision this week and we will also have a few senior Fed officials speaking in public
forums, including non-FOMC voters Bostic (7-9 Jul), Daly (7 Jul) and Barkin (7 Jul) but nothing is scheduled for FOMC Chair
Powell yet. ECB President Lagarde will speak in an online conference on Saturday (4 Jul).
4) The US economic data will be relatively lighter but the key data include:
o ISM non-manufacturing survey for June (6 Jul). According to the Bloomberg survey, it may improve to 50 (from 45.4 in
May). That said, we may see a positive surprise similar to the private sector PMI, and it could come in above 50.
o Initial jobless claims for week ending 4 July (09 Jul). We expect another above 1 million print (from the 1.43 million claims
reported on 2 Jul) while continuing claims could hover higher around 19.5 million (from 19.3 million).
Weekly Outlook
Friday, 03 July 2020
1|P a g eo June PPI on Friday (10 Jul). According to the Bloomberg poll, final demand PPI may climb 0.4% m/m (the same pace
recorded in May), translating to a smaller y/y decline of -0.2% (from -0.8% y/y in May).
5) Rest of G7 economic data include
a. German factory orders for May (6 Jul, Bloomberg Est +10% m/m, -26% y/y from -25.8% m/m, -36.6% y/y in Apr),
b. May industrial production data for Germany (7 Jul, Bloomberg Est +8% m/m, -21.2% y/y from -17.9% m/m, -25.3% y/y in
Apr), Italy (10 Jul) & France (10 Jul),
c. Japan May labor cash earnings (7 Jul, Bloomberg Est -0.8% y/y from -0.6% in Apr) and household spending (7 Jul,
Bloomberg Est -10.8% y/y from -11.1% in Apr),
d. Japan May core machine orders (9 Jul, Bloomberg Est -4.7% m/m, -17.1% y/y from -12% m/m, -17.7% y/y in Apr),
e. Canada’s June unemployment rate (10 Jul, Bloomberg Est 12.5% down from the record 13.7% in May)
6) It will be a quiet start to the US corporate earnings reporting season with just four S&P 500 companies reporting this week
(6-10 Jul) including a US airline on 10 Jul. The focus will be on major US banks reporting the week after (14 Jul onwards).
7) Spain will hold regional elections in the Basque Country and Galicia on Sunday, 12 July. These are the first elections since
Spain went into lockdown in March due to the COVID-19 pandemic. Spain is one of the worst impacted country in Europe with
the official death toll exceeding 28,000.
ASIA WEEKLY RECAP
Economy Data/Event UOB’s View/Comment
China Stronger-Than- China's official Manufacturing Purchasing Manager's Index (PMI) rose 0.3 point to 50.9 in June
Expected PMIs Boost (Bloomberg est: 50.5) while the non-manufacturing PMI jumped 0.8 to 54.4 in June (Bloomberg
Recovery Hope est: 53.6) - highest reading since Nov 2019 when it was at the same level. Full Report here.
Indonesia Inflation Slowed To Inflation for June 2020 slowed to 1.96% y/y from May’s 2.19%; the lowest since June 2000
Below Central Bank (2.04% y/y) and slightly below the central bank’s target range. Indonesia National Statistics
Target In June Bureau (BPS) reiterated the low inflation print seen year-to-date was due to weaker purchasing
power as the pandemic reined in consumer demand. The inflation pattern turned different this
year, as inflation usually at peak during May/June in Ramadhan and Hari Raya. Full Report here.
Malaysia May Exports Down Exports fell further by 25.5% y/y in May (Apr: -23.9%). Imports fell by a wider 30.4% y/y (Apr: -
25.5% y/y, Trade 8.0%) bringing the trade balance into surplus of MYR10.41bn (Apr: deficit of MYR3.63bn). Year-
Balance Returns To to-date exports fell 9.7% y/y in Jan-May. We think trade activity should gradually recover in
coming months as restrictions are lifted in low-risk countries while demand and supply conditions
The Black
resume. We expect exports to decline 10% in 2020 (2019: -1.7%). Full Report here.
Philippines Manufacturing Sector IHS Markit Philippines Manufacturing PMI rose from 40.1 in May to 49.7 in June, just below the
Stabilises neutral 50.0 mark that separates expansion from contraction. This data indicates considerable
easing in the downturn across the Filipino manufacturing sector, as operating conditions were
close to stabilisation and output levels increased for the first time since February.
Singapore Bank Loans Fall For Bank lending fell 0.6% on a month-on-month basis in May 2020, dragged by a broad weakness
The Third Month across all segments. Loans via the domestic banking unit clocked merely S$685.3 billion in May,
Amid The COVID-19 the lowest since September 2019 (at S$684.5 billion), marking its third straight decline on a m/m
basis. Across the segments, business loans fell 0.7% m/m, led by declines in loans by financial
Pandemic
institutions (-2.2% m/m) while consumer loans fell 0.5% m/m.
Thailand World Bank Cuts According to the latest World Bank’s Thailand Economic Monitor Report, the Thailand economy
Thailand’s Outlook, is expected to contract by at least 5.0% in 2020 given the negative impacts of COVID-19. This
GDP To Contract By compares with Bank of Thailand’s latest growth downgrade to -8.1% in its latest MPC press
release. The World Bank also expects tourism and exports to be key headwinds to growth this
At Least 5%
year, as already previously highlighted in our past reports. Still, the agency expects Thailand to
recover by 4.1% and 3.6% in 2021 and 2022, respectively.
Vietnam Positive growth in 2Q Despite impact from COVID-19 pandemic, Vietnam’s economy managed to expand 0.36%y/y in
but full year 2Q20, but with a sharp deceleration from 3.68% in 1Q20. Activities across the economy
expansion to stay soft decelerated sharply in 2Q which should be the trough of the impact from COVID-19. Services
sector bore the brunt of the downturn and expanded just 0.57%y/y in 1H20, a fraction of the
7.30% growth seen at end-2019. Manufacturing output fared relatively better, with 4.96%y/y gain
in 1H20, vs. 11.29% at end-2019. Given the sharply lower 2Q20 data and a weakened base in
the first half, we have trimmed our 2020 growth forecast to 3.5%, from 5.2% made earlier. The
revised projection implies a rebound of economic growth pace of around 5.5-7.0% in second
half of the year, which is still possible given that the country has emerged from lockdowns earlier
than many of its neighbours and the dynamism of its economy. Full report here..
Weekly Outlook
Friday, 03 July 2020
2|P a g eKEY DATA/EVENTS: ASIA & OCEANIA
Date Data/Event Mth Prior Date Data/Event Mth Prior
03 Jul SK Foreign Reserves Jun $407.31b 08 Jul NZ QV House Prices YoY Jun 7.70%
AU Retail Sales MoM May -17.70% 09Jul NZ ANZ Business Confidence Jul P -34.4
CH Caixin China PMI Composite Jun 54.5 CH PPI YoY Jun -3.70%
CH Caixin China PMI Services Jun 55 CH CPI YoY Jun 2.40%
TH CPI YoY (NSA MOM=0.01%) Jun -3.44% AU Investor Loan Value MoM May -4.20%
TH CPI Core YoY Jun 0.01% AU Home Loans Value MoM May -4.80%
MA Exports YoY (Imports=-8%) May -23.80% AU Owner-Occupier Loan Value MoM May -5.00%
MA Trade Balance MYR May -3.50b VN Domestic Vehicle Sales YoY Jun -29.10%
IN Markit India PMI Services Jun 12.6 10 Jul GE 2020: Polling Day In Singapore
SI
(Public holiday)
Retail Sales YoY (SA MOM=-
SI May -40.50% NZ Card Spending Retail MoM Jun 78.90%
31.7%)
SI Retail Sales Ex Auto YoY May -32.80% NZ Card Spending Total MoM Jun 80.70%
TH Foreign Reserves Jun-26 -- PH Trade Balance May -$499m
SI Purchasing Managers Index Jun 46.8 $2783.5
PH Exports (YoY=-50.8%) May
m
SI Electronics Sector Index Jun 46.2 $3282.7
05 Jul Thailand celebrates Asarnha PH Imports (YoY=-65>3%) May
TH m
Bucha Day MA Industrial Production YoY May -32.00%
06 Jul Thai markets are closed in
TH observance of Asarnha Bucha MA Manufacturing Sales Value YoY May -33.00%
Day TH Foreign Reserves Jul-03 --
HK Markit Hong Kong PMI Jun 43.9 IN Industrial Production YoY May --
AU Melbourne Institute Inflation MoM Jun -1.20% NZ REINZ House Sales YoY Jun -46.60%
NZ ANZ Commodity Price Jun -0.10% CH Money Supply M2 YoY Jun 11.10%
AU Melbourne Institute Inflation YoY Jun 0.10% CN New Yuan Loans CNY Jun 1480.0b
AU ANZ Job Advertisements MoM Jun 0.50% CN Aggregate Financing CNY Jun 3190.0b
TW Foreign Reserves Jun $484.52b Foreign Direct Investment YoY
CH Jun 7.50%
ID Consumer Confidence Index Jun 77.8 CNY
07 Jul AU RBA Cash Rate Target Jul-07 0.25%
AU Foreign Reserves Jun A$60.8b
MA BNM Overnight Policy Rate Jul-07 2.00%
MA Foreign Reserves Jun-30 $102.8b
TW Trade Balance Jun $4.72b
TW Exports YoY Jun -2.00%
TW Imports YoY Jun -3.50%
TW WPI YoY Jun -11.60%
TW CPI YoY (Core YoY=-1.19%) Jun -1.19%
SI Foreign Reserves Jun $300.99b
HK Foreign Reserves Jun $442.3b
PH Foreign Reserves Jun $93.3b
$3101.69
CH Foreign Reserves Jun
b
AU AiG Perf of Services Index Jun 31.6
-
SK BoP Current Account Balance May $3124.3
m
SK BoP Goods Balance May $823.6m
PH CPI YoY 2012=100 Jun 2.10%
ID Net Foreign Assets IDR Jun 1884.3t
ID Foreign Reserves Jun $130.50b
Weekly Outlook
Friday, 03 July 2020
3|P a g eKEY DATA/EVENTS: US AND DEVELOPED ECONOMIES
Date Data/Event Mth Prior Date Data/Event Mth Prior
03 Jul US Markets closed in observance 08 Jul JN Bank Lending Incl Trusts YoY Jun 4.80%
US
of US 4th July Independence Day
JN BoP Current Account Balance May ¥262.7b
JN Jibun Bank Japan PMI Services Jun F 42.3
JN BoP Current Account Adjusted May ¥252.4b
IT Markit Italy Services PMI Jun 28.9
JN Trade Balance BoP Basis May -¥966.5b
UK Markit/CIPS UK Services PMI Jun F 47
JN Bank Lending Ex-Trusts YoY Jun 5.10%
UK Markit/CIPS UK Services PMI Jun F 47
BOJ Outright Bond Purchase 1-3, 3~5
JN
EC Markit Eurozone Services PMI Jun F 47.3 Years
ECB's Knot Speaks at Bloomberg JN Bankruptcies YoY Jun -54.82%
EC
EU Policy Series Event
JN Eco Watchers Survey Current SA Jun 15.5
04 Jul US US Independence Day
JN Eco Watchers Survey Outlook SA Jun 36.5
06 Jul BOJ Outright Bond Purchase 5~10
JN FR Bank of France Ind. Sentiment Jun 83
Years
GE Factory Orders MoM May -25.80% US MBA Mortgage Applications Jul-03 -1.80%
GE Factory Orders WDA YoY May -36.60% Fed’s Bostic Takes Part in Webinar on
US
Economy
GE Markit Germany Construction PMI Jun 40.1 -
US Consumer Credit May
UK New Car Registrations YoY Jun -89.00% $68.779b
ec Sentix Investor Confidence Jul -24.8 UK RICS House Price Balance Jun -32%
UK Markit/CIPS UK Construction PMI Jun 28.9 09 Jul JN Money Stock M2 YoY Jun 5.10%
ec Retail Sales MoM May -11.70% JN Core Machine Orders MoM May -12.00%
ec Retail Sales YoY May -19.60% JN Core Machine Orders YoY May -17.70%
CA Bloomberg Nanos Confidence Jul-03 46 GE Trade Balance May 3.5b
US Markit US Services PMI Jun F 46.7 GE Current Account Balance May 7.7b
US Markit US Composite PMI Jun F 46.8 GE Exports SA MoM May -24.00%
US ISM Non-Manufacturing Index Jun 45.4 GE Imports SA MoM May -16.50%
BoC Overall Business Outlook JN Machine Tool Orders YoY Jun P -52.80%
CA 2Q -0.7
Survey Bank of Italy Publishes Monthly
IY
CA BoC Business Outlook Future Sales 2Q 22 Report `Money and Banks'
07 Jul JN Labor Cash Earnings YoY May -0.60% Housing Starts Jun 193.5k
US Initial Jobless Claims Jul-04 1427k
JN Real Cash Earnings YoY May -0.70%
Jun-
JN Household Spending YoY May -11.10% US Continuing Claims 19290k
27
JN Official Reserve Assets Jun $1378.2b US Wholesale Trade Sales MoM May -16.90%
JN Leading Index CI May P 77.7 US Wholesale Inventories MoM May F -1.20%
JN Coincident Index May P 80.1 Fed’s Bostic Takes Part in Webinar on
US
Fiscal Policy for...
UK Unit Labor Costs YoY 1Q 2.40%
10 Jul CA Unemployment Rate Jun 13.70%
GE Industrial Production SA MoM May -17.90%
JN PPI YoY (MoM=-0.4%) Jun -2.70%
GE Industrial Production WDA YoY May -25.30%
BOJ Outright Bond Purchase 1-3, 5-
FR Trade Balance May -5021m JN
10, 25 Years~
FR Current Account Balance May -5.4b FR Ind. Production MoM (YoY=-34.2%) May -20.10%
IT Retail Sales YoY (MoM=-10.5%) May -26.30% FR Mfg Production MoM (YoY=-37.1%) May -21.90%
UK Output Per Hour YoY 1Q F -2.90% Ind. Production MoM (WDA YoY=-
IT May -19.10%
42.5%)
Istat Releases the Monthly
IT
Economic Note
Fed’s Bostic Takes Part in Webinar CA Net Change in Employment Jun 289.6k
US
on Economy
CA Full Time Employment Change Jun 219.4
Ivey Purchasing Managers Index
CA Jun 39.1 CA Part Time Employment Change Jun 70.3
SA
US JOLTS Job Openings May 5046 US PPI Final Demand MoM Jun 0.40%
Bank of Italy Report on Balance- US PPI Ex Food and Energy MoM Jun -0.10%
IT
Sheet Aggregates US PPI Final Demand YoY Jun -0.80%
JN Tokyo Avg Office Vacancies Jun 1.64
US PPI Ex Food and Energy YoY Jun 0.30%
Fed’s Daly and Barkin Takes Part in
US Spain to hold regional elections in
NABE Talk on Economy 12 Jul SP
the Basque Country and Galicia
Weekly Outlook
Friday, 03 July 2020
4|P a g eDisclaimer This publication is strictly for informational purposes only and shall not be transmitted, disclosed, copied or relied upon by any person for whatever purpose, and is also not intended for distribution to, or use by, any person in any country where such distribution or use would be contrary to its laws or regulations. This publication is not an offer, recommendation, solicitation or advice to buy or sell any investment product/securities/instruments. Nothing in this publication constitutes accounting, legal, regulatory, tax, financial or other advice. Please consult your own professional advisors about the suitability of any investment product/securities/ instruments for your investment objectives, financial situation and particular needs. The information contained in this publication is based on certain assumptions and analysis of publicly available information and reflects prevailing conditions as of the date of the publication. Any opinions, projections and other forward-looking statements regarding future events or performance of, including but not limited to, countries, markets or companies are not necessarily indicative of, and may differ from actual events or results. The views expressed within this publication are solely those of the author’s and are independent of the actual trading positions of United Overseas Bank Limited, its subsidiaries, affiliates, directors, officers and employees (“UOB Group”). Views expressed reflect the author’s judgment as at the date of this publication and are subject to change. UOB Group may have positions or other interests in, and may effect transactions in the securities/instruments mentioned in the publication. UOB Group may have also issued other reports, publications or documents expressing views which are different from those stated in this publication. Although every reasonable care has been taken to ensure the accuracy, completeness and objectivity of the information contained in this publication, UOB Group makes no representation or warranty, whether express or implied, as to its accuracy, completeness and objectivity and accept no responsibility or liability relating to any losses or damages howsoever suffered by any person arising from any reliance on the views expressed or information in this publication. Weekly Outlook Friday, 03 July 2020 5|P a g e
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