Asia review 2013
China
Ok – though there was insufficient drama to test this one
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Month
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Prediction
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Outcome
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No drama expected
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Feb
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Surprises around leadership
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Not a surprise but an event as Xi Xinping was confirmed as president
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Mar
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Nothing too dramatic
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Nothing of note
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Apr/aug
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Uneventful. Possibly some image related events. Talk of slowdown not an
actuality
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Weak q1, less so in q2. Some worries about stats but not too
negative. Short term liquidity crisis
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Sep
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Optimism
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Growth picked up in 3rd quarter – first time for 3
quarters
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Oct
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Dynamism
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Inflation might be rising as economy firming more than expected
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Nov-Dec
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Some darker elements and perhaps economic issues to confront
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Late Nov – issues with Japan air
Govt revealed significant ( biggest fro 3 decades) economic and
social reforms in Nov. Inflation better
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Renminbi
There were few events to match but what I really identified
was the creeping strength
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Month
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Prediction
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Outcome
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Pre mar
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N/a gone
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N/a
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Mar-jun
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More transactions, talk of what to do with peg. But only talk
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Appreciated
Liquidity support on and off
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July-Aug
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Step forward re peg etc but inflationary concerns
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Appreciated
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Oct-Nov
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Stalling of planning. More liquidity
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Appreciated.
PBOC admitted that liquidity growth in the banking system has accelerated in
recent months as capital inflows had risen notably,
Plans for more currency market
liberalisation
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Dec
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Quiet but with expectations
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Another liquidity boost. Ban on use of ‘cash crunch’
Appreciated
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Shanghai Comp
Not the best forecast. Though not terrible. Could do
better
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Month
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Prediction
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Outcome
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Pre Mar
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n/a
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n/a
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Mar
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Volatility but less negative so upwards
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Volatile but down
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April
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Consolidation – new trend
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consolidation
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May/June
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Mixed but very little pullback
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Up in May , but big fall ( nearly 20%)June
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July/aug
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More consolidation into new trend
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July consolidation – finding bottom, August rising again
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Sep
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Volatile – external effects
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Big rise – peak and some fall back
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Nov
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Trade increases so more volatile
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Bit more variation but not huge
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Dec
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No change to underlying. More interest from investors
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Pull back nor rising above Sept peak
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Japan
Ok – but again not enough to test in most cases
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Month
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Prediction
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Outcome
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Pre Mar
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n/a gone
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n/a
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Mar
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Quite stable
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Nothing much
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April-Jun
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Focus back on international arena- effect of internal changes small
as yet. More need for action in June
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Agreement between Japan and NATO
Plan to introduce massive liquidity
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July/Nov
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Nothing significant in terms of obvious change
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Growth more or less on track for Q2
Oct - government agreed use of part of the ( already planned-Jan) stimulus
package,
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Dec
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Increased protectionism and nationalistic elements. Some lessening of
long term inertia
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Q3 weaker than expected. Abe’s visit to the war-related
shrine last month revived international concerns that he
might be a dangerous nationalist.
China
disagreement. Increased concerns over the damaged reactors
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Yen
Quite good, except last month
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Month
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Prediction
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Outcome
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Pre Mar
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Gone
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N/a
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Mar
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Relaxation of recent trend
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Quite stable vs. Sterling
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April
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Volatility
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Liquidity Plan caused rapid weakening
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May/june
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Focus moves elsewhere – yen might even rise
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Weakened after liquidity announcement , but then didn’t really do
much till June’s slight rise vs sterling and bigger vs dollar.
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Jul
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More likely to see currency movements . Turning point
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This then reversed as quickly
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Jul-Nov
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Gradual decline in Yen to end of year
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It traded within range against the dollar for the whole period–
though the trend was weakening
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Dec
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Trend slackens off
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The Yen weakened again in the last month- did not slacken off until
Jan 2014
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Nikkei
Spotted the April event which was key. And got the turning
points. Didn’t always get direction particularly at the end of the year again.
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Month
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Prediction
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Outcome
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Pre Feb
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n/a
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n/a
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Feb/mar
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Conditions continue, more caution and uncertainty though
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Rises continued with some flattening off in late March
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Apr/May
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Complicated - return to weakness of earlier years. But boost due to
monetary shifts
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Big increase once BOj announced stimulus . Carried on into May, Huge
gain
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June
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Turning point. May even have shocks
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Reversed mid may to mid June. Then found bottom
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Jul- Aug
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Stability – surprising- flat
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Quieter – some decline but not rapid in late Jul and Aug
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sept
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Reactivation of earlier conditions
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Rose again
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Oct-Dec
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Fluctuations no trend
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Fluctuations in oct and early Nov – no trend but last 6 weeks showed
rise again to long term peak
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I’m not commenting on the rest as they were only 1-3 months
forecasts and with a potential margin of error of 1 month either side ( as
these are long term rolling predictions not short term ones) not much can be
read into the results . Though the results were generally good.
Hong Kong $
See my comments on Reminmbi
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Month
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Prediction
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Outcome
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Pre Oct
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N/A
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N/A
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Oct
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Little change
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Peg celebrated 30 years but not without detractors
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Nov-Dec
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Perhaps interesting stats and peak of bubble
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Recent SWIFT data shows that RMB usage in traditional trade finance
grew from an activity share of 1.89% in January 2012 to 8.66% in October
2013, propelling the RMB to the second most used currency in this market
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Hang Seng
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Month
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Prediction
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Outcome
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Pre Oct
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n/A
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N/A
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Oct-Dec
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Mixed – struggle to find direction, maybe even decline in December
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Index did struggle to find direction- rising a bit and falling in
November but finally doing nothing in the quarter
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India
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Month
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Prediction
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Outcome
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Pre Oct
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N/a
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N/a
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Oct-Dec
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Slight increase in hardship for people and opposition of govt. Maybe
some protests
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The $1.8-trillion Indian economy suffered its worst
slowdown in over a decade with growth below 5 per cent for four
straight quarters, amid threats of a ratings downgrade. The middle classes
were feeling the pinch
Protests were against Us arrest of a diplomat
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Rupee
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Month
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Prediction
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Outcome
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Pre Oct
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N/a
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N/a
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Oct-Dec
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Looks shaky in the final quarter, but more credibility for the bank,
more caution in policy, and change in
foreign perspectives means Rupee looks more secure at this time
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A couple of rate rises by the New Governor that would help the financial stability and
protect against Fed taper
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Sensex
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Month
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Prediction
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Outcome
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Pre Oct
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N/a
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N/a
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Oct
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More uncertainty and negative sentiment than Sept
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The index rose in Oct but less than Sept and was tailing off
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Nov-Dec
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less volatility but no direction, the upside is weak but the downside
in wait and see mode.
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Index was flat from Oct to December and volatility declined over the
period too
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Pakistan
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Month
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Prediction
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Outcome
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Pre Oct
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N/a
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N/a
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Oct
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continued on-going difficulties this may well be the pattern for some
while. Still things seem to be kept in check
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Level of violence lower than earlier in year but it was a bad year
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Nov-Dec
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restrictions that look like they might relate to border issues - possibly indicating military presence.
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In Nov A new hardline Taliban leader claimed it was time to be more
aggressive
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Indonesia
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Month
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Prediction
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Outcome
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Pre Sep
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N/a
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n/a
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Sept –Oct
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once again a noticeable weakness in economic statistics and social
welfare matters are to the fore. Environmental issues are also likely to be
highlighted
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Worst growth in 4 years announced for 3rd quarter in early
November
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Nov
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better for those
in power, with a sense of calm
control. But financing and investment issues are critical – perhaps caused by
external events, and there may be earthquake or related activity.
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Indonesia tough on Australia due to spy allegations
No earthquake – just a volcano Mount Sinabung
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Dec
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people become more nationalistic and less focused on
trade.
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Indonesia announced on
Tuesday it will allow increased levels of foreign investment in the country's
power plants, advertising, and pharmaceutical industries
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Rupiah
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Month
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Prediction
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Outcome
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Pre Oct
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N/a
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N/a
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Oct
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Although the decline is likely to even off there is still a lot of
pressure on the currency.
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Better in October but
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Nov-Dec
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The picture is slightly better in the final two months of the year
with the possibility of supporting measures being more successful
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Currency fell in November though not in December . The Bank stated
that it was undervalued and that they did not intend to change policy. But a
swap arrangement with Japan was agreed
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South korea
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Month
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Prediction
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Outcome
|
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Pre May
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N/a - gone
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n/a
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May
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No let- up but a lull in threat from NK
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See below NK for the conflict and here for economy
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June-Aug
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A very powerfully positive time for the country economically but also
could mean engagement in conflict. Good for leadership
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July - beat expectations by posting its fastest growth rate in more
than two years
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Sep-Dec
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some difficulty in creating a clear sense of stability, confusion but profile of country high. Economically very
promising
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gradual recovery path on the back
of fiscal and monetary stimulus.The Korean economy grew 1.1 percent
on-quarter in the third quarter, topping market expectations, but there was
worry about global slowdowns affecting exports
signed the Korea-Australia
Free Trade Agreement (KAFTA) on December 5, 2013
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North Korea
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Month
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Prediction
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Outcome
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Pre Apr
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N/a gone
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n/a
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Apr
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will be more displays of power by the country. Missile tests will go
ahead
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Situation ongoing, still building
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May- aug
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Escalation esp 10th May and June and late June
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May 18th-20th missile tests, plans for talks with SK in june broke down, but eventually
plans for 6 party talks
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Sep-Oct
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More muted - dissipating
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Hotline restored, situation better though October 8, 2013, North
Korea prepared its army and warned the United States of a "horrible
disaster
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Nov- Dec
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Prob leader more confident so calmer but could mean success in war
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Nov- Dec Various other
threats and propaganda against SK
Late Dec – purge against
internal threats
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Australia
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Month
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Prediction
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Outcome
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Dec
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Some pressure on Govt – not too significant
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Australia's budget deficit may last for a decade if urgent
"remedial action" is not taken to improve the country's finances, its
government has warned.
Heatwave
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