CARI Captures Issue 582: Growth across the ASEAN manufacturing sector reports slowdown for second consecutive month
Growth across the ASEAN manufacturing sector reports slowdown for second consecutive month
(01 December 2022) According to S&P Global’s latest purchasing managers index (PMI) survey, growth across the ASEAN manufacturing sector reported a slowdown for the second consecutive month in November 2022, amid falling factory orders for the first time in 14 months as a result of reduced client activity. It was noted that firms registered a weaker rise in purchasing activity, while staffing levels fell for the first time since June 2022. The ASEAN headline PMI registered 50.7 in November 2022, down from 51.6 in October, signaling only a mild improvement in operating conditions. While the latest reading remained above the 50.0 mark, indicating a 10th monthly improvement in the health of the ASEAN manufacturing sector, the rate of growth was the slowest within this period. Cost pressures across the region’s manufacturing sector remained elevated in November, due to high material and energy costs.
Thailand to levy tax on stock trading in 2023 to fund post-pandemic recovery
(29 November 2022) Thailand will levy a tax on stock transactions in 2023, as the country seeks to tap new revenue streams to fund its post-pandemic recovery measures. According to the finance ministry, a levy of 0.05% will be imposed on stock trading in 2023, before it’s raised to 0.1%. Some investors such as market-makers and pension funds will be exempted from the tax. The country had waived the tax in January 1992 to help promote equity trading. In the past three decades, the value of average daily stock trading has surged about tenfold to US$2.3 billion, as more retail investors turn towards the market amidst a low interest rate environment. Thailand’s bourse has about 660 listed companies. Thailand’s Finance Minister noted that retail investors might be less impacted than large investors by the new levy.
The Bank of Thailand raises its key interest rate by quarter point to 1.25% to keep inflation in check
(30 November 2022) The Bank of Thailand raised its key interest rate by a quarter point to 1.25% in order to keep inflation in check. This is the third time in a row in 2022 the Bank of Thailand has raised its key interest rate, bringing the rate to its highest since February 2020. The bank had previously raised rates by 25 basis points in both August and September. Inflation in Thailand had slowed to 5.98% in October, down from 6.41% in September. Prices are still rising relatively quickly, largely due to accelerating oil prices. The bank has forecast Thailand’s economy to grow by 3.3% in 2022, while also expanding by 3.8% in 2023.
SINGAPORE, SOUTH KOREA
Korean entertainment company SM Entertainment plans to set up its Southeast Asian headquarters in Singapore
(30 November 2022) South Korean entertainment company SM Entertainment plans to set up its Southeast Asian headquarters in Singapore as part of its expansion plans in the region. The planned Singapore headquarters will be managing its joint ventures in Indonesia, Viet Nam and Thailand, as well as communicate with its South Korea office for other related ventures and plans. The company is currently in the midst of hiring more local talents. The company also plans to set up retail businesses in Singapore, including cafes, merchandise stores, and pop-up exhibitions. SM Entertainment’s Indonesia branch has won brand endorsements such as Mie Sedaap and Sasa for Choi Siwon of K-pop boy band Super Junior, and Somethinc and Lemonilo for NCT Dream.
Malaysian palm oil output to drop by 5% to 8% month-on-month in November 2022 due to flooding
(30 November 2022) Malaysian palm oil output will likely drop by 5% to 8% month-on-month in November 2022 due to the impact of heavy rains and flooding on plantation operations. Rainfall was much higher than usual in October and November, which prevented harvesting and transport of palm fruit in several producing regions. Supply worries caused by the flooding have sent benchmark palm oil prices to near a four-month high in November. In the first 15 days of November, many oil palm estates had water levels that were several feet high, leading to crop losses. Among the affected areas included Perak, Pahang and Johor in Malaysia, as well as Kalimantan in Indonesia. Malaysia’s total palm oil production is estimated at 18.2 million to 18.4 million tonnes in 2022.
Inflation eased in November 2022 but stayed above the central bank’s target range
(01 December 2022) Inflation in Indonesia eased in November 2022, but stayed above the central bank’s target range for the sixth consecutive month amid rising food prices and higher transportation fares. Headline annual inflation eased to 5.42% in November, compared with 5.71% in October. Bank Indonesia’s inflation target range is 2% to 4%. Annual core inflation which excludes government-controlled prices and volatile food prices, edged lower to 3.30% from 3.31% in October. Among the largest contributors to inflation were fuel prices, air fares, and inner city transportation costs. Bank Indonesia intends to maintain a front-loaded and pre-emptive interest rate policy in 2023 to control inflation.
The Philippines central bank sees November annual inflation between 7.4% and 8.2%
(30 November 2022) The Philippines’ central bank, the Bangko Sentral ng Pilipinas (BSP), expects November annual inflation to be in the range of 7.4% and 8.2%, reflecting upward price pressures from electricity and agricultural products. Inflation hit its highest in nearly 14 years in October 2022 at 7.7%, and is expected to decelerate gradually in the following months due to the dissipation of cost-push shocks owing to bad weather. The BSP has stated that it may pause its interest rate hikes in the first quarter of 2023 if there are no major shocks. The BSP has raised policy rates six times in 2022 to 5% to curb inflation, with rate rises running near a 14-year high.
Japan’s factory output falls for second consecutive month in October 2022
(01 December 2022) Japan’s factory output fell for the second consecutive month in October 2022, as stalling global demand and ongoing supply bottlenecks affected Japanese manufacturer’s production plans. Factory output fell 2.6% month-on-month in October 2022 on a seasonally adjusted basis. Production machinery output dropped by 5.4%, while electronic parts and devices output decreased 4.1%, driving the overall index down in October. However, production in the auto sector advanced 5.6%. Japan’s Economy, Trade and Industry Ministry (METI) cut its assessment of industrial output for the first time in five months. In order to counter inflationary pressures, Prime Minister Fumio Kishida has sought another US$210 billion extra budget, which will likely pass the parliament later this week.
HSBC announces plans to sell its New Zealand business in latest retrenchment goal
(30 November 2022) HSBC announced possible plans to sell its New Zealand business, which would present the latest retrenchment by the bank as it seeks to improve returns amid criticism from its biggest shareholder, Ping An Insurance Group of China. This comes amidst greater pressure on retail banking profits worldwide due to intense competition from low-cost digital rivals, who can avoid the cost of running large branch networks. HSBC stated that it was responding to changing customer behavior, with more people now banking online. HSBC’s business in New Zealand is small, generating a pretax profit of US$32 million in 2021.
South Korean housing prices record largest drop since 2013 amidst credit woes
(28 November 2022) South Korean housing prices recorded the largest drop since 2013 due to the central bank’s ongoing monetary tightening cycle and its impact on the property market. Nationwide home prices dropped 0.32% year-on-year in November 2022, while home prices in Seoul slid 0.12%. Policymakers are attempting to avert a hard landing for the property sector, since property represents a key driver of Korea’s record-high household debt. Forward indicators suggest the housing-market correction is likely to deepen. In a recent survey by Kookmin Bank, it was found that the outlook for nationwide property prices slid further to 59, with the survey setting 100 as the dividing line between optimism and pessimism.