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Weekly Briefing: Chinese Economy Back to Normal

Chinese Economy Openg Again - Photo: Privacy

JAKARTA (TheInsiderStories) – Good Morning! The chinese economy back to normal again starting today after the coronavirus outbreak has hit the country for weeks. Although, numerous stores and factories will remain shut and many white-collar employees will continue working from home.

The Hubei Provincial Health Committee reported the total of confirmed cases to 40,235 and number of deaths in the mainland recorded 906, higher than SARS. Market still concern on the virus impact to the market.

Still on China, Goldman Sachs cutting its first quarter gross domestic products (GDP) target to 4 percent from 5.6 percent previously and saying an even deeper hit is possible. The global growth hit a 10-month high in January, but that was prior to the virus outbreak.

The economist are keen to get more information on the scale and impact of the virus before updating 2020 growth forecasts. This week, key releases include GDP numbers for Japan, British and Germany, which look set to show both European economies avoided sliding into contraction, but that Japan slipped into decline.

Industrial production, retail sales and inflation data are released for the United States (US), while policy action comes from New Zealand. With manufacturing representing a weak link in the recent performance of the US economy (factory output fell 0.3 percent in the fourth quarter), official production updates for January will be important to gauge growth momentum at the start of the first quarter.

In Europe, fourth quarter GDP releases for the United Kingdom and Germany are expected to show downturns have been narrowly avoided, while Eurozone industrial production numbers will be eyed for confirmation of the recent green shoots seen in the January PMI data.

In Asia Pacific, Japan’ fourth quarter GDP may well show the economy sliding into a downturn as weakened demand resulting from the sales tax hike was exacerbated by typhoon disruptions. Indian economic statistics will also garner attention following the recent budget announcement.

Malaysia will also publish fourth quarter GDP performance while New Zealand will decide on monetary policy. The Reserve Bank is expected to remain on hold but may sound more hawkish after a recent rise in inflation.

Federal Reserve (the Fed) chair, Jerome Powell, is set to deliver his semi-annual monetary policy testimony on the economy on Tuesday and on Wednesday he will appear in front the Senate Banking Committee. He is expected to reinforce the signal that policy is on hold given the labor market continues to tighten and private consumption growth remains solid.

While, the Commerce of department will publish January inflation figures on Thursday. Consumer prices are expected to have risen 0.2 percent last month, matching the increase seen for December. On a yearly base, the inflation is projected to climb 2.5 percent, up from 2.3 percent a month earlier.

On Friday, the department will release data on retail sales for January. The consensus forecast is that the report will show retail sales rose 0.3 percent last month, after rising at the same pace in December. Excluding the automobile sector, sales are also expected to increase 0.3 percent.

Rising retail sales over time correlate with stronger economic growth, while weaker sales signal a declining economy. Consumer spending accounts for as much as 70 percent of US economic growth.

End of last week, Indonesian Rupiah closed down 0.002 percent to 13,675 compared to US Dollar and the Jakarta Composite Index edge up 1.0 percent to 5.999,61 compared to prior day. Today, the local currency its expecting move in the range 13, 600 – 13,700 and the stock index 5,969 – 6.078.

The analysts recommended PT Bank Negara Indonesia Tbk (IDX: BBNI), PT Bank Tabungan Negara Tbk (IDX: BBTN), PT Indocement Tunggal Perkasa Tbk (IDX: INTP), PT Kalbe Farma Tbk (IDX: KBLF), PT Astra International Tbk (IDX: ASII), PT Pakuwon Jati Tbk (IDX: PWON), PT HM Sampoerna Tbk (IDX: HMSP), PT Telkom Indonesia Tbk (IDX: TLKM), PT Gudang Garam Tbk (IDX: GGRM), PT Unilever Indonesia Tbk (IDX: UNVR), PT Wijaya Karya Tbk (IDX: WIKA), and PT Indofood CBP Sukses Makmur Tbk (IDX: ICBP) stocks for today. 

– IHS Markit and Investing contributed to this report

May you have a profitable Week!

Written by Linda Silaen and TIS Intelligence Team, Please Read Our Insight to Get More information about Indonesia