China's July consumer prices flat, factory-gate prices miss forecast
Factory-gate prices have been declining for more than two years, and Saturday's (Aug 9) data suggest early-stage efforts to tackle price competition have yet to yield results.
Deflationary pressures have prompted Chinese authorities to address overcapacity in key industries. However, the latest round of industrial restructuring appears to be a pared-down version of the sweeping supply-side reforms launched a decade ago that were pivotal in ending a deflationary spiral.
The consumer price index (CPI) was flat year on year in July, compared with a 0.1 per cent rise in June, National Bureau of Statistics data showed on Saturday, beating a Reuters poll forecast of a 0.1 per cent slide.
Food prices fell 1.6 per cent, following a 0.3 per cent decline in June.
Extreme weather added to the economic strain, with sweltering heat gripping much of China's eastern seaboard last month and heavier-than-usual downpours lashing the country with the East Asian monsoon stalling over its north and south.
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On a monthly basis, the CPI edged up 0.4 per cent, against a 0.1 per cent drop in June and exceeding forecasts for a 0.3 per cent rise.
Core inflation, which excludes volatile food and fuel prices, was 0.8 per cent in July from a year earlier, quickening from June's 0.7 per cent.
A prolonged housing downturn and a fragile trade truce with the US are weighing on consumer spending and factory activity.
Policymakers are prioritising efforts to curb what they view as disorderly competition in the auto and other key industries, rather than rolling out immediate stimulus measures, but analysts see limited potential for the campaign to significantly boost final demand.
The producer price index fell 3.6 per cent year on year in July, missing economists' forecast of a 3.3 per cent slide. It fell 3.6 per cent in June too, which was the lowest since July 2023. REUTERS
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Business Times
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In May 2023, she was subsequently slapped with three counts of breaching the Companies Act, while another independent director, Lee Joo Hai, was charged in March that year over Hyflux's non-disclosures. Former CFO Cho will be on trial after being charged with one count of violating the Securities and Futures Act due to allegedly conniving in Hyflux's intentional failure to disclose information relating to Tuaspring. Olivia Lum, 64, ex-CEO Lum, 64, faces six charges: four counts of Companies Act violations and two counts of breaching the Securities and Futures Act. PHOTO: BT FILE Charged with six counts: four counts of Companies Act violations and two counts of breaching the Securities and Futures Act The Securities and Futures Act charges are: For consenting to Hyflux's intentional failure to disclose information relating to the Tuaspring Integrated Water and Power Project despite listing rules requiring it. 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Business Times
2 hours ago
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Tariff heat sees Europe heighten focus on Vietnam and Indonesia
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Stephen Olson, former US trade negotiator and visiting senior fellow at Iseas-Yusof Ishak Institute echoed the sentiment: 'The EU is clearly attempting to diversify its trade relations away from the US, and Asean is a key focal point.' Recent developments, including the breakthrough Indonesia-EU Comprehensive Economic Partnership Agreement (Cepa) and sector-specific pacts such as the UK-Vietnam pharmaceutical deal, underscore this structural shift. The pivot is evident from recent Allianz Trade surveys before and after the US' 'Liberation Day' tariffs on Apr 2, which found that European export interest towards South and South-east Asia doubled from 7 per cent to 14 per cent as trade links between the regions are intensifying with more free-trade agreements (FTAs). A NEWSLETTER FOR YOU Friday, 8.30 am Asean Business Business insights centering on South-east Asia's fast-growing economies. Sign Up Sign Up The shifting sentiments were more evident when it came to supply-chain exposures. 'The trade war is creating opportunistic friendshoring (with) the Europe-Asia rapprochement,' Allianz analysts wrote. They pointed out that the Asia-Pacific has now become the preferred relocation destination for German companies with current links to North American supply chains – with 43 per cent opting for this, rising sharply from 28 per cent. 'We see a lot of manufacturing and industrial companies leveraging Vietnam as an expansion, and it creates opportunities for wider exchange (between Vietnam and Europe),' said Thomas Saueressig, member of the executive board of SAP, during a press briefing on Aug 7 to launch its new SAP Labs in Ho Chi Minh City. The German enterprise software giant plans to invest more than 150 million euros over the next five years to strengthen its engineering hub in Vietnam, the second in South-east Asia following the one established in Singapore in 2022. '(How we try to boost SAP Labs here) is also a great next signal for more and further increased collaborations and partnerships across industries from Germany, Europe, to South-east Asia, specifically in Vietnam,' he added. Europe is not stopping at Indonesia or Vietnam. The Philippines embarked on a fresh round of FTA talks with the EU in June, with the next one scheduled in October. Negotiations with Malaysia and Thailand are also ongoing, and are at various stages. 'Once (the Indonesia-EU Cepa) is signed, I believe it opens the way for further conclusions and negotiations with other Asean member states,' said Edison Bako, executive director at the European Business Chamber of Commerce (EuroCham) in Indonesia. One of the key challenges for these countries, according to Olson, will be navigating differing perspectives on values-driven social issues and climate change – areas that the EU increasingly intertwines with its trade policies. 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'(The deal) would also open the floodgates in terms of the prospects for environmental sustainability and governance standards here in Asean,' added Bako. Europe has emerged as one of the top seven sources of foreign investment in Indonesia, with inflows reaching US$4.59 billion in 2024, up 52 per cent from US$3.02 billion in the previous year, driven by growing interest in the EV, healthcare and resource sectors. 'The ongoing uncertainty in EU-US trade relations is prompting many to look more seriously at Asean,' said Fabian Kieble, chairman of EuroCham in Indonesia. 'Indonesia's EV battery and mining sectors are key areas of interest. The country's push for EVs aligns well with European expertise,' he added. Vietnam-UK sectoral strategy Vietnam has been playing a key role in Europe's Asia strategy, with the UK-Vietnam pharmaceutical agreement – confirmed on the same day as the announcement of the Cepa between the EU and Indonesia – symbolising deeper engagement. 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Recent manufacturing investments by Sanofi, Biotronik, Siltronic and NTS in Singapore highlight the 'queen bee' effect – where global firms cluster their suppliers and partners around the South-east Asian region, said Dino Tan, senior vice-president and head of Europe at Singapore Economic Development Board. Following the Europe-Singapore Digital Trade Agreement, which was finalised last year, London-headquartered fintech Wise expanded its Asia-Pacific hub in Singapore in April to better serve markets in the region. Norwegian gamified learning platform Kahoot launched its Asia-Pacific hub in the Republic in July, using Singapore as a gateway for its regional growth. 'Singapore is deepening regional economic integration within South-east Asia, which will make it easier for companies to do business in our region,' Tan noted. 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Business Times
2 hours ago
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Computer-driven traders are bullish on stocks, humans are bears
THE thing about trading stocks is everyone has an opinion. And right now there's an unusual divergence in the market that's as stark as man versus machine. Computer-guided traders haven't been this bullish on stocks compared to their human counterparts since early 2020, before the depths of the Covid pandemic, according to Parag Thatte, a strategist at Deutsche Bank. The two groups look at different cues to form their opinions, so it's not a shock that they see the market differently. While computer-driven fast-money quants use systematic strategies based on momentum and volatility signals, discretionary money managers are individuals looking at economic and earnings trends to guide their moves. Still, this degree of disagreement is rare – and historically, it doesn't last long, Thatte said. 'Discretionary investors are waiting for something to give, whether that's slowing growth or a spike in inflation in the second half of the year from tariffs,' he said. 'As the data trickles in, their concerns will either be proven right if the market sells off on growth fears, or the economy will remain resilient, in which case discretionary managers would likely begin to lift their stock exposure on economic optimism.' Wall Street offers a lot of confident predictions, but the reality is nobody knows what will happen with President Donald Trump's trade agenda or the Federal Reserve's interest-rate policy. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up With the S&P 500 Index hitting repeatedly hitting all-time highs, professional investors aren't sticking around to find out. As of the week ended Aug 1, they'd cut their equity exposure from neutral to modestly underweight on lingering uncertainty surrounding global trade, corporate earnings and economic growth, according to data compiled by Deutsche Bank. 'No one wants to buy pricier stocks already at records so some are praying for any selloff as an excuse to buy,' said Frank Monkam, head of macro trading at Buffalo Bayou Commodities. Chasing momentum Trend-following algorithmic funds, however, are chasing that momentum. They've been lured into a buying spree after cut-to-the-bone positioning in the spring cleared the path to return in recent months as the S&P 500 rallied almost 30 per cent from its April low. Through the week ended Aug 1, long equity positions for systematic strategies were the highest since January 2020, Deutsche Bank's data shows. This divergence underpins the tug-of-war between technical and fundamental forces, with the S&P 500 stuck in a tight range after posting its longest streak of tranquility in two years in July. The Cboe Volatility Index – or VIX – which measures implied volatility of the benchmark US equity futures via out-of-the-money options, closed at 15.15 on Friday, near the lowest level since February. The VVIX, which measures the volatility of volatility, dropped for the third time in four weeks. 'The rubber band can only stretch so far before it snaps,' said Colton Loder, managing principal of the alternative investment firm Cohalo. 'So the potential for a mean-reversion selloff is higher when there's systematic crowding, like now.' This kind of collective piling into a trade periodically happens with computer-driven strategies. In early 2023, for instance, quants loaded up on US stocks on the heels of the S&P 500's 19 per cent drop in 2022, until volatility spiked in March of that year during the regional banking tumult. And in late 2019, fast-money traders powered stocks to records after a breakthrough in trade talks between Washington and Beijing. This time around, however, Thatte expects this split between man and machine to last weeks, not months. If discretionary traders start selling in response to weaker growth or softening corporate earnings trends, pushing volatility higher, computer-based strategies are likely to begin to unwind their positions as well, he said. In addition, fast-money investors will likely reach full exposure to US equities by September, which could prompt them to sell stocks as they become vulnerable to downside market shocks, according to Scott Rubner of Citadel Securities. CTA risk Given how systematic funds operate, selling may start with commodity trading advisers, or CTAs, unwinding extreme positioning, Loder said. That would increase the risk of sharp reversals in the stock market, although there would need to be a substantial selloff for a spike in volatility to last, he added. CTAs, who have been persistent stock buyers, are long US$50 billion of US stocks, putting them in the 92nd percentile of historical exposure, according to Goldman Sachs Group. However, the S&P 500 would need to breach 6,100, a decline of roughly 4.5 per cent from where the index closed on Friday, for CTAs to begin dumping stocks, said Maxwell Grinacoff, head of equity derivatives research at UBS Group. So the question is, with quant positioning this stretched to the bullish side and pressure building in the stock market due to extreme levels of uncertainty, can any rally from here really last? 'Things are starting to feel toppy,' said Grinacoff, adding that the upside for stocks 'is likely exhausted' in the short run given that CTA positioning is near max long. 'This is a bit worrisome, but it's not raising alarm bells yet.' What's more, any pullback from systematic selling would likely create an opportunity for discretionary asset managers who missed out on this year's gains to re-enter the market as buyers, warding off a more severe plunge, according to Cohalo's Loder. 'Whatever triggers the next drawdown is a mystery,' he said. 'But when that eventually happens, asset-manager exposure and discretionary positioning is so light that it will add fuel to a 'buy the dip' mentality and prevent an even bigger selloff.' BLOOMBERG
