CEBI Research

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September 29, 2022
Economic Acumen
CEBI Research

Global recession risks building bearish sentiment in crude oil market


Global oil markets have been on a turbulent ride as surging worldwide recession risks driven by tightened monetary stance cause an unprecedented impact on crude oil demand and supply. Skyrocketing inflation in the U.S. and Europe, slowdown of China’s economic growth as well as rising global interest rates alongside mounting geopolitical risks worsen global economic outlook, thus triggering demand destruction of key commodities.
Bearish sentiment is running rampant in oil markets as Organization of the Petroleum Exporting Countries and its allies (OPEC+) production cuts and supply threats from Russia are unable to slow the oil price slide.
International crude oil prices continue to fluctuate on fears of sizable demand destruction and the likelihood of weak demand outlook for the commodities while Russia's supply side risks and China's recovery uncertainty further deepen supply-demand imbalance of oil markets.
Taking all unfavorable factors against oil prices into account with the balance of relevant risks, we forecast crude oil prices will stay between USD $80 and $90 per barrel for the rest of 2022.





September 22, 2022
Economic Acumen
CEBI Research

The Fed pursuing the third 75 bps rate hike


At the conclusion of the sixth FOMC policy meeting in 2022, the Fed announced another 75bps rate hike, lifting the benchmark federal fund rates (FFR) within a target range between 3.0% and 3.25%.
The Fed’s statement stressed that tighter monetary policy is of paramount importance in taming inflation, which could prompt further softening of the labor market and aggregate demand for goods and services. Despite robust job gains in recent months with low unemployment rate, persistence of high inflation and mounted geopolitical risks trigger uncertainties around the path of economic recovery and growth momentum of the U.S. economy has demonstrated decelerating trend amid a series of rate hikes since March.
High inflation will last in the next three months to six months and the Fed will maintain its aggressive stance in monetary tightening for the remaining 2022 FOMC meetings to head off inflation spiral. Hawkish rate hikes of 75 bps in November and December FOMC meeting remain intact with the aim to push back inflation closer to 2% target but rate-sensitive personal consumption and investment will face sharp deceleration of growth momentum, thus enlarging the drag on the U.S economy.





September 16, 2022
Economic Acumen
CEBI Research

China's economy embracing stable growth momentum in August


China’s economy demonstrated modest growth momentum in August as rebounding growth trend has emerged from some major economic indicators under which FAI, industrial production and retail sales accelerated in varying degree. August survey-based urban unemployment rate decreased to 5.3% from July’s 5.4%, reflecting faster pace of creating new jobs in manufacturing and services sector.
Sporadic Covid- lockdowns, property market woes and energy supply crunch alongside wave of global recession risks and rising geopolitical risks continue to cloud growth outlook of China. China’s policymakers have made coordinated efforts to beef up policy supports, thus adding job opportunities, stimulating aggregate demand and offsetting the economic shocks.
With strong support for infrastructure investment as well as consumption-related measures, lower lending rates and refined COVID-19 containment measures, China’s economy is well-positioned for growing economic strengths.
The recent recovery trend will continue throughout the year and we forecast China’s economy will expand by 3.0% YoY in 2022.





September 14, 2022
Economic Acumen
CEBI Research

Tighter liquidity conditions fueling strength of the dollar


Global foreign exchange market stayed volatile during the first nine months of 2022 due to sizable U.S. rate hikes to tame inflation, fluctuating energy and commodity prices as well as turbulence of capital markets. Surging U.S. consumer prices has put the markets on high alert for excessive inflationary pressure that tilts the U.S. Federal Reserve (Fed) towards stronger tightening stance.
The dollar’s strengths will continue for the rest of 2022 as challenging geopolitical situation, worldwide inflationary economy and safe haven’s status boosted by global economic slowdown have induced investors buying into the USD. In contrast, the Euro’s status is gloomy due to energy crisis and swelling yield spread and the Japanese Yen continues to stay weak due to the central bank’s resistance to tighten monetary policy. China’s repeated Covid-lockdown and economic slowdown deepen the near-term weakness of renminbi while emerging market currencies face surging depreciation on high imported energy and food inflation.
We are of the view that the USD is embedded into an upswing. Swelling inflation risks remain intact to support high interest rate with which tight global liquidity is less supportive for risk assets, which overweight the holdings of the USD.





September 6, 2022
Economic Acumen
CEBI Research

Equity markets embracing heightened market volatility


Equity markets around the globe braced for substantial fluctuations on the hawkish speech of the Fed Chairman Jerome Powell at the annual Jackson Hole central banking summit. He stressed that tighter monetary policy remains as the effective tool to tame the current drivers of inflation, which could prompt a softening of the labor market and aggregate demand for goods and services.
Stock markets reacted negatively by experiencing a vicious sell-off in the wake of Powell’s comments as Dow Jones index, S&P 500 index and Nasdaq Composite plummeted more than 6% so far. The dollar index and the US 10-year yield have been giving upward momentum signals, indicating a short-term bearish outlook for the equity markets.
The Fed is trying to avoid pushing the world’s largest economy into a recession with their program of aggressive rate hikes. The implications for the equity market is that previous expectations of the Fed’s downsizing rate hikes seem premature and hence the short-term direction could point to the downside.
We are of the view that higher interest rates and further economic slowdown will weigh on corporate profits, thus worsening economic outlook. Global economic recovery is set to lose traction, thus extending turbulent ride of equity markets.





September 1, 2022
Economic Acumen
CEBI Research

China’s PMI demonstrating continued weakness in August


Amid Sichuan's worst drought leading to industrial power cuts, weaker-than-expected market demand, and repeated Covid-induced lockdowns, China’s manufacturing activities contracted again in August as the manufacturing PMI reached 49.4, staying above the consensus estimate of 49.2 and July’s 49.0. The reading extended the contraction of factory activity for a second straight month, with sub-indexes for output, new orders and employment all contracting. Non-manufacturing PMI, slowed further to 52.6, against the consensus estimate of 52.3 and July’s 53.8.
Chinese manufacturers are still facing operational challenges such as high raw material prices and logistic expenses, which are squeezing profit margins while the export outlook is being clouded by fears of a global recession. Surging downside risks add urgency for more policy support to maintain economic stability of China’s economy.
We are of the view that cities’ lockdowns, recent housing crisis and rising risks of worldwide stagflation are the major headwinds to weigh on China’s growth momentum. China’s policymakers have recently rolled out additional supportive monetary and fiscal measures to hedge against these headwinds, thus strengthening economic outlook.





August 25, 2022
Economic Acumen
CEBI Research

Eurozone embedded into gloomy economic outlook


Energy and food supply disruptions led by Russia-Ukraine crisis alongside staggering inflation, lingering supply-chain challenges and ongoing COVID-19 outbreaks are all factors darkening economic outlook of Eurozone.
The Eurozone’s economic performance will largely hinge on the development of energy supply-chain resilience and inflation. We are of the view that Eurozone will face tepid, uneven and fragile recovery in 2H2022 and 2023 as high energy and consumer inflation as well as worldwide supply constraints impair the recovery momentum.
With the war continuing in Ukraine, higher food, commodity and energy prices have become entrenched and economic uncertainties are intensifying. Europe’s policymakers will stay on course to cool price level and engineer a soft landing while robust and sizable fiscal stimulus are enacted to hedge against the headwinds and strengthen revival of economic activities.
We forecast that the Eurozone GDP will expand by 2.6% and 1.0% in 2022 and 2023.





August 18, 2022
Economic Acumen
CEBI Research

The HK economy bracing for steady recovery with challenges


Amid Covid-19-related economic disruptions and heightened geopolitical tensions, the Hong Kong (HK) economy continued to embrace economic fallout in the second quarter of 2022 with GDP growth declining by 1.3% YoY. On adjusted quarter-to-quarter basis, HK’s economy rebounded by 1.0% from 1Q2022’s contraction of 2.9% on improvement of the local epidemic situation, indicating that economic slump has hit the bottom during 1H2022.
Looking ahead, constant threat of lockdowns on the ongoing pandemic, international geopolitical tensions and interest rate hikes place enormous social and economic pressure on the HK economy. We are of the view that the Consumption Voucher Scheme and additional fiscal stimulus measures will help support consumption-related sectors, safeguard jobs and relieve people’s burden. Accelerating pace of work and consumption normalization as well as further relaxation of the restrictions on cross-border movement along with easing pressure of the pandemic and surging vaccination rates will speed up recovery momentum in 2H2022.
We forecast that the HK economy will grow by 3.2% in 2H2022, with GDP growth reaching 0.4% for the whole year of 2022.





August 15, 2022
Economic Acumen
CEBI Research

China's economy encountering slower growth momentum in July


China’s major economic indicators demonstrated a decelerating trend in July, with which fixed asset investment, industrial production and retail sales showed slowdown on both YoY and MoM basis in vary degrees. Job market showed slight improvement as gradual recovery of manufacturing and consumption activities lowered July survey-based urban unemployment rate to 5.4% from June’s 5.5%.
China’s economy faced a bumpy ride in 2Q2022 by encountering disrupted growth momentum. Looking forward, China embraces continued activity normalization although the real estate slump and Covid controls remain as drags on market sentiment. China’s policymakers have pledged to ramp up support to boost the growth and reduce unemployment rate. Policy responses will focus on growth and stability, namely more spending on fixed assets as well as stronger credit support and regulatory forbearance.
China’s economy is embedded into stable recovery path with broadening growth momentum, which is driven by the steady pick-up in aggregate demand for goods and services, thus alleviating the downside risks and ensuring a more sustainable recovery of economic strengths in 2H2022.





August 11, 2022
Economic Acumen
CEBI Research

HK property market embracing sluggish recovery


In the wake of the fifth wave of Covid-19 outbreak during the first half of 2022, Hong Kong Special Administrative Region (HKSAR) has suffered severe disruption of economic activities, thus lifting the unemployment rate and clouding near-term outlook of HK economy. The adverse effects from Covid-19 pandemic put HK economy embedded into slump of 2.7% during the first half of 2022.
Surging uncertainties in economic conditions hampered the growth momentum of housing market as property prices dropped by 3.4% during the first half of 2022. Rising interest rates in the U.S. and a slowdown in China’s economy alongside limited relaxation of cross-border travel are set to deal a blow to the world’s most expensive real estate market.
We are of the view that the pent-up demand for property accumulating during the fifth wave of the pandemic will help reverse the downtrend of property prices in coming months but HK’s interest rate uptrend in response to the U.S. rate hikes as well as uncertain economic outlook remain as the key headwinds to hamper the pace of housing market recovery.





August 1, 2022
Economic Acumen
CEBI Research

China’s PMI plummeting unexpectedly in July


Amid the traditional production off-peak period, weaker-than-expected market demand, and continued contraction in energy-intensive industries, China July manufacturing PMI slumped to 49.0, staying below the consensus estimate of 50.3 and June’s 50.2. The reading was the lowest in three months, with sub-indexes for output, new orders and employment all contracting. Non-manufacturing PMI slowed to 53.8 against the consensus estimate of 53.9 and June’s 54.7.
July’s weaker-than-expected PMI demonstrated that the deterioration of manufacturing conditions alongside fading demand for goods and services led to the drop of industrial activities, adding to the urgency for more policy support to stabilize growth momentum.
We are of the view that constant threat of lockdowns on the ongoing pandemic, weak consumer confidence and rising risks of worldwide stagflation act as the major headwinds to weigh on China’s growth momentum. China’s policymakers will roll out more supportive monetary and fiscal measures to hedge against these headwinds, thus navigating and strengthening economic outlook.





July 28, 2022
Economic Acumen
CEBI Research

The Fed enacting a rate hike of 75 bps for the second consecutive time to tame inflation


The Fed announced another 75bps rate hike, lifting the benchmark FFR within a target range between 2.25% and 2.5%.
The Fed indicated that economic activities grew at a slower pace after a series of rate hikes. Although inflation remained elevated on high energy and food prices as well as mounted geopolitical risks, job gains were robust and unemployment rate remained low, thus propelling steady growth of the U.S. economy.
The emergence of stagflation headwinds trigger uncertainties around the path of economic recovery. The Fed opted for not supersizing the interest rate hike in this FOMC meeting to quell stubbornly-high inflation, reflecting that the U.S. policymakers aim at engineering a soft landing for the economy.
We are of the view that the Fed’s monetary tightening has cooled down aggregate demand and helped head off inflation spiral. As energy and commodity prices demonstrate signs of slowdown, pricing pressures are likely to peak in coming months. We expect the Fed will downsize the rate hike to 50bps during the next FOMC meeting in September while pursuing 25bps rate hike in each of last two FOMC meetings in November and December.





July 21, 2022
Economic Acumen
CEBI Research

Crude oil market risk skewing to the upside


Global oil markets have been on a bumpy ride as the Covid-19 pandemic and Russia-Ukraine crisis alongside surging worldwide stagflation risks cause an unprecedented impact on worldwide oil demand and supply.
During the first half of 2022, oil prices continued to gain strengths, settling higher at more than 40% jump on hopes of further demand recovery and concerns about energy sanctions on Russia.
We are of the view that demand-side recovery in oil market remains intact for the rest of 2022 but the growth momentum will slow amid the ongoing pandemic exacerbating concerns of a setback in oil demand and interest rate hikes undermining global economic growth.
The current correction in crude oil prices is short-lived and oil prices will continue to pursue upward trend by witnessing volatilities and fluctuations on uneven global recovery momentum and tight spare oil supply capacity. Taking all positive and negative factors against oil prices into account with the balance of relevant risks, we forecast crude oil prices will stay well-supported between USD $100 and $120 per barrel for the rest of 2022.





July 15, 2022
Economic Acumen
CEBI Research

China’s economy embracing slower growth in 2Q2022 due to extensive Covid-19 lockdowns


Amid COVID-19 outbreaks hitting multiple cities of China, ongoing disruptions in supply-chain, and surging geopolitical risks, China’s economy was embedded into slower year-on-year growth of 0.4% YoY (MoM -2.6%) during 2Q2022, staying worse than the consensus estimate of 1.2% and 1Q2022’s 4.8%. For 1H2022, China’s economic growth posted a rise of 2.5% YoY, against 1H2021’s 12.7% and 2021’s 8.1%.
China’s economy has been severely hit by COVID-19 outbreaks alongside domestic and external economic headwinds. Balancing COVID-19 suppression weigh on China’s growth momentum due to stoppage of consumption and production while soaring global energy and food prices caused by Russia-Ukraine crisis further add to cloudy economic outlook.
China has encountered accelerated pace of work resumption on the relief of Covid-19 pandemic in May with which activity normalization will continue, albeit gradually and with eventual turbulences. Against the backdrop of surging downward pressure on the economy, China’s policymakers beef up policy supports to enhance growth momentum. China’s economy is well-positioned for a strong rebound in the second half of 2022.





July 7, 2022
Economic Acumen
CEBI Research

Equity markets embracing a volatile wave of recession risks


Complicated global economic environment reshaped by Russia-Ukraine crisis, the ongoing pandemic, global central banks’ sharp policy normalization path, unresolved worldwide supply-chain chaos and US-China heightened tensions has dominated investment sentiment in global equity markets.
Derailed path of worldwide economic recovery triggers slower growth of output and income, thus resulting in hiking recession risks in the next 6 to 12 months. Stock markets across the globe reacted by pointing to the downswing during 1H2022, which has been mainly driven by uncertain economic outlook, contracting liquidity flow and rising equity risk premium.
Recent market rebalancing has priced-in faster pace of monetary tightening as well as rising geopolitical risks. Equity market volatility has shown no signs of easing on economic, political and health headwinds but post-pandemic reopening of economies is expected to gain growing strengths in 3Q2022, which not only supports modest growth momentum of economic activities, but also unlock upside potential in equities.





July 4, 2022
Economic Acumen
CEBI Research

China's June PMI bracing for expansion of economic activities


After encountering accelerated pace of work resumption on the relief of Covid-19 pandemic in May, China’s economy showed further signs of stronger recovery in June. Manufacturing PMI edged up to 50.2, staying below the consensus estimate of 50.4 but higher than May’s 49.6 while non-manufacturing PMI for June rose to 54.7, which exceeded the consensus estimate of 50.5 and May’s 47.8. Both figures rebounded above the reading of 50, the first time since February 2022, representing that reopening of factories and consumption normalization restored expansion of production and services.
Looking ahead, alleviation of pandemic’s conditions in China will further prop up the pace of activities normalization. Against the backdrop of surging downward pressure on the economy, China’s policymakers roll out a broad package of 33 stabilization measures to increase job opportunities, stimulate aggregate demand and offset the economic damage from Covid-19 lockdowns.
Resumption of consumption and production alongside countercyclical policy supports will further strengthen growth momentum and stabilize the economy. China’s sound economic fundamentals remain intact and forward-looking economic indicators point to a modest pick-up in economic activities.





June 29, 2022
Economic Acumen
CEBI Research

Navigating the renminbi in 2H2022


The renminbi has been embedded into a sharp depreciation in 2Q2022 as it experienced downside of more than 5.0% against the U.S. dollar (USD) under which month of April posted the biggest drop of 4.3%, reflecting investors’ concerns about the impact of lockdowns in multiple cities on economic outlook.
Even though China’s economy was facing a bumpy start in 1H2022 given the stringent zero-COVID-19 strategy applied to renewed pandemic outbreaks and ongoing supply side chaos driven by swelling energy prices and Russia-Ukraine crisis, policy support through effective implementation of 33 economic stimulus measures on monetary and fiscal front has been stepped up to stabilize the economy, thus reinforcing risk rebalancing of the renminbi.
China’s economic recovery out of the pandemic through resumption of consumption and production will strengthen the outlook of stronger renminbi in 2H2022. Abundant foreign exchange reserves, sound fiscal conditions, stable financial systems and proper progress of the renminbi internationalization embrace growing strengths of renminbi, which will stay well-supported between 6.5 and 6.6 per USD for the rest of 2022.





June 16, 2022
Economic Acumen
CEBI Research

The Fed pursuing aggressive 75 bps rate hike to cool inflation


The Fed announced a rate hike of 75bps, lifting the FFR within a target range between 1.5% and 1.75%. The three-quarters of a point surge in FFR was the biggest hike by the Fed since 1994.
The U.S. economy was facing steady economic recovery alongside persistent high inflation and mounted geopolitical risks. The post-pandemic recovery momentum was constrained by worldwide supply-chain meltdown from soaring energy and commodity prices.
The inflationary impact from the pandemic, Russia-Ukraine crisis and China’s Covid-19 lockdowns on supply-chain disruption could have damaging impact in delaying the normalization of production and consumption. The Fed will aim at taking an aggressive approach for monetary normalization to head off inflation spiral while maintaining economic upside momentum.
We expect the Fed will conduct 75bps and 50bps rate hike during the next two FOMC meetings in July and September while pursuing 25bps rate hike in each of last two FOMC meetings in November and December.





June 15, 2022
Economic Acumen
CEBI Research

China's economy embracing gradual activity normalization in May on the relief of Covid-19 pandemic


China’s major economic indicators demonstrated a reversing trend in May. Job market demonstrated improvement as faster pace of creating new job opportunities due to gradual recovery of manufacturing activities lowered May survey-based urban unemployment rate to 5.9% from April’s 6.1%.
China is facing a bumpy ride to maintain proper economic recovery in 2Q2022 amid the unexpected challenges and uncertainties. Stringent lockdowns to curb Covid-19 infections are taking a significant toll on the economy and global supply-chain, weighing on China’s growth momentum due to stoppage of consumption and production.
China’s policymakers have pledged to ramp up support for the flagging economy in stabilizing the growth and reducing soaring unemployment rate. Shanghai has eased its lockdown restrictions for many businesses after two months of a grinding COVID-19 lockdown and announced a fresh raft of economic measures which are expected to ease 300 billion yuan of pandemic-induced financial burden for market players.
We are of the view that the pick-up pace of consumption and investment driven by macroeconomic policy support will help alleviate the downside risks and accelerate growth momentum, thus ensuring a more sustainable recovery of economic strengths.





June 1, 2022
Economic Acumen
CEBI Research

China's May PMI signaling improvement on the relief of Covid-19 lockdowns


After experiencing a lockdown-led slump of economic activities in April, China’s economy gradually restored steady growth momentum on the relief of Covid-19 lockdowns in May as manufacturing and non-manufacturing PMI edged up to 49.6 and 47.8 from April’s 47.4 and 41.9, which exceeded the consensus estimate of 49.0 and 45.5.
Premier Li Keqiang is aware of economic shocks with which China’s economic indicators have weakened significantly and the economy is faring worse than in 2020 when the Covid-19 pandemic first emerged. He hosted an emerging meeting with government officials at all levels in an attempt to ensure effective implementation of 33 economic stimulus measures in stabilizing the growth and reducing soaring unemployment rate.
China’s policymakers roll out a broad package of measures to support businesses and stimulate demand, thus offsetting the damage from Covid-19 lockdowns. We are of the view that resumption of consumption and production alongside countercyclical policy supports will further prop up growth momentum and strengthen supply-chain resilience that will boost manufacturing and services activities in coming months.





May 31, 2022
Economic Acumen
CEBI Research

Worldwide stagflation fears on the rise


Staggering inflation, lingering supply-chain challenges, ongoing COVID-19 pandemic, persistent labor market shortages alongside unresolved Russia-Ukraine military conflicts are all factors clouding global economic outlook in 2022. The intensification of economic, health and geopolitical headwinds has led to rising concerns on slowing global growth and soaring inflation, thus triggering fears of stagflation.
The global economy is moving in a direction that is embedded into stagflationary shock characterized by fading growth momentum and escalating pricing pressures. Global central banks are set to take more aggressive approach for monetary tightening to head off inflation spirals as global inflation accelerates rapidly to multi-decade highs.
Global inflation is likely to peak in the middle of 2022 but stick to high level for the rest of 2022 under which tightening liquidity conditions remain as the major headwind to impinge on growth momentum. Global policy makers will stay on course to tighten monetary stance by cooling price level and engineering a soft landing while robust and sizable fiscal stimulus are enacted to hedge against the headwinds and strengthen revival of global economic activities.





May 19, 2022
Economic Acumen
CEBI Research

HK economy embracing modest recovery in 2H2022


In the wake of the fifth wave of Covid-19 outbreak, HKSAR has re-imposed stricter containment measures to avoid the spread of infection, thus disrupting domestic economic activities, lifting the latest unemployment rate to 5.0% from 4Q2021’s 3.9% and clouding near-term outlook of HK economy. As a result, declines in private consumption, external trade and investment dragged down HK GDP growth by 4% during 1Q2022.
Although improvement in health conditions alongside relaxation of social-distancing measures has emerged in April, economic activities are recovering slowly on gradual restoration of consumption and production in 2Q2022 with which the adverse effects from Covid-19 pandemic put HK economy embedded into slump during the first half of 2022.
Looking ahead, the pandemic, international geopolitical tensions and interest rate hikes continue to place enormous social and economic pressure on HK. We are of the view that HK economy is set to enhance recovery momentum in 2H2022. HK’s economy will face negative growth of 2.6% in 1H2022 while improving health and economic conditions will lead to rebounding growth of 4.5% in 2H2022. For 2022, HK’s GDP growth will reach 1.0%.





May 17, 2022
Economic Acumen
CEBI Research

China’s economy encountering slower growth momentum in April amid Covid-19 lockdowns


China’s economic conditions were characterized by downbeat trend in April as lockdowns of multiple cities in containing the spread of Covid-19 have led to mobility restrictions, thus disrupting consumption and production.
Domestic COVID-19 resurgence alongside the economic fallout of Russia-Ukraine conflict and US aggressive monetary tightening caused economic headwinds, thus weighing on China’s growth momentum.
Looking ahead, the economic disruptions from lockdowns is expected to ease as nationwide infections have shown a falling trend and Shanghai is set to lift lockdown gradually.
China’s policymakers have aware of economic shocks against the economy and the prompt implementation of an array of measures, including higher fiscal spending, tax and fee relief as well as easier monetary stance, helps support economic growth and employment, thus alleviating the downside risks and ensuring a more sustainable recovery of economic strengths.





May 5, 2022
Economic Acumen
CEBI Research

The Fed pursuing faster tightening pace to curb inflation


The Fed announced a rate hike of 50bps, lifting the FFR within a target range between 0.75% and 1.0%. The half-point surge in FFR was the most aggressive move by the Fed since 2000. The Fed also launched quantitative tightening (QT) to downsize the Fed’s balance sheet.
The Fed’s statement pointed out that the U.S. economy was facing steady economic recovery alongside headwinds from persistent high inflation, characterized by tight labor market and complicated international environment. The U.S. economic growth was attributed to solid job gains but the post-pandemic recovery momentum was constrained by soaring energy and commodity prices driven by mounted geopolitical risks and the ongoing pandemic.
We are of the view that the Fed will aim at taking a more aggressive approach for monetary normalization to head off inflation spiral while maintaining economic upside momentum. Amid the U.S. inflation sticking at 40-year high and above the Fed's 2% target, we expect 50bps rate hike in each of the next two upcoming FOMC meetings and three 25bps rate hike in each of the last three FOMC meetings.





May 3, 2022
Economic Acumen
CEBI Research

China’s PMI plummeting further in April


China’s April PMI slumped further to 47.4, staying above the consensus estimate of 47.3 but below March’s 49.5 while non-manufacturing PMI plummeted to 41.9 against the consensus estimate of 46 and March’s 48.4. In sum, the official PMI marked the second consecutive months of contraction under which the deterioration of manufacturing conditions alongside fading demand for goods and services led to the quickest drop of industrial and service activities.
Looking ahead, cushioning the downside risks is of paramount importance to maintain economic stability of China’s economy. Activity in manufacturing and service sectors simultaneously contracted in April added to the urgency for more policy support to stabilize growth momentum.
We are of the view that China’s policy makers will roll out more supportive monetary and fiscal measures to hedge against destructive impact of COVID-19 outbreaks from cities’ lockdowns and disruption of industrial production, thus navigating and strengthening economic outlook.





April 21, 2022
Economic Acumen
CEBI Research

China embracing pro-growth policies to ensure economic stability


China embraces challenges related to the ongoing pandemic, which results in lockdown-led stoppage of economic activities in multiple cities as well as severe disruption of domestic and global supply chain. The triple pressure of demand contraction, supply shocks, and weakening expectations amid an increasingly complicated external environment are widening which hampers the growth prospect of China.
In order to cushion the downside risks, China’s policy makers have signaled to deploy and strengthen policy support, thus ensuring stable economic performance for 2022. China’s government will pursue a policy characterized by flexible liquidity management, proactive fiscal expansion and stable fluctuation of the renminbi to revert growth momentum of China’s economy.
The PBOC will retain flexibility in adjusting monetary policy to mitigate the downside risks by using different monetary tools to unleash the potential credits into the economy while both the central and local governments will roll out more supportive fiscal policies, thus boosting investment in infrastructure and strategic emerging industries as well as providing tax and fee relief to enterprises.





April 8, 2022
Economic Acumen
CEBI Research

Navigating the renminbi outlook


The renminbi has been embedded into a volatile ride during the past 15 months as it experienced upside of more than 2.5% against the U.S. dollar (USD) in 2021 on stronger recovery of economic growth and external trading activities while facing ups and downs in 1Q2022 on concerns of economic headwinds as well as surging health and geopolitical risks.
An expected decline in current account surplus due to shrinking external demand, a narrowing yield spread on China-US monetary policy divergence and slowdown of economic activities on combating the pandemic may pose risks on making turbulent wave against the renminbi.
Keeping the renminbi stable is of paramount importance in propelling China’s growth momentum. We are of the view that China’s economic recovery out of the pandemic has been relatively swift and sturdy economic fundamentals for the renminbi remain intact in 2022. The renminbi will stay well-supported between 6.35 and 6.45 per USD for the rest of 2022.





April 6, 2022
Economic Acumen
CEBI Research

Fixed income market embracing risks and opportunities in the wake of unwinding pandemic-induced ultra-loose monetary regime


A combination of fading global growth momentum, a more hawkish stance of the US Federal Reserve (Fed) and unresolved Russia-Ukraine crisis push forward continued flattening of yield curves in the sense that the evolution of inflation and central bank policy responses will likely drive higher fixed income market volatility.
Although the Fed accelerates the pace of monetary normalization and bond yields are climbing steadily, global liquidity remains ample with the yields still rising at a reasonable pace. Investors continue to act as yield chasers, which bolster the prospects for high-yield and investment-grade bonds.
Despite the current macroeconomic headwinds, global advances along the path to vaccinations and activities normalization will continue to boost business and consumer confidence. Cash flow and leverage will likely pick up for enterprises, which reduce default risks of fixed income market in coming quarters. Investors seek diversification in their portfolios, especially after turbulent run of equity markets and we are of the view that global liquidity will continue to flow into high-quality bonds to balance risks and returns in 2Q2022.





March 29, 2022
Economic Acumen
CEBI Research

Riding turbulent wave of equity markets


Global investment environment was complicated and uncertain in 1Q2022 as equity markets around the globe have fluctuated turbulently on the ongoing pandemic, Russia-Ukraine crisis, the U.S. first pandemic-era rate hike, unresolved worldwide supply-chain chaos, US-China financial market tensions over delisting threat of Chinese companies in the U.S. alongside the ongoing China’s regulatory crackdown and debt woes of China’s property sector.
The U.S. and European markets corrected mainly on the potential economic and political impact of Russia military actions against Ukraine. For China and HK markets, market sentiment was hit by signs of slowing economic activity and potential delisting of US-traded Chinese companies.
Global equities continue to be challenging due to headwinds surrounding inflationary pressures and sanctions against Russia alongside derailing US-China relations. The complication of global economy paves the way for more near-term fluctuation in financial markets but provides more investment opportunities in different markets and sectors.
We are of the view that recent market rebalancing has priced-in faster pace of monetary easing as well as rising geopolitical risks. As the economic expansion driven by more widespread vaccinations and rebounding domestic demand broadens out, investors’ optimism will escalate under which global equities point to embrace for an overweight position with volatile ride in 2Q2022.





March 17, 2022
Economic Acumen
CEBI Research

The Fed’s first pandemic-era rate hike to battle escalating inflation despite hovering geopolitical risks


The Fed kicked off the widely-expected post-pandemic rate hike for the first time since 2018, lifting the benchmark federal fund rates (FFR) by 25 bps to a target range between 0.25% and 0.5%. The Fed has also wrapped up pandemic-era bond purchases program and prepared to downsize the Fed’s USD$9 trillion balance sheet in May.
The U.S. growth was strengthening on solid job gains but the post-pandemic recovery momentum was constrained by unresolved supply-side disruptions, soaring energy and commodity prices, hiking geopolitical risks and the ongoing pandemic. The Fed’s move signaled clearly that monetary tightening is of paramount importance in easing the staggering inflation.
The Fed will embark on anchoring inflation expectations to reduce the risk of persistently high inflation. Amid the U.S. inflation hovering at 40-year high and remaining significantly above the Fed's 2% target, we expect six 25bp rate hikes during the upcoming FOMC meetings for the rest of 2022 alongside shrinking the size of the Fed's balance sheet gradually.





March 15, 2022
Economic Acumen
CEBI Research

China’s economy maintaining modest growth momentum during 2M2022


China’s economy demonstrated modest growth momentum during the first two months of 2022 as slower growth trend has emerged from some major economic indicators under which property investment, industrial production, external trade and retail sales decelerated in varying degree while fixed asset investment (FAI) showed rebounding momentum and inflation remained mild.
China’s economy faces surging downward pressures on economic activities driven by fading domestic growth expectations, continued supply-chain bottlenecks, unresolved Russia-Ukraine conflict and rising US-China economic and political tensions. China’s policymakers have stepped up efforts on policy stimulus to maintain stability of economic momentum while limiting mounted health risks towards the pandemic.
Slower growth remains intact in 1H2022 while the pick-up pace of domestic demand and technological innovation will help alleviate the downside risks and accelerate growth momentum in 2H2022. The trajectory of China's economy is towards sound and stable growth with which GDP growth will reach 5.5% in 2022.





March 8, 2022
Economic Acumen
CEBI Research

China’s 2022 NPC: embracing more policy support to maintain economic stability


The NPC opened its fifth annual session in Beijing on 5th March 2022. Amid the complex and volatile economic environment as well multiple challenges from the ongoing COVID-19 pandemic, the NPC focused on addressing the issues including fading domestic growth expectations, continued supply-chain bottlenecks, unresolved Russia-Ukraine conflict and rising US-China economic and political tensions.
In tandem with economic headwinds, China lowered economic growth target for 2022 to 5.5%. The economic uncertainties prompt China’s policymakers to exercise stronger stimulus measures to maintain stability of economic momentum while limiting mounted health risks towards the pandemic.
China strives to achieve the goal of building a moderately prosperous society. China’s economy will grow within a reasonable range in 2022 under which slower growth remains intact in 1H2022 while the pick-up pace of domestic demand and technological innovation alongside macroeconomic policy stimulus will accelerate growth momentum in 2H2022, thus ensuring a more sustainable recovery of economic strengths.





February 24, 2022
Economic Acumen
CEBI Research

Omicron shockwave derailing recovery momentum of Hong Kong economy


In the wake of renewed outbreak of the pandemic, HK has re-imposed social-distancing measures to avoid the spike of infected cases, thus disrupting domestic economic activities and clouding near-term outlook of HK economy.
HK’s battle against an escalating outbreak of the highly contagious OV causes marked unavoidable slowdown in growth momentum and is expected to hammer HK economy severely in the first half of 2022.
With the support of the Central Government, HK is set to control the epidemic and restore recovery path of the economy. The previous Government’s relief packages and fiscal measures announced in the latest Budget will help support consumption sectors, safeguard jobs and relieve people’s burden, thus offsetting the contractionary economic pressures.
HK’s economy is expected to grow slowly by 1% in 1H2022 while 2H2022 is likely to demonstrate rebounding growth at 2.9% YoY on improving health and economic conditions. For 2022, HK’s GDP growth will reach 2.0%.





February 16, 2022
Economic Acumen
CEBI Research

China’s inflation staying mild in January


China’s CPI edged up only by 0.9% on YoY basis in January. CPI weakening uptrend was mainly due to swelling of food deflation and lower price inflation of consumer goods.
China’s PPI rose at a decelerating pace at YoY growth of 9.1% in January. The costs for goods at the factory gate demonstrated slowing uptrend due to less MoM rise of raw material prices.
Multiple growth headwinds have clouded the growth outlook of China’s economy. A continuously mild inflation would ease the concern of ample liquidity to push up inflation, therefore supporting the flexible monetary policy to stimulate economic growth.
The recent government’s efforts in taming commodities prices, restoring stable power supply and ensuring supply chain resilience will further stabilize the general price level of consumers and manufacturers, thus supporting modest growth of China’s economy in 2022.





January 27, 2022
Economic Acumen
CEBI Research

The Fed signaling earlier rate hikes to sustain inflation flight


The Fed continued to keep the target range of the Fed fund rates (FFR) unchanged at the level near zero and wrap up pandemic-era bond purchases program in early March. The Fed also signaled the proceeding with earlier-than-expected rate hikes in 2022 to hedge against inflation spikes, thus ensuring continued recovery of economic activities.
The U.S. economy was strengthening on solid job gains but the post-pandemic recovery momentum is constrained by residual supply-side disruption, upside inflation risks and the spread of the Omicron variant (OV). The policy shift of the Fed aims at tightening monetary conditions in 2022 to ease the staggering inflation.
Amid the U.S. economic outlook clouded by growth and health headwinds, the U.S. policy makers point to maintain the accommodative stance of different economic tools to propel growth momentum in 2022.
We expect four 25bp rate hikes will be launched during the year, with the first rate hike kicking off in March and the Fed’s balance sheet shrinking in 2H2022.





January 17, 2022
Economic Acumen
CEBI Research

China's economy embracing modest expansion in 2021


China’s economy grew by 8.1% in 2021, recovering further from 2020’s 2.2% and staying above the consensus estimate of 8.0%. Economic indicators embraced uptrend from the slump in 2020, with growth of FAI, industrial production, retail sales and external trade accelerating in varying degrees.
The growth headwinds including sustained pressures from pandemic, flooding, supply chain meltdown, regulatory crackdown on business, energy shortage and debt problems afflicting property sector put China’s economy embedded into slower YoY quarterly expansion of 4.0% during 4Q2021 from 3Q2021’s 4.9%.
Looking forward to 2022, China’s economy is facing threefold pressure, namely contraction of aggregate demand, supply shocks and slowing growth momentum. China’s policy makers has pledged to maintain stability of economic momentum by strengthening stimulus measures.
China’s economic fundamentals remain sound and we forecast GDP growth will reach 5.0% YoY in 2022.





January 13, 2022
Economic Acumen
CEBI Research

China’s inflation remaining stable in 2021


China's CPI slowed down to 1.5% YoY in December. Softening CPI was mainly due to drop of food price and moderating non-food price with which proper supply of food alongside weakening rise of retail energy prices stabilized general price level. For 2021, China consumer inflation rose 0.9%.
China’s PPI grew less quickly than expected in December at 10.3% YoY. The decelerating trend of industrial prices was mainly driven by proper government policies to safeguard the supply of raw materials and curb shortage of energy. For 2021, PPI rose 8.1% YoY.
Cooling consumer and industrial prices have alleviated inflationary pressures on China’s economy, thus supporting the flexible monetary policy in countering the economic slowdown.
The recent government’s efforts in taming commodities prices, restoring stable power supply and ensuring supply chain resilience will further strengthen stabilization of the general price level of consumers and manufacturers, thus supporting the recovery of China’s economy.





January 7, 2022
Economic Acumen
CEBI Research

Global financial markets signaling heightened volatility ahead


Staggering inflation, global supply-chain bottlenecks, emerging COVID-19 variants alongside geopolitical risks were all factors overwhelming investors in 2021.
Entering into 2022, the trajectory of the stock markets continues to demonstrate split trend around the globe. The post-pandemic recovery is expected to continue but growth will be constrained by residual supply-side disruption, global tightening of financial conditions due to upside inflation risks and the spread of the Omicron variant (OV).
The complication of global economy paves the way for more near-term fluctuations in financial markets but provides more investment opportunities in different markets and sectors.
We are of the view that as the economic expansion driven by more widespread vaccinations and rebounding domestic demand broadens out along with decelerating health risks, investors’ optimism will escalate under which global equities point to embrace for an overweight position with volatile ride in 2022.






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