The Week Ahead: China trade data, Digi.Com 3Q results and IMF-World Bank meet in focus

TheEdge Tue, Oct 13, 2020 01:00pm - 4 months ago

The key focus this week will be on China’s trade data, Digi.Com Bhd’s third-quarter earnings and the International Monetary Fund (IMF)-World Bank annual meeting in the US.

In the courts, the graft case of former Penang chief minister Lim Guan Eng in relation to the Penang undersea tunnel project is up for mention on Monday.

Digi.Com is expected to release its third-quarter financial results on Friday. In the second quarter, the telecommunications service provider saw net profit decline 26.6% year on year to RM288.04 million as revenue, impacted by the Covid-19 outbreak, slipped 6.4% y-o-y to RM1.45 billion.

On Monday, the Department of Statistics will release industrial production index and manufacturing sales value data for August, as well as the performance of wholesale and retail trade. This will be followed by the latest labour force statistics on Tuesday, and rubber statistics on Thursday.

All eyes will be on China’s September trade data, out on Tuesday, for a gauge of how the world’s second largest economy is faring on the import-export front amid the coronavirus pandemic.

China will also release September producer price index and consumer price index data on Thursday. Inflation, as measured by the CPI, is seen declining to 2% compared with 2.4% in August, a Bloomberg poll shows.

Singapore is expected to reveal an advanced estimate of third-quarter gross domestic product data this week. A Bloomberg poll sees GDP contracting 6.7% y-o-y, after the second quarter’s 13.2% y-o-y contraction.

Indonesia and South Korea will have interest rate decisions, on Tuesday and Wednesday respectively. Each is widely expected to stay pat on rates.

At its last meeting, the Indonesian central bank held the benchmark seven-day reverse repurchase rate steady at 4% for a second month running, in a bid to keep the rupiah stable. It has cut interest rates four times so far this year by a total of 100 basis points, cut banks’ required reserves and loosened lending rules to support the economy.

“Lower-than-expected growth turnouts in 2H2020, alongside low inflationary pressure, and should foreign exchange stability remain more entrenched, we expect a 25bps rate cut in 4Q, possibly in October, bringing the benchmark rate to 3.75%. Bank Indonesia could also opt for liquidity-supporting measures and macro-prudential policies,” says UOB Global Economics & Markets Research in a report last Friday.

As for South Korea, its central bank has cut the benchmark rate by 75bps so far this year.

New Zealand will have a general election on Oct 17 to elect members for its 53rd parliament. Elections were delayed from earlier this year due to the coronavirus pandemic.

Over in the US, the IMF-World Bank will have its annual meeting, albeit virtually this year, over Oct 12 to 18. “Expectations are for upward revisions to the very dire GDP projections made midyear, although the stretched fiscal positions will raise concerns that reduced stimulus could hamper the recovery,” UOB remarks.

Meanwhile, the European Union leaders’ summit will take place in Brussels, Belgium, on Oct 15 and 16. Among the key topics that will be discussed are the Covid-19 situation, climate change and relations with Africa. Attention will also be on Brexit. UK Prime Minister Boris Johnson recently reiterated that he is prepared to fully leave the EU without a deal when the Brexit transition period ends, but he still believes there is a deal to be done.

Focus will also centre on whether the second US presidential debate between incumbent Donald Trump and Democrat nominee Joe Biden takes place as planned on Oct 15. The Commission on Presidential Debates has declared that it should be a virtual debate because of Trump’s recent Covid-19 diagnosis. However, according to news reports as at last Friday, while Biden welcomed the move, Trump was deadly opposed to a virtual debate.

In the US, a slew of data can be expected, including September CPI (Oct 13), the monthly budget statement, producer price index final demand (Oct 14), initial jobless claims (Oct 15), advanced September retail sales and industrial production (both on Oct 16) as well as August business inventories (Oct 16).

The corporate earnings reporting season will also kick in, with the focus this week expected to be on the large banks.

Markets in Thailand will be closed on Tuesday to commemorate King Bhumibol Memorial Day. Canada’s markets will close for Thanksgiving Day on Oct 12.

Back home, companies with an annual general meeting this week include Marine & General Bhd (Oct 12), LKL International Bhd and Tower REIT (Oct 13), as well as Kein Hing International Bhd and YTL Hospitality REIT (Oct 15).

Related Stocks

DIGI 3.700
LKL 0.580
M&G 0.140
YTL 0.660


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