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   Daily Economic News – Feb. 9, 2015


AUTHORS                Derek Chen (x-81602)                     Eung Ju Kim (x-85804)
                       Mizuho Kida (x-31943)



Global equities retreat on China trade data and Greek stresses… Eurozone
investor confidence strongest since May 2014… India projects 7.4% growth for
FY 2014-15


Financial Markets

U.S. equities slipped with European stocks on Monday as disappointing Chinese trade data and lingering
tensions between Greece and its European partners damped market sentiment. The S&P 500 index lost
0.3% in morning trade, after climbing 3% last week, and the Dow Jones Industrial Average and the
Nasdaq Composite also edged down 0.44% and 0.36%, respectively. Europe’s benchmark Stoxx 600
index fell as much as 1.2% with bank shares contributing the most to the gauge’s drop. Greece’s ASE
stock index slumped 6% with its trading volume climbing to a record, while the nation’s 10 -year bond yield
surged 84 basis points (bps) to 11.3%. Contagion from Greece for other European government bonds
was relatively mild, with 10-year yields on Portuguese, Italian, and Spanish bonds up between 4-9 bps
and the regions’ benchmark German yields slid ing 5 bps to 0.33%.

Oil prices climbed for a third day after OPEC made the deepest cut to its forecast for non-OPEC oil supply
growth and a further decline in rig counts in the U.S. A report from the OPEC said countries outside of
the group will produce about 400,000 barrels a day less than previously thought. Data from last week
showed the U.S. oil rig count fell to a 3-year low. Brent oil future gained 1% to $58.40 a barrel on the
London exchange, while U.S. crude future (WTI) climbed nearly 3% to $53.15 a barrel on the New York
exchange.



High Income Economies

On the back of the European Central Bank’s (ECB) €60bn a month asset purchasing program, the Sentix
investor sentiment index for the Eurozone came in at 12.5 points for February, much higher than the 0.9
points for January. The latest reading is the highest since May 2014 and far exceeds economists’
expected score of 3. Meanwhile, the expectations component of the index hit a nine-year high.


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Suggesting a sustained recovery amid lower oil prices and a weaker euro, Germany’s exports surged
3.4% (m/m) in December, well ahead of economists' forecasts of 1.0%. Germany's imports also declined
0.8% leading the trade surplus to rise to €21.8bn from €17.9bn in November.

Greek industrial production plunged 3.8% (y/y) in December, far worse than economists' expectations of a
1.5% drop and a significant downturn from November’s 2.3% increase. Contributing to the decline,
mining and quarrying output tumbled 13.2%, while manufacturing production grew 2.1%. Month-on-
month, industrial production fell for the third straight month by 2.6% in December, following a 1.8% drop
in November.



Developing Economies

Europe and Central Asia

Turkey’s industrial production rose by a calendar-adjusted 2.6% (y/y) in December, faster than 2%
expected by economists and up from 0.7% in November, driven by export growth and rebound in
domestic activity. Output in the manufacturing sector climbed 2.8%, while that of the mining and quarrying
sector rose 7%. Production of capital goods increased 7%, intermediate goods rose 2.3%, and durable
and non-durable consumer goods rose 1.7% and 2.2%, respectively. On a monthly basis, industrial
production growth rebounded to 1.2% in December after the 0.1% decline in the previous month.

South Asia

Under a new methodology that includes rebasing and measuring output at market prices rather than at
factor cost, India’s GDP grew 7.5% (y/y) in the October to December quarter slower than the 8.2% in the
previous three months, according to the Central Statistics Office (CSO). Meanwhile, a flash estimate
under the new methodology showed that the Indian economy is set to expand 7.4% in FY 2014-15, up
from a revised 6.9% for 2013-14.


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