Schroders
Weekly market watch
Week ending June 17, 2016
Equities:
Region /
Country
ASIA-PACIFIC
Hong Kong
India
Japan
Singapore
South Korea
Taiwan
EUROPE
France
Germany
Italy
Russia
U.K.
AMERICAS
Brazil
Mexico
NASDAQ
U.S.
U.S.
Close
Net Change
Year-to-date
Performance
52-week
HSI
BSE 30
Nikkei
STI
KOSPI
WSE
20169.98
26625.91
15599.66
2763.42
1953.40
8568.08
(872.66)
(9.84)
(1001.70)
(59.55)
(64.23)
(147.40)
(7.96 %)
1.95%
(18.04%)
(4.14%)
(0.40%)
2.76%
(24.61%)
(0.77%)
(22.85%)
(16.91%)
(4.00%)
(6.77%)
CAC
DAX
FTSE MIB
RTSI
FTSE 100
4193.83
9631.36
16923.30
910.28
6021.09
(112.89)
(203.26)
(196.90)
(14.37)
(94.67)
(9.56%)
(10.35%)
(20.99%)
20.24%
(3.54%)
(12.46%)
(12.27%)
(23.86%)
(5.82%)
(9.87%)
IBOV
IPC
CCMP
S&P 500
DOW
49533.84
45306.22
4800.34
2071.22
17675.16
111.68
128.72
(94.21)
(24.85)
(190.18)
14.27%
5.42%
(4.14%)
1.33%
1.44%
(6.98%)
1.15%
(5.22%)
(1.39%)
(1.45%)
Index
Bonds
10 Year Gilt
10 Year BTAN
10 Year Bund
10 Year Japan
10 Year Treasuries
Close
1.1450
0.4250
0.0180
-0.1480
1.6180
Previous
1.2350
0.3900
0.0210
-0.1470
1.6390
Yield
Month ago
1.3700
0.4730
0.1330
-0.1090
1.7590
Year ago
2.0630
1.2380
0.8140
0.4840
2.3080
Base lending rates
Prime Rates
U.S.
Canada
Japan
Britain
ECB
Switzerland
Australia
Hong Kong
Latest
3.50
2.70
1.48
0.50
0.00
0.50
2.00
5.25
Percent change is for indication only; local currency except where stated.
6 months ago
3.25
2.70
1.48
0.50
0.05
0.50
2.00
5.25
12 months ago
3.25
2.85
1.48
0.50
0.05
0.50
2.00
5.25
Schroders Weekly market watch
EQUITY MARKETS
US
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U.S. stocks fell last week as investors focused on the potential consequences of a U.K. exit from the
European Union, which had looked increasingly likely before the shocking murder of a pro-EU politician
in northern England on Thursday. The tragedy may have increased support for the Remain camp.
Growing uncertainty about the path for U.S. interest rate hikes and a fall in the oil price also weighed on
sentiment. The S&P 500 fell 1.19% over the week to settle at 2,071.22, the Dow Jones Industrial
Average dropped 1.06% to 17,675.16 and the tech-heavy Nasdaq gave up 1.92% to 4,800.34.
Microsoft announced Monday it had agreed to pay $26.2 billion in cash for professional social network
LinkedIn, marking its biggest acquisition ever. The computer software giant will pay $196 per LinkedIn
share, representing a 50% premium to the company’s previous closing price.
Hair care and makeup company Revlon said Thursday it would pay nearly $420 million in cash for
Elizabeth Arden, whose luxury skin-care products and perfumes are available in 120 countries,
including the Asia-Pacific region, helping Revlon expand in high-growth markets.
Twitter shares rose sharply Wednesday after the microblogging site confirmed it had acquired a stake in
German online music platform SoundCloud, reportedly investing about $70 million, as the U.S. social
network looks for ways to boost user growth and engagement with its service.
German chemical maker BASF has agreed to pay $3.2 billion in cash for Albemarle’s Chemetall surface
treatment business, the North Carolina-based Albemarle said Friday. The specialty chemicals
manufacturer acquired Chemetall when it took over Rockwood Holdings in 2015.
Software company Oracle on Thursday posted a net profit of $2.81 billion for the fiscal fourth quarter
ended May 31, compared with a year-ago $2.76 billion, on better-than-expected revenue of $10.59
billion after its cloud-based revenue soared 51% to $859 million.
UK
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London stocks rallied Friday after campaigning for the Brexit vote on June 23 was suspended following
the murder of a pro-EU politician, which appeared to increase support for the Remain camp. The
benchmark index still finished lower over the week, however, as investors fretted over recent surveys
showing more Britons wanted to leave the EU, which many investors believe would have disastrous
consequences for the economy. The FTSE 100 fell 1.55% to close at 6,021.09.
Mulberry on Thursday posted a full-year pre-tax profit of GBP6.2 million, compared with a year-earlier
profit of GBP1.9 million, as the luxury fashion house’s decision to boost its range of affordable products
bore fruit. Total revenue rose 5% to GBP155.9 million, with retail sales up 8% to GBP118.7 million and
online sales 19% higher at GBP21.4 million.
BP has agreed to set up a joint venture with Russian state-owned oil company Rosneft to explore for oil
and gas in Russia, the companies said Friday. The British oil major will invest up to $300 million in the
joint-venture company Yermak Neftegaz, in which Rosneft will have a 51% stake and BP the remaining
49%.
Shares in G4S fell sharply Monday after it emerged that the gunman responsible for the massacre of 49
people in a U.S. gay nightclub had worked for the U.K.-based security services company, raising
concerns G4S may find it more difficult to win U.S. government contracts.
Equipment hire company Ashtead announced a GBP200 million share buyback on Tuesday alongside
robust fiscal fourth-quarter earnings that were boosted by the U.S. construction market where it does
80% of its business. Pre-tax profit for the quarter ended April 30 rose to GBP151.3 million from a yearago profit of GBP104.7 million, while revenue was up 18% to GBP666 million.
Wal-Mart Stores announced Monday that Andy Clarke, the chief executive of its U.K. supermarket arm
Asda for the past six years, would be replaced by Wal-Mart China boss Sean Clarke, as Wal-Mart
Stores seeks to turn around its struggling British business. The reshuffle will happen in July.
Europe (ex. UK)
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2
European stocks retreated last week as investors fretted that the U.K. will exit the European Union,
which many fear would trigger turmoil in global financial markets and severely impact the economy. The
Eurofirst 300 closed down 2.19% to 1,280.11.
Volkswagen unveiled ambitious plans Thursday to introduce more than 30 electric-powered cars over
the next decade as well as step up development of battery technology, self-driving cars and digital
Schroders Weekly market watch
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mobility services as the German automaker seeks to boost profitability and get past last year’s
emissions-cheating scandal.
Spanish fashion retailer Inditex on Wednesday posted better-than-expected earnings for the first
quarter, defying the terror attacks, currency fluctuations and poor weather that have squeezed the
profits of its competitors. The owner of Zara and Massimo Dutti said its net profit for the quarter ended
April 30 rose to EUR554 million from a year-ago EUR521 million, as sales rose 12% to EUR4.88 billion.
HSBC said Thursday it had agreed to pay $1.58 billion to settle a 14-year lawsuit involving shareholders
of U.S. sub-prime lender Household International, which HSBC bought in 2003 and renamed HSBC
Finance. The shareholders had accused Household International executives of engaging in misleading
mortgage-lending practices.
Swiss electronic components distributor Daetwyler Holding said Tuesday it had agreed to buy Premier
Farnell, the British maker of the Raspberry Pi minicomputer, for GBP615 million.
Finnish telecoms company Nokia will supply China Mobile with infrastructure and equipment to operate
a flexible cloud network under a EUR1.36 billion framework agreement announced Monday.
Japan
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Japanese stocks fell last week after the Bank of Japan’s decision to keep monetary policy steady sent
the yen higher, eroding support for exporters, while growing concerns ahead of the U.K. referendum on
staying in the European Union weighed on sentiment. The Nikkei 225 fell 6.03% to 15,599.66.
Mitsubishi Motors said Friday it would pay a total of more than $600 million in compensation to owners
of mini vehicles affected by the fuel economy scandal. Each owner would receive nearly $1,000 as part
of reimbursement costs stemming from Mitsubishi’s admissions that it had used improper mileage tests.
Japanese auto parts companies Tokai Kogyo and Maruyasu Industries and their U.S. subsidiaries have
been charged with price-fixing, the U.S. Department of Justice said Wednesday. Five executives were
also charged over their alleged involvement in the international conspiracy to rig bids and fix prices of
sealing products and steel tubes.
Nippon Paper Industries on Wednesday agreed to pay $285 million in cash for the liquids packaging
board business of U.S. timber company Weyerhaeuser, which plans to use most of the after-tax
proceeds to reduce its debt level.
Asia-Pacific (ex. Japan)
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Chinese stocks declined last week after MSCI decided not to add mainland shares to one of its
benchmark indexes while data showing a sharp slowdown in private investment last month fuelled
concerns about the strength of the economy. The Shanghai Composite Index closed at 2,885.04 for a
weekly loss of 1.44%.
Hong Kong stocks slumped last week, tracking losses in global markets as anxiety over the possibility of
the U.K. exiting the European Union sparked a stampede into safe-haven investments. The Hang Seng
Index fell 4.15% to 20,169.98.
Taiwanese stocks fell last week as investors braced themselves for export data and the U.K. vote on
whether to quit the European Union. The Taiex closed at 8,568.08 for a weekly loss of 1.69%.
Brexit fears also weighed on South Korean stocks last week as investors focused on the potential
impact on the global economy if the U.K. were to cut ties with the European Union. The KOSPI tumbled
3.18% to 1,953.40.
Singapore stocks were caught up in the global sell-off last week as investors reduced their exposure to
risky assets ahead of the U.K. referendum on its membership in the European Union. The Straits Times
Index fell 2.11% to 2,763.42.
Emerging Markets
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3
Brazilian stocks posted modest gains last week, defying the gloom in global markets, as investors went
bargain hunting following the recent sell-off on the benchmark index. The Bovespa closed at 49,533.84
for a weekly gain of 0.23%.
Mexican stocks rose on Friday, extending gains over the week, on the back of a rebound in oil prices
and speculation that the murder of a pro-European Union politician in Britain could boost support for the
U.K. Remain camp ahead of the June 23 referendum. The IPC rose 0.28% to 45,306.22.
Indian stocks were almost unchanged over the week as investors traded cautiously ahead of the Brexit
vote, while uncertainty over the timing of U.S. interest rate hikes also kept many on the sidelines. The
BSE 30 fell 0.04% to 26,625.91.
Schroders Weekly market watch
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Russian stocks fell last week as lower crude oil prices, the country’s main export earner, and uncertainty
over the U.K. vote on whether to remain in the European Union eroded investor confidence. The dollardenominated RTSI closed at 910.28 for a drop of 1.55%
ALTERNATIVE ASSETS
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U.S. crude oil prices retreated last week, dragged down by signs U.S. producers are ramping up output
in response to the recent rally and fears British voters will decide to leave the European Union,
triggering global financial and economic turmoil. The July contract for West Texas Intermediate, a
benchmark for U.S. oils, fell 2.22% over the week to settle at $47.98 a barrel in New York. August Brent
crude, a yardstick for most international oils, declined 2.71% to $49.17 a barrel in London.
Gold prices rose last week as investors sought shelter in safe-haven assets after several surveys
showed growing support for the campaign pushing for the U.K. to leave the European Union. Reduced
expectations for a U.S. interest rate hike any time soon also increased the allure of bullion. Gold for
August delivery rose 1.48% to $1,294.80.
FIXED INCOME
US
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4
The yield on benchmark 10-year Treasuries closed at 1.6180% on Friday, down from the previous
week’s finish of 1.6390%, as investors sought shelter in safe-haven assets ahead of the U.K.
referendum on its membership in the European Union.
Although Federal Reserve officials at large continued to project two 2016 interest rate hikes on
Wednesday, Chairman Janet Yellen left plenty of doubt as to how soon even one of those moves might
come. A 25 basis point increase in the federal funds rate was "possible" at the late July meeting of the
Fed's policymaking Federal Open Market Committee, she said, after reiterating that every meeting was
"live." But the bar for a July 27 hike is fairly high, judging from the concerns Yellen expressed about the
"loss of momentum" in the labor market and her reassertion of the need to "proceed cautiously" as she
spoke to reporters after the FOMC left the funds rate in a 25-to-50 basis point target range.
"Uncertainty" and a "careful approach" were recurring themes throughout her news conference,
seemingly indicating a lack of eagerness to take the next step in "normalizing" the funds rate, which has
been unchanged since the FOMC first raised it in December after seven years near zero. The Fed chief
left no doubt that she and her colleagues were taken aback by the surprisingly weak May employment
report, which showed non-farm payrolls growing a mere 38,000 and prior months' payrolls being revised
down by 59,000, even though other data point to a sizable second quarter GDP rebound. Uncertainty
about the U.K.’s June 23 vote on leaving the European Union also "factored" into Wednesday's decision
to stay on hold for now, she indicated.
The U.S. May retail sales data released by the Commerce Department on Tuesday showed a healthy
economy. Retail sales gained 0.5% last month, while sales ex-autos were up 0.4% and ex-motor
vehicles and gas rose 0.3%, a little better than expected. Core sales gained 0.4%. March-to-April sales
levels also were revised slightly higher. Sales were led higher by a 2.1% surge in gas sales on higher
pricing, a 1.3% jump in sporting goods and a 1.3% gain in non-store sales. They would have been
higher if not for a 1.8% decline in building materials and a 0.1% dip in furniture sales. Core sales
appeared strong, with food up 0.5%, healthcare up 0.6% and clothing up 0.8% in its best gain since
November. Motor vehicle and parts sales rose 0.5%. The spring surge in retail sales came after a slow
first quarter and despite a poor May jobs report. Total sales were up 2.5% over the year.
The consumer price index rose 0.2% in May, propelled by the biggest jump in shelter costs since early
2007, the Bureau of Labor Statistics reported Thursday. Without counting the shelter category, however,
the CPI would have been up just 0.1% after the food index declined across all its major categories.
Without food and energy, the core rate also rose 0.2% for the month, and this year is running at an
annualized seasonally adjusted rate of 2.5%. Energy rose 1.2% as expected, with petrol up 2.3%, the
third monthly increase in a row, but hardly denting petrol's accumulated drop of 16.9% over the 12
months through May.
The Federal Reserve reported Wednesday U.S. industrial production fell 0.4% in May, with April revised
down to a 0.6% increase from the previous estimate of 0.7%. Manufacturing was down 0.4% and 0.1%
year over year, led by a sharp 4.2% drop in motor vehicles and parts. Manufacturing ex-motor vehicles
was down 0.1%. Capacity utilization slipped 0.4 of a point in May to 74.9% from a revised 75.3% in April.
Schroders Weekly market watch
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It's now 5.1 points below its long-run average. In manufacturing, output of durable goods was off 0.7%
while non-durables was flat. Mining was up 0.2% after eight months of declines.
Initial claims for U.S. state unemployment benefits rose 13,000, more than expected, to a level of
277,000 in the June 11 week, data released by the Labor Department on Thursday showed.
Expectations for the week's data, which turned out to be the highest in five weeks, were for an adjusted
claims level of 270,000, which would have been up 6,000 from the previous week's unrevised 264,000
level. The latest seasonally adjusted four-week moving average slipped 250 from the previous week's
average of 269,500. The level of continuing claims for the June 4 week increased 45,000 to 2.16 million
and the May 28 week was revised up 17,000 to 2.11 million.
UK
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5
The yield on 10-year Gilts fell to 1.1450% on Friday, compared with the previous week’s close of
1.2350%, as investors worried about the U.K. vote on whether to leave the European Union snapped up
government bonds.
The Bank of England’s Monetary Policy Committee voted unanimously to leave policy unchanged at its
June meeting but said it would face a tricky policy trade-off if the country voted to leave the European
Union on June 23. The minutes of the MPC's meeting, released Thursday, said a vote to leave would
likely push down growth and drive up inflation, and it would then face a trade-off between stabilizing
growth or unemployment. The committee said the sterling was likely to fall, perhaps sharply, on Brexit
while both supply and demand in the economy would be hit. Recent opinion polls have suggested that
the warnings of economic experts on the costs of Brexit have fallen on deaf ears, with the Leave camp
ahead of the Remain campaign in polls. If the country votes to stay in the EU it is more likely than not
that the Bank Rate would head higher, albeit gradually, the MPC agreed. The committee members
stuck to the line that they would take whatever action was needed to ensure inflation expectations
remained well anchored and that inflation would return to the target. The MPC said a vote for Brexit was
the number one risk to U.K. – and perhaps global – financial stability.
The U.K. unemployment rate dropped to its lowest level in more than a decade, as earnings growth
confounded expectations to accelerate modestly, lifted partially by the introduction of the National Living
Wage in April, data released by the Office for National Statistics showed Wednesday. Joblessness, as
measured by the Labour Force Survey, fell to 5.0% in the three months to April, below expectations of
5.1% and the 5.1% level in the three months to February. That's the lowest rate of unemployment since
August to October of 2005. Employment rose by 55,000 to 31.59 million, just below the market’s
forecast of a 60,000 increase, while unemployment fell by 20,000 in the three months to April to 1.67
million. Wage growth accelerated in the month of April, boosted by the introduction of the National
Living Wage, taking earnings for the three months to April above expectations. Wage growth was
particularly pronounced in the retail sector, according to a National Statistics official. Regular earnings,
which exclude bonuses, improved, running at an annual pace of 2.3% in the three months to April,
above expectations of a 2.1% gain and up from 2.2% in the previous period. The improvement follows
decelerating wage growth in the previous seven three-month periods. Regular earnings rose by an
annual rate of 2.5% in the single month of April.
Retail activity increased across the board in May, while strong sales in April were revised significantly
higher, the Office for National Statistics said Thursday. Sales volumes jumped by 0.9% between April
and May, well ahead of estimates of a 0.3% gain. On an annual basis, retail sales surged by 6.0%,
topping expectations of a 4.0% improvement. Clothing and footwear, which account for 12.5% of total
volume, surged by 4.3% in May, possibly due to warmer weather, according to a National Statistics
official. Sales increased in all major sectors, with the exception of other stores, which fell by 2.7%. Sales
over the month of April were revised sharply higher to show a 1.9% gain for a 5.2% annual rise,
stronger than the originally reported 1.3% monthly increase and 4.3% year-on-year rise.
Consumer price inflation steadied in May, while core inflation was also unchanged, official data showed
Tuesday. The consumer price index rose by an annual rate of 0.3% last month, falling short of
expectations of 0.4%, after rising by 0.3% in April. The annual outturn also fell short of the Bank of
England staff forecast for May, up 0.4%, as reported in the May Quarterly Inflation Report. Transport
prices fell by 1.0% in the year to May, a smaller decline than in the year to April, meaning the sector
added 0.05 percentage point to the change in annual CPI. That was balanced by a 0.4% fall in clothing
and footwear prices, which translated into a 0.05 percentage point decline in the change in annual CPI.
Stripping out food and energy, annual core inflation steadied at 1.2% in May, below expectations of a
1.3% rise and unchanged from the 1.2% pace recorded in April.
U.K. house price inflation eased slightly in April in the wake of an increase in stamp duty on buy-to-let
and second-home purchases that took effect from April 1, according to data released by the Office for
National Statistics on Tuesday. The series is produced jointly with the Land Registry, and replaces
Schroders Weekly market watch
indices previously released separately by the two agencies. The new house price index rose by 8.2% in
the year to April, decelerating from the 8.5% annual pace recorded in March. The March outturn was the
highest since October of 2014, and was most likely elevated by tax changes announced in the Autumn
Statement last year. Under the old series, national house prices showed a 9.0% annual increase in
March.
Europe (ex. UK)
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6
The yield on benchmark 10-year Bunds dropped to 0.0180% on Friday from the previous week’s close
of 0.0210%, as investors braced for a possible Brexit after more polls pointed to growing support for the
Leave camp.
Eurozone industrial production rebounded firmly at the start of the second quarter, according to initial
figures published Tuesday by Eurostat, as stronger-than-expected activity around the region's core
helped snap a two-month streak of declines. Industrial output in April rose 1.1% on the month, Eurostat
said, well ahead of expectations of 0.8% and up from the final March reading of a 0.7% decline (revised
from -0.8%). When compared to April 2015, production advanced by 2.0%, Eurostat said, again ahead
of the 1.5% figure anticipated by analysts. Eurozone durable consumer goods production led the April
advance, Eurostat said, rising by 2.3%. Gains were also recorded in capital goods production, 1.9%,
non-durable consumer goods, 1.6%, intermediate goods, 0.4%, and energy production, 0.4%, Eurostat
said. The broader Eurozone reading follows stronger-than-expected figures from the region's largest
economies that continue to point to modest, if not spectacular, second quarter GDP growth.
France’s economy is set to grow by 1.6% this year, the fastest pace since 2011, the national statistics
institute Insee said Thursday in its quarterly economic outlook. GDP growth, which measured 1.2% in
2015, will continue to be driven by low oil prices and rock-bottom interest rates, which are fueling gains
in consumer spending and business investment, Insee said. "Although (oil) prices have rebounded
recently, a barrel of oil at mid-2016 remains roughly half as expensive as at mid-2014," Insee said. "It's
past decline is contributing to still very weak inflation, which is stimulating household purchasing power,"
it said. French inflation should average 0.3% over the course of the year, up from 0.0% last year.
France's EU-harmonized inflation rate returned to positive territory for the first time in four months in
May, according to the final estimate released by the national statistics institute Insee on Wednesday.
HICP consumer prices rose by 0.1% on the year in May, up from a flash estimate of 0.0% and a 0.1%
decline in April, Insee said. The final May increase was above the 0.0% median forecast among
economists. Prices rose by a revised 0.5% on the month, up from a flash estimate of 0.3%, Insee said.
Excluding volatile items like food and energy, core consumer prices rose at an annual rate of 0.7% in
May compared with a 0.6% increase in April, Insee said. Prices turned positive in May as energy prices
fell at an annual rate of 5.7%, less than the 6.8% drop in April, and food prices rose by 1.0%, more than
double the 0.4% April increase, driven by a 5.8% rise in the cost of fresh produce. In other categories,
prices of manufactured goods fell by 0.6% in May, matching a 0.6% April drop, while the cost of
services rose by 1.0%, also matching a 1.0% gain in April.
European Central Bank President Mario Draghi stressed Friday that Europe needed to work harder to
build trust among and between its states and its citizens. In prepared remarks for a speech in Munich to
honor the German politician and former Finance Minister Theodor Waigel, Draghi said that the region's
states and institutions needed to push the case – and the benefits – of further integration more clearly
and more effectively. "We have seen that the price of inaction is high. We have seen how it leaves the
economy vulnerable to instability," Draghi said. "We have seen how the perceived impotence of public
authorities in meeting the needs of their people feeds into frustration and rejection." He added: "And we
have seen how that risks undermining trust in and support for our institutions – and even the European
Union itself." Draghi’s remarks came just one week ahead of a key referendum in Britain that will
determine the country's future in the EU. Draghi said the region's economic, financial and security
needs could be more effectively met within a strong, cohesive Union. "I think that in many cases the
evidence is already there for all to see," Draghi said. "But to move forward, and I believe it is in our
interests to do so, will require us to draw on the qualities that made Theo Waigel a leader,” he added.
The European Central Bank said Tuesday that its ultra-low interest rates had boosted households'
interest income in Spain while weighing on that of Italian households. Overall, low interest rates have
had a positive impact on demand in the currency union, helping along the recovery that is needed so
interest rates can eventually rise again, the ECB said in an article in its Economic Bulletin. "The net
interest income of the household sector has remained fairly stable in Germany and France, but less so
in Italy and Spain," according to a study on low interest rates and households' net interest income. In
Germany and France, the drop in interest earnings and payments largely cancelled out each other so
that low rates had a "minimal effect" on the net interest income of the household sector as a whole, the
Schroders Weekly market watch
report said. In Italy, the drop in household interest earnings is more than twice as large as the drop in
household interest payments.
Japan
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The yield on 10-year Japanese government bonds sank deeper into negative territory, falling to 0.1480% from the previous week’s finish of -0.1470%, as concerns about the fragile Japanese economy
and uncertainty over the Brexit vote increased the appeal of fixed-income assets.
Japan's economy remained on a "moderate recovery" track with soft spots but the pace of record
corporate profits brought on by the weak yen was slowing and inflation was weaker, the government
said in its monthly economic report released Friday. While keeping its overall economic assessment, the
government downgraded its view on corporate profits for the second straight month and noted the
inflation rate was falling, the first downward revision since November 2014. Consumer spending, factory
output and exports all remained flat, it said.
The Bank of Japan board on Thursday decided by a majority vote to continue its massive asset
purchases and charge 0.1% interest on a small portion of cash parked by lenders while keeping its
optimism that inflation will rise towards its target of 2% after a recent slump. In the short term, the BOJ
downgraded its view, saying: "The year-on-year rate of increase in the CPI is likely to be slightly
negative or about zero percent for the time being, due to the effects of the decline in energy prices."
Previously it said it would be around zero. But it added that "as the underlying trend in inflation steadily
rises," the core inflation measure – which excludes volatile fresh food prices – was likely to "accelerate
towards 2%."
Bank of Japan Governor Haruhiko Kuroda on Thursday vowed to defend a fragile economic recovery
and a bumpy road towards the bank's 2% inflation target with more monetary easing should the
economy be hit by a drastic yen rise which would hurt exporter profits and overall sentiment. Kuroda
also told reporters after the bank's two-day policy meeting that he still believed the bank could guide
zero inflation to 2% in fiscal 2017, its latest and often-delayed timeframe. To this effect, he said: "We will
examine risks to economic activity and prices at every policy meeting and take additional easing
measures in terms of three dimensions – quantity, quality and the interest rate – if we judge them
necessary for achieving the price stability target."
Source: Market News International
The information is based on management forecasts and reflects prevailing conditions and our views as of this date, all of which are accordingly
subject to change. In preparing this document, we have relied upon and assumed, without independent verification, the accuracy and
completeness of all information available from public sources or which was provided to us by or on behalf of the potential investor or which was
otherwise reviewed by us. No responsibility can be accepted for errors of fact or opinion.
Past performance and any forecasts are not necessarily a guide to future or likely performance. You should remember that the value of
investments can go down as well as up and is not guaranteed. Exchange rate changes may cause the value of the overseas investments to rise or
fall.
The information contained in this document is provided for information purpose only and does not constitute any solicitation and offering of
investment products. Potential investors should be aware that such investments involve market risk and should be regarded as long-term
investments.
Derivatives carry a high degree of risk and should only be considered by sophisticated investors.
The investments mentioned in this document may not be suitable to all investors. The information contained in this document is provided for
reference only and does not constitute any investment advice. Investors are advised to seek independent advice before making any investment
decision. Past performance is not indicative of future performance. Investment involves risk and investors may not get back the amount originally
invested. Please read the relevant offering document carefully, in particular fund features and the risks involved in investing in the fund.
Schroder Investment Management (Hong Kong) Limited is regulated by the SFC. Non-Hong Kong residents are responsible for observing all
applicable laws and regulations of their relevant jurisdictions before proceeding to access the information contained herein.
The document has not been reviewed by the SFC and may contain information of non-SFC authorized funds. Issued by Schroder Investment
Management (Hong Kong) Limited.
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