Forex Investment and Currency Trading

China Ministry of Commerce forecast full year export growth at 10% and trade balance below $200 bn, lower than expectation. As exports grew by 21.4% in 1Q08, this latest forecast implied the assumption of drastic slowdown of exports in the rest of 2008 from 30% averaged yoy quarterly growth in the last five years to below 10% growth, which seems to be over pessimistic. Going ahead, this highlights that the government’s policy priority will likely switch toward cushioning the economic
slowdown rather than stemming overheating risks. Meanwhile, April CPI, likely due next week, is expected to moderate to around 8% from [...]

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South Africa Private sector credit growth unexpectedly rose by 22.6% yoy in March after 20.8%, well above market expectations for 20.5%. M3 money supply also rose to 21.0% yoy from downward revised 20.9% (consensus 20.7%). Following SARB Governor’s recent hawkish comments, an emergency rate hike cannot be ruled out given the sharp deterioration in inflation development. Market sees a 50bp rate hike likely in the run up to the prescheduled June 12 meeting, unless the ZAR recovers strongly – a function of improved international market sentiment.
Hungary March PPI was on the strong side of expectations, advancing to 5.7% yoy after 4.9% [...]

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Hungary Retail sales were slightly better than expectations, however remained in red at -2.5% yoy in February after -3.0% in January. In the breakdown, sales declined across the board on a year-on-year basis. In particular, food sales posted -0.8% yoy after -2.4%, while non-food sales registered at -4.0% yoy after -3.5%. As the NBH is a concerned about inflation risks, tight monetary policy suggests a delay to recovery in the Hungarian economy. Two additional 25-bp rate hikes are expected in April and May before the NBH goes on hold. The scope for rate cuts may resume in the final months of [...]

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China The China Securities Regulatory Commission (CSRC) announced on Sunday measures that will limit the influx of shares into the stock market after a lock-up period expires. The stock market regulator ordered shareholders of listed firms to transfer the large amount of previously non-tradable shares into a separate block trading system. The non-tradable shares that are due to be freed after the locked-in period are estimated to reach CNY3 trillion in 2008, and the sheer size of these potential inflow of new shares have depressed investment sentiment and partly led to the nearly 50% decline in the Shanghai Composite Index [...]

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