Fundamental Analysis (Part 4) - Asian FiguresReading Time: 8 Min Experience Level:Beginner
Asian Figures
China Trade Balance
This figure indicates the difference between the imported and exported goods and services over the reported period. If more goods and services were exported, the number will be positive, and the opposite is correct. A number higher than expected is taken as a positive sign for the Chinese Yuan (CNY), while the opposite is a negative sign.
This figure is crucial for China’s economy as it is the world’s largest exporter of goods and one of the economic pillars.
The Chinese government even continuously attempts to devalue its
currency to make its manufactured goods more attractive.
China has almost always relied on a trade surplus as it displays demand
on their highly competitive and cheap manufactured goods. A rising surplus
indicates increased demand for Chinese goods, thus boosting the Yuan and vice
versa.
China Exports (Year-on-Year)
This term refers to the number of exported goods and services
from residents of the country to non-residents. A number higher than forecast
is usually taken as a positive sign for the Yuan, while the opposite is taken
as a negative sign for the currency.
China Imports (Year-on-Year)
Chinese Imports measure all goods and services brought into
the country from another country in a legitimate fashion, typically for the use
in trade. Foreign producers provide imported goods and services to domestic
consumers. A number lower than expected is usually taken as a positive sign, and
the opposite is true.
China’s Official Manufacturing Purchasing Managers Index (PMI)
This index, commonly referred to as PMI for short, is designed to give a sign about the economic activities in the Chinese manufacturing sector. The data is collected and displayed by the National Bureau of Statistics (NBS) and presented by the China Logistics Information Centre (CLIC) and the China Federation of Logistics and Purchasing (CFLP).
The Purchasing Managers Index is an indicator of economic health or conditions of the manufacturing sector. It is comprised of five major indicators, which include employment conditions and environment, deliveries of suppliers, production, inventory levels, and new orders.
This data compiles the responses of 700 manufacturing
enterprises all over China on a monthly basis, considering their supply
situation and purchasing activities.
This PMI is highly regarded by central bankers when used in
decision-making. A number higher than expected is usually taken as a positive
sign for the Yuan, while the opposite is taken as a negative sign.
China Non-Manufacturing (Services) Purchasing Managers Index (PMI)
This non-manufacturing PMI gives an early indication on the sector’s economic activities each month.
Similar to the manufacturing PMI, the data is collected and displayed by the National Bureau of Statistics (NBS) and presented by the China Logistics Information Centre (CLIC) and the China Federation of Logistics and Purchasing (CFLP).
It is also comprised of the responses of 700 non-manufacturing
enterprises all over China on a monthly basis, considering their supply
situation and purchasing activities.
China Caixin Manufacturing Purchasing Managers Index (PMI)
This Chinese manufacturing PMI delivers a holistic view of the sector’s activity, acting as a leading indicator for the whole economy. When the PMI reading is higher than 50.0, this means that the manufacturing economy is expanding, while the opposite means that the economy is declining.
Flash figures are released approximately six business days
before the end of the month, prior to releasing a final reading revising the
data for the same month.
In contrast with the official PMI releases, the Caixin PMI is
concentrated on smaller private firms and is concluded from a monthly survey of
about 430 purchasing managers. These surveys revolve around rating business
conditions, including inventories, new orders, supplier deliveries, production,
prices, and employment.
China Caixin Services Purchasing Managers Index (PMI)
This index is designed to track multiple variables in the services
sector, such as prices, inventories, and employment. It surveys over 400
private service sector companies’ purchasing executives, who are carefully
chosen to accurately replicate the true structure of the services economy.
China Industrial Production (Year-on-Year)
This indicator measures the change in the value of manufacturers, miners, and utilities in the economy’s output, after being adjusted for inflation.
Factory output in China is the most important industry and the major pillar of its economy.
The monthly releases provide continuous insight into how the
economy is handling
production, costs, and supplies.
The Bank of Japan (BoJ) Interest Rate Decision
The Bank of Japan holds eight meetings per year to decide on
the Monetary Policy
and update its inflation and interest rate expectations.
Japan Household Spending (Month-on-Month)
This indicator gauges the change in the value of all expenses
by consumers after inflation adjustments. A number higher than expected is
usually taken as a positive sign for the Japanese Yen, while the opposite is
taken negatively.
The monthly release shows a year-on-year and monthly change
in household spending. The indicator’s impact reflects directly on the Japanese
yen.
Bank of Japan’s Tankan Large Manufacturers Index
The Bank of Japan’s Tankan Large Manufacturers Index,
officially known as the short-term economic observation survey, is a
statistical survey conducted by the Bank of Japan based on the Statistical Law,
and it aims to accurately show corporate trends throughout the country and to
contribute to the appropriate management of Monetary Policy. The index is
comprised of about 10,000 companies across the country quarterly.
This index affects stock prices and currency rates
considerably and is taken as a key financial indicator. This index is
considered a prominent measure of economic growth.
Japan National Core Consumer Price Index (CPI) (Year-on-Year)
The CPI measures the change in the price of goods and
services purchased by consumers, excluding fresh food.
A stable price level with inflation of around 2% is desired
in all economies, but in the case of the Japanese economy, that has not been
the case for almost three decades. The deflation problem Japan has been facing
means that inflation numbers are read differently than most other nations.
A decline in the price level has had a severe dampening
impact on the Japanese economy, and the Bank of Japan has struggled to get
level back into appropriate territories.
Therefore, the CPI release is one of the most closely watched
indicators in the Japanese economy.
