Malaysia

The 4Q13 GDP Gained 5.1% YoY, slightly stronger than the previous quarter’s 5.0%. Though this beats the market estimate of 4.8%, it is below our own expectation of 5.6%. The main reason behind the slower that expected pace is by part the result in a moderation in aggregate demand (4Q13: 6.4% vs 3Q13: 8.1%), due to a trimming down of public investment and consumption. In addition to that, fiscal consolidation in the form of subsidy rationalization is partly responsible for the moderate growth in private consumption. On the flip side, we can see that global economic recovery especially that of the G10 countries improved exports further. The manufacturing and services sectors also contributed significantly to overall growth. Compared to the previous quarter, 4Q13 GDP expanded by 2.9% QoQ (3Q13: 3.9%) though the QoQ seasonally adjusted basis posted a 2.1% growth from 1.7% in the 3Q13. For the whole of 2013, GDP grew by 4.7% compared to 5.6% in 2012, which is a smidgen lower than our full-year estimate of 4.8%. (Please refer to Economic Viewpoint for further comments)

The Current Account Balance Surplus Widened To RM16.2b in the 4Q13 from RM9.8b in the preceding quarter. As a result, its share of Gross National Income (GNI) increased to 6.4% from 4.1% previously. The wider surplus is the result of a higher surplus in the goods accounts, which widened to RM33.6b from RM25.8b in the 3Q13 and a lower deficit from the services account (4Q13: -RM3.7b, 3Q13: -RM4.3b). In detail, it can be seen that under the good account, exports increased to RM182.4b from RM175.9b in the 3Q13, which mirrors the 2.9% increase (3Q14: 1.7%) in the exports component of the GDP. The biggest chunk of shipment went to China, Singapore and Japan, exporting E&E goods, palm oil & its products and LNG. Imports however, moderated slightly, recording RM148.8b in the 4Q13, compared to RM150.1b previously. This is due to slightly lesser imports of intermediate goods. (Please refer to Economic Viewpoint for further comments)

Asia

Record Tumble In Japan Machinery Orders Casts Doubt On Abenomics. Japan's core machinery orders suffered their steepest fall on record in December, a worrying sign that the manufacturing sector is not doing the heavy lifting required for a durable recovery in the world's third-biggest economy. The 15.7% slump in orders, a leading indicator of capital expenditure, was much worse than a projected 4.1% decline and was the largest in comparable data available from fiscal year 2005. The data could fuel scepticism of Prime Minister Shinzo Abe's reflationary policies, known as Abenomics, which has combined a massive injection of fiscal and monetary stimulus to pull the economy out of a decades-long slump. (Reuters)

China Trade Surplus Jumps To $32bn. China's trade surplus jumped to $31.9bn in January, easing concerns the world's second-largest economy may be stuck in a slowdown. The figure was up 14% from a year earlier and stronger than forecasts for a $23.7bn surplus. Imports rose by 10% from a year earlier to $175.27bn - led by record shipments of crude oil, iron ore and copper. Exports increased by 10.6% from a year earlier, far faster than analysts' forecasts, to $207.13bn. The positive trade figures also add to expectations China will overtake the US as the world's largest trading nation this year. (BBC)

India Consumer Inflation, Factory Output Fall After Rate Rises. India’s consumer-price growth eased more than analysts estimated in January and factory output fell in December following an increase in interest rates as central bank Governor Raghuram Rajan fights Asia’s fastest inflation. The consumer-price index rose 8.79 % from a year earlier, compared with 9.87 % in December, the Statistics Ministry said in New Delhi yesterday. The median estimate in a Bloomberg News survey of 37 analysts was 9.2 %. The latest rate was the lowest since January 2012. Rajan pledged to fight inflation and preserve the value of the rupee when he boosted borrowing costs last month along with nations from Brazil to Turkey as the U.S. reduced monetary stimulus. Higher rates have taken a toll on consumer demand, with another report yesterday showing industrial output shrank 0.6 % in December. (Bloomberg)

USA

Budget Deficit In U.S. Shrinks Oct.-Jan. on Rise in Revenue. The U.S. budget deficit narrowed by 37 % in the first four months of the fiscal year compared with a year earlier as spending declined and a stronger economy helped increase revenue. Outlays exceeded receipts by $184 billion from October through January compared with a $290.4 billion shortfall in the same period a year earlier, the Treasury Department said today in Washington. Last month’s deficit was $10.4 billion, compared with a $2.9 billion surplus in January 2013. (Bloomberg)

Europe

Mark Carney Adjusts Bank Interest Rate Policy. Bank of England governor Mark Carney has overhauled the Bank's interest rate policy to reflect falling unemployment and the economic recovery. He said the Bank's forward guidance policy "is working" and had helped to secure growth. The Bank's rate policy will now be determined not just by unemployment, but by a wider range of indicators. But Mr Carney warned the recovery was not secure and that when rates rose, they would do so only "gradually". (BBC)

Currencies

Dollar Falls Vs. Pound After BOE Boosts GDP View. The dollar fell against the British pound Wednesday after the Bank of England raised its projections for 2014 U.K. growth, but analysts warned that gains against the dollar could be limited as the central bank threw cold water on the prospect of higher yields. The pound jumped to $1.6587 from $1.6450, reaching the highest level since Jan. 23. The ICE dollar index , which tracks the U.S. unit against six other currencies, rose to 80.718 from 80.634 late Tuesday. Meanwhile, the euro fell to $1.3592 from $1.3640 late Tuesday. The Australian dollar was at 90.29 U.S. cents versus 90.38 U.S. cents late Tuesday, giving up earlier gains after the country’s major trade partner -- China -- reported stronger-than-expected exports growth in January. The dollar fell to ¥102.44 from ¥102.64 late Tuesday. (Market Watch)

Commodities

Brent Edges Above $109 On Record China Import Data. Brent crude oil edged above $109 a barrel on Wednesday on data showing Chinese oil imports hit a record high last month, raising hopes of strengthening demand from the world. Brent crude for March delivery was 41 cents higher at $109.09 at 1032 GMT, after closing five cents higher in the previous session. U.S. crude was up 71 cents at $100.66 a barrel, after closing 12 cents lower on Tuesday. (Reuters)

Gold Flat; Technical Momentum, Fed Hopes Seen Supporting. Gold prices ended little changed on Wednesday on profit-taking after rising to a three-month high near $1,300 an ounce underpinned by technical buying and hopes that the Federal Reserve will continue its measured tapering of bond purchases. Spot gold was up 0.2 % to $1,293.55 by 2:58 p.m. EST (1958 GMT), after hitting a three-month high at $1,295.91. Among other precious metals, silver dropped 0.2% to $20.19 an ounce. Platinum was up 1.7 % at $1,404 an ounce, while palladium gained 1.4 % to $724.90 an ounce. (Reuters)