Malaysia

• Higher Fuel Prices Lift June Consumer Price Inflation. Consumer price inflation continued to increase as expected in June, to 2.5% YoY from 2.1% in May. The increase was mostly due to higher transport costs following an upwards adjustment to government-regulated fuel prices and cost pass-through from the April implementation of the Goods and Services Tax (GST). June Headline inflation was between consensus expectations of a 2.4% YoY increase and the house estimate of 2.6%. The two main categories of Food & Non-Alcoholic Beverages and Housing, Water, Electricity, Gas & Other Fuels were up 3.4% and 2.5% YoY respectively. (See Economic Viewpoint)

Asia

• China GDP Growth Beats Economists’ Forecast. China’s economic growth proved resilient in the second quarter as the central bank accelerated monetary easing. Gross domestic product rose 7% in the three months through June from a year earlier, the National Bureau of Statistics said Wednesday, unchanged from the first quarter and beating economists’ estimates for 6.8%. Industrial output in June rose 6.8%, while fixed-asset investment increased 11.4% in the first half. Services expanded 8.4% in the first half, the NBS said, while secondary industry including industrial production and mining grew 6.1% and agriculture 3.5%. (Bloomberg) 
• Bank of Japan Keeps Record Stimulus, Trims Inflation Outlook. The Bank of Japan refrained from increasing its monetary stimulus as officials count on the economy shaking off recent weakness and inflation picking up toward its target. The central bank will continue to expand the monetary base at an annual pace of 80 trillion yen ($648 billion). It lowered its inflation projection for the fiscal year through March 2016 to 0.7% from 0.8% and forecast 1.9% for the following year. (Bloomberg) 
• Indonesia's Trade Surplus Narrows in June, Raises Growth Concerns. Indonesia's trade surplus narrowed to $477 million in June, with weak imports and exports underscoring concerns over weakening growth in Southeast Asia's largest economy. June exports were down 12.78% from a year ago reflecting a near-50% drop in oil and gas shipments as prices slumped globally. Indonesia's annual economic growth was 4.7% in the first quarter, the weakest since 2009. (Reuters) 
• China Oil Demand Rises in June, Car Sales Slump May Cap Growth. China's implied oil demand grew 3.5% in June, as rising air travel and vehicle usage boosted fuel consumption. Demand growth, however, may weaken after China's automakers association cut its 2015 forecast for vehicle sales growth to a meager 3% last week as a major slump in the stock market depressed sales to consumers already concerned about the slowing economy. The IEA's latest forecast for Chinese demand growth in 2015 is 3.2%, with gasoline, jet fuel and liquefied petroleum gas (LPG) leading the gains. (Reuters) 
• China State Revenue Jumps in June, Aided by Property Taxes. China said government revenue in June was 13.9% higher than a year earlier, and this supported a spike in state spending. The Finance Ministry said on Wednesday that June revenue hit 1.53 trillion yuan ($246.5 billion) after the biggest annual percentage rise this year. May's total was 1.44 trillion yuan, only 5% above the year-earlier level. The big rise in June was a result of companies paying more taxes on the back of stronger earnings, as well as a tentative improvement in the housing market. (Reuters) 
• Vietnam ran $140 Million Trade Deficit in June. Vietnam posted a trade deficit of $140 million in June, putting the deficit far low than the $700 million estimated by the government. June's exports were up 4.6% from a month ago at $14.3 billion, while imports fell 3.2% from May to $14.46 billion. Vietnam ran a trade deficit of $3.07 billion for the first half of 2015. (Reuters)

• Yellen Defends Fed Policies from Critical House Lawmakers. Federal Reserve Chair Janet Yellen said Wednesday she is encouraged by signs that the economy is reviving after a brutal winter. And if the improvements stay on track, the Fed will likely start raising interest rates later this year. Interest rates will remain at very low levels "for quite some time after the first increase". She also noted solid gains in consumer spending, auto sales and home construction. At the same time, Yellen described business investment and export sales as weak. (AP) 
• U.S. Producer Inflation Firming; Industrial Output Rises. U.S. producer prices increased more than expected in June as the cost of gasoline and a range of other goods rose. Other data showed a rebound in industrial production last month and a pick-up in factory activity in New York state in July. Industrial output rose 0.3% in June, the largest increase in seven months. The signs of stabilizing manufacturing and firming inflation came as Federal Reserve Chair Janet Yellen said the Fed remained on track to hike interest rates this year. (Reuters)

Source: Kenanga Research - 16 Jul 2015