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abc Global Research Chinese exports improve, but fixed asset investment slows and CPI falls below 2% Asian central banks on hold for now, but tightening bias evident, except Thailand New in this issue: momentum heatmaps and indispensable China data dashboard Not quite there With Lunar New Year distortions dropping out of the data, March and April provided the first clean read on economic momentum in Asia. The verdict: no real sign of a bounce. In China, investment slowed further last month and loan growth spluttered. Across the region, exports also disappointed, better data in the West notwithstanding. In Thailand, political turmoil is starting to take a greater toll on growth. But, it’s not all discouraging. In Japan, the initial signs are that the economy is taking the sales tax hike in its stride. Producers appear quite optimistic about a rebound in the coming months. The Bank of Japan also struck a confident note, leading many observers, including us, to push back expectations of further easing. Meanwhile, in Australia, better employment data and robust building approvals also suggest underlying strength. Inflation continues to be subdued across much of Asia. One exception is India, where the CPI ticked up last month. The persistence of price pressures, despite weaker growth, raises the chance of another rate hike by the central bank. With a new administration set to take the reins shortly, however, it may get trickier for the RBI to deliver this. An added risk is that the monsoon this year may deliver below average rainfall, which could put upward pressures on agricultural prices. Central banks in Australia, Korea, Indonesia, and Malaysia held rates in recent weeks. So did the BSP in the Philippines, even if it raised the reserve requirement ratio. In New Zealand, as expected, officials raised the cash rate. Across the region, the various statements had a hawkish tint, hinting at some (gentle) tightening to come in the next several quarters. Thailand, alas, is an exception: with political uncertainty still elevated, and fiscal policy out of commission, another cut may seems likely. Check out our new heatmaps and China dashboard inside! Macro Asian Economics On top of the data Following the flow in Asia 15 May 2014 Frederic Neumann Economist The Hongkong and Shanghai Banking Corporation Limited +852 2822 4556 [email protected] Ronald Man Economist The Hongkong and Shanghai Banking Corporation Limited +852 2996 6743 [email protected] Joseph Incalcaterra Economist The Hongkong and Shanghai Banking Corporation Limited +852 2822 4687 [email protected] Rini Sen Economics Associate Bangalore View HSBC Global Research at: http://www.research.hsbc.com Issuer of report: The Hongkong and Shanghai Banking Corporation Limited Disclaimer & Disclosures This report must be read with the disclosures and the analyst certifications in the Disclosure appendix, and with the Disclaimer, which forms part of i t

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Page 1: 20140515-HSBC-On Top of the Data Following the Flow in Asia[1]

abcGlobal Research

Chinese exports improve, but fixed asset

investment slows and CPI falls below 2%

Asian central banks on hold for now, but tightening bias evident, except Thailand

New in this issue: momentum heatmaps and indispensable China data dashboard

Not quite there With Lunar New Year distortions dropping out of the data,

March and April provided the first clean read on economic

momentum in Asia. The verdict: no real sign of a bounce. In

China, investment slowed further last month and loan growth

spluttered. Across the region, exports also disappointed,

better data in the West notwithstanding. In Thailand, political

turmoil is starting to take a greater toll on growth.

But, it’s not all discouraging. In Japan, the initial signs are that

the economy is taking the sales tax hike in its stride. Producers

appear quite optimistic about a rebound in the coming months.

The Bank of Japan also struck a confident note, leading many

observers, including us, to push back expectations of further

easing. Meanwhile, in Australia, better employment data and

robust building approvals also suggest underlying strength.

Inflation continues to be subdued across much of Asia. One

exception is India, where the CPI ticked up last month. The

persistence of price pressures, despite weaker growth, raises

the chance of another rate hike by the central bank. With a

new administration set to take the reins shortly, however, it

may get trickier for the RBI to deliver this. An added risk is

that the monsoon this year may deliver below average rainfall,

which could put upward pressures on agricultural prices.

Central banks in Australia, Korea, Indonesia, and Malaysia held

rates in recent weeks. So did the BSP in the Philippines, even

if it raised the reserve requirement ratio. In New Zealand, as

expected, officials raised the cash rate. Across the region, the

various statements had a hawkish tint, hinting at some (gentle)

tightening to come in the next several quarters. Thailand, alas,

is an exception: with political uncertainty still elevated, and

fiscal policy out of commission, another cut may seems likely.

Check out our new heatmaps and China dashboard inside!

Macro Asian Economics

On top of the data

Following the flow in Asia

15 May 2014 Frederic Neumann Economist The Hongkong and Shanghai Banking Corporation Limited +852 2822 4556 [email protected]

Ronald Man Economist The Hongkong and Shanghai Banking Corporation Limited +852 2996 6743 [email protected]

Joseph Incalcaterra Economist The Hongkong and Shanghai Banking Corporation Limited +852 2822 4687 [email protected]

Rini Sen Economics Associate Bangalore

View HSBC Global Research at: http://www.research.hsbc.com

Issuer of report: The Hongkong and Shanghai Banking Corporation Limited

Disclaimer & Disclosures This report must be read with the disclosures and the analyst certifications in the Disclosure appendix, and with the Disclaimer, which forms part of it

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What’s New 3

PMI Heatmaps 5

Indicators 11 GDP 12

Industrial Production 13

Exports 14

Consumer Spending 15

Headline CPI 16

Core CPI 17

Asset Prices 18

Money & Credit 19

Rates 20

Foreign Exchange 21

Global indicators 22

G7 Indicators 23

Asia Electronics 24

Asia Major Events 25 Australia 26

China 27

Hong Kong 28

India 29

Indonesia 30

Japan 31

Korea 32

Malaysia 33

New Zealand 34

Philippines 35

Singapore 36

Sri Lanka 37

Taiwan 38

Thailand 39

Vietnam 40

Asia Brief 41

Momentum Heatmaps 42

Best of Asian economics research 44

Disclosure appendix 50

Disclaimer 51

Contents

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What’s New Change in forecast – change in growth bias

Australia BIAS Retail sales, business confidence and export volumes have picked up further, while the labour market is continuing to improveNew Zealand BIAS New Zealand remains on track to post one of the strongest growth rates amongst the OECD economies China BIAS HSBC Manufacturing PMI remained in contraction in April. IP and FAI growth also eased pointing to downside risks to Q2 14 growthHong Kong BIAS Growth is expected to rise 3.6% y-o-y in Q1. However risks tilt to the downside owing to weak exports growth to slowing MainlandIndia BIAS Weak PMIs have increased downside risks to growth in the near term. A strong mandate government would lift medium-term growth biasIndonesia BIAS Monetary tightening is slowing growth as BI intended, and we retain our growth forecast of 5.2% for this year Japan BIAS Real household spending spiked 10.5% m-o-m sa in March, posing upside risks to our 8.7% q-o-q saar estimate in Q1 14 consumptionKorea BIAS Korea adopted the 2008 system of national accounts, which poses upside risks to our 3.2% 2014 GDP forecast on statistical groundsMalaysia BIAS We retain our view for growth forecast of 5.2% for this year. Domestic demand will moderate, but net exports should pick up the slackPhilippines BIAS Inflation rose 4.1% y-o-y in April from 3.9% in March; with output lower this year, prices will likely accelerate in the summer monthsSingapore BIAS Upside risk to growth following better-than-expected factory output and improving PMIsSri Lanka BIAS Upside risk to growth thanks to additional monetary policy stimulus this yearTaiwan BIAS Robust manufacturing and private consumption kept growth at 3.0% y-o-y in Q1, in line with our estimates for the full-yearThailand BIAS Political uncertainty poses downside risks to growth. Although household debt is high, we continue to expect one more cut from the BOTVietnam BIAS The headline PMI Index increased sharply to 53.1 in April from 51.3 in March. Output, new orders, and employment roseSource: HSBC

Data surprises

Australia Trimmed mean CPI increased by +2.6% y-o-y in Q1 (market had +2.9%)New Zealand Employment increased by +3.7% y-o-y in Q1 (market had +3.4% y-o-y)China April FAI growth ytd eased to 17.3% y-o-y (vs. BBG consensus 17.7%)Hong Kong Retail sales value fell 1.3% y-o-y in March vs. Bloomberg expectations of +7.4%India March IIP fell 0.5% y-o-y vs. consensus expectations of -1.5% y-o-y. April CPI came in slightly higher than expected (8.6% y-o-y vs. 8.5% consensus)Indonesia Q1 GDP was weaker than expected. Net trade subtracted more than we thought. Although consumption beat our forecast, investment was sub-trendJapan Real household spending spiked 7.2% y-o-y in March vs. consensus expectations of 2.0%Korea April export growth beat expectations, but the weaker new export orders suggest the strong momentum may be difficult to sustain Malaysia The trade surplus widened more than expected to MYR9.6bn in March. Imports were weaker, while exports were stronger than expectedPhilippines The BSP raised the RRR by 1 ppt to 20%; S&P upgraded the Philippines to BBB ratingSingapore March industrial production rose 12.1% y-o-y (vs. consensus expectation of 6.4%). Mar CPI rose 1.2% y-o-y (vs. 1.1% consensus expectation)Sri Lanka April CPI inflation rose to 4.9% y-o-y, below consensus expectation of 5.0 % y-o-yTaiwan Export orders rose 5.9% y-o-y in March, up from 5.7% in the previous month and consensus expectations of 4.7% Thailand Exports and imports disappointed with 3.1% and 14.2% y-o-y contraction, respectively. Current account surplus surprised on the upside at USD2.9bnVietnam Inflation stayed steady at 4.4% y-o-y in April from 4.4% in MarchSource: Bloomberg, HSBC

Did you know? Time to pay up! Number of hours it takes to prepare and pay taxes (2013)

Source: World Bank, HSBC; NB: Time to prepare and pay taxes is the time, in hours per year, it takes to prepare, file, and pay (or withhold) the corporate income tax, the value added or sales tax, and labor taxes, including payroll taxes and social security contributions.

0

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BR VN MX JA CH IT TH ID IN TU GE SL SA PH KR RU US NZ MA FR CA SW UK AU SI HK

World Av erage= 267

Vietnam = 872

Brazil = 2600

hours per y ear hours per y ear

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PMI Heatmaps

April 2014 Manufacturing PMI

Source: Markit, HSBC. * Whole Economy PMI

PMI not reported

Expanding and stronger

Expanding but weaker

Contracting and weaker

Contracting but improving

China

South Korea

TaiwanIndia

Hong Kong*

Sri Lanka

Vietnam PhilippinesThailand

Indonesia

Malaysia

Singapore

Japan

Australia

New Zealand

India

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Source: Markit, CEIC, HSBC

Apr 14 Mar 14 Feb 14 Apr 14 Mar 14 Feb 14 Apr 14 Mar 14 Feb 14 Apr 14 Mar 14 Feb 14 Apr 14 Mar 14 Feb 14Australia 44.8 47.9 48.6 42.6 49.2 51.5 41.8 52.3 50.0 49.3 39.6 45.5 -7.5 12.8 4.5

New Zealand 58.4 56.5 60.5 59.0 60.5 57.0 51.1 49.4 9.4 7.7

China HSBC 48.1 48.0 48.5 47.9 47.2 48.8 47.4 46.5 48.6 50.7 51.0 50.1 -3.3 -4.5 -1.5

China NBS 50.4 50.3 50.2 52.5 52.7 52.6 51.2 50.6 50.5 47.3 48.3 47.8 3.9 2.3 2.7

India 51.3 51.3 52.5 51.7 52.2 54.0 52.5 52.7 54.9 52.7 51.4 51.4 -0.2 1.3 3.5

Indonesia 51.1 50.1 50.5 49.8 49.8 50.3 52.7 51.2 50.3 49.5 49.8 48.9 3.2 1.4 1.4

Japan 49.4 53.9 55.5 46.2 54.2 58.4 47.4 54.9 56.2 50.0 50.3 50.6 -2.6 4.5 5.6

Korea 50.2 50.4 49.8 49.8 50.4 49.7 50.0 50.4 49.9 49.6 48.5 47.8 0.4 1.9 2.2

Singapore 51.1 50.8 50.9 52.3 51.5 51.9 52.4 50.8 51.2 50.5 49.9 50.8 1.9 0.9 0.4

Taiwan 52.3 52.7 54.7 54.0 54.3 57.2 54.5 54.1 57.8 48.8 51.2 50.4 5.7 2.9 7.4

Vietnam 53.1 51.3 51.0 53.7 52.3 51.4 54.9 53.0 51.8 50.3 48.2 43.3 4.5 4.8 8.6

Global 51.9 52.4 53.3 53.0 53.5 54.6 52.7 53.3 54.6 49.1 50.0 49.8 3.6 3.3 4.8

US (ISM) 54.9 53.7 53.2 55.7 55.9 48.2 55.1 55.1 54.5 53.0 52.5 52.5 2.1 2.6 2.0

US (Markit) 55.4 55.5 57.1 58.2 57.5 57.8 58.9 58.1 59.6 49.1 47.9 47.0 9.7 10.2 12.6

UK 57.3 55.8 56.6 61.9 58.7 58.5 59.8 57.4 59.5 49.4 49.5 46.5 10.5 7.9 12.9

Germany 54.1 53.7 54.8 58.8 57.0 57.4 54.5 55.5 57.1 47.2 49.3 49.0 7.3 6.1 8.1

France 51.2 52.1 49.7 51.7 53.3 50.8 51.8 53.2 49.2 50.4 48.0 49.5 1.5 5.2 -0.2

Eurozone 53.4 53.0 53.2 56.5 55.6 55.3 53.9 54.3 54.5 47.9 48.5 48.3 6.0 5.8 6.1

Apr 14 Mar 14 Feb 14 Apr 14 Mar 14 Feb 14 Apr 14 Mar 14 Feb 14 Apr 14 Mar 14 Feb 14 Apr 14 Mar 14 Feb 14Australia 62.8 67.7 75.1 31.9 31.1 25.8 43.6 45.0 47.4

New Zealand 56.3 54.7

China HSBC 46.5 41.7 45.0 46.4 41.5 46.8 0.1 0.2 -1.8 48.9 51.3 48.5 47.9 49.4 47.2

China NBS 48.3 44.4 47.7 49.1 50.1 48.2 48.3 48.3 48.0

India 50.9 51.0 51.4 54.6 57.2 61.0 -3.7 -6.2 -9.6 53.0 56.8 54.1 50.2 50.2 50.2

Indonesia 56.0 55.4 57.4 60.3 60.0 65.7 -4.3 -4.6 -8.3 50.9 50.4 50.8 50.2 48.2 48.7

Japan 50.1 49.8 51.8 55.3 57.8 58.5 -5.3 -8.0 -6.6 49.1 52.3 51.5 53.8 52.6 53.7

Korea 47.7 48.3 48.2 47.9 47.8 49.8 -0.2 0.5 -1.6 49.9 50.7 50.5 50.9 51.9 50.6

Singapore 50.8 50.2 50.5 52.5 51.7 51.5 49.7 50.7 50.1

Taiwan 48.2 48.1 49.2 52.2 52.5 54.4 -4.0 -4.3 -5.3 54.8 53.8 56.7 50.8 51.2 50.9

Vietnam 49.3 49.5 50.0 55.6 53.9 54.4 -6.3 -4.5 -4.4 53.7 52.7 49.4 52.2 49.2 50.9

Global 51.4 51.6 53.5 51.0 51.8 51.5 51.5 51.6 51.3

US (ISM) 56.5 59.0 60.0 57.0 55.5 53.5 54.7 51.1 52.3

US (Markit) 50.9 51.6 52.3 53.5 54.5 54.1 -2.6 -2.9 -1.8 51.7 51.1 51.6 53.7 53.9 54.1

UK 53.1 53.9 55.1 48.2 46.5 50.0 4.8 7.4 5.1 54.9 53.3 54.8 55.5 55.1 55.5

Germany 50.0 49.4 51.2 43.8 46.0 48.2 6.2 3.4 2.9 52.0 52.2 55.2 51.1 50.4 50.7

France 48.6 49.3 51.6 45.7 46.2 49.8 2.9 3.1 1.8 51.1 51.8 50.2 49.6 50.2 48.5

Eurozone 49.2 49.3 50.5 45.4 47.2 49.8 3.8 2.0 0.7 53.3 53.4 54.5 51.3 50.3 50.6

Notes: above 50 + rising above 50 + falling below 50 + falling below 50 + rising

unchanged above 50 Unchanged below 50

New orders-InventoryPMI Output New orders Inventories

Output prices Input prices Output minus Input prices New export orders Employment

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Non-manufacturing/service PMIs

Source: Markit, HSBC; HK PMI services stands for whole economy PMI, business activity for output, New business for New orders and Outstanding business for backlogs of work, US data is ISM non-manufacturing

Apr 14 Mar 14 Feb 14 Apr 14 Mar 14 Feb 14 Apr 14 Mar 14 Feb 14 Apr 14 Mar 14 Feb 14Australia 48.6 48.9 55.2 47.7 45.3 52.7 49.8 51.8 53.7China (HSBC) 51.4 51.9 51.0 50.3 51.7 50.8 51.4 51.3 51.4 49.7 49.8 48.6China (NBS) 54.8 54.5 55.0 50.2 51.4 50.9 50.8 50.8 51.4Hong Kong 49.7 49.9 53.3 49.5 51.1 50.4 47.2 50.5 54.1India 48.5 47.5 48.8 49.8 51.2 50.1 48.4 47.6 49.5 52.1 52.2 48.2Japan 46.4 52.2 49.3 51.8 50.9 52.0 48.8 52.4 51.9 50.2 50.6 49.4

Global 52.7 53.5 52.7 51.2 51.1 51.6 53.0 52.6 54.0 48.9 49.4 50.1Eurozone 53.1 52.2 52.6 50.5 49.8 50.1 52.3 51.8 51.9 50.0 49.7 48.6France 50.4 51.5 47.2 49.0 49.6 46.8 49.4 51.3 48.0 51.5 52.7 47.4Germany 54.7 53.0 55.9 52.4 51.0 53.9 52.4 51.3 52.3 48.5 46.6 48.4UK 58.7 57.6 58.2 56.0 53.5 55.6 58.2 58.5 59.2 50.2 52.7 54.6US (Markit) 55.0 55.3 53.3 51.2 51.8 51.9 55.1 53.0 56.0

US (ISM non-mfg) 60.9 53.4 54.6 51.3 53.6 47.5 58.2 53.4 51.3 49.0 51.5 52.0

Apr 14 Mar 14 Feb 14 Apr 14 Mar 14 Feb 14Australia 60.7 63.7 61.4 China (HSBC) 51.2 52.8 51.6 49.7 49.8 48.6China (NBS) 52.4 52.8 52.1 47.2 48.3 46.5Hong Kong 53.2 53.5 56.0 50.6 48.6 52.7India 53.9 53.2 53.9 52.1 52.2 48.2Japan 54.6 52.2 54.0 50.2 50.6 49.4

Global 54.6 53.5 54.6 48.9 49.4 50.1Eurozone 52.6 52.8 54.1 50.0 49.7 48.6France 52.1 51.9 52.4 51.5 52.7 47.4Germany 54.0 53.5 56.2 48.5 46.6 48.4UK 54.0 54.1 55.0 50.2 52.7 54.6US (Markit) 55.9 53.2 54.7US (ISM non-mfg) 60.8 58.3 53.7 49.0 51.5 52.0

Notes: above 50 + rising above 50 + falling below 50 + falling below 50 + rising

Unchanged above 50 Unchanged below 50

Business activity Employment New Business Outstanding business

Input prices Outstanding Business

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CH HK IN JN WD EU FR GE UK US (ISM) US (markit)

Latest Long Term average

Serv ices PMI Business Activity Index Index

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PMI charts Chart 1: Global PMI and Asia ex Japan Business Index

NB: Asia Business Index is a composite of available PMI and similar surveys. Source: Markit, CEIC, HSBC

Chart 2: Asia ex Japan New orders minus Inventories and IP growth

Source: Markit, CEIC, HSBC

Chart 3: US ISM New orders minus Inventories and Asian export growth

NB: Exports series is simple regional average. Source: Markit, CEIC, HSBC

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May-00 May-02 May-04 May-06 May-08 May-10 May-12 May-14Global manufacturing PMI Asia Business Index (ex Japan)

Index Index

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Asia ex JP new orders minus inventories (LHS) IP %3m/3m, Asia simple avg. ex HK & JP (RHS)

Index % 3m/3m

-25-20-15-10-505101520253035

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101520253035

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US ISM New orders minus Inventories (LHS) Exports sa, Asia ex JP, simple, % 3m/3m (RHS)

% y -o-yIndex

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Chart 4: Asia ex Japan New Export orders and New orders

Source: Markit, CEIC, HSBC

Chart 5: Asia ex Japan Input and Output prices

Source: Markit, CEIC, HSBC

Chart 6: Asia ex Japan employment measure and retail sales growth

Source: Markit, CEIC, HSBC

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Asia ex JP: New Export Orders Asia ex JP New Orders

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Asia ex JP: Output prices Asia ex JP: Input prices

Index Index

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Asia ex Japan: PMI employment index Real retail sales for Asia ex JP (% y-o-y, simpl avg., RHS)

Index % y -o-y

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Latest monthly CPI (% y-o-y)

Source: CEIC, Bloomberg, HSBC. *Quarterly data

Above consensus

At par with consensus

Below consensus

China

South Korea

TaiwanIndia Hong Kong

Sri Lanka

Vietnam Philippines

Thailand

Indonesia

Malaysia

Singapore

Japan

Australia*

New Zealand*

India

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Indicators

Latest export growth (% y-o-y)

Source: CEIC, Bloomberg, HSBC

Consensus not availableAbove consensus

At par with consensus

Below consensus

China

South Korea

TaiwanIndia

Hong Kong

Sri Lanka

Vietnam Philippines

Thailand

Indonesia

Malaysia

Singapore

Japan

Australia

New Zealand

India

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GDP GDP (red denotes an improvement, grey denotes a deterioration or unchanged from previous reading; ▲,▼, ◄►denotes relative to consensus)

Source: Thomson Reuters Datastream, CEIC, HSBC; ▲,▼, ◄► denotes above, below or no-change from Bloomberg consensus respectively

Asia GDP (% y-o-y, weighted average) Asia GDP (% y-o-y)

Source: CEIC, HSBC Source: Thomson Reuters Datastream, CEIC, HSBC

% y-o-y 2013 2014f 2015f 4Q13 1Q14e 2Q14f 3Q14f 4Q14f 1Q15f 2Q15f

Australia 2.4 2.8 (2.8) 3.2 (2.9) 2.8 2.9 2.7 2.8 2.7 2.9 3.2New Zealand 2.7 3.5 (3.5) 3.0 (3.0) 3.1 3.5 3.8 3.5 3.3 3.2 3.1China 7.7 7.4 (7.3) 7.7 (7.2) 7.7 7.4 7.6 7.3 7.4 7.6 7.7Hong Kong 2.9 3.7 (3.4) 4.0 (3.5) 3.0 3.6 3.7 3.6 3.8 3.8 3.9India 4.6 5.3 (5.4) 6.3 (6.0) 4.7 4.5 5.1 5.0 5.3 5.9 6.1Indonesia 5.8 5.2 (5.4) 6.0 (5.8) 5.7 5.2 5.2 5.1 5.1 5.6 5.9Japan 1.5 1.0 (1.4) 1.0 (1.3) 2.6 2.5 0.4 0.5 0.7 0.0 1.5Korea 3.0 3.2 (3.5) 3.4 (3.7) 3.7 3.9 3.3 2.8 3.4 3.6 3.6Malaysia 4.7 5.2 (5.1) 5.0 (5.0) 5.1 6.5 6.0 4.9 3.5 3.5 4.2Philippines 7.2 5.9 (6.4) 6.1 (6.3) 6.5 6.0 6.0 5.7 6.1 6.3 6.0Singapore 4.1 3.5 (3.8) 4.0 (4.0) 5.5 5.1 2.5 3.4 2.9 3.9 4.0Sri Lanka 7.2 7.2 (7.2) 7.2 (7.0) 8.2 7.8 7.4 7.1 6.5 7.1 7.2Taiwan 2.1 3.0 (3.3) 3.5 (3.6) 2.9 3.0 3.1 3.1 2.9 3.7 3.7Thailand 2.9 3.0 (2.5) 4.0 (4.2) 0.6 3.3 3.3 2.7 2.8 3.2 3.6Vietnam 5.4 5.6 (5.7) 5.8 (5.9) 6.0 5.0 5.5 5.8 6.2 5.5 5.7Asia 4.7 4.5 (4.6) 4.8 (4.7) 5.1 5.0 4.4 4.3 4.4 4.4 4.9Asia x JN 6.2 6.1 (6.1) 6.5 (6.2) 6.2 6.1 6.2 6.0 6.1 6.4 6.5Asia x JN x CH 4.2 4.4 (4.6) 5.0 (5.0) 4.4 4.5 4.4 4.2 4.3 4.8 4.9ASEAN 5.1 4.7 (4.8) 5.2 (5.3) 4.8 5.1 4.7 4.6 4.4 4.8 5.1

NB: Numbers in parenthesis are consensus as of Apr 2014; Regional aggregates are nominal GDP USD weighted, Asia excludes Australia and New Zealand Source: Thomson Reuters Datastream, CEIC, HSBC, Consensus Economics

Mar-14 Dec-13 Sep-13 Jun-13

Australia 2.8 2.4 2.4 0.8 0.6 0.8New Zealand 3.1 3.3 2.3 0.6 1.0 0.1China 7.4 7.7 7.8 7.5 1.5 2.0 2.2 1.6Hong Kong 3.0 2.8 3.1 1.1 0.7 0.6India 4.7 4.8 4.4 1.2 1.2 1.0Indonesia 5.2 5.7 5.6 5.8 0.9 1.4 1.4 1.4Japan 2.6 2.3 1.2 0.2 0.2 1.0Korea 3.9 3.7 3.4 2.7 0.9 0.9 1.1 1.0Malay sia 5.1 5.0 4.4 1.7 1.6 1.6Philippines 6.5 6.9 7.6 1.5 1.3 1.5Singapore 5.1 5.5 5.8 4.2 0.0 1.5 0.1 3.5Sri Lanka 8.2 7.8 6.8 2.0 2.1 2.0Taiw an 3.0 2.9 1.3 2.7 0.3 1.8 0.1 1.0Thailand 0.6 2.7 2.9 0.6 1.4 0.6Vietnam 5.0 6.0 5.5 4.9 -1.1 2.5 2.0 1.6

% y-o-y % q-o-q sa

Mar-14 Dec-13 Sep-13 Jun-13

-3

0

3

6

9

12

-3

0

3

6

9

12

Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14

Asia ex JN ex CH Asia ex JN

% y -o-y % y -o-y

0123456789

0123456789

TH JN AU TA HK NZ SK IN MA SI ID VN PH CH SL

Dec-13 Mar-14

% y -o-y % y -o-y

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Industrial Production IP (red denotes an improvement, grey denotes a deterioration or unchanged from previous reading; ▲,▼, ◄► denotes relative to consensus)

Source: Thomson Reuters Datastream, CEIC, HSBC; * Australia, New Zealand and Hong Kong IP are available on a quarterly basis, rest are monthly data, ▲,▼, ◄► denotes above, below or no-change from Bloomberg consensus respectively

Asia IP (% y-o-y, weighted average) Asia IP (% y-o-y)

Source: CEIC, HSBC Source: Thomson Reuters Datastream, CEIC, HSBC

% y-o-y 2013 2014f 2015f 4Q13 1Q14e 2Q14f 3Q14f 4Q14f 1Q15f 2Q15f

Australia 2.6 2.7 3.5 -1.2 0.9 2.3 4.1 3.5 4.1 4.1New Zealand 0.7 2.2 1.1 3.4 3.8 4.5 3.1 1.3 1.3 1.2China 9.7 9.4 9.8 10.0 8.7 9.4 9.2 9.5 9.6 9.8Hong Kong -0.7 2.7 0.6 0.5 2.0 3.0 2.8 3.0 2.7 2.9India -0.1 3.8 6.2 -0.8 -0.5 3.4 2.2 4.3 5.0 5.5Indonesia 5.6 4.2 5.0 1.5 3.8 4.2 4.1 4.1 4.6 4.9Japan -0.9 2.3 5.3 5.8 8.1 0.9 2.5 3.5 5.2 5.4Korea 0.1 -0.4 0.0 0.6 0.2 -0.3 -1.5 -0.1 0.5 0.4Malaysia 2.7 5.6 4.9 3.4 7.3 5.5 6.4 3.5 3.5 4.2Philippines 10.5 8.0 8.0 12.3 8.0 8.0 8.0 8.0 8.0 8.0Singapore 1.6 2.8 4.0 7.1 9.8 2.5 2.7 1.5 3.8 4.0Sri Lanka 0.2 5.2 7.3 2.3 4.5 4.6 5.4 6.4 7.5 7.5Taiwan 0.7 3.8 3.7 2.0 2.4 3.7 4.4 2.0 2.7 3.5Thailand -3.2 0.6 5.6 -7.1 -7.0 -0.4 2.8 4.9 5.2 5.5Asia 3.9 5.3 6.7 6.0 6.4 4.8 5.1 5.7 6.5 6.7Asia x JN 6.1 6.6 7.4 6.1 5.6 6.5 6.3 6.8 7.1 7.3Asia x JN x CH 1.3 3.0 4.2 0.9 1.5 2.8 2.5 3.2 3.8 4.1ASEAN 3.6 4.0 5.3 2.2 3.6 3.7 4.4 4.2 4.8 5.1

Source: Thomson Reuters Datastream, CEIC, HSBC *NB: regional aggregates are nominal GDP USD weighted, Asia excludes Australia and New Zealand; India annual numbers are fiscal year.

Apr-14 Mar-14 Feb-14 Jan-14China 8.7 8.8 8.6 8.6 0.5 -3.5 4.9 -0.2India -0.5 -1.8 0.8 0.9 -0.9 1.3Indonesia 4.9 3.5 2.9 0.6 0.3 0.4Japan 7.0 7.0 10.6 0.4 -1.8 2.5Korea 2.7 4.1 -4.3 0.9 -1.9 -0.2Malay sia 4.4 6.8 3.5 -0.3 1.8 -1.6Philippines -1.1 6.8 4.8 -8.2 1.4 -9.8Singapore 12.1 13.1 4.3 6.1 6.5 -7.8Sri Lanka 3.7 -0.3Taiw an 3.1 6.8 -1.8 -2.1 1.3 -1.7Thailand -10.4 -4.7 -5.6 -2.1 -0.5 0.6Vietnam 5.8 4.1 15.5 -1.7 1.6 1.7 0.3 -2.1

4Q13 3Q13 2Q13 1Q13Australia* 2.7 2.0 5.0 4.4 1.3 0.8 0.3 0.4New Zealand* 3.6 1.1 -0.2 1.5 3.1 1.1 -1.0 0.5Hong Kong* 0.5 -0.9 0.3 0.5 -1.0 -0.1 0.4 0.2

1Q134Q13 3Q13 2Q13

% q-o-q, sa/ % m-o-m, saApr-14 Mar-14 Feb-14 Jan-14

% y-o-y

-20

-10

0

10

20

30

40

50

-20

-10

0

10

20

30

40

50

Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14Asia ex JN ex CH Asia ex JN

% y -o-y % y -o-y

-12-9-6-303691215

-12-9-6-30369

1215

TH PH HK IN NZ AU SK TA VN MA ID JN CH SI

Mar-14/3Q13 Apr-14/4Q13

% y -o-y % y -o-y

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Exports Exports* (red denotes an improvement, grey denotes a deterioration or unchanged from previous reading; ▲,▼, ◄►denotes relative to consensus)

Source: Thomson Reuters Datastream, CEIC, HSBC; ▲,▼, ◄► denotes above, below or no-change from Bloomberg consensus respectively. *Growth rates are calculated using the export series in local currency terms. Rest are calculated using the export series in USD terms.

Asia exports (% y-o-y, weighted average) Asia exports (% y-o-y)

Source: CEIC, HSBC Source: Thomson Reuters Datastream, CEIC, HSBC

% y-o-y 2013 2014f 2015f 1Q14e 2Q14f 3Q14f 4Q14f 1Q15f 2Q15f 3Q15f

Australia* 6.1 7.9 6.9 9.4 8.5 7.1 6.8 6.4 6.5 7.0New Zealand* 2.8 7.8 1.3 0.4 5.5 7.3 4.4 3.9 3.6 3.4China 7.8 10.0 12.0 -3.5 11.5 11.5 10.5 12.0 11.0 13.0Hong Kong 13.9 4.2 3.4 3.0 3.8 5.2 4.5 3.4 3.3 3.2India 5.9 8.0 8.7 5.4 7.5 4.8 7.5 10.2 9.0 9.3Indonesia -2.6 -3.8 3.6 -2.4 -3.9 -0.5 -6.0 4.9 3.1 5.3Japan -10.9 -1.5 12.1 -3.6 -2.7 -0.4 4.4 13.4 13.4 11.6Korea 2.7 8.1 13.5 2.5 10.5 10.0 9.4 13.5 13.7 13.5Malaysia -1.7 4.5 8.4 1.4 9.4 4.4 3.0 8.1 8.3 8.5Philippines -3.6 7.8 8.0 7.0 7.0 8.0 9.0 8.0 8.0 8.0Singapore 0.0 3.8 8.4 4.5 2.8 4.5 3.3 7.2 8.0 8.8Sri Lanka 7.3 7.7 11.0 8.0 14.0 16.0 16.0 14.0 14.0 12.0Taiwan 1.4 4.4 4.8 4.1 3.6 4.4 3.2 3.5 4.0 4.4Thailand -0.2 3.3 7.2 -0.8 2.3 1.4 3.9 5.8 6.4 7.6Vietnam 15.4 15.4 13.0 12.2 17.4 13.3 10.5 11.7 10.3 14.3Asia 0.5 5.0 10.9 -1.6 5.3 5.9 6.9 11.4 10.9 11.3Asia x JN 5.6 7.9 10.4 -0.6 9.0 8.8 8.1 10.6 9.8 11.2Asia x JN x CH 2.8 5.3 8.3 3.1 5.7 5.2 4.9 8.7 8.2 8.8ASEAN -1.7 0.9 6.0 0.4 1.2 2.1 0.0 6.2 5.6 6.9

Source: Thomson Reuters Datastream, CEIC, HSBC, Australia and New Zealand data are exports of goods and services; Regional aggregates data are nominal GDP USD weighted, Asia excludes Australia and New Zealand

Apr-14 Mar-14 Feb-14 Jan-14

Australia* 18.4 19.1 22.6 -2.4 0.2 4.9New Zealand* 15.2 16.3 21.4 1.1 3.8 0.5China 0.8 -6.6 -18.1 10.5 4.5 5.9 -14.2 5.1Hong Kong 3.4 -1.4 -0.6 12.5 -9.4 -1.1India 5.3 -3.2 -5.5 2.7 1.1 0.9 -0.7 -0.1Indonesia 1.2 -2.5 -5.9 -3.5 2.9 -5.3Japan* 1.8 9.8 9.5 -1.5 -0.2 -1.1Korea 9.0 5.1 1.4 -0.2 0.9 3.5 -1.8 0.3Malay sia 2.4 5.9 4.0 -5.3 3.1 2.7Philippines 11.2 11.6 -3.0 -0.5 7.4 -11.7Singapore -3.4 8.3 -1.8 -11.3 8.7 0.9Sri Lanka 5.4 23.2 -9.8 13.4Taiw an 7.9 1.1 7.4 -4.3 0.6 2.4 0.3 -3.0Thailand -2.7 2.2 -1.5 1.4 1.6 -1.1Vietnam 21.6 11.3 33.5 -0.1 3.1 0.9 2.0 4.6

Jan-14Feb-14Mar-14Apr-14

% y-o-y % m-o-m, sa

-40-30-20-1001020304050

-40-30-20-10

01020304050

Feb-08 Feb-09 Feb-10 Feb-11 Feb-12 Feb-13 Feb-14

Asia ex JN Asia ex JN ex CH

% y -o-y % y -o-y

-10

0

10

20

30

-10

0

10

20

30

CH SI IN TH TA ID JN MA HK SK PH VN NZ AU

Mar-14 Apr-14

% y -o-y % y -o-y

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Consumer Spending Consumer spending (red denotes an improvement, grey denotes a deterioration or unchanged from previous reading)

Source: Thomson Reuters Datastream, CEIC, HSBC; * New Zealand data available on quarterly basis, rest are monthly data

Asia Retail Sales (% y-o-y, weighted average) Asia Retail Sales (% y-o-y)

Source: CEIC, HSBC Source: Thomson Reuters Datastream, CEIC, HSBC

Source: Thomson Reuters Datastream, CEIC, HSBC

Retail Sales

Apr-14 Mar-14 Feb-14 Jan-14 Apr-14 Mar-14 Feb-14 Jan-14Australia 4.4 5.0 6.7 0.1 0.3 1.1China 11.9 12.2 11.8 11.8 0.8 0.7 0.8 0.6Hong Kong -1.3 -2.1 14.4 -3.0 -4.8 5.5Indonesia 27.7 25.1 18.8 24.8 2.5 3.4 -0.1 -0.5Japan 11.0 3.7 4.4 3.8 0.2 1.2Korea 2.6 -0.7 6.1 2.1 -2.7 2.2Singapore -9.5 0.1 3.0 0.6Taiw an -3.8 6.5 -4.0 0.6Thailand -8.0 -10.4 -0.6 -3.2Vietnam 11.5 6.3 12.7 11.9 3.5 -2.2 3.1 0.0

4Q13 3Q13 2Q13 1Q13 4Q13 3Q13 2Q13 1Q13New Zealand* 3.9 4.5 3.2 3.2 1.3 0.7 0.8 1.1

% y-o-y % q-o-q, sa/ % m-o-m, sa

-20

-10

0

10

20

30

40

-20

-10

0

10

20

30

40

Feb-08 Feb-09 Feb-10 Feb-11 Feb-12 Feb-13 Feb-14

Asia ex JN ex CH Asia ex JN

% y -o-y % y -o-y

-10-5051015202530

-10-505

1015202530

SI TH TA HK KR NZ JA AU CH

Feb-14/3Q13 Mar-14/4Q13

% y -o-y % y -o-y

Motor Vehicle Sales

Apr-14 Mar-14 Feb-14 Jan-14 Apr-14 Mar-14 Feb-14 Jan-14Australia -2.8 -3.6 -3.2 Malay sia 3.1 12.9 -8.2China 8.8 6.6 17.8 6.0 Philippines 25.4 16.5 27.1Hong Kong -11.1 23.1 -15.0 Singapore 14.5 38.5 -8.7India 7.8 13.4 5.3 4.3 Sri Lanka Indonesia 17.8 8.2 7.0 Taiw an 14.6 11.5 -4.9Japan -5.5 17.4 18.4 29.4 Thailand -46.7 -44.8 -45.5Korea 12.6 7.3 5.5 -6.4 Vietnam 21.8 60.6 20.9

% y-o-y % y-o-y

_______________________ Consumer Confidence ________________________ _______________________ Private Consumption ________________________ ______________________________ Index _______________________________ % y-o-y % q-o-q, sa Apr-14/1Q14 Mar-14/ 4Q13 Feb-14/ 3Q13 Jan-14/ 2Q13 1Q14 4Q13 1Q14 4Q13

Source: Thomson Reuters Datastream, CEIC, HSBC; * Hong Kong Consumer confidence is available on a quarterly basis (latest being 4Q-2013), rest are monthly data

Australia 99.7 99.5 100.2 107.6 2.6 1.6New Zealand 3.7 1.2China 107.9 103.1 101.1 Hong Kong* 75.6 75.3 75.0 3.2 1.7India 2.5 0.7Indonesia 113.9 118.2 116.2 116.7 5.6 5.3 1.5 1.3Japan 38.0 38.8 39.7 2.1 0.5Korea 110.2 110.2 110.2 111.2 2.2 0.9Malay sia 7.3 1.2Philippines 5.6 1.3Singapore 1.9 0.3Taiw an 83.7 81.0 82.9 80.8 3.3 1.0Thailand 67.8 68.8 69.9 71.5 -4.5 -0.2

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Headline CPI Headline CPI (red denotes an improvement, grey denotes a deterioration or unchanged from previous reading; ▲,▼, ◄► denotes relative to consensus)

Source: Thomson Reuters Datastream, CEIC, HSBC; * Australia and New Zealand CPI are available on a quarterly basis, rest are monthly data; ▲,▼, ◄► denotes above, below or no-change from Bloomberg consensus resp.

Asia CPI (% y-o-y, weighted average) Asia CPI (% y-o-y)

Source: CEIC, HSBC Source: Thomson Reuters Datastream, CEIC, HSBC

% y-o-y 2013 2014f 2015f 1Q14 2Q14f 3Q14f 4Q14f 1Q15f 2Q15f 3Q15f

Australia 2.4 2.8 (2.8) 2.8 (2.6) 2.9 3.1 2.6 2.5 2.7 2.8 2.8New Zealand 1.1 2.3 (1.9) 2.5 (2.3) 1.5 2.3 2.2 2.6 2.5 2.5 2.4China 2.6 2.6 (2.6) 3.1 (3.0) 2.3 2.6 2.4 2.7 3.0 3.1 3.2Hong Kong 4.3 4.1 (3.9) 4.0 (3.6) 4.1 4.0 4.2 4.0 3.9 4.2 3.9India (WPI) 5.9 5.0 (5.6) 6.4 (5.8) 5.1 6.0 4.0 3.9 6.0 6.3 6.4India (CPI) 9.4 7.4 (7.7) 8.0 (7.1) 8.4 7.7 7.4 6.6 8.0 8.2 8.1Indonesia 6.4 6.3 (6.3) 4.9 (5.5) 7.8 7.4 4.5 5.5 4.7 4.8 5.0Japan 0.4 2.8 (2.6) 1.8 (1.7) 1.5 3.2 3.3 3.1 3.2 1.0 1.0Korea 1.3 2.4 (1.9) 3.3 (2.6) 1.1 2.2 2.8 3.3 3.6 3.5 3.2Malaysia 2.1 3.2 (3.3) 3.3 (3.6) 3.5 3.5 3.2 2.5 2.0 3.5 3.8Philippines 2.9 4.2 (4.1) 4.3 (3.8) 4.1 4.1 4.5 4.1 4.0 4.3 4.4Singapore 2.4 2.4 (2.5) 3.2 (2.7) 1.0 2.9 2.7 2.7 3.2 3.3 3.2Sri Lanka 6.9 6.0 (6.2) 7.2 (6.7) 4.2 4.3 6.6 8.8 9.0 8.2 6.2Taiwan 0.8 1.4 (1.2) 1.6 (1.7) 0.8 1.2 2.0 2.0 1.5 1.6 1.6Thailand 2.2 2.3 (2.4) 2.5 (2.8) 2.0 2.1 2.5 2.7 2.6 2.6 2.5Vietnam 6.6 5.1 (6.0) 7.3 (6.9) 4.8 4.5 4.9 5.8 6.5 6.7 6.8Asia 2.6 3.3 (3.2) 3.3 (3.1) 2.5 3.3 3.0 3.2 3.4 2.9 2.9Asia x JN 3.6 3.5 (3.5) 3.9 (3.7) 3.0 3.4 2.9 3.2 3.6 3.7 3.7Asia x JN x CH 5.0 4.8 (4.7) 5.1 (4.6) 3.8 4.3 3.5 3.7 4.3 4.4 4.4ASEAN 4.3 4.4 (4.5) 4.1 (4.3) 4.8 5.0 3.7 4.1 3.6 4.0 4.1

NB: Numbers in parenthesis are consensus as of Apr 2014; Regional aggregates data are nominal GDP USD weighted, Asia excludes Australia and New Zealand Source: Thomson Reuters Datastream, CEIC, HSBC, Consensus Economics

Apr-14 Mar-14 Feb-14 Jan-14China 1.8 2.4 2.0 2.5 -0.2 0.2 -0.1 0.2Hong Kong 3.9 3.9 4.6 0.1 0.3 0.4India (WPI) 5.7 4.7 5.2 0.5 0.2 -0.3India (CPI) 8.6 8.3 8.0 8.8 0.7 0.8 0.4 0.2Indonesia 7.3 7.3 7.7 8.2 0.4 0.4 0.4 0.5Japan 1.6 1.5 1.4 0.0 0.0 -0.1Korea 1.5 1.3 1.0 1.1 0.1 0.0 0.1 0.2Malay sia 3.5 3.5 3.4 0.3 0.3 0.4Philippines 4.1 3.9 4.1 4.2 0.2 0.1 0.1 0.5Singapore 1.2 0.4 1.4 0.3 0.1 0.2Sri Lanka 4.9 4.2 4.2 4.4 0.6 0.5 0.2 0.1Taiw an 1.6 1.6 0.0 0.8 0.2 0.5 0.4 0.1Thailand 2.4 2.1 2.0 1.9 0.1 0.1 0.1 0.3Vietnam 4.4 4.4 4.6 5.5 0.2 0.0 -0.2 0.2

1Q14 4Q13 3Q13 2Q13Australia* 2.9 2.7 2.2 2.4 0.5 0.9 1.0 0.6New Zealand* 1.5 1.6 1.4 0.7 0.2 0.4 0.7 0.2

% q-o-q, sa/ % m-o-m, sa% y-o-yApr-14 Mar-14 Feb-14 Jan-14

2Q131Q14 3Q134Q13

-2

0

2

4

6

8

10

-2

0

2

4

6

8

10

Feb-08 Feb-09 Feb-10 Feb-11 Feb-12 Feb-13 Feb-14Asia ex JN Asia ex JN ex CH

% y -o-y % y -o-y

0

3

6

9

0

3

6

9

SI KR NZ JA TA TH CH AU MA HK PH SL VN ID IN

Mar-14/4Q 13 Apr-14/1Q14

% y -o-y % y -o-y

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Core CPI Core CPI (red denotes an improvement, grey denotes a deterioration or unchanged from previous reading)

Source: Thomson Reuters Datastream, CEIC, HSBC; * Australia and New Zealand CPI is available on quarterly basis, rest are monthly data; Australia data is trimmed mean inflation

Asia core CPI (% y-o-y, weighted average) Asia core CPI (% y-o-y)

Source: CEIC, HSBC Source: Thomson Reuters Datastream, CEIC, HSBC

% y-o-y 2013 2014f 2015f 1Q14 2Q14f 3Q14f 4Q14f 1Q15f 2Q15f 3Q15f

Australia 2.4 2.8 2.8 2.8 2.8 2.8 2.5 2.7 2.8 2.8New Zealand 1.6 2.1 2.3 n/a n/a n/a n/a n/a n/a n/aChina 1.7 1.7 1.8 0.1 n/a n/a n/a n/a n/a n/aHong Kong 2.3 0.3 4.6 4.0 5.3 4.7 4.9 5.0 4.8 4.5India (WPI) 2.8 4.6 4.9 3.2 4.6 4.4 4.5 4.9 4.9 4.9Indonesia 4.4 5.2 4.8 4.6 5.7 4.9 4.9 4.6 4.8 4.8Japan 0.4 2.6 1.9 1.3 2.9 3.1 3.1 3.2 1.0 1.1Korea 1.6 2.5 2.9 1.9 2.3 2.9 2.8 3.2 3.1 2.8Malaysia 1.4 1.8 2.3 2.5 2.0 1.9 1.4 1.1 2.4 2.8Philippines 2.9 3.5 3.6 3.0 3.3 3.8 3.7 3.6 3.6 3.6Singapore 2.4 2.6 3.3 2.0 n/a n/a n/a n/a n/a n/aSri Lanka 4.5 5.4 4.7 3.3 4.1 6.5 7.5 5.6 5.2 4.2Taiwan 0.7 0.9 1.2 0.6 0.9 1.5 1.5 1.1 1.2 1.2Thailand 1.0 1.6 1.6 1.2 1.5 1.8 1.9 1.7 1.6 1.5Vietnam 10.5 5.5 5.8 6.0 n/a n/a n/a n/a n/a n/aAsia 1.6 2.5 2.4 2.0 3.2 3.4 3.3 3.5 2.3 2.3Asia x JN 2.1 2.4 2.6 2.8 3.6 3.6 3.6 3.7 3.8 3.7Asia x JN x CH 2.6 3.3 3.7 2.8 3.6 3.6 3.6 3.7 3.8 3.7ASEAN 2.8 3.5 3.5 3.4 3.9 3.6 3.5 3.3 3.6 3.6

Source: Thomson Reuters Datastream, CEIC, HSBC; Australia data is trimmed mean; Regional aggregates data are nominal GDP USD weighted, Asia excludes Australia and New Zealand

Apr-14 Mar-14 Feb-14 Jan-14 Apr-14 Mar-14 Feb-14 Jan-14China 1.6 1.7 1.7 2.0 0.0 0.1 0.0 0.3Hong Kong 3.9 4.0 5.0 0.0 0.0 0.5India (Core WPI) 3.5 3.1 3.0 0.4 0.2 0.3India (Core CPI) 7.8 7.8 7.9 8.2 0.5 0.7 0.5 0.7Indonesia 4.7 4.6 4.6 4.5 0.4 0.3 0.4 0.4Japan 0.6 0.7 0.6 -0.1 0.1 -0.1Korea 2.3 2.1 1.7 1.7 0.2 0.2 0.2 0.1Malay sia 2.6 2.5 2.3 0.2 0.3 0.2Philippines 2.9 2.8 3.0 3.2 0.2 0.1 0.2 0.3Singapore 1.9 1.7 2.4 0.2 -0.1 -0.1Sri Lanka 3.4 3.4 3.1 3.5 0.3 0.5 0.2 0.9Taiw an 1.2 1.0 -0.2 1.0 0.2 0.7 -0.7 0.4Thailand 1.7 1.3 1.2 1.0 0.3 0.1 0.2 0.2Vietnam 5.1 5.7 5.9 6.5 0.1 0.2 0.1 -0.1

1Q14 4Q13 3Q13 2Q13 1Q14 4Q13 3Q13 2Q13Australia* 2.6 2.6 2.3 2.3 0.5 0.9 0.7 0.6New Zealand* 1.6 1.6 1.1 0.9 0.3 0.6 0.3 0.3

% y-o-y % q-o-q, sa/ % m-o-m, sa

-2

0

2

4

6

8

-2

0

2

4

6

8

Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14Asia ex JN Asia ex JN ex CH

% y -o-y % y -o-y

-1012345678

-1012345678

JN TA TH NZ CH SI KR AU MA PH SL HK ID VN IN

Mar-13/ 4Q13 Apr-14/ 1Q14

% y -o-y % y -o-y

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Asset Prices Real Estate Prices (red denotes an increase, grey denotes decrease or unchanged)

NB: China: Property price ytd avg; New Zealand: median sales price of dwellings; Hong Kong: Property price index, domestic price; Korea, Malaysia, Thailand, Australia: Housing price Index; India: 15 city average of Housing Price Index, National Housing Bank; Taiwan: Sinyi Residential Property price Index for Taipei area; Indonesia and Singapore: Residential property price Index; India m-o-m data is nsa; Source: CEIC, HSBC, Thomson Reuters Datastream

Real Estate Prices (% y-o-y) Real Policy Rates (%)

Source: CEIC, Thomson Reuters Datastream, HSBC Source: CEIC, Thomson Reuters Datastream, HSBC

HSBC Real Policy Rates - (negative readings denoted in red)

1Q 14 2Q 14f 3Q 14f 4Q 14f 1Q 15f 2Q 15f 3Q 15f

Australia -0.36 -0.57 -0.09 0.23 0.27 0.17 0.42 New Zealand 1.25 0.91 1.00 0.93 1.23 1.53 1.83Bangladesh -0.15 -0.35 -0.05 0.65 -0.05 -0.25 0.05China 3.70 3.40 3.60 3.30 3.00 2.90 2.80Hong Kong -3.60 -3.53 -3.70 -3.50 -3.40 -3.70 -2.90India -0.40 0.55 0.82 1.69 0.22 0.03 0.13Indonesia -0.31 0.06 3.01 1.99 2.83 2.65 2.51Japan -1.49 -3.12 -3.27 -3.08 -3.14 -0.95 -0.99Korea 1.40 0.32 -0.07 -0.29 -0.36 0.03 0.59Malaysia -0.50 -0.50 0.25 0.95 1.47 -0.03 -0.31Philippines -0.63 -0.31 -0.48 -0.10 0.04 -0.33 -0.37Singapore -0.70 -2.50 -2.40 -2.30 -2.80 -2.90 -2.80Sri Lanka 3.80 3.66 1.41 -0.84 -0.52 0.50 2.57Taiwan 1.08 0.68 -0.13 -0.13 0.50 0.55 0.60Thailand 0.01 -0.38 -0.76 -0.99 -0.83 -0.31 -0.25Vietnam 0.17 0.47 0.11 -0.77 -0.50 -0.72 -0.75

Source: Central Banks, CEIC, HSBC.

Apr-14 Mar-14 Feb-14 Jan-14 Apr-14 Mar-14 Feb-14 Jan-14

China -1.5 -3.6 -3.6 0.3 0.2 -1.9

Hong Kong 1.6 1.7 5.2 -0.2 -0.2 -0.2

Korea 1.3 1.1 0.8 0.5 0.1 0.1 0.1 0.2

New Zealand 10.0 8.6 8.6 1.6 1.0 -2.2

Thailand 6.5 7.4 0.4 0.2

1Q14 4Q13 3Q13 2Q13 1Q14 4Q13 3Q13 2Q13

Australia 9.5 8.1 5.3 2.8 3.2 2.1

India 3.4 6.4 5.9 2.4 1.1 -1.7

Indonesia 11.5 13.5 12.1 1.8 2.3 2.2

Malay sia 8.1 12.2 11.3 -0.8 3.2 3.7

Singapore -0.8 1.1 3.9 4.1 -1.3 -0.9 0.4 1.0

Taiw an 15.1 15.0 15.4 2.0 0.8 7.4

% y-o-y % m-o-m sa/% q-o-q sa

-5

0

5

10

15

20

-5

0

5

10

15

20

CH SI KR HK IN TH MA AU NZ ID TA

Latest 6 months ago

% y -o-y % y -o-y

-4

-3

-2

-1

0

1

2

3

4

-4

-3

-2

-1

0

1

2

3

4

HK JN SI PH MA IN AU ID BD TH VN TA NZ SK CH SL

Last Quarter (1Q-14) 2014f (period-end)

% %

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Money & Credit Private Credit (red denotes an improvement, grey denotes a deterioration or unchanged from previous reading)

Source: Thomson Reuters Datastream, CEIC, HSBC; *New Zealand data available on quarterly basis, rest are monthly data

Private Credit Growth (% y-o-y) Asia Money Supply (% y-o-y)

Source: CEIC, HSBC, Thomson Reuters Datastream Source: CEIC, HSBC, Thomson Reuters Datastream

Money Supply (red denotes an improvement, grey denotes a deterioration or unchanged from previous reading)

Source: Thomson Reuters Datastream, CEIC, HSBC. NB: Australia money supply is M3, the rest is M2

Apr-14 Mar-14 Feb-14 Jan-14 Apr-14 Mar-14 Feb-14 Jan-14

Australia 6.8 6.8 6.6 0.5 0.6 0.6

China 13.7 13.9 14.2 14.3 0.9 1.0 1.0 1.2

Hong Kong 19.0 21.8 17.8 -1.2 3.2 3.7

India 14.1 17.0 15.6 15.6 -0.1 1.5 1.1 2.2

Indonesia 19.1 19.9 20.9 1.2 0.7 1.5

Japan 2.7 2.8 0.1 0.3

Korea 6.1 6.1 5.7 0.2 0.7 0.8

Malay sia 10.4 10.9 11.4 0.5 0.2 1.0

Philippines 18.0 15.9 1.4 0.7

Singapore 13.5 14.6 16.5 0.7 0.6 1.3

Sri Lanka

Taiw an 4.4 4.2 4.2 0.6 0.5 0.7

Thailand 7.1 -1.0

4Q13 3Q13 2Q13 1Q13 4Q13 3Q13 2Q13 1Q13

New Zealand* 5.1 4.8 4.4 4.2 1.3 1.3 1.0 1.4

% y-o-y % q-o-q, sa/ % m-o-m, sa

0

5

10

15

20

25

0

5

10

15

20

25

JN NZ TA SK AU TH MA SL SI CH IN PH HK ID

Latest 6 months ago

% y -o-y % y -o-y

0510152025303540

05

10152025303540

SI JN KR NZ TA MA TH AU ID IN HK CH SL PH

% y-o-y latest % 3m/3m saar latest

% y -o-y % y -o-y

Apr-14 Mar-14 Feb-14 Jan-14 Apr-14 Mar-14 Feb-14 Jan-14Australia 6.6 7.1 6.6 7.4 7.8 7.7New Zealand 5.0 6.8 7.0 7.2 5.8 4.6China 13.2 12.0 13.3 13.2 14.0 13.1 12.3 12.1Hong Kong 12.1 12.8 9.6 11.6 12.8 13.0India 10.7 9.3 9.6 11.1 9.8 10.0 9.6 9.9Indonesia 10.0 10.9 11.6 7.1 6.2 6.8Japan 3.4 3.6 4.0 4.3 1.6 3.0 4.2 4.7Korea 5.0 5.7 5.5 7.3 6.8 6.1Malay sia 6.3 6.4 6.8 2.9 2.1 0.9Philippines 34.8 36.1 37.3 23.9 24.7 31.9Singapore 2.0 2.4 3.6 4.8 3.1 1.3Sri Lanka 16.1 17.8 12.6 13.3Taiw an 5.9 5.8 6.1 4.4 3.8 4.3Thailand 6.4 7.4 7.4 6.0 6.9 6.2

% y-o-y % 3m/3m saar

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Rates Asia Policy rate forecasts % pa, (red denotes rate hikes or HSBC above implied rate, grey denotes rate cuts or HSBC below implied rate)

Current Last Move/Date Next MPC 1Q 14 2Q 14f 3Q 14f 4Q 14f 1Q 15f 3M FW 6M FW 12M FW

Australia 2.50 -25bp (Aug-2013) 3-Jun 2.50 2.50 2.50 2.75 3.00 2.66 2.69 2.83New Zealand 3.00 +25bp (Apr-2014) 11-Jun 2.75 3.25 3.25 3.50 3.75 3.50 3.68 4.04Bangladesh 7.25 -50bp (Feb-2013) n/a 7.25 7.25 7.25 7.25 7.25 n/a n/a n/aChina 6.00 -31bp (Jul-2012) n/a 6.00 6.00 6.00 6.00 6.00 n/a n/a n/aHong Kong 0.50 -100bp (Dec-2008) n/a 0.50 0.50 0.50 0.50 0.50 n/a n/a n/aIndia Repo 8.00 +25bp (Jan-2014) 3-Jun 8.00 8.25 8.25 8.25 8.25 8.02 7.93 8.03Indonesia 7.50 +25bp (Nov-2013) 12-Jun 7.50 7.50 7.50 7.50 7.50 n/a n/a n/aJapan 0.0-0.10 (Oct-2010) 21-May 0.05 0.05 0.05 0.05 0.05 n/a n/a n/aKorea 2.50 -25bp (May-2013) 12-Jun 2.50 2.50 2.75 3.00 3.25 2.50 2.56 2.66Malaysia 3.00 +25bp (May-2011) 10-Jul 3.00 3.00 3.50 3.50 3.50 3.25 3.18 3.59Philippines 3.50 -25bp (Oct-2012) 19-Jun 3.50 3.75 4.00 4.00 4.00 n/a n/a n/aSri Lanka 8.00 -50bp (Jan-2014) 25-May 8.00 8.00 8.00 8.00 8.50 n/a n/a n/aTaiwan 1.875 +12.5bp (Jun-2011) 25-Jun 1.875 1.875 1.875 1.875 2.000 2.030 2.060 2.120Thailand 2.00 -25bp (Mar-2014) 18-Jun 2.00 1.75 1.75 1.75 1.75 2.46 2.05 2.03Vietnam 5.00 -50bp (Mar-2014) n/a 5.00 5.00 5.00 5.00 6.00 n/a n/a n/a

NB: forecasts in italics; New Zealand and Australia implied rates are OIS swap rates. Singapore implied rates are calculated through 'the Bloomberg FWCM function'; Rest of the implied rates are based on recommendation from our local rates strategy team. For implied rates comparison, 3m compares to 2Q-2014, 6M to 3Q-2014 and 12 months to 1Q-2015; Source: Bloomberg, CEIC, HSBC

Asia nominal vs. core deflated real Policy rate (%) Expected change in Policy rate (bps)

Source: Thomson Reuters Datastream, CEIC, HSBC Source: Thomson Reuters Datastream, CEIC, HSBC

HSBC Asia bond yields forecast (% pa)

______________________ 5 yr ____________________ _____________________ 10 yr ____________________ Rates strategy comment Current + 3m + 6m + 9m Current + 3m + 6m + 9m 9m view

US 1.7 1.4 1.1 1.4 2.7 2.5 2.1 2.5 n/aUK 1.9 2.2 1.9 1.7 2.7 3.0 2.8 2.5 n/aEuro 0.6 0.5 0.5 0.7 1.6 1.5 1.4 1.6 n/aAustralia 3.2 3.2 3.4 3.6 3.8 3.8 4.0 4.2 NeutralNew Zealand 4.0 4.8 4.9 5.1 4.3 5.0 5.2 5.4 FlatteningChina 4.0 4.0 4.1 4.3 4.2 4.4 4.6 4.8 SteepeningHong Kong 1.3 1.1 1.3 1.5 2.0 2.0 2.2 2.4 NeutralIndia 8.8 9.0 8.5 8.5 8.8 9.0 8.6 8.6 SteepeningIndonesia 7.6 7.7 7.8 7.8 8.0 8.2 8.3 8.3 FlatteningJapan 0.2 0.1 0.1 0.1 0.6 0.6 0.7 0.7 FlatteningKorea 3.1 3.4 3.6 3.8 3.5 3.8 4.0 4.2 FlatteningMalaysia 3.6 4.2 4.2 4.2 4.0 4.6 4.6 4.6 SteepeningPhilippines 3.7 4.0 4.1 4.1 4.1 4.4 4.5 4.5 FlatteningSingapore 1.4 1.2 1.1 1.3 2.3 2.1 2.3 2.5 FlatteningTaiwan 1.0 1.1 1.1 1.2 1.5 1.6 1.6 1.7 NeutralThailand 3.1 2.9 3.1 3.1 3.5 3.5 3.6 3.6 Flattening

Note: Rates strategy recommendations from HSBC: Asia-Pac Rates: A decline in term and political premium as of 24 April 2014; forecasts in italics, 3m compares to 2Q-2014, 6M to 3Q-2014 and 9 months to 4Q-2014. For US, UK, Euro forecasts are for 3M, 6M and 12M. Source: HSBC, CEIC & Bloomberg

-4

-2

0

2

4

6

8

10

-4

-2

0

2

4

6

8

10

JN HK TA NZ AU KR MA TH PH VN CH ID IN SL

Nominal Policy rate (latest) Real Policy rate (core deflated)

% %

-50

-25

0

25

50

75

100

125

-50

-25

0

25

50

75

100

125

TH JN AU CH HK ID SL TA VN NZ IN KR MA PHOver 6 months Over 12 months

bps bps

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Foreign Exchange HSBC Asia FX forecast (period end, vs. USD) (red denotes appreciation or HSBC above forward rate, grey denotes depreciation or HSBC below forward rate)

Q4 13 Q1 14 Q2 14f Q3 14f Q4 14f Q1 15f % chg 2014 3M FW 6M FW 12M FW

Australia 0.93 0.93 0.90 0.87 0.86 0.86 -8.51 0.93 0.93 0.92 New Zealand 0.83 0.87 0.85 0.86 0.87 0.88 1.16 0.86 0.85 0.84China 6.05 6.17 6.26 6.20 6.14 6.12 -0.16 6.17 6.18 6.20Hong Kong 7.75 7.76 7.80 7.80 7.80 7.80 0.65 7.75 7.75 7.75India 61.90 60.10 61.00 62.00 62.00 63.00 3.54 60.36 61.44 63.59Indonesia 12,189 11,404 11,750 12,000 12,250 12,500 6.14 11,620 11,815 12,221Japan 105.37 102.98 103.00 103.00 101.00 99.00 -0.98 102.00 102.00 101.00Korea 1,055 1,069 1,060 1,050 1,040 1,030 1.76 1,024 1,029 1,036Malaysia 3.25 3.27 3.30 3.32 3.33 3.35 3.42 3.23 3.25 3.28Philippines 44.41 45.00 44.80 45.00 45.20 45.40 3.20 43.80 43.80 44.00Singapore 1.27 1.27 1.27 1.28 1.28 1.28 2.40 1.25 1.25 1.25Sri Lanka 130.89 131.98 130.00 130.00 130.00 130.00 -0.30 n/a n/a n/aTaiwan 29.95 29.78 30.20 30.00 29.80 29.70 -1.00 30.10 30.00 29.80Thailand 32.68 31.71 32.80 33.40 34.00 34.30 4.62 32.60 32.70 33.10Vietnam 21,095 21,080 21,100 21,100 21,100 21,100 -0.01 21,236 21,463 22,755Euro 1.37 1.39 1.33 1.30 1.28 1.25 -7.91 1.39 1.39 1.39Sterling 1.66 1.66 1.61 1.55 1.50 1.47 -11.76 1.69 1.69 1.69

NB: forecasts in italics; % change from May 8, 2014 to end 4Q 14; FW rates are from Bloomberg FXFC function using forward rate; for forward rate comparison, 3M compares to 2Q-2014, 6M to 3Q-2014, and 12M to 1Q-2015; Source: HSBC, Bloomberg

Asia REER (% y-o-y) Exchange rate- 2014 upside/downside vs. spot rates (%)

Source: BIS, HSBC Source: Bloomberg, HSBC, Spot returns as of May 14, 2014

HSBC Asia FX policy sustainability dashboard — (negative readings denoted in red)

S.T. ext debt FX reserves S.T. debt C/A 2014f C/A 2015f ______________ Exports % y-o-y _______________ (USD bn) (USD bn) Cover (%) (% of GDP) (% of GDP) 3mma (Latest) 2014f 2015f

Australia n/a 57 n/a -1.9 -1.5 3.7 7.9 6.9New Zealand n/a 12 n/a -2.9 -3.8 19.6 7.8 1.3China 741 3,948 18.8 2.5 2.7 -8.0 10.0 12.0Hong Kong 788 318 n/a 4.1 6.2 0.5 4.2 3.4India 100 284 35.3 -2.2 -2.7 -2.0 8.0 8.7Indonesia 52 106 49.1 -2.4 -2.0 -2.4 -3.8 3.6Korea 151 356 42.3 4.6 4.7 5.2 8.1 13.5Malaysia 35 118 29.4 5.4 7.4 4.1 4.5 8.4Philippines 7 80 8.7 3.1 2.4 11.2 7.8 8.0Singapore n/a 275 n/a 19.3 19.8 1.0 3.8 8.4Sri Lanka 6 8 73.2 -5.2 -5.6 13.9 7.7 11.0Taiwan 118 421 28.0 8.7 6.3 5.5 4.4 4.8Thailand 68 167 41.0 1.0 1.2 -0.7 3.3 7.2Vietnam 10 30 33.0 3.3 0.9 22.1 15.4 13.0

NB: (1) short term debts are 2014 estimates and FX reserves are the latest released; forecasts in italics; (2) Re-exports are excluded from Taiwan’s export no.s; (3) USD export values are used. Source: HSBC, CEIC.

-25-20-15-10-50510

-25-20-15-10-505

10

AU ID IN JN TH PH MA SI TA CH HK SK NZ

Latest 6 months ago

% y -o-y % y -o-y

-2

0

2

4

6

8

10

-2

0

2

4

6

8

10

NZ TA JN SL CH VN HK SK SG PH MA IN TH ID AU

% change ytd

% %

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Global indicators Global High Frequency data (red denotes an improvement, grey denotes a deterioration or unchanged from previous reading)

_________________________ GDP (% y-o-y) _______________________ _______________________ Exports (% y-o-y) _____________________ 1Q14 4Q13 3Q13 2Q13 Apr-14 Mar-14 Feb-14 Jan-14

US (q-o-q saar) 0.1 2.6 4.1 2.5 US 6.0 1.6 3.0 Eurozone 0.5 -0.3 -0.6 Eurozone 4.0 1.3 Germany 1.4 0.6 0.5 Germany 10.3 2.8 Japan 2.6 2.3 1.2 Japan 1.8 9.8 9.5 Brazil 1.9 2.2 3.3 Brazil -4.4 -8.8 2.5 0.4 Russia 2.0 1.3 1.0 Russia 13.6 13.7 17.5 16.9 India 4.7 4.8 4.4 India 5.3 -3.2 -5.5 2.7 China 7.4 7.7 7.8 7.5 China 0.8 -6.6 -18.1 10.5 South Africa 2.1 1.8 1.9 South Africa -6.9 -4.7 Turkey 4.4 4.5 Turkey 12.4 5.7 8.3 Mexico 0.7 1.4 1.6 Mexico 4.5 4.7 -1.0

________________________ IP (% y-o-y) _______________________ __________________ Retail Sales (% m-o-m sa) _________________ Apr-14 Mar-14 Feb-14 Jan-14 Apr-14 Mar-14 Feb-14 Jan-14

US 4.1 3.8 3.2 US 0.1 1.2 0.8 -0.9 Eurozone 1.8 Eurozone 0.3 -0.1 0.9 Germany 2.4 4.7 4.7 Germany -0.2 -0.1 1.1 Japan 7.0 7.0 10.6 Japan 2.3 0.4 1.1 Brazil 5.0 -2.2 Brazil 0.5 1.1 Russia 1.4 2.1 -0.2 Russia 36.0 -38.8 India -0.5 -1.8 0.8 India 0.7 2.4 -0.4 2.1 China 8.7 8.8 8.6 8.6 China 0.8 0.7 0.8 0.6 South Africa 1.5 2.5 South Africa -0.2 0.5 Turkey 3.8 4.1 6.4 Turkey 5.6 -10.8 -14.6 -21.0 Mexico 3.4 0.5 0.8 Mexico -0.9 -0.7

________________________ CPI (% y-o-y) _______________________ _____________________ Core CPI (% y-o-y) ____________________ Apr-14 Mar-14 Feb-14 Jan-14 Apr-14 Mar-14 Feb-14 Jan-14

US 1.5 1.1 1.6 US 1.7 1.6 1.6 Eurozone 0.5 0.7 0.8 Eurozone 0.8 1.1 1.0 Germany 1.3 1.0 1.2 1.3 Germany 0.9 1.2 1.2 Japan 1.6 1.5 1.4 Japan 0.6 0.7 0.6 Brazil 6.3 6.2 5.7 5.6 Brazil 6.4 6.2 5.7 Russia 7.3 6.9 6.2 6.1 Russia 9.4 6.0 5.6 5.5 India 5.7 4.7 5.2 India 3.5 3.1 3.0 China 1.8 2.4 2.0 2.5 China 1.6 1.7 1.7 2.0 South Africa 6.0 5.9 5.8 South Africa 5.5 5.3 5.3 Turkey 9.4 8.4 7.9 7.8 Turkey 9.4 8.9 8.1 7.2 Mexico 3.5 3.8 4.2 4.5 Mexico 3.1 2.9 3.0 3.2

______________________ Policy rate (%) ______________________ ____________________ OECD Lead Indicator ___________________ Apr-14 Mar-14 Feb-14 Jan-14 Feb-14 Jan-14 Dec-13 Nov-13

US 0-0.25 0-0.25 0-0.25 0-0.25 US 100.5 100.6 100.7 100.7 Eurozone 0.25 0.25 0.25 0.25 Eurozone 101.1 101.0 100.9 100.8 Germany Germany 98.3 98.5 98.7 98.8 Japan 0.04 0.04 0.04 0.04 Japan 101.2 101.2 101.2 101.1 Brazil 11.00 10.75 10.75 10.50 Brazil 98.3 98.5 98.7 98.8 Russia 7.50 7.00 5.50 Russia 99.4 99.6 99.7 99.7 India 8.00 8.00 8.00 8.00 India 97.6 97.7 97.8 97.9 China 6.00 6.00 6.00 6.00 China 99.3 99.3 99.3 99.4 South Africa 5.50 5.50 5.50 South Africa 100.1 100.2 100.2 100.2 Turkey 10.00 10.00 10.00 10.00 Turkey 97.9 98.4 98.8 99.2 Mexico 3.50 3.50 3.50 3.50 Mexico 99.4 99.1 98.9 98.8

____________________ Unemployment rate (%) ___________________ __________________ Consumer Confidence Index _________________ Apr-14 Mar-14 Feb-14 Jan-14 Apr-14 Mar-14 Feb-14 Jan-14

US 6.3 6.7 6.7 6.6 US 82.3 83.9 78.3 79.4 Eurozone 11.8 11.8 11.8 Eurozone -12.7 -11.7 Germany 6.7 6.7 6.7 6.8 Germany 8.5 8.5 8.3 7.7 Japan 3.6 3.6 3.7 Japan 36.9 37.6 39.7 Brazil 5.0 5.1 4.8 Brazil 106.3 107.2 107.1 108.9 Russia 5.4 5.6 5.6 China 107.9 103.1 101.1 Turkey 10.1 Turkey 78.5 72.7 69.2 72.4 Mexico 4.8 4.6 5.1 Mexico 90.3 88.79 84.52 84.5

4Q13 3Q13 2Q13 1Q13 4Q13 3Q13 2Q13 1Q13 China 4.1 4.1 4.0 4.1 Russia -11.0 -7.0 -6.0 -7.0 South Africa 17.5 17.6 18.2 South Africa -5.7 -6.9 -7.8 1.2

Note: Japan exports is in local currency, rest are in USD terms; Eurozone retail sales is ex-motor vehicles, Eurozone IP is ex-construction, Germany Consumer confidence is Gfk consumer confidence index, South Africa unemployment rate is average of Black African, coloured, Indian and white, India inflation data is WPI; Source: CEIC, Thomson Reuters Datastream

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G7 Indicators German IFO – current assessment versus expectations G-3 Capital Goods Orders (% y-o-y, non-weighted)

Source: CEIC, HSBC Source: CEIC, HSBC

G-3 Retail Sales (% y-o-y, non-weighted) G-7 OECD lead indicator vs. Asia ex Japan IP Growth (% y-o-y)

Source: CEIC, HSBC Source: Thomson Reuters Datastream, HSBC

Brent crude oil and Gold prices IMF Commodity price indices (2005 = 100)

Source: Thomson Reuters Datastream, HSBC Source: IMF, HSBC

US and Germany 10 year bond yields US and EU core CPI

Source: Thomson Reuters Datastream, HSBC Source: Thomson Reuters Datastream, HSBC

75

85

95

105

115

125

75

85

95

105

115

125

May-04 May-06 May-08 May-10 May-12 May-14

IFO - Current Assessment (LHS) IFO - Expectation (RHS)

Index Index

-40

-30

-20

-10

0

10

20

-40

-30

-20

-10

0

10

20

Mar-04 Mar-06 Mar-08 Mar-10 Mar-12 Mar-14

G-3 Capital Goods Orders

% y -o-y % y -o-y

-10-8-6-4-202468

-10-8-6-4-202468

Feb-04 Feb-06 Feb-08 Feb-10 Feb-12 Feb-14G-3 Retail Sales

% y -o-y % y -o-y

-15

-5

5

15

25

95

97

99

101

103

Feb-02 Feb-04 Feb-06 Feb-08 Feb-10 Feb-12 Feb-14

G7: OECD lead indicator (LHS)

Asia ex JP (Simple) IP growth (RHS)

Index % y -o-y

1000

1200

1400

1600

1800

2000

60

80

100

120

140

160

Nov-10 May-11 Nov-11 May-12 Nov-12 May-13 Nov-13 May-14

Brent (LHS) Gold (RHS)

USD/bbl USD/Troy Ounce

100

150

200

250

300

100

150

200

250

300

Apr-06 Apr-07 Apr-08 Apr-09 Apr-10 Apr-11 Apr-12 Apr-13 Apr-14

Food Price Index (LHS) Metal Price Index (RHS)

Index Index

1.0

1.5

2.0

2.5

3.0

3.5

4.0

1.0

1.5

2.0

2.5

3.0

3.5

4.0

Nov-10 May-11 Nov-11 May-12 Nov-12 May-13 Nov-13 May-14

US 10-yr bond yield (LHS) Germany 10-yr bond yield (RHS)

% %

0.650.901.151.401.651.902.152.402.65

0.650.901.151.401.651.902.152.402.65

Apr-06 Apr-08 Apr-10 Apr-12 Apr-14US PCE Core CPI (LHS) EU Core CPI (RHS)

% y -o-y % y -o-y

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Asia Electronics Asian electronics lead indicator

Source: CEIC, HSBC

US Semiconductor Equipment book-to-bill ratio Singapore Electronics PMI

Source: CEIC, HSBC Source: CEIC, HSBC

Philly Semiconductor Index US Semiconductor shipments worldwide

Source: CEIC, HSBC Source: CEIC, HSBC

US electronic imports Japan, Korea and Taiwan electronic exports

Source: CEIC, HSBC Source: CEIC, HSBC

-30

-20

-10

0

10

20

-1.5

-1.0

-0.5

0.0

0.5

1.0

May-08 Nov-08 May-09 Nov-09 May-10 Nov-10 May-11 Nov-11 May-12 Nov-12 May-13 Nov-13 May-14

Asian electronics lead indicator (LHS) Asian electronics production growth (RHS)

Change in indicator v alue % 3m/3m sa

0.4

0.6

0.8

1.0

1.2

1.4

0.4

0.6

0.8

1.0

1.2

1.4

05 06 07 08 09 10 11 12 13 14US SEMI book-to-bill

Ratio Ratio

40

45

50

55

60

40

45

50

55

60

05 06 07 08 09 10 11 12 13 14

Singapore Electronics PMI

Index Index

190

290

390

490

590

190

290

390

490

590

05 06 07 08 09 10 11 12 13 14

Philly Semiconductor Index

Index Index

-40-30-20-10010203040

-40-30-20-10

010203040

05 06 07 08 09 10 11 12 13 14

US Semiconductor shipments, 3m rolling avg

% y -o-y % y -o-y

-30

-20

-10

0

10

20

30

40

-30

-20

-10

0

10

20

30

40

05 06 07 08 09 10 11 12 13 14US Electronics Imports

% y -o-y % y -o-y

-60

-30

0

30

60

90

-60

-30

0

30

60

90

05 06 07 08 09 10 11 12 13 14Korea Electronic Exports Taiwan Electronic ExportsJapan Electronic Exports

% y -o-y % y -o-y

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Asia Major Events

Major Events

Source: Bloomberg, HSBC.

China

South Korea

TaiwanIndia Hong Kong

Sri Lanka

Vietnam Philippines

Thailand

Indonesia

Malaysia

Singapore

Japan

Australia

New Zealand

India

State Council announces new capital market reforms for the next five years

Sewol ferry incident

PM Yingluck foundguilty by Constitutional Court of abuse of power in 2011 transfer of securityhead

Opposition party PDI-P wins most votes in April 9 legislative elections

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Australia News Highlights

Australia’s fiscal settings are currently in focus, given the release of Budget 2014/15 on 13 May. To provide a guide to government spending reform, the new government had appointed a Commission of Audit, which released its report recently. Two key themes were highlighted among the report’s 86 recommendations. First, that without cuts to spending or boosted tax revenue, Australia faces the prospect of persistent budget deficits. Second, Australia can implement gradual reform to get the budget deficit under control, without the need for urgent fiscal austerity. This room for gradual reform reflects Australia’s low – by international standards – level of net public debt.

Data Trends

The economy continues to rebalance away from mining-led growth towards other drivers. Low rates and rising asset prices are supporting a rise in consumer spending, with retail sales up 5.7% y-o-y in March, while resource export volumes continue to rise strongly. More broadly, businesses are reporting improved trading conditions, consistent with a further increase in domestic demand. Stronger activity is also supporting the labour market, with solid jobs growth in April and the unemployment rate holding steady at 5.8%, down from 6.0% in February. Higher frequency indicators continue to point to further improvement in the labour market.

Australia GDP Australia PMI Manufacturing

Source: Thomson Reuters Datastream, HSBC Source: Markit, HSBC

Australia Inflation v/s Policy rate Australia NAB Business survey

`

Source: Thomson Reuters Datastream, HSBC Source: Thomson Reuters Datastream, HSBC

-4

-2

0

2

4

6

8

-4

-2

0

2

4

6

8

Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13

GDP y-o-y (LHS) GDP q-o-q saar (RHS)

% y -o-y % q-o-q saar

30

34

38

42

46

50

54

58

30

34

38

42

46

50

54

58

Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14

PMI Manufacturing New Orders Index

Index , sa Index , sa

012345678

012345678

05 06 07 08 09 10 11 12 13 14

Inflation (LHS) Policy rate (RHS)

% y -o-y %

-30

-20

-10

0

10

20

30

-30

-20

-10

0

10

20

30

01 02 03 04 05 06 07 08 09 10 11 12 13 14

Business conditions:actual Business conditions:expected

Index Index

Paul Bloxham, Economist HSBC Australia Limited +612 9255 2635 [email protected]

Adam Richardson, Economist HSBC Australia Limited +612 9006 5848 [email protected]

Indicator Last 12 data

points DoR* Unit

Mar Trade Balance

1-May AUD m

RBA Cash Target

6-May %

Mar Retail Sales

7-May % m-o-m

Apr Emp Change

8-May ‘000s

Apr Unemployment

8-May %

* Date of Release

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China News Highlights

On 12 May, the State Council issued new capital market reforms to be rolled out in the next five years. These include inroads into the equity, bond and futures markets to reduce government involvement and broaden private sector participation in financing growth. The Ministry of Industry and Information Technology on 10 May announced it is granting telecom pricing autonomy to all operators in China. Telcos can now freely design service packages and set prices based on consumer needs and market conditions.

Data Trends

At 48.1 in April, the HSBC manufacturing PMI continued to disappoint although domestic demand and output stabilized from their March readings. The HSBC services PMI also eased in the month. Export figures rebounded after two consecutive months of contraction. Exports and imports rose 0.9% y-o-y and 0.8% y-o-y respectively in April. IP eased to 8.7% y-o-y whereas retail sales fell to 11.9% y-o-y in April. Disinflationary pressures continued to build this month – CPI eased to 1.85% y-o-y on declining vegetable and pork prices. On the credit side, M2 growth rebounded in April but lending still remains weak, likely weighing on investment growth.

China GDP China PMI

Source: CEIC, HSBC Source: Markit, HSBC

China HSBC manufacturing PMI China HSBC services PMI

Source: Markit, HSBC Source: Markit, HSBC

0

5

10

15

20

25

0

3

6

9

12

15

Sep-06 Mar-08 Sep-09 Mar-11 Sep-12 Mar-14

GDP y-o-y (LHS) GDP q-o-q saar (RHS)

% y -o-y % q-o-q saar

474849505152535455

474849505152535455

Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14

PMI Manufacturing Business Activity Index

Index , sa Index , sa

Apr-14 Mar-14 Feb-1448.1 48.0 48.547.9 47.2 48.847.4 46.5 48.650.7 51.0 50.1-3.3 -4.5 -1.546.5 41.7 45.046.4 41.5 46.80.1 0.2 -1.8

48.9 51.3 48.547.9 49.4 47.2

>50 + rising >50 + falling <50 + rising <50 + falling

unchanged above 50 Unchanged below 50

PMI ManufacturingOutputNew OrdersInventoriesNew Orders - InventoryOutput PricesInput PricesOutput Prices - Input PricesNew export ordersEmployment

Apr-14 Mar-14 Feb-1451.4 51.9 51.050.3 51.7 50.8

New Business 51.4 51.3 51.4Input Prices 51.2 52.8 51.6Outstanding Business 49.7 49.8 48.6Business Expectations 60.7 63.1 62.2

>50 + rising >50 + falling <50 + rising <50 + falling

unchanged above 50 Unchanged below 50

Business ActivityEmployment

Qu Hongbin, Economist The Hongkong and Shanghai Banking Corporation Limited +852 2822 2025 [email protected]

Julia Wang, Economist The Hongkong and Shanghai Banking Corporation Limited +852 3604 3663 [email protected]

Indicator Last 12 data

points DoR* Unit

Apr HSBC PMI

5-May Index

Apr Exports

8-May % y-o-y

Apr CPI

9-May % y-o-y

Apr M2

12-May % y-o-y

Apr IP

13-May % y-o-y

* Date of Release

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Hong Kong News Highlights

The HKMA stated that the risks to Hong Kong banks from lending to Mainland China are manageable, as it is supported by genuine economic activity. Loans to Chinese borrowers by banks in Hong Kong, including branches of Mainland banks, surged 30% last year. The increased holdings of bonds traded in China’s interbank market and trade-related activities are also among the reasons for the increase, according to Arthur Yuen, the HKMA’s deputy chief executive. The Hong Kong Stock Exchange plans to list coal and industrial metal futures on its trading platform. It also expects to offer RMB-denominated futures for zinc, copper and nickel by the end of 2014.

Data Trends

The HSBC Hong Kong PMI fell further to 49.7 in March, the lowest reading since August 2013, on slowing output and a sharp reversal in new business from China. Retail sales were also weak in March, contracting 1.3% y-o-y and 2.3% y-o-y in value and volume terms respectively, while the trade deficit also widened. However, price pressures remained subdued in March, with CPI unchanged at 3.9% y-o-y. The unemployment rate was unchanged for the third consecutive month in March at 3.1%, the lowest rate since the 1990s. A relatively tight labor market is therefore not translating into higher prices just yet.

Hong Kong GDP HSBC Hong Kong PMI

Source: CEIC, HSBC Source: Markit, HSBC

Hong Kong Inflation v/s Policy rate HSBC Hong Kong PMI

Source: CEIC, HSBC Source: CEIC, HSBC

-16

-12

-8

-4

0

4

8

12

16

-12

-9

-6

-3

0

3

6

9

12

Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13

GDP y-o-y (LHS) GDP q-o-q saar (RHS)

% y -o-y % q-o-q saar

46

48

50

52

54

56

58

46

48

50

52

54

56

58

Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14

PMI New Orders Index

Index , sa Index , sa

-3

0

3

6

9

-3

0

3

6

9

05 06 07 08 09 10 11 12 13 14

Inflation (LHS) HIBOR-3 months rate (RHS)

% y -o-y %Apr-14 Mar-14 Feb-1449.7 49.9 53.349.4 49.2 55.150.3 49.1 54.850.0 52.0 53.40.3 -2.9 1.4

51.5 51.2 54.455.5 53.5 56.2-3.9 -2.3 -1.947.2 50.5 54.149.5 51.1 50.4

>50 + rising >50 + falling <50 + rising <50 + falling

unchanged above 50 Unchanged below 50

PMIOutputNew OrdersInventoriesNew Orders - InventoryOutput PricesInput PricesOutput Prices - Input PricesNew Business from ChinaEmployment

John Zhu, Economist The Hongkong and Shanghai Banking Corporation Limited +852 2996 6621 [email protected]

Rini Sen, Economics Associate Bangalore

Indicator Last 12 data

points DoR* Unit

Apr PMI

7-May Index

1Q-2014 GDP

16-May % y-o-y

Apr CPI

22-May % y-o-y

Apr Exports

27-May % y-o-y

Apr Imports

27-May % y-o-y

* Date of Release

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India News Highlights

Exit polls suggested the NDA-led coalition would comfortably win the elections, but these polls have been unreliable in the past (source: Reuters). The Planning Commission will recommend a more business friendly version of the land acquisition bill to the new government. Lower expenditure due to election code of conduct may have lowered FY14 fiscal deficit to 4.5% (vs. 4.6% revised estimate) according to a finance ministry official. The World Bank estimated that India is the third largest economy in PPP terms. The current account deficit for FY13-14 fell to USD32bn (1.7% of GDP), according to the finance ministry. India Meteorological Department expects monsoon rainfall to be 5% below normal due to El Nino.

Data Trends

The manufacturing PMI was broadly unchanged despite softer readings for output. This was largely the result of firmer domestic demand, which countered the slowdown in export orders. Meanwhile, services PMI readings for activity and new business flows improved, but remained below the water line. The trade balance was broadly unchanged in April at USD10.1bn vs. USD10.5bn in March. Exports bounced back and imports declined further in annual terms. Industrial production continued to contract in annual terms in March. Meanwhile, CPI inflation rose more than expected due to food price, but core CPI eased slightly.

India GDP India PMI

Source: CEIC, HSBC Source: Markit, HSBC

HSBC India manufacturing PMI HSBC India services PMI

Source: Markit, HSBC Source: Markit, HSBC

-4

0

4

8

12

16

20

-3

0

3

6

9

12

15

Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13

GDP y-o-y (LHS) GDP q-o-q saar (RHS)

% y -o-y % q-o-q saar

444648505254565860

444648505254565860

Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14

PMI Manufacturing Business Activity Index

Index , sa Index , sa

Apr-14 Mar-14 Feb-14PMI Manufacturing 51.3 51.3 52.5Output 51.7 52.2 54.0New Orders 52.5 52.7 54.9Inventories 52.7 51.4 51.4

-0.2 1.3 3.550.9 51.0 51.454.6 57.2 61.0-3.7 -6.2 -9.6

New export orders 53.0 56.8 54.1Employment 50.2 50.2 50.2

>50 + rising >50 + falling <50 + rising <50 + falling

unchanged above 50 Unchanged below 50

New Orders - InventoryOutput PricesInput PricesOutput Prices - Input Prices

Apr-14 Mar-14 Feb-1448.5 47.5 48.849.8 51.2 50.1

New Business 48.4 47.6 49.5Input Prices 53.9 53.2 53.9Outstanding Business 52.1 52.2 48.2Business Expectations 65.8 66.0 63.4

>50 + rising >50 + falling <50 + rising <50 + falling

unchanged above 50 Unchanged below 50

Business ActivityEmployment

Leif Eskesen, Economist The Hongkong and Shanghai Banking Corporation Limited, Singapore Branch +65 6658 8962 [email protected]

Prithviraj Srinivas, Economics Associate Bangalore

Indicator Last 12 data

points DoR* Unit

Apr Mfg PMI

2-May Index

Apr Exports

9-May % y-o-y

Apr Imports

9-May % y-o-y

Mar IIP

12-May % y-o-y

1Q-2014 GDP

30-May % y-o-y

* Date of Release

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Indonesia News Highlights

The official tally of the 9 April legislative polls confirmed that the PDI-P had won the most votes (18.9%), followed by Golkar and Gerinda, at 14.8% and 11.8%, respectively. Including NasDem and the PKB, the PDI-P-led coalition garnered 34.7% of the vote. PDI-P presidential nominee Joko Widodo said he would phase out fuel subsidies gradually over four years if elected, because the subsidy bill was too large and could be used for more productive industries. S&P reaffirmed the country’s credit rating just one notch below investment grade at BB+, saying that fiscal reform and the state of governance would be important in its future assessment.

Data Trends

Q1 GDP growth slowed to 5.2% y-o-y from 5.7% in Q4. Seasonally adjusted, q-o-q growth decelerated to 1.0%, the slowest since the Lehman crisis and below long-term trend growth of around 1.5%. Although private consumption was stronger than we expected, sub-trend investment spending and a sequential contraction in imports suggest that monetary tightening will continue to cool domestic demand in a broad-based manner. After the GDP report Bank Indonesia (BI) kept policy on hold, but trimmed its 2014 growth forecast to 5.1-5.5% from 5.5-5.9% earlier. April inflation remained stable at 7.3% y-o-y, while trade balance posted a modest surplus of USD673m in March.

Indonesia GDP Indonesia PMI Manufacturing

Source: CEIC, HSBC Source: Markit, HSBC

Indonesia Inflation v/s Policy rate HSBC Indonesia manufacturing PMI

Source: CEIC, HSBC Source: Markit, HSBC

0

2

4

6

8

10

0

2

4

6

8

10

Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14

GDP y-o-y (LHS) GDP q-o-q saar (RHS)

% y -o-y % q-o-q saar

47

48

49

50

51

52

53

54

47

48

49

50

51

52

53

54

Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14

PMI Manufacturing New Orders Index

Index , sa Index , sa

3

6

9

12

15

0

5

10

15

20

05 06 07 08 09 10 11 12 13 14

Inflation (LHS) Policy rate (RHS)

% y -o-y %Apr-14 Mar-14 Feb-14

PMI 51.1 50.1 50.5Output 49.8 49.8 50.3New Orders 52.7 51.2 50.3Inventories 49.5 49.8 48.9

3.2 1.4 1.456.0 55.4 57.460.3 60.0 65.7-4.3 -4.6 -8.3

New export orders 50.9 50.4 50.8Employment 50.2 48.2 48.7

>50 + rising >50 + falling <50 + rising <50 + falling

unchanged above 50 Unchanged below 50

New Orders - InventoryOutput PricesInput PricesOutput Prices - Input Prices

Su Sian Lim, Economist The Hongkong and Shanghai Banking Corporation Limited, Singapore Branch +65 6658 8963 [email protected]

Abanti Bhaumik, Economics Associate Bangalore

Indicator Last 12 data

points DoR* Unit

Apr Mfg PMI

2-May Index

Apr CPI

2-May % y-o-y

Mar Exports

2-May % y-o-y

1Q-2014 GDP

5-May % y-o-y

Reference rate

8-May %

* Date of Release

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Japan News Highlights

US President Obama made a state visit to Japan on 23-25 April. Though there were hopes that the President's visit would yield a breakthrough in the stalled Trans-Pacific Partnership negotiations, the two sides were unable to reach an agreement. According to media reports, progress was made on tariff discussions for beef, dairy, rice, barley, and sugar. However, there remained disagreements over pork tariffs and safety standards for US auto exports to Japan. Discussions will continue at the ministerial level at TPP talks in Vietnam (12-15 May). Meanwhile, in early April, Japan announced that it had concluded an economic partnership agreement (EPA) with Australia after seven years of negotiation.

Data Trends

Consumption-related indices registered a sharp pick-up in March, thanks to front-loaded spending in the run-up to the 1 April tax hike. Department store sales were up 25% y-o-y, and retail sales jumped 6.3% m-o-m sa in March. Meanwhile, real household spending surged 10.8% m-o-m sa, beating even the most aggressive analyst estimates. Preliminary reports from retail shops – though highly anecdotal – suggest that the "payback" from the tax hike has been no worse than feared. April business surveys have shown deterioration in corporate sentiment, with Reuters Tankan, Shoko Chukin SME survey, and Markit PMIs all pointing to a slowdown in activity. But firms see momentum picking up again in the near term.

Japan GDP Japan PMI

Source: CEIC, HSBC Source: Markit, HSBC

Japan Inflation v/s Policy rate Japan manufacturing PMI

Source: CEIC, HSBC Source: Markit, HSBC

-20

-15

-10

-5

0

5

10

15

-12

-9

-6

-3

0

3

6

9

Jun-06 Dec-07 Jun-09 Dec-10 Jun-12 Dec-13

GDP y-o-y (LHS) GDP q-o-q saar (RHS)

% y -o-y % q-o-q saar

44

46

48

50

52

54

56

58

44

46

48

50

52

54

56

58

Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14

PMI Manufacturing Business Activity Index

Index , sa Index , sa

-0.6

-0.4

-0.2

0.0

0.2

0.4

0.6

-3

-2

-1

0

1

2

3

06 07 08 09 10 11 12 13 14

Inflation (LHS) Policy rate (RHS)

% y -o-y % Apr-14 Mar-14 Feb-14PMI 49.4 53.9 55.5Output 46.2 54.2 58.4New Orders 47.4 54.9 56.2Inventories 50.0 50.3 50.6

-2.6 4.5 5.650.1 49.8 51.855.3 57.8 58.5-5.3 -8.0 -6.6

New export orders 49.1 52.3 51.5Employment 53.8 52.6 53.7

>50 + rising >50 + falling <50 + rising <50 + falling

unchanged above 50 Unchanged below 50

Input Prices

New Orders - InventoryOutput Prices

Output Prices - Input Prices

Izumi Devalier, Economist The Hongkong and Shanghai Banking Corporation Limited +852 2822 1647 [email protected]

Indicator Last 12 data

points DoR* Unit

Apr Mfg PMI

7-May Index

Mar CI-prelim**

9-May Index

1Q-2014 GDP

15-May % y-o-y

Mar IP-final

16-May % y-o-y

Apr Exports

21-May % y-o-y

* Date of Release ** Coincident Index

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Korea News Highlights

The 16 April Sewol ferry disaster is expected to weigh on Korea’s economic activity in Q2. In response, the government announced on 9 May that it will increase its front-loaded spending by allocating 57% of its 2014 budget into H1 from 55%. The Bank of Korea will provide support to impacted firms, mainly from the transport and tourism industries, by using money from its small- and medium-sized enterprise lending facility. Private consumption growth, which fell from 0.6% q-o-q sa to 0.3% in Q1, may slow further and dip into negative territory in Q2.

Data Trends

Korea is on track to close its output gap by year-end. Strong sequential GDP growth was sustained in Q1 and export growth in April beat market expectations. However, the HSBC Korea PMI showed that manufacturers also recorded a decline in new export orders. Hence such strong shipment growth may be difficult to sustain. While growth is in line with the Bank of Korea’s baseline scenario, uncertainty over the growth in key emerging market economies, such as China, and the impact of the Sewol ferry incident remain a downside risk. We expect the Bank of Korea to keep its policy rate low at 2.50% in H1 2014 to support the recovery.

Korea GDP Korea PMI Manufacturing

Source: CEIC, HSBC Source: Markit, HSBC

Korea Inflation v/s Policy rate HSBC Korea manufacturing PMI

Source: CEIC, HSBC Source: Markit, HSBC

-18

-9

0

9

18

-9

-6

-3

0

3

6

9

Sep-06 Mar-08 Sep-09 Mar-11 Sep-12 Mar-14

GDP y-o-y (LHS) GDP q-o-q saar (RHS)

% y -o-y % q-o-q saar

42

44

46

48

50

52

54

56

42

44

46

48

50

52

54

56

Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14

PMI Manufacturing New Orders Index

Index , sa Index , sa

0

1

2

3

4

5

6

7

0

1

2

3

4

5

6

7

05 06 07 08 09 10 11 12 13 14

Inflation (LHS) Policy rate (RHS)

% y -o-y %Apr-14 Mar-14 Feb-14

PMI 50.2 50.4 49.8Output 49.8 50.4 49.7New Orders 50.0 50.4 49.9Inventories 49.6 48.5 47.8

0.4 1.9 2.247.7 48.3 48.247.9 47.8 49.8-0.2 0.5 -1.6

New export orders 49.9 50.7 50.5Employment 50.9 51.9 50.6

>50 + rising >50 + falling <50 + rising <50 + falling

unchanged above 50 Unchanged below 50

New Orders - InventoryOutput PricesInput PricesOutput Prices - Input Prices

Ronald Man, Economist The Hongkong and Shanghai Banking Corporation Limited +852 2996 6743 [email protected]

Indicator Last 12 data

points DoR* Unit

Apr Exports

1-May % y-o-y

Apr CPI

1-May % y-o-y

Apr HSBC PMI

2-May Index

7-Day Repo Rate

9-May %

Apr IP

30-May % y-o-y

* Date of Release

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Malaysia News Highlights

Second finance minister Datuk Seri Ahmad Husni Hanadzlah said efforts to reduce the cost of living and aspects of subsidy rationalization will continue to be the government’s main focus in preparing the 2015 budget, which is expected to be tabled in Parliament on 10 October. There will also be emphasis on the entrepreneurship sector. Meanwhile the agriculture ministry said it was making plans to brace for El Nino in H2, with the weather pattern potentially hurting the production of rice and other crops. Separately, BNM Governor Zeti said the economy remains vibrant, and that the financial system is able to cope with volatility of capital flows.

Data Trends

Bank Negara Malaysia (BNM) left its policy rate unchanged at 3.00% in May. But it said “the degree of monetary accommodation may need to be adjusted” and that “inflation ... is expected to remain above its long-run average due to higher domestic cost factors”. We look for two 25bp rate hikes from the 10 July meeting, taking the policy rate to 3.50% by the year-end. March CPI remained stable but above BNM’s comfort range at 3.5% y-o-y, but our estimates of core suggested that underlying inflation continued to creep higher to 2.4% y-o-y. Meanwhile the trade surplus narrowed slightly in March, to MYR9.6bn, as exports rose 8.4% y-o-y and imports gained just 0.5% y-o-y.

Malaysia GDP Malaysia Commodity Prices

Source: CEIC, HSBC Source: CEIC, HSBC

Malaysia Inflation v/s Policy rate Malaysia Exports v/s IP

Source: CEIC, HSBC Source: CEIC, HSBC

-15

-10

-5

0

5

10

15

-12

-8

-4

0

4

8

12

Jun-06 Dec-07 Jun-09 Dec-10 Jun-12 Dec-13

GDP y-o-y (LHS) GDP q-o-q saar (RHS)

% y -o-y % q-o-q saar

6

9

12

15

18

2000

2500

3000

3500

4000

Apr-11 Oct-11 Apr-12 Oct-12 Apr-13 Oct-13 Apr-14

Palm Oil Price (LHS) Rubber Price (RHS)

MYR/ton MYR/kg

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

-4

-2

0

2

4

6

8

10

05 06 07 08 09 10 11 12 13 14

Inflation (LHS) Policy rate (RHS)

% y -o-y %

-10

-5

0

5

10

15

20

-10

-5

0

5

10

15

20

Jul-11 Nov-11 Mar-12 Jul-12 Nov-12 Mar-13 Jul-13 Nov-13 Mar-14

Exports IP

% y -o-y % y -o-y

Su Sian Lim, Economist The Hongkong and Shanghai Banking Corporation Limited, Singapore Branch +65 6658 8963 [email protected]

Abanti Bhaumik, Economics Associate Bangalore

Indicator Last 12 data

points DoR* Unit

Mar Exports

7-May % y-o-y

BNM Policy Rate

8-May %

Mar IP

12-May % y-o-y

1Q-2014 GDP

16-May % y-o-y

Apr CPI

21-May % y-o-y

* Date of Release

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New Zealand News Highlights

The RBNZ has offered its initial assessment of the macro-prudential tools it adopted last year. It sees the policy as having been effective, having restricted the pace of high loan-to-value ratio (LVR) lending to 4.8% of new lending (below the mandated 10% maximum), down from a rate of 25% prior to implementation. Credit growth has also slowed and the RBNZ’s modelling suggests the policy has dampened house price inflation. Despite this, house price inflation is currently at +8.5% y-o-y and near-record levels of migrant inflows are likely to provide on-going support. The RBNZ indicated that LVR restrictions are likely to remain in place until at least later this year.

Data Trends

Recent data continue to point to strong growth in New Zealand. Inward migration was at the second highest level on record in March. New Zealand’s labour market continues to improve, with employment growth running at +3.7% y-o-y in Q1 and business confidence remains well above average levels. With the economy continuing to pick up strongly, the RBNZ raised its cash rate by a further 25bp in April. Further rate hikes are likely in the near term, as economic momentum continues to build. However, the recent strength of the NZD and the recent fall in dairy prices from very elevated levels should also help to keep the economy from overheating.

New Zealand GDP New Zealand PMI

Source: Thomson Reuters Datastream, HSBC Source: Markit, HSBC

New Zealand Inflation v/s Policy rate inflation New Zealand Manufacturing PMI

Source: Thomson Reuters Datastream, HSBC Source: Markit, HSBC

-6-4-20246810

-6-4-202468

10

Jun-06 Dec-07 Jun-09 Dec-10 Jun-12 Dec-13

GDP y-o-y (LHS) GDP q-o-q saar (RHS)

% y -o-y % q-o-q saar

45

50

55

60

65

45

50

55

60

65

Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14

PMI Manufacturing New Orders Index

Index , sa Index , sa

0

2

4

6

8

10

0

2

4

6

8

10

05 06 07 08 09 10 11 12 13 14

Inflation (LHS) Policy rate (RHS)

% y -o-y %Mar-14 Feb-14 Jan-14

PMI 58.4 56.5 56.4Output 60.5 59.0 59.7New Orders 60.5 57.0 59.9Inventories 51.1 49.4 48.7New Orders-Inventory 9.4 7.7 11.2Employment 56.3 54.7 51.0

>50 + rising >50 + falling <50 + rising <50 + falling

unchanged above 50 Unchanged below 50

Paul Bloxham, Economist HSBC Bank Australia Limited +612 9255 2635 [email protected]

Adam Richardson, Economist HSBC Bank Australia Limited +612 9006 5848 [email protected]

Indicator Last 12 data

points DoR* Unit

Apr PMI

15-May Index

Apr Net Migration

21-May ‘000s

Apr Exports

26-May % y-o-y

Apr Imports

26-May % y-o-y

Apr Trade Balance

26-May NZD m

* Date of Release

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Philippines News Highlights

S&P raised the Philippines' rating one notch to BBB. Following the upgrade, Governor Tetangco commented that the strengthening of the PHP will help temper inflationary pressures. Weather experts estimate that the Philippines will likely receive below-average rainfall in Q4 2014 and Q1 2015 and have a more volatile tropical cyclone pattern. This means that while the impact of Typhoon Haiyan is still lingering, the Philippines will potentially experience more supply shocks in H2 2014. While the Supreme Court extended indefinitely the temporary restraining order it issued against Manila Electric Company over the increase of electricity prices, risks to accelerating inflation remain.

Data Trends

Inflation rose 4.1% y-o-y in April from 3.9% in March; with the storm season approaching and agricultural output lower this year, prices will likely accelerate in the summer months. M3 increased in March to 34.8% y-o-y due to higher deposits; credit also accelerated to 18.3% y-o-y from 18.0% in February. Excess liquidity is a concern but manageable; the BSP kept policy rates on hold but raised the RRR by 1ppt to 20%. Net FDI declined by 59% in February to USD350m, according to the BSP.

Philippines GDP Philippines Trade

Source: CEIC, HSBC Source: CEIC, HSBC

Philippines Inflation v/s Policy rate Philippines Overseas Remittances

Source: CEIC, HSBC Source: CEIC, HSBC

-12-9-6-303691215

-12-9-6-30369

1215

Jun-06 Dec-07 Jun-09 Dec-10 Jun-12 Dec-13

GDP y-o-y (LHS) GDP q-o-q saar (RHS)

% y -o-y % q-o-q saar

-2000

-1500

-1000

-500

0

500

-20

-10

0

10

20

30

40

Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14

Balance of Trade (RHS) Exports (LHS) Imports (LHS)

USD m% y -o-y

3

4

5

6

7

8

9

0

2

4

6

8

10

12

05 06 07 08 09 10 11 12 13 14

Inflation (LHS) Policy rate (RHS)

% y -o-y %

-12-9-6-3036912

-6

-4

-2

0

2

4

6

Feb-12 May-12 Aug-12 Nov-12 Feb-13 May-13 Aug-13 Nov-13 Feb-14

% y-o-y (RHS) % m-o-m sa (LHS)

% y -o-y % y -o-y

Trinh Nguyen, Economist The Hongkong and Shanghai Banking Corporation Limited +852 2996 6975 [email protected]

Indicator Last 12 data

points DoR* Unit

Apr CPI

6-May % y-o-y

BSP Policy Rate

8-May %

Mar Exports

9-May % y-o-y

Mar Remittances

15-May % y-o-y

1Q-2014 GDP

29-May % y-o-y

* Date of Release

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Singapore News Highlights

Deputy Prime Minister Tharman Shanmugaratnam took over as Chairman of the Singapore Economic Development Board (EDB)’s international advisory council (IAC) on 1 May. As per the EDB, manufacturers in Singapore are upbeat about their prospects over the next six months; the precision engineering cluster is the most optimistic. Singapore attracted 15.6m tourists in 2013, a record for the country. Singapore and the US agreed to facilitate compliance of Singapore financial institutions with US tax laws.

Data Trends

CPI inflation picked up, mainly on account of a smaller fall in car prices. Contributions from all other sectors, except accommodation, were also slightly higher. Non-oil domestic exports fell in March, with the volatile pharmaceuticals sector pulling down growth. Manufacturing output continued to grow at a sharp pace in March supported by both the biomedical and the transport engineering clusters. PMIs from April indicate that the pickup in factory output is set to continue supported by new export orders.

Singapore GDP Singapore PMI

Source: CEIC, HSBC Source: Markit, HSBC

Singapore Inflation v/s Policy rate Singapore PMI

Source: CEIC, HSBC Source: Markit, HSBC

-18-12-6061218243036

-18-12-606

1218243036

Sep-06 Mar-08 Sep-09 Mar-11 Sep-12 Mar-14

GDP y-o-y (LHS) GDP q-o-q saar (RHS)

% y -o-y % q-o-q saar

46474849

505152

5354

46474849

505152

5354

Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14

PMI Manufacturing New Orders Index

Index , sa Index , sa

-1

0

1

2

3

4

-2-1012345678

05 06 07 08 09 10 11 12 13 14Inflation (LHS) Policy rate (RHS)

% y -o-y %Apr-14 Mar-14 Feb-14

PMI 51.1 50.8 50.9Output 52.3 51.5 51.9New Orders 52.4 50.8 51.2Inventories 50.5 49.9 50.8

1.9 0.9 0.4

50.8 50.2 50.5

New export orders 52.5 51.7 51.5Employment 49.7 50.7 50.1

>50 + rising >50 + falling <50 + rising <50 + falling

unchanged above 50 Unchanged below 50

New Orders - InventoryOutput PricesInput PricesOutput Prices - Input Prices

Leif Eskesen, Economist The Hongkong and Shanghai Banking Corporation Limited, Singapore Branch +65 6658 8962 [email protected]

Prithviraj Srinivas, Economics Associate Bangalore

Indicator Last 12 data

points DoR* Unit

Apr PMI

5-May Index

Mar Retail Sales

15-May % y-o-y

Apr NODX

16-May % y-o-y

1Q-2014 GDP-final

20-May % y-o-y

Apr CPI

23-May % y-o-y

* Date of Release

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Sri Lanka News Highlights

The IMF raised its 2014 GDP growth forecast for Sri Lanka from 6.5% to 7%. The government is confident of achieving its target of a per-capita income of USD4,000 by 2015, one year before the target date. The central bank governor has asked banks to change their attitude towards lending to SMEs and allocate more loans to these. On the recent UNHRC resolution against Sri Lanka, the president noted that “except for an international inquiry, we are in the process of implementing all other demands made by sponsors of the resolution”. Fitch affirms Sri Lanka's rating at 'BB-' with stable outlook. It believes risks to the rating outlook were well balanced.

Data Trends

The central bank of Sri Lanka kept policy rates on hold as expected in April. The statement noted that inflation continued to moderate, but also that the drought may push up food inflation in coming months. Annual inflation picked up in April on a weak base in the previous year and price increases for food. Meanwhile, core CPI was unchanged. The trade deficit continued to narrow as a result of an increase in exports and a decline in imports. Remittance and tourism receipts improved as well, helping to lower the current account deficit.

Sri Lanka GDP Sri Lanka Trade

Source: CEIC, HSBC Source: CEIC, HSBC

Sri Lanka Inflation v/s Policy rate Sri Lanka Domestic credit v/s Money supply

Source: CEIC, HSBC Source: CEIC, HSBC

-20246810121416

-202468

10121416

Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13

GDP y-o-y (LHS) GDP q-o-q saar (RHS)

% y -o-y % q-o-q saar

-150

-75

0

75

150

-60

-30

0

30

60

Feb-12 Aug-12 Feb-13 Aug-13 Feb-14

Balance of Trade (RHS) Imports (LHS) Exports (LHS)

LKR bn% y -o-y

7

8

9

10

11

12

13

0

5

10

15

20

25

30

05 06 07 08 09 10 11 12 13 14

Inflation (LHS) Policy rate (RHS)

% y -o-y %

5

10

15

20

25

-15

0

15

30

45

05 06 07 08 09 10 11 12 13 14Domestic credit: Private (LHS) M2 (RHS)

% y -o-y % y -o-y

Leif Eskesen, Economist The Hongkong and Shanghai Banking Corporation Limited, Singapore Branch +65 6658 8962 [email protected]

Prithviraj Srinivas, Economics Associate Bangalore

Indicator Last 12 data

points DoR* Unit

Feb Exports

5-May % y-o-y

Feb Imports

5-May % y-o-y

Deposit Rate

22-25 May %

Lending Rate

22-25 May %

May CPI

30-May % y-o-y

* Date of Release

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Taiwan News Highlights

In a bid to contain soaring property prices, the Legislature’s Finance Committee approved an amendment to increase the minimum and maximum housing tax to 1.5% (from 1.2%) and 3.6% (from 2%) respectively. If passed, the amendment will come into effect in May 2015, affecting 15% of Taiwan’s population. Labour Minister Pan Shih-wei said that the basic minimum wage could be adapted differently by region to mitigate the widening wealth gap between the north and south. There was renewed speculation that Taiwan’s move to merge its four public pension funds (combined assets of USD100bn) will eventually lead to the creation of a sovereign wealth fund.

Data Trends

Taiwan’s Q1 2014 GDP was in line with market expectations at 3.0% y-o-y. Strong private consumption and lower imports offset weak investment. However, sequential growth slowed to 0.3% q-o-q sa from 1.3% in Q4 2013. The HSBC Taiwan PMI eased further to 52.3 in April from 52.7 in March although new export orders accelerated, and actual export orders also picked up in March, rising 5.9% y-o-y. Meanwhile, CPI rose 1.65% y-o-y in April, marginally higher than consensus expectations. We expect prices to trend upwards in Q2 but remain well under the CBC’s comfort zone.

Taiwan GDP Taiwan PMI Manufacturing

Source: CEIC, HSBC Source: Markit, HSBC

Taiwan Inflation v/s Policy rate HSBC Taiwan manufacturing PMI

Source: CEIC, HSBC Source: Markit, HSBC

-20-15-10-50510152025

-20-15-10-505

10152025

Sep-06 Mar-08 Sep-09 Mar-11 Sep-12 Mar-14

GDP y-o-y (LHS) GDP q-o-q saar (RHS)

% y -o-y % q-o-q saar

424446485052545658

424446485052545658

Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14

PMI Manufacturing New Export Orders Index

Index , sa Index , sa

1

2

3

4

-3-2-10123456

05 06 07 08 09 10 11 12 13 14

Inflation (LHS) Policy rate (RHS)

% y -o-y %Apr-14 Mar-14 Feb-14

PMI 52.3 52.7 54.7Output 54.0 54.3 57.2New Orders 54.5 54.1 57.8Inventories 48.8 51.2 50.4

5.7 2.9 7.448.2 48.1 49.252.2 52.5 54.4-4.0 -4.3 -5.3

New export orders 54.8 53.8 56.7Employment 50.8 51.2 50.9

>50 + rising >50 + falling <50 + rising <50 + falling

unchanged above 50 Unchanged below 50

Input Prices

New Orders - InventoryOutput Prices

Output Prices - Input Prices

John Zhu, Economist The Hongkong and Shanghai Banking Corporation Limited +852 2996 6621 [email protected]

Rini Sen, Economics Associate Bangalore

Indicator Last 12 data

points DoR* Unit

Apr Mfg PMI

2-May Index

Apr CPI

6-May % y-o-y

Apr Exports

7-May % y-o-y

Apr IP

23-May % y-o-y

1Q-2014 GDP-final

23-May % y-o-y

* Date of Release

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Thailand News Highlights

The Constitutional Court ruled that caretaker PM Yingluck and nine other cabinet ministers acted illegally in the transfer of former national security head Thawil Pliensri in 2011 (source: Bloomberg, 7 May). Following the verdict, Ms Yingluck could be impeached, but that would require a 3/5 vote from the senate. The 20 July election date is now also in doubt. Separately, the anti-corruption office also indicted Ms Yingluck over the controversial rice scheme; if also found guilty by the Supreme Court, she could face a five-year ban from politics.

Data Trends

Headline inflation rose to a 12-month high of 2.5% y-o-y in April, bringing the four-month average to 2.1% vs. 2% in Q1. Core inflation also grew at a faster pace of 1.7%, as the dry season damaged crops and lifted processed food prices. Meanwhile the trade balance reverted to a surplus of USD706m in Q1 2014 vs a deficit of USD2.6bn in Q4 2013. However this was on the back of weak imports (as domestic demand slowed), rather than exports. The latter was down -3.1% y-o-y in March after a brief upturn in February.

Thailand GDP BoT Investment and Consumption Indicators (%3m/3m saar)

Source: CEIC, HSBC Source: CEIC, HSBC

Thailand Inflation v/s Policy rate Thailand Business Sentiment Index

Source: CEIC, HSBC Source: CEIC, HSBC

-40-30-20-100102030405060

-20-15-10-505

1015202530

Jun-06 Dec-07 Jun-09 Dec-10 Jun-12 Dec-13

GDP y-o-y (LHS) GDP q-o-q saar (RHS)

% y -o-y % q-o-q saar

-20

-10

0

10

20

30

40

-50

-25

0

25

50

75

100

Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14

Investment Index (LHS) Consumption Index (RHS)

% 3m/3m saar % 3m/3m saar

0.000.751.502.253.003.754.505.256.00

-6-4-202468

10

05 06 07 08 09 10 11 12 13 14

Inflation (LHS) Policy rate (RHS)

% y -o-y %Mar-14 Feb-14 Jan-14

Business Sentiment Index 46.4 46.0 45.5New Orders 45.3 46.1 44.9Inventories 46.4 46.2 43.0

-1.1 -0.1 1.944.9 42.5 42.438.0 40.4 37.16.9 2.1 5.3

Employment 51.3 50.5 49.7

>50 + rising >50 + falling <50 + rising <50 + falling

unchanged above 50 Unchanged below 50

New Orders - InventoryOutput PricesInput PricesOutput Prices - Input Prices

Su Sian Lim, Economist The Hongkong and Shanghai Banking Corporation Limited, Singapore Branch +65 6658 8963 [email protected]

Abanti Bhaumik, Economics Associate Bangalore

Indicator Last 12 data

points DoR* Unit

Apr CPI

1-May % y-o-y

1Q-2014 GDP

19-May % y-o-y

Apr Exports

23-27 May % y-o-y

Apr Imports

23-27 May % y-o-y

Apr Mfg Prod

28-May % y-o-y

* Date of Release

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Vietnam News Highlights

The head of management of Vietnam Railway Authority was arrested for allegedly “abusing positions and powers while performing official duties” (source: Bloomberg, 9 May). He will be the sixth official detained in connection with the Japanese ODA funded Hanoi urban railway project. The Prime Minister approved 127 public works projects requiring foreign investment by 2020, including a refinery, airport and railway. For example, the first phase of Long Thanh International Airport requires USD5.6bn of foreign investment. The Bien Hoa - Vung Tau Railway project requires USD5bn in foreign investment.

Data Trends

The headline PMI Index increased sharply to 53.1 in April from 51.3 in March. Output, new orders, new export orders, and employment rose. New export orders have increased in the past two months to reflect rising demand from the US and the Eurozone. However, Thailand is expected to dump its rice stockpile into the global market in Q2 2014, which will likely drive global prices lower, reducing the value of Vietnam rice exports. CPI rose slightly in April on a month-on-month basis but was still very low in comparison to the historical average. Even with an assumption of higher social service and electricity costs in August and September, we expect headline to end at 5.6% y-o-y in 2014.

Vietnam GDP Vietnam PMI Manufacturing

Source: CEIC, HSBC Source: Markit, HSBC

Vietnam Inflation v/s Refinancing rate HSBC Vietnam PMI

Source: CEIC, HSBC Source: Markit, HSBC

2

4

6

8

10

2

4

6

8

10

Sep-06 Mar-08 Sep-09 Mar-11 Sep-12 Mar-14

GDP y-o-y

% y -o-y % y -o-y

404244464850525456

404244464850525456

Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14

PMI Manufacturing New Orders Index

Index , sa Index , sa

4

6

8

10

12

14

16

0

5

10

15

20

25

30

08 09 10 11 12 13 14Inflation (LHS) Refinancing rate (RHS)

% y -o-y %Apr-14 Mar-14 Feb-14

PMI 53.1 51.3 51.0Output 53.7 52.3 51.4New Orders 54.9 53.0 51.8Inventories 50.3 48.2 43.3

4.5 4.8 8.649.3 49.5 50.055.6 53.9 54.4-6.3 -4.5 -4.4

New export orders 53.7 52.7 49.4Employment 52.2 49.2 50.9

>50 + rising >50 + falling <50 + rising <50 + falling

unchanged above 50 Unchanged below 50

Output PricesInput PricesOutput Prices - Input Prices

New Orders - Inventory

Trinh Nguyen, Economist The Hongkong and Shanghai Banking Corporation Limited +852 2996 6975 [email protected]

Indicator Last 12 data

points DoR* Unit

Apr Mfg PMI

2-May Index

May CPI

24-May % y-o-y

May Exports-ytd

26-30 May % y-o-y

May Retail Sales**

26-30 May % y-o-y

May IP

26-30 May % y-o-y

* Date of Release **ytd

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Asia Brief Should we worry about corporate leverage in Asia?

In recent years, corporations in much of Asia – as in other parts of the world – have shifted their funding mix away from equity towards debt. This is partly the result of quantitative easing by central banks in advanced markets, as well as credit easing in China. Our first chart below shows the decline in equity issuance last year compared with 2007. Note the drop in China, where the equity market was roaring in 2007 but has treaded water since. Singapore and Japan are two exceptions. The former is a regional financial centre and the data might therefore not reflect a rise in stock issuance by local companies. In the latter, the liquidity-fuelled rally in the equity market last year probably explains the rise in issuance, but this may prove temporary as corporate Japan remains awash in cash and debt financing as cheap as anywhere in the world.

One measure of corporate leverage is the debt-to-equity ratio. Chart 2 shows this for listed companies in Asia (excluding financial firms). Note that the debt-to-equity ratio has risen in most markets, and quite sharply so in China, Thailand, the Philippines, and Singapore last year compared to 2007. However, there are other markets where it has declined in recent years, with listed firms in Indonesia, for instance, now having the lowest debt-to-equity ratio in Asia. In short, from this perspective, the build-up in corporate leverage has been quite uneven across the region in the last few years.

The trouble with the analysis so far, of course, is that it focuses on listed firms. This is a good starting point, since data is available in greater detail than for the corporate sector as a whole. However, most companies in Asia are not listed. It’s therefore useful to look at total private sector indebtedness (although this also includes loans to households, which is not corporate debt). Chart 3 uses a definition from the World Bank. Note that, as a share of GDP, this has increased everywhere since 2007, except for Sri Lanka and Japan.

But back to listed companies. That debt has become a more prominent source of funding than equity is clear from the data. But, to what extent, are firms taking on too much leverage? One useful measure is “interest cover” or the ratio of profits to interest rate expenses. If this falls, then companies have a smaller cushion against unforeseen shocks, such as a rise in interest rates or a downturn in profits. Compared with 2007, the interest cover has fallen in most Asian markets and in some cases quite sharply; Taiwan, Hong Kong, and Malaysia are the exceptions. In sum: keep an eye on corporate leverage.

Chart 1: Lower equity raised in all markets except Japan and Singapore Chart 2: Leverage has risen, but below pre-Asian financial crisis levels

Source: Bloomberg, HSBC equity strategy team. NB: based on announcement by firms Source: Thomson DataStream, Bloomberg, HSBC. NB: MSCI (ex financials) country indices, India is FY13

Chart 3: However, economies are more credit driven now Chart 4: Profit cover has declined despite lower interest rates

Source: World Bank, HSBC Source: Thomson DataStream, Bloomberg, HSBC. NB: MSCI (ex financials) country indices, India is FY13

-10

10

30

50

70

90

110

130

150

CH HK IN AU SK TW SG JP

Equity issuance (USD bn)

2007 2013

0

20

40

60

80

100

HK MA SK ID IN TW SG CH TH PH

Leverage (Debt/Equity)

2007 2013

0

50

100

150

200

250

JN SL AU SK PH IN VN ID BD MA CH SG TH HK

Indebtedness (Total private credit/GDP)

2007 2012

0

5

10

15

20

25

30

CH TH PH SG IN ID SK MA HK TW

Interest cover (EBITDA/interest expenses)

2013 2007

Frederic Neumann, Economist The Hongkong and Shanghai Banking Corporation Limited +852 2822 4556 [email protected]

Prithviraj Srinivas, Economics Associate Bangalore

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Momentum Heatmaps

Exports to the world

Source: CEIC, HSBC. Colour codes are based on the z-score of the year-on-year figures on a rolling 36 months basis.

Exports by destination

Source: CEIC, HSBC. Colour codes are based on the z-score of the year-on-year figures on a rolling 36 months basis.

Industrial Production

Source: CEIC, HSBC. Colour codes are based on the z-score of the year-on-year figures on a rolling 36 months basis.

Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14ChinaHong KongIndiaIndonesiaJapanKoreaMalaysiaPhilippinesSingaporeSri LankaTaiwanThailandVietnamAsiaAsia ex JNAsia ex JN & CH

Above average and rising Above average but falling Below average but rising Below average & falling

Dec-13 Jan-14 Feb-14 Dec-13 Jan-14 Feb-14 Dec-13 Jan-14 Feb-14 Dec-13 Jan-14 Feb-14ChinaHong KongIndiaIndonesiaJapanKoreaMalaysiaPhilippinesSingaporeSri LankaTaiwanThailandVietnamAsiaAsia ex JapanAsia ex Japan & China

Above average and rising Above average but falling Below average but rising Below average & falling

World US EU China

Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14ChinaHong KongIndiaIndonesiaJapanKoreaMalaysiaPhilippinesSingaporeSri LankaTaiwanThailandVietnamAsia ex JN & HK (simple)Asia ex JN & HK (weighted)

Above average and rising Above average but falling Below average but rising Below average & falling

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China Data Dashboard

Source: Markit, CEIC, HSBC. Colour codes are based on the z-score of the year-on-year figures on a rolling 24 months basis, black denotes z-score less than -1.0, light grey denotes z-score between -1.0 and -0.5, white denotes z-score between -0.5 and 0.5, pink denotes z-score between 0.5 and 1.0, and red denotes z-score greater than 1.0.

Headline CPI

Source: CEIC, HSBC. Colour codes are based on the z-score of the year-on-year figures on a rolling 36 months basis.

F-12 M-12 A-12 M-12 J-12 J-12 A-12 S-12 O-12 N-12 D-12 J-13 F-13 M-13 A-13 M-13 J-13 J-13 A-13 S-13 O-13 N-13 D-13 J-14 F-14 M-14 A-14

Outstanding Loan Growth -0.8 -0.5 -0.6 -0.3 -0.1 -0.1 0.05 0.2 0.09 0.05 -0.6 0.1 -0.4 -0.6 -0.5 -1.1 -1.4 -1.1 -1.3 -1.1 -1.2 -1.2 -1.3 -1 -1.1 n/a n/a

Total Social Finance/GDP -0.1 0.29 -1.1 -0.2 1.3 0.3 0.19 1.31 1.04 0.03 1.08 2 -0.4 1.74 0.84 -0.5 -1.3 -0.7 0.55 -0.1 -0.8 -0.3 -0.6 1.6 -1.3 -0 -0.2

Real 7D Repo Rate -0.7 -0.4 -0.7 0.15 -1.7 -1.3 -1.2 -1.1 -1 -0.8 -1.2 -0.8 -0.6 -0.8 -0.1 -1.7 -1.7 -1.1 -0.1 -0 -0.6 -0.4 -1.6 -1.2 0.8 -0.3 -0.8

M0 Real Growth -0.7 -0.5 -0.5 -0.4 -0.1 -0.2 -0.2 0.32 -0.1 -0 -0.5 -1.9 2.2 0.7 0.25 0.45 -0.2 -0.2 -0.2 -1.5 -0.8 -0.7 -0.7 3.3 -1.6 -1.2 -0.9

M1 Real Growth -1.2 -1.2 -1.2 -1.1 -0.8 -0.6 -0.6 -0.1 -0.2 -0.3 -0 2.6 0.7 1.71 1.56 1.41 0.6 0.8 0.8 0.34 0.28 0.44 0.51 -1.8 -0.1 -0.7 -0.5

M2 Real Growth -0.6 -0.5 -0.6 -0.3 0.2 0.5 0.37 1.06 0.97 0.82 0.71 2 0.9 1.63 1.52 1.39 0.3 0.4 0.54 -0.1 -0.2 -0.2 -0.3 -0.7 -0.3 -1.7 -0.4

GDP Growth -2 -2.1 -2.2 -1.9 -1.8 -1.8 -1.6 -1.4 -0.8 -0.8 -0.7 -0.9 -0.8 -0.7 -0.9 -0.9 -0.8 -0.3 -0.2 -0.1 -0.2 -0.1 0.07 -1.5 -1.4 -1.3 n/a

Non-M PMI -0.3 -0.3 -1.1 -1.3 -1.5 -2 -1.7 -2.3 -2.9 -1.7 -2.2 -2.4 -2.2 -1.2 -0.8 -0.9 -1.1 -0.6 -0.4 0.18 0.25 0.53 1.13 0.8 1 0.81 0.43

M PMI -0.7 0.5 0.74 -1 -1.1 -1.1 -1.5 -1 -0.7 -0.4 -0.4 -0.5 -0.6 0.11 -0.1 0.18 -0.5 -0.3 0.43 0.54 0.8 0.74 0.27 -0.3 -0.6 -0.4 -0.2

HSBC M PMI -0.8 -1.3 -0.8 -1.1 -1.2 -0.7 -1.3 -1.1 -0.3 0.26 0.96 1.8 0.5 1.38 0.53 -0.3 -1 -1.3 0.51 0.57 1.12 0.96 0.62 -0.1 -0.8 -1.2 -1.1

PMI M Output -0.6 -1.3 -0.7 -0.5 -0.6 -0.2 -0.9 -1.1 -0.8 0.37 0.8 1.6 0.5 1.66 0.7 0.49 -0.6 -0.9 0.62 0.24 0.73 1.26 0.76 0.4 -0.8 -1.7 -1.3

New Orders -1 -1.2 -0.5 -0.9 -1.1 -0.7 -1.3 -0.9 0.24 0.27 1.08 1.6 0.7 1.42 0.64 -0.4 -0.8 -1.1 0.59 0.58 0.88 0.93 0.8 0.1 -0.6 -1.3 -1

New Orders-Inventory -1.2 -0.9 -0.5 -1.2 -1.4 -0.9 -1.9 -0.9 0.3 0.28 0.61 1 0.5 0.72 -0.3 -0.9 -0.8 -0.5 0.77 0.67 0.86 0.8 -0.1 -0.5 -1.3 -0.9

IP 2.6 -1.1 -1.9 -1.6 -1.5 -1.5 -1.4 -1.2 -1 -0.8 -0.7 -0.8 -0.7 -0.9 -0.8 -0.7 -0.7 -0.5 -0.2 -0.2 -0.2 -0.2 -0.3 n/a n/a -1.6 -1.6

Electricity consump 1.6 -0.8 -1.3 -1 -1 -0.9 -1 -1 -0.5 -0.3 0.45 2.3 -2.7 -0.8 -0.1 -0.3 -0.1 0.2 0.84 0.42 0.32 0.2 0.12 -1.3 1.1 0.09 n/a

Freight -0.2 -2 -1 -1 -1.6 -0.6 -2.2 -1.5 -1.2 -0.7 -0.7 -0.8 -1.7 -1.5 -2.4 -2.2 -0.8 2.1 -0.4 -0.3 0.35 1.29 0.36 -0.6 -1.2 -0.6 n/a

Business Climate -1.7 -1.7 -1.3 -1.3 -1.3 -1.6 -1.6 -1.6 -1 -1 -1 -0.6 -0.6 -0.6 -1.5 -1.5 -1.5 -1.2 -1.2 -1.2 -1.5 -1.5 -1.5 n/a n/a n/a n/a

Fixed Asset Investment -2.8 -2.7 -2.6 -2.2 -1.8 -1.6 -1.6 -1.3 -1.1 -1 -1 -0.7 -0.6 -0.7 -0.7 -0.8 -0.9 -0.8 -0.6 -0.6 -0.7 -1 -1.9 -3.6 -2.9 -2.6 -2.4

Real Estate Climate -2 -2.1 -2.3 -2.2 -2 -1.8 -1.6 -1.5 -1.4 -0.9 -0.9 -0.1 -0.1 -0.1 -0.1 -0.1 0 0.1 0.18 0.25 0.13 -0.1 0.59 0.4 0.4 0.03 n/a

Property Price -2.8 -1.4 -0.9 -0.5 -0.1 0.1 0.08 0.15 0.14 0.1 0.3 2.1 1.9 1.62 1.23 0.74 0.5 0.3 0.22 0.17 0.16 0.09 0.02 -1.8 -1.9 -1.5 n/a

Retail sales -1.6 -1.2 -1.6 -1.6 -1.5 -1.6 -1.4 -0.9 -0.7 -0.4 -0.2 -1.6 -1.7 -1.4 -1.2 -1 -0.7 -0.7 -0.6 -0.6 -0.5 -0.1 -0.1 -1.9 -1.7 -1.2 -1.4

Employment* 0.6 -2.2 -2.4 -2.1 -1.5 -1.9 -1.7 -1 -0.8 -0.4 0.56 1.3 0.7 0.54 -0.1 -0.7 -1.5 -1.4 -0.2 -0.2 1.27 -0.1 -0.2 -1.4 -1.4 0.69 -0.7

CPI -1.1 -0.8 -1.1 -1.4 -2 -2.1 -1.8 -1.7 -1.6 -1.3 -0.9 -1.1 -0.4 -1 -0.7 -0.8 -0.4 -0.3 -0.3 0.25 0.55 0.39 -0.2 -0.1 -0.9 -0.1 -1.3

PPI -2.5 -2.2 -2.1 -2 -2 -1.9 -1.8 -1.7 -1.3 -1.1 -0.9 -0.8 -0.7 -0.7 -0.8 -0.9 -0.7 -0.6 -0.3 -0 0.01 0.22 0.39 0.3 -0 -0.3 0.19

Wage 1.3 1.24 1 0.92 0.8 0.7 0.63 0.57 -1.1 -1.2 -1.2 -1.5 -1.4 -1.4 -1.3 -1.2 -1.2 -0.7 -0.7 -0.7 n/a n/a n/a n/a n/a n/a n/a

Export -0.5 -1.2 -1.4 -0.5 -0.8 -1.6 -1.3 -0.6 -0.4 -1.1 -0 1.2 0.8 -0.5 0.21 -1.5 -1.8 -0.7 -0.4 -1.3 -0.5 0.52 -0.6 0.2 -2.9 -1.5 -0.6

Import -1.1 -0.8 -1.1 -1.4 -2 -2.1 -1.8 -1.7 -1.6 -1.3 -0.9 -1.1 -0.4 -1 -0.7 -0.8 -0.4 -0.3 -0.3 0.25 0.55 0.39 -0.2 -0.1 -0.9 -0.1 -1.3

New Export Orders -1.4 -1.4 0.01 -0.9 -2.3 -1.6 -2 -2 -1 1.35 0.12 0.8 0.7 0.73 -0.2 0.04 -1.8 -0.5 -0.6 0.89 1.19 0.8 0.25 -0 0 1.3 0.15

Terms of Trade -0.5 -0.4 -0.4 0.94 1.1 0.8 0.35 0.73 1.2 1 0.82 0.2 0.5 0.4 1.02 1.09 1.5 0.1 -0.9 0.09 0.34 0.24 -0.2 0.8 0.3 0.17 0.98

* Employment is from HSBC PMI Employment

Trade

Financing

Consumption

Investment

Growth

Deceleration Acceleration n/a Data n/a

May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14ChinaHong KongIndiaIndonesiaJapanKoreaMalaysiaPhilippinesSingaporeSri LankaTaiwanThailandVietnamAsia ex JN (simple)Asia ex JN (weighted)

Above average and rising Above average but falling Below average but rising Below average & falling

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Income inequality is a challenge in Asia, too

Click here for PDF

Books on economics rarely become instant best-

sellers. But Thomas Piketty’s “Capital in the

twenty-first century” managed the feat with

impressive speed. Only a few weeks after its

release in the United States, the French

professor’s tome sold out on Amazon and is

among the most widely reviewed books in years.

The author evidently struck a chord with the

American public.

– Frederic Neumann

Chart of the Week: So, who’s the biggest?

Click here for PDF

Plenty of headlines about it over the past couple

of weeks. According to new data, China’s

economy will exceed the US in terms of size at

the end of this year. Some commentators were so

excited, they even calculated the exact day when

this will happen: November 2 (on the basis of

World Bank forecasts, at least). Other interesting

factoids are buried in the new dataset as well:

India is now number three in the world, Indonesia

is bigger than Italy, and Sri Lanka beats New

Zealand. Wonderful. Except it’s all a bit

theoretical. These findings are based on new

purchasing power parity (PPP) indices published

at the end of April by the International

Comparison Program, which is hosted by the

World Bank. These are designed to improve

comparisons of living standards across economies.

Since prices vary across economies, and market

exchange rates are doing an imperfect job of

translating true living costs from one to the next,

researchers like to resort to PPPs. Fair enough.

But to compare the relative size of economies, the

measure is rather misleading. For this, USD GDP

is still the best guide. Depending on your

assumptions, China may not exceed the US for

another decade.

– Frederic Neumann & Dinkar Pawan

Something missin': What the latest PMIs mean for Asia

Click here for PDF

Have a quick glance at data in the West, and you

might conclude Asia's trade cycle is about to fire

up. In the US, output has accelerated in recent

months as reflected in the PMIs. In Europe, too,

the recovery is spreading and strengthening

beyond Germany. This should, in principle, lead

to a lift in Asia as well. But that's not the case.

New export orders remain lacklustre and new

orders are still contracting. This hardly signals a

rebound in growth. China, in particular, isn't out

of the woods yet. Japan and India, too, are sliding.

Thankfully, Vietnam is rocking ahead. Its PMI hit

the highest level on record.

– Frederic Neumann & Dinkar Pawan

Best of Asian economics research

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An uptick: Asian electronics lead indicator rose

Click here for PDF

The April 2014 reading for our headline Asian

electronics lead indicator (AELI) was -0.08, up

from -0.20 in the previous month.

– Ronald Man

Chart of the Week: Japan and the world

Click here for PDF

Last week, we looked at capital flows from Japan

to ASEAN over the past year. The conclusion:

bank lending and FDI from the former to the latter

have risen sharply since the Bank of Japan

stepped up its easing program in April 2013;

portfolio flows, by contrast, barely budged. Here,

we look at capital outflows from Japan more

broadly. Again, the sharp pick-up in FDI outflows

is the most notable feature. Total overseas bank

lending also grew, if not quite as rapidly as to

ASEAN specifically. Portfolio flows were highly

volatile over the past year, although Japanese

investors stepped up their overseas purchase over

time. This should accelerate given (a) the wider

yield differential between yen and dollar debt, (b)

falling FX volatility, and (c) rising excess reserves

by Japanese banks. True, further easing by the

BoJ may only come next year, but there’s already

plenty of cash in the system. The money train has

left Tokyo station: it may not run at shinkansen

speed, but it’ll arrive soon enough.

– Frederic Neumann & Dinkar Pawan

Asia Economics Comment: Decoupling, still

Click here for PDF

Last week brought several painful reminders that

stronger growth in the West isn’t providing much

of a lift to Asia. Over the coming days, expect the

data to reinforce that message. Asian exports,

including Japan’s, have so far failed to respond

convincingly to improving demand in the US and

the EU. With consumption and investment

looking a little tired in most markets, the expected

pick-up in growth will be decidedly muted.

Fortunately, stable interest rates and resilient

capital flows will help keep things on an even keel

for the time being. At least that’s something.

– Frederic Neumann

Chart of the Week: Japan and ASEAN

Click here for PDF

Time for a quick update on one of our favourite

themes. A year ago, the Bank of Japan (BoJ)

rolled up its sleeves, readied the ink, and started to

print yen galore: in an unprecedented move, the

central bank promised to double the monetary

base within two years. The question was, and is,

where is all that money headed? Corporate Japan

doesn’t really need it: capital spending hasn’t

picked up yet and, in any case, firms are sitting on

cash reserves equivalent to almost half of GDP.

Banks and investors used to place most of their

cash in government bonds as a result, but these

are now hoovered up by the BoJ. Our thinking

thus was that part of the extra liquidity would spill

abroad. But has this happened? It appears so, but

not necessarily in ways that the market initially

anticipated. Portfolio outflows from Japan, at least

into emerging Asia, haven’t really fired up. But,

as we’ve argued for a while, it is bank lending and

FDI, especially into ASEAN, where the effect is

really felt. And there’s plenty of liquidity still on

its way to keep the region afloat for a while.

– Frederic Neumann & Dinkar Pawan

Australian Budget Observer: Gradual consolidation expected

Click here for PDF

The government has announced that next week's

budget will be 'tough' as it maps out a plan to

return to budget surplus. According to the

government, carbon and mining taxes to be

removed, disability insurance and paid parental

leave scheme to be introduced, but likely offset by

cuts in benefits and tax hike for high income

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earners. We expect the budget to project a return

to surplus over time; we don't expect aggressive

short-term austerity measures.

– Paul Bloxham & Adam Richardson

The RBA Observer: On hold and comfortable, for now

Click here for PDF

The Q1 CPI data showed that inflation remains

close to target and is a bit below the RBA's last set

of published forecasts. We expect the RBA to

leave the cash rate at 2.50% and to restate that it

expects rates to remain 'stable' for some time.

With inflation close to target and growth lifting,

we also expect the central bank to refrain from

'jawboning' the AUD lower, despite the currency

remaining historically high.

– Paul Bloxham

Australian economics comment: Fiscal audit to inform 2014/15 budget

Click here for PDF

The government published the results of its

Commission of Audit on Australia's fiscal

situation, which is designed to provide advice on

budget policy. The 1,200 page report contained 86

key recommendations, some of which could be

implemented in the 2014/15 budget, to be

delivered on 13 May. Without adjustments to

policy commitments, the Commission suggests

that Australia faces perpetual budget deficits. The

government has already flagged some measures

that are being considered for the May budget,

including increasing the pension age and cutting

social benefits. They are likely to announce more

budget plans in coming days.

– Paul Bloxham & Adam Richardson

China Inside Out: Time to ease a little

Click here for PDF

Despite looser interbank liquidity, long-term

interest rates have stayed stubbornly high. With

more disinflationary pressures, real rates risk

moving higher, squeezing private sector

investments and pushing up the debt to GDP ratio.

Monetary policy should be more accommodative

to cushion the growth slowdown.

– Qu Hongbin & Julia Wang

India PMI Chartbook: Activity remains subdued

Click here for PDF

Manufacturing held steady as firmer domestic

demand countered softer export orders. Services

activity continues to remain subdued, although the

PMI index ticked up a bit in April. While price

pressures eased in manufacturing, they picked up

for services.

– Leif Eskesen & Prithviraj Srinivas

Bank of Japan Watch: Pushing back our call: Easing unlikely until FY 2015

Click here for PDF

The BoJ leadership has sounded increasingly

optimistic on the prospects of achieving its 2%

inflation target. Firm inflation readings have

reduced pressure on the central bank; the BoJ is

likely to remain on hold as long as core inflation

stays above 1% and begins reaccelerating by Q1

CY15. We have pushed back our expectation of

additional easing from Q3 CY14 currently. Our

base case is that further stimulus will be

announced at the April 2015 policy meeting.

– Izumi Devalier

Bank of Japan too optimistic on

inflation

Click here for PDF

One the face of it, a victory for Japan’s central

bank. Core inflation in Tokyo jumped 2.7% in

April, the fastest pace since 1992. Not bad for an

economy gripped by deflation for well over a

decade. The Bank of Japan unveiled its most

ambitious easing program yet last year, with a

promise to double the monetary base and slay

deflation for good. Look closely, however, and

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it’s not clear that price pressures have really risen

as much as the headline numbers suggest.

– Frederic Neumann

Bank of Japan Watch: The signal and the noise

Click here for PDF

The Bank of Japan is likely to keep the size and

pace of its asset purchases unchanged at its 30

April one-day meeting. With a hold priced in,

markets will focus on the BoJ’s revised price and

growth projections; the policy board will likely

maintain its forecast that core inflation will reach

2% in FY15. We think the risks to the BoJ’s CPI

forecasts skew to the downside and expect

additional easing to be delivered in Q3 14.

– Izumi Devalier

Why Korea will not be “the next Japan”: It can avoid making the same missteps

Click here for PDF

Korea’s economy has grown 1,800% since 1980 –

more than three times the global rate. But there

are concerns that Korea may suffer similar

problems to Japan. We think Korea will avoid

making the same missteps, but more reforms are

needed.

– Ronald Man

Korea central bank watch: According to plan

Click here for PDF

Korea sustained strong GDP growth in Q1 and its

economy continues to benefit from a gradual

export-led recovery. Calls for the Bank of Korea

to deliver a rate hike later this year are growing

louder, even if headline CPI will stay low. We

expect the central bank to hold its policy rate at

2.50% on 9 May and the next move to be a 25bp

hike in Q3 2014.

– Ronald Man

Malaysia Central Bank Watch: Still in pause mode

Click here for PDF

We look for Bank Negara Malaysia (BNM) to

continue to pause at 3.00% when it meets on

Thursday, 8 May. Although BNM has not turned

completely hawkish, we think risks remain for a

further 50bp of hikes later this year. Inflation now

exceeds the policy rate, and loan growth

particularly for residential property remains

elevated.

– Su Sian Lim

New Zealand Economics Comment: Opposition proposes changing RBNZ mandate

Click here for PDF

New Zealand's opposition Labour party has

proposed adjusting the RBNZ's inflation targeting

regime, as a part of its agenda in the lead up to the

September election. They propose that the current

account position should be part of the RBNZ's

policy targets agreement and the central bank be

given another tool to adjust household saving

rates via superannuation contributions through the

cycle, partly to weaken the high NZD. In our

view, this is over-engineering and would be

demanding too much from monetary policy.

Instead, addressing the underlying causes of low

saving, a persistent current account deficit and

poor productivity growth would better tackle the

issues of an elevated exchange rate.

– Paul Bloxham & Adam Richardson

Philippines central bank watch: Moderate measure: Policy rates to stay on hold

Click here for PDF

Inflation rose 4.1% y-o-y in April from 3.9% in

March; with the storm season approaching and

agricultural output lower this year, prices will

likely accelerate in the summer months. M3

increased in March to 34.8% y-o-y due to higher

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deposits; credit also accelerated to 18.3% y-o-y

from 18.0% in February. Excess liquidity is a

concern but manageable; the BSP likely keep

policy rates on hold but raise the RRR by 1ppt to

20%.

– Trinh D Nguyen

Vietnam at a glance: A new high: April PMI rises

Click here for PDF

April’s HSBC manufacturing PMI rose to 53.1

from 51.3 in March, with all key components

increasing sharply. Government indicators show

exports, retail sales and lending increasing on the

month, indicating a broad pick-up of activity.

While inflation may gradually accelerate,

especially in H2 2014, it is likely to stay

contained, allowing the SBV to keep rates low.

– Trinh D Nguyen

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Asian Economics Desk Reference 12 May 2014

For inquiries please contact Asian Economics Team: [email protected], Phone: +852 2822 4556

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HSBC US and Europe policy rate outlook (% pa) — (rate hikes denoted in red, cuts denoted in grey)

1Q 2014 2Q 2014f 3Q 2014f 4Q 2014f 1Q 2015f 2Q 2015f 3Q 2015f 4Q 2015f

United States 0.00-0.25 0.00-0.25 0.00-0.25 0.00-0.25 0.00-0.25 0.00-0.25 0.50 0.75Eurozone 0.25 0.25 0.15 0.15 0.15 0.15 0.15 0.15UK 0.50 0.50 0.50 0.50 0.50 0.50 0.75 1.00

NB: Forecast in italics. Source: HSBC

HSBC Asia FX policy sustainability dashboard — (negative readings denoted in red)

S.T. ext debt FX reserves S.T. debt C/A 2014f C/A 2015f ___________ Exports % yr ____________ (USD bn) (USD bn) Cover (%) (% of GDP) (% of GDP) 3mma (Latest) 2014f 2015f

Australia n/a 57 n/a -1.9 -1.5 3.7 7.9 6.9New Zealand n/a 12 n/a -2.9 -3.8 19.6 7.8 1.3China 741 3,948 18.8 2.5 2.7 -8.0 10.0 12.0Hong Kong 788 318 n/a 4.1 6.2 0.5 4.2 3.4India 100 284 35.3 -2.2 -2.7 -2.0 8.0 8.7Indonesia 52 106 49.1 -2.4 -2.0 -2.4 -3.8 3.6Korea 151 356 42.3 4.6 4.7 5.2 8.1 13.5Malaysia 35 118 29.4 5.4 7.4 4.1 4.5 8.4Philippines 7 80 8.7 3.1 2.4 11.2 7.8 8.0Singapore n/a 275 n/a 19.3 19.8 1.0 3.8 8.4Sri Lanka 6 8 73.2 -5.2 -5.6 13.9 7.7 11.0Taiwan 118 421 28.0 8.7 6.3 5.5 4.4 4.8Thailand 68 167 41.0 1.0 1.2 -0.7 3.3 7.2Vietnam 10 30 33.0 3.3 0.9 22.1 15.4 13.0

NB: (1) short-term debts are 2014 forecasts and FX reserves are the latest released; forecasts in italics; (2) Re-exports are excluded from Taiwan’s export numbers; (3) USD export values are used; (4) BoP exports: goods only. Source: CEIC, HSBC

PMI Manufacturing — (Red denotes above 50 & stronger; pink denotes above 50 & falling, or unchanged ; light grey denotes below 50 & rising, or unchanged; dark grey denotes below 50 & falling)

_______PMI Manufacturing ______ ___________ Output ____________ __________ New Orders __________ Apr Mar Feb Apr Mar Feb Apr Mar Feb

Australia 44.8 47.9 48.6 42.6 49.2 51.5 41.8 52.3 50.0 New Zealand 58.4 56.5 60.5 59.0 60.5 57.0 China HSBC 48.1 48.0 48.5 47.9 47.2 48.8 47.4 46.5 48.6 China NBS 50.4 50.3 50.2 52.5 52.7 52.6 51.2 50.6 50.5 India 51.3 51.3 52.5 51.7 52.2 54.0 52.5 52.7 54.9 Indonesia 51.1 50.1 50.5 49.8 49.8 50.3 52.7 51.2 50.3 Japan 49.4 53.9 55.5 46.2 54.2 58.4 47.4 54.9 56.2 Korea 50.2 50.4 49.8 49.8 50.4 49.7 50.0 50.4 49.9 Singapore 51.1 50.8 50.9 52.3 51.5 51.9 52.4 50.8 51.2 Taiwan 52.3 52.7 54.7 54.0 54.3 57.2 54.5 54.1 57.8 Vietnam 53.1 51.3 51.0 53.7 52.3 51.4 54.9 53.0 51.8

Source: Markit, HSBC

Asian Economics Desk Reference 12 May 2014

For inquiries please contact Asian Economics Team: [email protected], Phone: +852 2822 4556

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HSBC Global real GDP growth forecast (% yr) — (red denotes above consensus, grey denotes below consensus)

4Q 13 1Q 14e 2Q 14f 3Q 14f 4Q 14f 2012 2013 2014f Consensus 2015f Consensus Trend Forecasts

US 2.6 0.1 3.7 2.3 2.6 2.8 1.9 2.3 2.8 2.5 3.1 n/a UK 2.7 3.1 3.0 2.8 2.8 0.2 1.8 2.9 2.7 2.5 2.5 n/a Eurozone 0.5 1.0 0.8 0.9 0.9 -0.6 -0.4 0.9 1.1 1.1 1.4 n/a Australia 2.8 2.9 2.7 2.8 2.7 3.6 2.4 2.8 2.8 3.2 2.9 3.0 New Zealand 3.1 3.5 3.8 3.5 3.3 2.6 2.7 3.5 3.5 3.0 3.0 2.5 Bangladesh n/a n/a n/a n/a n/a 6.0 5.9 6.2 6.0 6.4 6.3 6.0 China 7.7 7.4 7.6 7.3 7.4 7.7 7.7 7.4 7.3 7.7 7.2 8.5 Hong Kong 3.0 3.6 3.7 3.6 3.8 1.5 2.9 3.7 3.4 4.0 3.5 3.9 India 4.7 4.5 5.1 5.0 5.3 4.5 4.6 5.3 5.4 6.3 6.0 8.0 Indonesia 5.7 5.2 5.2 5.1 5.1 6.3 5.8 5.2 5.4 6.0 5.8 7.0 Japan 2.6 2.5 0.4 0.5 0.7 1.4 1.5 1.0 1.4 1.0 1.3 0.7 Korea 3.7 3.9 3.3 2.8 3.4 2.3 3.0 3.2 3.5 3.4 3.7 3.4 Malaysia 5.1 6.5 6.0 4.9 3.5 5.6 4.7 5.2 5.1 5.0 5.0 5.0 Mongolia n/a n/a n/a n/a n/a 12.2 12.0 10.0 n/a 12.0 n/a n/a Philippines 6.5 6.0 6.0 5.7 6.1 6.8 7.2 5.9 6.4 6.1 6.3 4.9 Singapore 5.5 5.1 2.5 3.4 2.9 1.9 4.1 3.5 3.8 4.0 4.0 4.0 Sri Lanka 8.2 7.8 7.4 7.1 6.5 6.4 7.2 7.2 7.2 7.2 7.0 6.9 Taiwan 2.9 3.0 3.1 3.1 2.9 1.5 2.1 3.0 3.3 3.5 3.6 4.7 Thailand 0.6 3.3 3.3 2.7 2.8 6.5 2.9 3.0 2.5 4.0 4.2 4.5 Vietnam 6.0 5.0 5.5 5.8 6.2 5.2 5.4 5.6 5.7 5.8 5.9 5.8 Asia 5.2 5.1 4.5 4.4 4.5 4.8 4.9 4.7 4.8 5.0 4.8 5.2 Asia x C 3.5 3.5 2.4 2.4 2.6 2.9 2.9 2.8 3.0 3.1 3.2 3.2 Asia. x J 6.3 6.2 6.3 6.0 6.1 6.2 6.2 6.2 6.2 6.6 6.3 7.3 Asia. x. J & C 4.4 4.5 4.4 4.3 4.4 4.2 4.3 4.5 4.6 5.1 5.0 5.8

NB: Consensus as of April 2014; India and Bangladesh annual data are for fiscal year; Asia aggregate data are nominal GDP USD weighted; US quarterly data are q-o-q annualised; forecasts in italics, actual in normal font. Regional Consensus forecasts are calculated using Consensus Economics country forecasts re-weighted on Nominal GDP basis in order to make them comparable to HSBC Asia aggregate forecasts. Source: HSBC, CEIC, Consensus Economics

HSBC Asia inflation forecast (headline CPI, avg.% yr) — (red denotes above consensus, grey denotes below consensus)

1Q14 2Q14f 3Q14f 4Q14f 1Q15f 2012 2013 2014f Consensus Target* 2015f Consensus Trend Forecasts

Australia 2.9 3.1 2.6 2.5 2.7 1.8 2.4 2.8 2.8 2 to 3 2.8 2.6 2.5 New Zealand 1.5 2.3 2.2 2.6 2.5 1.1 1.1 2.3 1.9 1 to 3 2.5 2.3 2.0 Bangladesh 7.4 7.6 7.3 6.6 7.3 7.2 7.5 7.2 7.1 7.0 7.2 6.9 6.9 China 2.3 2.6 2.4 2.7 3.0 2.7 2.6 2.6 2.6 3.5 3.1 3.0 3.0 Hong Kong 4.1 4.0 4.2 4.0 3.9 4.1 4.3 4.1 3.9 4.5 4.0 3.6 3.2 India 8.4 7.7 7.4 6.6 8.0 10.2 9.4 7.4 7.7 8.0 8.0 7.1 5.5 Indonesia 7.8 7.4 4.5 5.5 4.7 4.0 6.4 6.3 6.3 3.5 to 5.5 4.9 5.5 5.0 Japan 1.5 3.2 3.3 3.1 3.2 0.0 0.4 2.8 2.6 2.0 1.8 1.7 0.1 Korea 1.1 2.2 2.8 3.3 3.6 2.2 1.3 2.4 1.9 2.5 to 3.5 3.3 2.6 3.4 Malaysia 3.5 3.5 3.2 2.5 2.0 1.7 2.1 3.2 3.3 2.0 to 3.0 3.3 3.6 2.5 Mongolia n/a n/a n/a n/a n/a 14.3 10.5 10.0 n/a n/a 11.0 n/a n/a Philippines 4.1 4.1 4.5 4.1 4.0 3.2 2.9 4.2 4.1 3 to 5 4.3 3.8 5.0 Singapore 1.0 2.9 2.7 2.7 3.2 4.6 2.4 2.4 2.5 1.5 to 2.5 3.2 2.7 2.5 Sri Lanka 4.2 4.3 6.6 8.8 9.0 7.5 6.9 6.0 6.2 5 to 7 7.2 6.7 7.5 Taiwan 0.8 1.2 2.0 2.0 1.5 1.9 0.8 1.4 1.2 1.1 1.6 1.7 1.6 Thailand 2.0 2.1 2.5 2.7 2.6 3.0 2.2 2.3 2.4 0.5 to 3.0 2.5 2.8 3.5 Vietnam 4.8 4.5 4.9 5.8 6.5 9.3 6.6 5.1 6.0 less than 10 7.3 6.9 6.4

NB: Australia and New Zealand are quarterly data; India annual data are for fiscal year and target refers to end 2014 target as per new monetary policy framework transition path; *Thailand target for core inflation; Sri Lanka targets money supply; Malaysia has implicit preference; Hong Kong government forecasts underlying CPI for 2014 at 4.5%; and composite CPI at 4.5%; Taiwanese directorate general of budget’s forecasts for 2014 is 1.1%; forecasts in italics; Singapore CPI estimate by MAS; JP: 2014 CPI forecast includes the effects of the April 2014 consumption tax hike. Source: HSBC, CEIC, various central banks.

Page 50: 20140515-HSBC-On Top of the Data Following the Flow in Asia[1]

Asian Economics Desk Reference 12 May 2014

For inquiries please contact Asian Economics Team: [email protected], Phone: +852 2822 4556

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HSBC Asia policy rate forecast % pa (red denotes rate hikes or HSBC above implied rate, grey denotes rate cuts or HSBC below implied rate)

Current Last Move/Date Next MPC 1Q 14 2Q 14f 3Q 14f 4Q 14f 1Q 15f 3M FW 6M FW 12M FW

Australia 2.50 -25bp (Aug-2013) 3-Jun 2.50 2.50 2.50 2.75 3.00 2.66 2.69 2.83 New Zealand 3.00 +25bp (Apr-2014) 11-Jun 2.75 3.25 3.25 3.50 3.75 3.50 3.68 4.04 Bangladesh 7.25 -50bp (Feb-2013) n/a 7.25 7.25 7.25 7.25 7.25 n/a n/a n/a China 6.00 -31bp (Jul-2012) n/a 6.00 6.00 6.00 6.00 6.00 n/a n/a n/a Hong Kong 0.50 -100bp (Dec-2008) n/a 0.50 0.50 0.50 0.50 0.50 n/a n/a n/a India Repo 8.00 +25bp (Jan-2014) 3-Jun 8.00 8.25 8.25 8.25 8.25 8.02 7.93 8.03 Indonesia 7.50 +25bp (Nov-2013) 12-Jun 7.50 7.50 7.50 7.50 7.50 n/a n/a n/a Japan 0.0-0.10 (Oct-2010) 21-May 0.05 0.05 0.05 0.05 0.05 n/a n/a n/a Korea 2.50 -25bp (May-2013) 12-Jun 2.50 2.50 2.75 3.00 3.25 2.50 2.56 2.66 Malaysia 3.00 +25bp (May-2011) 10-Jul 3.00 3.00 3.50 3.50 3.50 3.25 3.18 3.59 Philippines 3.50 -25bp (Oct-2012) 19-Jun 3.50 3.75 4.00 4.00 4.00 n/a n/a n/a Sri Lanka 8.00 -50bp (Jan-2014) 25-May 8.00 8.00 8.00 8.00 8.50 n/a n/a n/a Taiwan 1.875 +12.5bp (Jun-2011) 25-Jun 1.875 1.875 1.875 1.875 2.000 2.030 2.060 2.120 Thailand 2.00 -25bp (Mar-2014) 18-Jun 2.00 1.75 1.75 1.75 1.75 2.46 2.05 2.03 Vietnam 5.00 -50bp (Mar-2014) n/a 5.00 5.00 5.00 5.00 6.00 n/a n/a n/a

NB: New Zealand and Australia implied rates are OIS swap rates; the rest implied rates are based on recommendation from our local rates strategy team. Source: Bloomberg, CEIC, HSBC

HSBC Asia reserve requirement outlook (%)

Pre-crisis level (15 Sep 2008) Cumulative change to date Current HSBC forecast

China 17.5/16.5 +250/150 bps 20.0/18.0 RRR likely to be unchanged, but there is room for cuts if needed

India 9.0 -500 bps 4.00 Expect CRR to be on hold

NB: Two RRR rates for China refer to the ratio for large banks and the ratio for small banks, respectively. Source: HSBC & Bloomberg

HSBC Asia public debt forecast — (grey denotes improvement, red denotes deterioration)

Budget balance (Local currency bn) ___ Budget balance (% of GDP) ____ _____ Public debt (% of GDP) ______ 2013e 2014f 2015f 2013e 2014f 2015f 2013e 2014f 2015f

Australia -19 -44 -33 -1.2 -2.8 -2.0 27.9 30.0 32.0 New Zealand -3 -2 0 -2.1 -1.0 0.0 36.7 35.8 33.3 Bangladesh -584 -605 -660 -4.9 -4.6 -4.4 42.8 43.2 43.5 China -1,060 -1,350 -1,400 -1.9 -2.2 -2.0 39.5 38.4 36.8 Hong Kong 74 32 21 3.5 1.4 1.1 33.0 32.0 31.0 India -5,245 -5,134 -5,074 -4.8 -4.5 -4.0 71.9 73.1 72.3 Indonesia -187,088 -183,825 -170,190 -2.1 -1.8 -1.5 26.2 29.1 29.3 Japan -44,429 -34,498 -29,349 -9.6 -7.0 -6.0 236.7 249.7 253.3 Korea 11,800 26,350 42,200 0.9 1.8 2.7 31.7 29.8 27.7 Malaysia -38 -39 -36 -3.9 -3.5 -3.0 54.8 52.2 51.5 Mongolia -297 -1,616 -1,589 -1.7 -7.5 -6.0 n/a n/a n/a Philippines -164 -216 -280 -1.4 -1.7 -2.0 49.2 45.0 42.7 Singapore 4 3 4 1.1 0.6 0.9 104.4 100.9 95.7 Sri Lanka -528 -540 -561 -6.0 -5.5 -5.0 74.7 74.1 71.6 Taiwan -221 -203 -185 -1.5 -1.3 -1.2 41.3 40.8 39.9 Thailand -239 -433 -561 -2.0 -3.4 -4.1 44.0 46.9 49.4 Vietnam -143,357 -159,566 -153,362 -4.0 -4.0 -3.4 46.6 45.5 45.5

NB: India figures are in fiscal year, forecasts in italics, Japan and Malaysia are gross central government debt; HK budget balance data is the government’s revised estimate for 2013-14 fiscal year, released in February 2014; HK public debt figures are sourced from IMF, WEO October 2013. Source: HSBC, CEIC, IMF

Asian Economics Desk Reference 12 May 2014

For inquiries please contact Asian Economics Team: [email protected], Phone: +852 2822 4556

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HSBC Asia bond yields forecast (% pa)

_______________ 5yr ________________ ______________ 10yr _______________ Rates strategy comment current +3m +6m +9m current +3m +6m +9m 9m view

US 1.7 1.4 1.1 1.4 2.7 2.5 2.1 2.5 n/a UK 1.9 2.2 1.9 1.7 2.7 3.0 2.8 2.5 n/a Euro 0.6 0.5 0.5 0.7 1.6 1.5 1.4 1.6 n/a Australia 3.2 3.2 3.4 3.6 3.8 3.8 4.0 4.2 Neutral New Zealand 4.0 4.8 4.9 5.1 4.3 5.0 5.2 5.4 Flattening China 4.0 4.0 4.1 4.3 4.2 4.4 4.6 4.8 Steepening Hong Kong 1.3 1.1 1.3 1.5 2.0 2.0 2.2 2.4 Neutral India 8.8 9.0 8.5 8.5 8.8 9.0 8.6 8.6 Steepening Indonesia 7.6 7.7 7.8 7.8 8.0 8.2 8.3 8.3 Flattening Japan 0.2 0.1 0.1 0.1 0.6 0.6 0.7 0.7 Flattening Korea 3.1 3.4 3.6 3.8 3.5 3.8 4.0 4.2 Flattening Malaysia 3.6 4.2 4.2 4.2 4.0 4.6 4.6 4.6 Steepening Philippines 3.7 4.0 4.1 4.1 4.1 4.4 4.5 4.5 Flattening Singapore 1.4 1.2 1.1 1.3 2.3 2.1 2.3 2.5 Flattening Taiwan 1.0 1.1 1.1 1.2 1.5 1.6 1.6 1.7 Neutral Thailand 3.1 2.9 3.1 3.1 3.5 3.5 3.6 3.6 Flattening

Note: Rates strategy recommendations from HSBC: Asia-Pac Rates: A decline in term and political premium as of 24 April 2014; forecasts in italics, 3m compares to 2Q 2014, 6M to 3Q 2014 and 9 months to 4Q 2014. For US, UK, Euro forecasts are for 3M, 6M and 12M. Source: HSBC, CEIC & Bloomberg

HSBC Asia FX forecast (period end, vs. USD) (red denotes appreciation or HSBC above forward rate, grey denotes depreciation or HSBC below forward rate)

4Q 13 1Q 14 2Q 14f 3Q 14f 4Q 14f 1Q 15f % chg 2014 3M FW 6M FW 12M FW

Australia 0.93 0.93 0.90 0.87 0.86 0.86 -8.51 0.93 0.93 0.92 New Zealand 0.83 0.87 0.85 0.86 0.87 0.88 1.16 0.86 0.85 0.84 China 6.05 6.17 6.26 6.20 6.14 6.12 -0.16 6.17 6.18 6.20 Hong Kong 7.75 7.76 7.80 7.80 7.80 7.80 0.65 7.75 7.75 7.75 India 61.90 60.10 61.00 62.00 62.00 63.00 3.54 60.36 61.44 63.59 Indonesia 12,189 11,404 11,750 12,000 12,250 12,500 6.14 11,620 11,815 12,221 Japan 105.37 102.98 103.00 103.00 101.00 99.00 -0.98 102.00 102.00 101.00 Korea 1,055 1,069 1,060 1,050 1,040 1,030 1.76 1,024 1,029 1,036 Malaysia 3.25 3.27 3.30 3.32 3.33 3.35 3.42 3.23 3.25 3.28 Philippines 44.41 45.00 44.80 45.00 45.20 45.40 3.20 43.80 43.80 44.00 Singapore 1.27 1.27 1.27 1.28 1.28 1.28 2.40 1.25 1.25 1.25 Sri Lanka 130.89 131.98 130.00 130.00 130.00 130.00 -0.30 n/a n/a n/a Taiwan 29.95 29.78 30.20 30.00 29.80 29.70 -1.00 30.10 30.00 29.80 Thailand 32.68 31.71 32.80 33.40 34.00 34.30 4.62 32.60 32.70 33.10 Vietnam 21,095 21,080 21,100 21,100 21,100 21,100 -0.01 21,236 21,463 22,755 Euro 1.37 1.39 1.33 1.30 1.28 1.25 -7.91 1.39 1.39 1.39 Sterling 1.66 1.66 1.61 1.55 1.50 1.47 -11.76 1.69 1.69 1.69

NB: forecasts in italics; % change from May 8, 2014 to end 4Q 2014; FW rates are from Bloomberg FXFC function using forward rate; for forward rate comparison, 3M compares to 2Q 2014, 6M to 3Q 2014, and 12M to 1Q 2015. Source: HSBC, Bloomberg

Page 51: 20140515-HSBC-On Top of the Data Following the Flow in Asia[1]

Economic Calendar – EM Asia May 2014

For inquiries please contact Asian Economics Team: [email protected], Phone: +852 2822 4556

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Main EM Asia economic indicators calendar

Date Location Local time Subject Unit Period of data Previous

1-May Korea 07:00 CPI % y-o-y Apr 1.3 1-May Korea 08:00 Exports % y-o-y Apr 5.1 1-May Korea 08:00 Imports % y-o-y Apr 3.6 1-May China 09:00 PMI-Manufacturing Index Apr 50.3 1-May Thailand 12:00 CPI % y-o-y Apr 2.1 1-May Thailand 12:00 CPI Core % y-o-y Apr 1.3 2-May Korea 08:00 PMI-Manufacturing Index Apr 50.4 2-May Indonesia 10:00 Imports % y-o-y Mar -9.9 2-May Taiwan 10:00 PMI-Manufacturing Index Apr 52.7 2-May Vietnam 10:00 PMI-Manufacturing Index Apr 51.3 2-May Indonesia 10:00 Exports % y-o-y Mar -2.5 2-May Indonesia 10:00 CPI % y-o-y Apr 7.3 2-May Indonesia 11:00 PMI-Manufacturing Index Apr 50.1 2-May India 13:00 PMI-Manufacturing Index Apr 51.3 2-May Hong Kong 16:30 Retail Sales Value % y-o-y Mar -2.2 3-May China 09:00 PMI: Non-manufacturing Index Apr 54.5 5-May China 09:45 HSBC PMI-Manufacturing final Index Apr 48.3 5-May Indonesia 12:02 GDP % y-o-y 1Q-2014 5.7 5-May Indonesia 12:02 GDP % q-o-q 1Q-2014 -1.4 5-May Singapore 21:30 PMI-Composite Index Apr 50.8 6-May Taiwan 08:30 CPI % y-o-y Apr 1.6 6-May Philippines 09:55 CPI % y-o-y Apr 3.9 6-May India 13:00 PMI-Services Index Apr 47.5 6-May India 13:00 PMI-Composite Index Apr 48.9 7-May China 09:45 HSBC PMI-Services Index Apr 51.9 7-May China 09:45 HSBC PMI-Composite Index Apr 49.3 7-May Hong Kong 10:30 PMI-Composite Index Apr 49.9 7-May Taiwan 16:00 Exports % y-o-y Apr 2.0 7-May Taiwan 16:00 Imports % y-o-y Apr 7.5 8-May Philippines 16:00 Overnight Borrowing Rate % 8-May 3.50 8-May Malaysia 18:00 Overnight Policy Rate % 8-May 3.00 8-May Indonesia n/a Reference Rate % 8-May 7.50 8-May China n/a Exports % y-o-y Apr -6.6 8-May China n/a Imports % y-o-y Apr -11.3 9-May Korea 09:00 7-Day Repo Rate % 9-May 2.50 9-May China 09:30 PPI % y-o-y Apr -2.3 9-May China 09:30 CPI % y-o-y Apr 2.4

Source: Bloomberg

Economic Calendar – EM Asia May 2014

For inquiries please contact Asian Economics Team: [email protected], Phone: +852 2822 4556

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Main EM Asia economic indicators calendar

Date Location Local time Subject Unit Period of data Previous

10-May China n/a Aggregate Financing RMB RMB bn Apr 2070.9 10-May China n/a M2 % y-o-y Apr 12.1 12-May India 20:00 Industrial Production % y-o-y Mar -1.9 12-May Sri Lanka n/a CBSL Standing Deposit Rate % 12-May 6.50 12-May Sri Lanka n/a CBSL Standing Lending Rate % 12-May 8.00 13-May China 13:30 Fixed Assets Ex Rural - ytd % y-o-y Apr 17.6 13-May China 13:30 Retail Sales % y-o-y Apr 12.2 13-May China 13:30 Industrial Production % y-o-y Apr 8.8 14-May Korea 07:00 Unemployment rate sa % Apr 3.5 14-May India 14:30 WPI % y-o-y Apr 5.7 15-May Singapore 13:00 Retail Sales % y-o-y Mar -9.5 15-May Philippines n/a Overseas Workers Remittances % y-o-y Mar 5.6 16-May Singapore 08:30 Non-oil Domestic Exports % y-o-y Apr -6.6 16-May Hong Kong 16:30 GDP-sa % q-o-q 1Q-2014 1.1 16-May Hong Kong 16:30 GDP % y-o-y 1Q-2014 3.0 16-May Malaysia 18:00 GDP % y-o-y 1Q-2014 5.1 17-May Singapore 05/23 GDP, saar final % q-o-q 1Q-2014 0.1 17-May Singapore 05/23 GDP final % y-o-y 1Q-2014 5.1 18-May China 09:30 Property Prices % Apr - 19-May Thailand 10:30 GDP % y-o-y 1Q-2014 0.6 20-May Taiwan 16:00 Export Orders % y-o-y Apr 5.9 21-May Malaysia 17:00 CPI % y-o-y Apr 3.5 22-May China 09:45 HSBC PMI-Manufacturing flash Index May 48.1 22-May Hong Kong 16:30 CPI % y-o-y Apr 3.9 23-May Taiwan 16:00 Industrial Production % y-o-y Apr 3.0 23-May Taiwan 17:00 GDP final % y-o-y 1Q-2014 3.0 23-May Singapore n/a CPI % y-o-y Apr 1.2 24-May Vietnam n/a CPI % y-o-y May 4.5 29-May Philippines 10:00 GDP % y-o-y 1Q-2014 6.5 29-May Philippines 10:00 GDP-sa % q-o-q 1Q-2014 1.5 30-May Korea 07:00 Industrial Production sa % m-o-m Apr 0.9 30-May Korea 07:00 Industrial Production % y-o-y Apr 2.7 30-May Sri Lanka 17:30 CPI % y-o-y May 4.9 30-May India 20:00 GDP % y-o-y 1Q-2014 4.7

Source: Bloomberg

Page 52: 20140515-HSBC-On Top of the Data Following the Flow in Asia[1]

Economic Calendar – DM May 2014

For inquiries please contact Asian Economics Team: [email protected], Phone: +852 2822 4556

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Main DM economic indicators calendar

Date Location Local time Subject Unit Period of data Previous

1-May US 02:00 Fed QE3 Pace USD bn Apr 55.0 1-May US 02:00 Fed Pace of Treasury Purchases USD bn Apr 30.0 1-May US 02:00 Fed Pace of MBS Purchases USD bn Apr 25.0 1-May US 02:00 FOMC Rate Decision % 30-Apr 0.25 1-May US 20:30 Initial Jobless Claims 000s Wk Apr 26 330.0 1-May US 20:30 Personal Income % m-o-m Mar 0.4 1-May US 20:30 Personal Spending % m-o-m Mar 0.5 1-May US 22:00 ISM Manufacturing Index Apr 53.7 2-May EMU 16:00 Manufacturing PMI final Index Apr 53.3 2-May EMU 17:00 Unemployment Rate % Mar 11.8 2-May US 20:30 Nonfarm Payrolls 000s Apr 203.0 2-May US 20:30 Unemployment Rate % Apr 6.7 2-May US 22:00 Factory Orders % m-o-m Mar 1.5 5-May Australia 09:30 Building Approvals % m-o-m Mar -5.4 5-May EMU 17:00 PPI % m-o-m Mar -0.2 5-May EMU 17:00 PPI % y-o-y Mar -1.7 5-May EMU 17:00 EC Publishes Spring Economic Forecast - - - 6-May Australia 12:30 Cash Rate Target % 6-May 2.50 6-May EMU 16:00 Services PMI final Index Apr 53.1 6-May EMU 16:00 Composite PMI final Index Apr 54.0 6-May EMU 17:00 Retail Sales % m-o-m Mar 0.1 6-May EMU 17:00 Retail Sales % y-o-y Mar 1.0 7-May Germany 14:00 Factory Orders % m-o-m Mar 0.9 8-May Australia 09:30 Employment Change 000s Apr 21.9 8-May Australia 09:30 Unemployment Rate % Apr 5.8 8-May Germany 14:00 Industrial Production sa % m-o-m Mar 0.4 8-May EMU 19:45 ECB Rate Decision % 8-May 0.25 8-May EMU 19:45 Marginal Lending Facility % 8-May 0.75 8-May EMU 19:45 ECB Deposit Facility Rate % 8-May 0.00 8-May US 20:30 Initial Jobless Claims 000s Wk May 3 344.0 9-May Australia 09:30 RBA releases Monetary Policy Statement - May - 13-May Germany 17:00 ZEW Survey Current Situation Index May 59.5 13-May Germany 17:00 ZEW Survey Expectations Index May 43.2 13-May US 20:30 Retail Sales % m-o-m Apr 1.2 15-May Japan 07:50 GDP-sa prelim % q-o-q 1Q-2014 0.2 15-May Japan 07:50 GDP saar prelim % q-o-q 1Q-2014 0.7 15-May Germany 14:00 GDP-sa prelim % q-o-q 1Q-2014 0.4 15-May Germany 14:00 GDP prelim % y-o-y 1Q-2014 1.4 15-May EMU 16:00 ECB Monthly Report - May - 15-May EMU 17:00 CPI % m-o-m Apr 0.9 15-May EMU 17:00 CPI final % y-o-y Apr - 15-May EMU 17:00 GDP-sa advance % q-o-q 1Q-2014 0.2 15-May EMU 17:00 GDP, sa advance % y-o-y 1Q-2014 0.5 15-May US 20:30 Empire Manufacturing Index May 1.29 15-May US 20:30 CPI % m-o-m Apr 0.2 15-May US 20:30 CPI Ex Food and Energy % m-o-m Apr 0.2

Source: Bloomberg

Economic Calendar – DM May 2014

For inquiries please contact Asian Economics Team: [email protected], Phone: +852 2822 4556

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Main DM economic indicators calendar

Date Location Local time Subject Unit Period of data Previous

15-May US 20:30 CPI % y-o-y Apr 1.5 15-May US 20:30 CPI Ex Food and Energy % y-o-y Apr 1.7 15-May US 20:30 Initial Jobless Claims 000s Wk May 10 - 15-May US 21:15 Industrial Production % m-o-m Apr 0.7 15-May US 22:00 Philadelphia Fed Business Outlook Index May 16.6 15-May US n/a Annual Manufacturing Revisions - - - 16-May Japan 12:30 Industrial Production final % m-o-m Mar 0.3 16-May US 20:30 Housing Starts Revisions - - - 16-May US 20:30 Housing Starts 000s Apr 946.0 16-May US 21:55 Univ. of Michigan Confidence prelim Index May 84.1 19-May Japan 07:50 Machine Orders % m-o-m Mar -8.8 19-May Japan 07:50 Machine Orders % y-o-y Mar 10.8 21-May Japan 07:50 Trade Balance JPY bn Apr -1446.0 21-May Japan 07:50 Exports % y-o-y Apr 1.8 21-May Japan 07:50 Imports % y-o-y Apr 18.1 21-May EMU 22:00 Consumer Confidence advance Index May -8.6 21-May Japan n/a 2014 Monetary Base Target JPY trn 21-May 270.0 22-May US 02:00 Fed Releases FOMC Meeting Minutes - Apr 29-30 - 22-May EMU 16:00 Manufacturing PMI prelim Index May 53.4 22-May EMU 16:00 Services PMI prelim Index May 53.1 22-May EMU 16:00 Composite PMI prelim Index May 54.0 22-May US 20:30 Initial Jobless Claims 000s Wk May 17 - 22-May US 22:00 Existing Home Sales M Apr 4.59 23-May Germany 14:00 GDP-sa final % q-o-q 1Q-2014 - 23-May Germany 14:00 GDP final % y-o-y 1Q-2014 - 23-May Germany 16:00 IFO Business Climate Index May 111.2 23-May US 22:00 New Home Sales Revisions - - - 23-May US 22:00 New Home Sales 000s Apr 384.0 25-May EMU n/a EC OECD Economic Outlook - - - 27-May US 20:30 Durable Goods Orders % m-o-m Apr 2.9 27-May US 20:30 Durables ex transportation % m-o-m Apr 2.4 27-May US 20:30 Cap Goods Orders Nondef Ex Air % m-o-m Apr 3.5 27-May US 20:30 Cap Goods Ship Nondef Ex Air % Apr 1.5 27-May US 22:00 Consumer Confidence Index May 82.3 27-May US 22:00 Richmond Fed Manufac. Index Index May 7.0 28-May EMU 17:00 Consumer Confidence final Index May - 29-May US 20:30 GDP Annualized % q-o-q 1Q-2014 0.1 29-May US 20:30 Initial Jobless Claims 000s Wk May 24 - 29-May US 22:00 Pending Home Sales % m-o-m Apr 3.4 30-May Japan 07:30 National CPI % y-o-y Apr 1.6 30-May Japan 07:30 Tokyo CPI Ex-Fresh Food % y-o-y May 2.7 30-May Japan 07:50 Industrial Production prelim % m-o-m Apr - 30-May US 20:30 Personal Income % m-o-m Apr 0.5 30-May US 20:30 Personal Spending % m-o-m Apr 0.9 30-May US 21:45 Chicago PMI Index May 63.0 30-May US 21:55 Univ. of Michigan Confidence final Index May -

Source: Bloomberg

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Notes

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Disclosure appendix Analyst Certification The following analyst(s), economist(s), and/or strategist(s) who is(are) primarily responsible for this report, certifies(y) that the opinion(s) on the subject security(ies) or issuer(s) and/or any other views or forecasts expressed herein accurately reflect their personal view(s) and that no part of their compensation was, is or will be directly or indirectly related to the specific recommendation(s) or views contained in this research report: Frederic Neumann, Hongbin Qu, Ronald Man, Paul Bloxham, Leif Eskesen, Trinh Nguyen, John Zhu, Su Sian Lim, Julia Wang, Izumi Devalier, Joseph Incalcaterra and Adam Richardson

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