20140515-HSBC-On Top of The Data Following The Flow in Asia

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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, its 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 fredericneumann@hsbc.com.hk
Ronald Man
Economist
+852 2996 6743 ronaldman@hsbc.com.hk
Joseph Incalcaterra
Economist
+852 2822 4687 joseph.f.incalcaterra@hsbc.com.hk
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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Whats 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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Whats 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 improve
New 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 growth
Hong 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 Mainland
India BIAS Weak PMIs have increased downside risks to growth in the near term. A strong mandate government would lift medium-term growth bias
Indonesia 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 consumption
Korea BIAS Korea adopted the 2008 system of national accounts, which poses upside risks to our 3.2% 2014 GDP forecast on statistical grounds
Malaysia 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 slack
Philippines 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 months
Singapore BIAS Upside risk to growth following better-than-expected factory output and improving PMIs
Sri Lanka BIAS Upside risk to growth thanks to additional monetary policy stimulus this year
Taiwan BIAS Robust manufacturing and private consumption kept growth at 3.0% y-o-y in Q1, in line with our estimates for the full-year
Thailand BIAS Political uncertainty poses downside risks to growth. Although household debt is high, we continue to expect one more cut from the BOT
Vietnam BIAS The headline PMI Index increased sharply to 53.1 in April from 51.3 in March. Output, new orders, and employment rose
Source: 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-trend
Japan 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 expected
Philippines The BSP raised the RRR by 1 ppt to 20%; S&P upgraded the Philippines to BBB rating
Singapore 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-y
Taiwan 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 USD2.9bn
Vietnam Inflation stayed steady at 4.4% y-o-y in April from 4.4% in March
Source: 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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400
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400
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
Taiwan
I ndia
Hong Kong*
Sri Lanka
Vietnam
Philippines
Thailand
I ndonesia
Malaysia
Singapore
Japan
Australia
New Zealand
I ndia

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Manufacturing PMIs
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 14
Australia 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 14
Australia 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-Inventory PMI 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 14
Australia 48.6 48.9 55.2 47.7 45.3 52.7 49.8 51.8 53.7
China (HSBC) 51.4 51.9 51.0 50.3 51.7 50.8 51.4 51.3 51.4 49.7 49.8 48.6
China (NBS) 54.8 54.5 55.0 50.2 51.4 50.9 50.8 50.8 51.4
Hong Kong 49.7 49.9 53.3 49.5 51.1 50.4 47.2 50.5 54.1
India 48.5 47.5 48.8 49.8 51.2 50.1 48.4 47.6 49.5 52.1 52.2 48.2
Japan 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 50.1
Eurozone 53.1 52.2 52.6 50.5 49.8 50.1 52.3 51.8 51.9 50.0 49.7 48.6
France 50.4 51.5 47.2 49.0 49.6 46.8 49.4 51.3 48.0 51.5 52.7 47.4
Germany 54.7 53.0 55.9 52.4 51.0 53.9 52.4 51.3 52.3 48.5 46.6 48.4
UK 58.7 57.6 58.2 56.0 53.5 55.6 58.2 58.5 59.2 50.2 52.7 54.6
US (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 14
Australia 60.7 63.7 61.4
China (HSBC) 51.2 52.8 51.6 49.7 49.8 48.6
China (NBS) 52.4 52.8 52.1 47.2 48.3 46.5
Hong Kong 53.2 53.5 56.0 50.6 48.6 52.7
India 53.9 53.2 53.9 52.1 52.2 48.2
Japan 54.6 52.2 54.0 50.2 50.6 49.4
Global 54.6 53.5 54.6 48.9 49.4 50.1
Eurozone 52.6 52.8 54.1 50.0 49.7 48.6
France 52.1 51.9 52.4 51.5 52.7 47.4
Germany 54.0 53.5 56.2 48.5 46.6 48.4
UK 54.0 54.1 55.0 50.2 52.7 54.6
US (Markit) 55.9 53.2 54.7
US (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


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-14
Global manufacturing PMI Asia Business Index (ex Japan)
Index Index
-10
-8
-6
-4
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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
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US ISM New orders minus Inventories (LHS) Exports sa, Asia ex JP, simple, % 3m/3m (RHS)
% y -o-y Index

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


Chart 5: Asia ex Japan Input and Output prices


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

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Asia ex JP: New Export Orders Asia ex JP New Orders
Index Index
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May-02 May-04 May-06 May-08 May-10 May-12 May-14
Asia ex JP: Output prices Asia ex JP: Input prices
Index Index
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May-04 May-05 May-06 May-07 May-08 May-09 May-10 May-11 May-12 May-13 May-14
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
Taiwan
I ndia
Hong Kong
Sri Lanka
Vietnam Philippines
Thailand
I ndonesia
Malaysia
Singapore
Japan
Australia*
New Zealand*
I ndia

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Indicators

Latest export growth (% y-o-y)
Source: CEIC, Bloomberg, HSBC
Consensus not available
Above consensus
At par with consensus
Below consensus
China
South Korea
Taiwan
I ndia
Hong Kong
Sri Lanka
Vietnam Philippines
Thailand
I ndonesia
Malaysia
Singapore
Japan
Australia
New Zealand
I ndia

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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 3.2
New Zealand 2.7 3.5 (3.5) 3.0 (3.0) 3.1 3.5 3.8 3.5 3.3 3.2 3.1
China 7.7 7.4 (7.3) 7.7 (7.2) 7.7 7.4 7.6 7.3 7.4 7.6 7.7
Hong Kong 2.9 3.7 (3.4) 4.0 (3.5) 3.0 3.6 3.7 3.6 3.8 3.8 3.9
India 4.6 5.3 (5.4) 6.3 (6.0) 4.7 4.5 5.1 5.0 5.3 5.9 6.1
Indonesia 5.8 5.2 (5.4) 6.0 (5.8) 5.7 5.2 5.2 5.1 5.1 5.6 5.9
Japan 1.5 1.0 (1.4) 1.0 (1.3) 2.6 2.5 0.4 0.5 0.7 0.0 1.5
Korea 3.0 3.2 (3.5) 3.4 (3.7) 3.7 3.9 3.3 2.8 3.4 3.6 3.6
Malaysia 4.7 5.2 (5.1) 5.0 (5.0) 5.1 6.5 6.0 4.9 3.5 3.5 4.2
Philippines 7.2 5.9 (6.4) 6.1 (6.3) 6.5 6.0 6.0 5.7 6.1 6.3 6.0
Singapore 4.1 3.5 (3.8) 4.0 (4.0) 5.5 5.1 2.5 3.4 2.9 3.9 4.0
Sri Lanka 7.2 7.2 (7.2) 7.2 (7.0) 8.2 7.8 7.4 7.1 6.5 7.1 7.2
Taiwan 2.1 3.0 (3.3) 3.5 (3.6) 2.9 3.0 3.1 3.1 2.9 3.7 3.7
Thailand 2.9 3.0 (2.5) 4.0 (4.2) 0.6 3.3 3.3 2.7 2.8 3.2 3.6
Vietnam 5.4 5.6 (5.7) 5.8 (5.9) 6.0 5.0 5.5 5.8 6.2 5.5 5.7
Asia 4.7 4.5 (4.6) 4.8 (4.7) 5.1 5.0 4.4 4.3 4.4 4.4 4.9
Asia x JN 6.2 6.1 (6.1) 6.5 (6.2) 6.2 6.1 6.2 6.0 6.1 6.4 6.5
Asia 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 4.9
ASEAN 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 0.8
New Zealand
3.1 3.3 2.3 0.6 1.0 0.1
China
7.4 7.7 7.8 7.5 1.5 2.0 2.2 1.6
Hong Kong
3.0 2.8 3.1 1.1 0.7 0.6
India
4.7 4.8 4.4 1.2 1.2 1.0
Indonesia
5.2 5.7 5.6 5.8 0.9 1.4 1.4 1.4
Japan
2.6 2.3 1.2 0.2 0.2 1.0
Korea
3.9 3.7 3.4 2.7 0.9 0.9 1.1 1.0
Malay sia
5.1 5.0 4.4 1.7 1.6 1.6
Philippines
6.5 6.9 7.6 1.5 1.3 1.5
Singapore
5.1 5.5 5.8 4.2 0.0 1.5 0.1 3.5
Sri Lanka
8.2 7.8 6.8 2.0 2.1 2.0
Taiwan
3.0 2.9 1.3 2.7 0.3 1.8 0.1 1.0
Thailand
0.6 2.7 2.9 0.6 1.4 0.6
Vietnam
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
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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
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8
9
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)


% 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 4.1
New Zealand 0.7 2.2 1.1 3.4 3.8 4.5 3.1 1.3 1.3 1.2
China 9.7 9.4 9.8 10.0 8.7 9.4 9.2 9.5 9.6 9.8
Hong Kong -0.7 2.7 0.6 0.5 2.0 3.0 2.8 3.0 2.7 2.9
India -0.1 3.8 6.2 -0.8 -0.5 3.4 2.2 4.3 5.0 5.5
Indonesia 5.6 4.2 5.0 1.5 3.8 4.2 4.1 4.1 4.6 4.9
Japan -0.9 2.3 5.3 5.8 8.1 0.9 2.5 3.5 5.2 5.4
Korea 0.1 -0.4 0.0 0.6 0.2 -0.3 -1.5 -0.1 0.5 0.4
Malaysia 2.7 5.6 4.9 3.4 7.3 5.5 6.4 3.5 3.5 4.2
Philippines 10.5 8.0 8.0 12.3 8.0 8.0 8.0 8.0 8.0 8.0
Singapore 1.6 2.8 4.0 7.1 9.8 2.5 2.7 1.5 3.8 4.0
Sri Lanka 0.2 5.2 7.3 2.3 4.5 4.6 5.4 6.4 7.5 7.5
Taiwan 0.7 3.8 3.7 2.0 2.4 3.7 4.4 2.0 2.7 3.5
Thailand -3.2 0.6 5.6 -7.1 -7.0 -0.4 2.8 4.9 5.2 5.5
Asia 3.9 5.3 6.7 6.0 6.4 4.8 5.1 5.7 6.5 6.7
Asia x JN 6.1 6.6 7.4 6.1 5.6 6.5 6.3 6.8 7.1 7.3
Asia x JN x CH 1.3 3.0 4.2 0.9 1.5 2.8 2.5 3.2 3.8 4.1
ASEAN 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-14
China 8.7 8.8 8.6 8.6 0.5 -3.5 4.9 -0.2
India -0.5 -1.8 0.8 0.9 -0.9 1.3
Indonesia 4.9 3.5 2.9 0.6 0.3 0.4
Japan 7.0 7.0 10.6 0.4 -1.8 2.5
Korea 2.7 4.1 -4.3 0.9 -1.9 -0.2
Malay sia 4.4 6.8 3.5 -0.3 1.8 -1.6
Philippines -1.1 6.8 4.8 -8.2 1.4 -9.8
Singapore 12.1 13.1 4.3 6.1 6.5 -7.8
Sri Lanka 3.7 -0.3
Taiwan 3.1 6.8 -1.8 -2.1 1.3 -1.7
Thailand -10.4 -4.7 -5.6 -2.1 -0.5 0.6
Vietnam 5.8 4.1 15.5 -1.7 1.6 1.7 0.3 -2.1
4Q13 3Q13 2Q13 1Q13
Australia* 2.7 2.0 5.0 4.4 1.3 0.8 0.3 0.4
New Zealand* 3.6 1.1 -0.2 1.5 3.1 1.1 -1.0 0.5
Hong Kong* 0.5 -0.9 0.3 0.5 -1.0 -0.1 0.4 0.2
1Q13 4Q13 3Q13 2Q13
% q-o-q, sa/ % m-o-m, sa
% y-o-y
-20
-10
0
10
20
30
40
50
-20
-10
0
10
20
30
40
50
% y -o-y % y -o-y
-12
-9
-6
-3
0
3
6
9
12
15
-12
-9
-6
-3
0
3
6
9
12
15
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)


% 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 7.0
New Zealand* 2.8 7.8 1.3 0.4 5.5 7.3 4.4 3.9 3.6 3.4
China 7.8 10.0 12.0 -3.5 11.5 11.5 10.5 12.0 11.0 13.0
Hong Kong 13.9 4.2 3.4 3.0 3.8 5.2 4.5 3.4 3.3 3.2
India 5.9 8.0 8.7 5.4 7.5 4.8 7.5 10.2 9.0 9.3
Indonesia -2.6 -3.8 3.6 -2.4 -3.9 -0.5 -6.0 4.9 3.1 5.3
Japan -10.9 -1.5 12.1 -3.6 -2.7 -0.4 4.4 13.4 13.4 11.6
Korea 2.7 8.1 13.5 2.5 10.5 10.0 9.4 13.5 13.7 13.5
Malaysia -1.7 4.5 8.4 1.4 9.4 4.4 3.0 8.1 8.3 8.5
Philippines -3.6 7.8 8.0 7.0 7.0 8.0 9.0 8.0 8.0 8.0
Singapore 0.0 3.8 8.4 4.5 2.8 4.5 3.3 7.2 8.0 8.8
Sri Lanka 7.3 7.7 11.0 8.0 14.0 16.0 16.0 14.0 14.0 12.0
Taiwan 1.4 4.4 4.8 4.1 3.6 4.4 3.2 3.5 4.0 4.4
Thailand -0.2 3.3 7.2 -0.8 2.3 1.4 3.9 5.8 6.4 7.6
Vietnam 15.4 15.4 13.0 12.2 17.4 13.3 10.5 11.7 10.3 14.3
Asia 0.5 5.0 10.9 -1.6 5.3 5.9 6.9 11.4 10.9 11.3
Asia x JN 5.6 7.9 10.4 -0.6 9.0 8.8 8.1 10.6 9.8 11.2
Asia x JN x CH 2.8 5.3 8.3 3.1 5.7 5.2 4.9 8.7 8.2 8.8
ASEAN -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
Australia* 18.4 19.1 22.6 -2.4 0.2 4.9
New Zealand* 15.2 16.3 21.4 1.1 3.8 0.5
China 0.8 -6.6 -18.1 10.5 4.5 5.9 -14.2 5.1
Hong Kong 3.4 -1.4 -0.6 12.5 -9.4 -1.1
India 5.3 -3.2 -5.5 2.7 1.1 0.9 -0.7 -0.1
Indonesia 1.2 -2.5 -5.9 -3.5 2.9 -5.3
Japan* 1.8 9.8 9.5 -1.5 -0.2 -1.1
Korea 9.0 5.1 1.4 -0.2 0.9 3.5 -1.8 0.3
Malay sia 2.4 5.9 4.0 -5.3 3.1 2.7
Philippines 11.2 11.6 -3.0 -0.5 7.4 -11.7
Singapore -3.4 8.3 -1.8 -11.3 8.7 0.9
Sri Lanka 5.4 23.2 -9.8 13.4
Taiwan 7.9 1.1 7.4 -4.3 0.6 2.4 0.3 -3.0
Thailand -2.7 2.2 -1.5 1.4 1.6 -1.1
Vietnam 21.6 11.3 33.5 -0.1 3.1 0.9 2.0 4.6
Jan-14 Feb-14 Mar-14 Apr-14
% y-o-y % m-o-m, sa
-40
-30
-20
-10
0
10
20
30
40
50
-40
-30
-20
-10
0
10
20
30
40
50
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: Thomson Reuters Datastream, CEIC, HSBC
Retail Sales
Apr-14 Mar-14 Feb-14 Jan-14 Apr-14 Mar-14 Feb-14 Jan-14
Australia 4.4 5.0 6.7 0.1 0.3 1.1
China 11.9 12.2 11.8 11.8 0.8 0.7 0.8 0.6
Hong Kong -1.3 -2.1 14.4 -3.0 -4.8 5.5
Indonesia 27.7 25.1 18.8 24.8 2.5 3.4 -0.1 -0.5
Japan 11.0 3.7 4.4 3.8 0.2 1.2
Korea 2.6 -0.7 6.1 2.1 -2.7 2.2
Singapore -9.5 0.1 3.0 0.6
Taiwan -3.8 6.5 -4.0 0.6
Thailand -8.0 -10.4 -0.6 -3.2
Vietnam 11.5 6.3 12.7 11.9 3.5 -2.2 3.1 0.0
4Q13 3Q13 2Q13 1Q13 4Q13 3Q13 2Q13 1Q13
New 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
% y -o-y % y -o-y
-10
-5
0
5
10
15
20
25
30
-10
-5
0
5
10
15
20
25
30
SI TH TA HK KR NZ JA AU CH
Feb-14/3Q13 Mar-14/4Q13
% y -o-y % y -o-y
Motor Vehicle Sales
Australia -2.8 -3.6 -3.2 Malay sia 3.1 12.9 -8.2
China 8.8 6.6 17.8 6.0 Philippines 25.4 16.5 27.1
Hong Kong -11.1 23.1 -15.0 Singapore 14.5 38.5 -8.7
India 7.8 13.4 5.3 4.3 Sri Lanka
Indonesia 17.8 8.2 7.0 Taiwan 14.6 11.5 -4.9
Japan -5.5 17.4 18.4 29.4 Thailand -46.7 -44.8 -45.5
Korea 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 1.6
New Zealand 3.7 1.2
China 107.9 103.1 101.1
Hong Kong* 75.6 75.3 75.0 3.2 1.7
India 2.5 0.7
Indonesia 113.9 118.2 116.2 116.7 5.6 5.3 1.5 1.3
Japan 38.0 38.8 39.7 2.1 0.5
Korea 110.2 110.2 110.2 111.2 2.2 0.9
Malay sia 7.3 1.2
Philippines 5.6 1.3
Singapore 1.9 0.3
Taiwan 83.7 81.0 82.9 80.8 3.3 1.0
Thailand 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)


% 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 2.8
New Zealand 1.1 2.3 (1.9) 2.5 (2.3) 1.5 2.3 2.2 2.6 2.5 2.5 2.4
China 2.6 2.6 (2.6) 3.1 (3.0) 2.3 2.6 2.4 2.7 3.0 3.1 3.2
Hong Kong 4.3 4.1 (3.9) 4.0 (3.6) 4.1 4.0 4.2 4.0 3.9 4.2 3.9
India (WPI) 5.9 5.0 (5.6) 6.4 (5.8) 5.1 6.0 4.0 3.9 6.0 6.3 6.4
India (CPI) 9.4 7.4 (7.7) 8.0 (7.1) 8.4 7.7 7.4 6.6 8.0 8.2 8.1
Indonesia 6.4 6.3 (6.3) 4.9 (5.5) 7.8 7.4 4.5 5.5 4.7 4.8 5.0
Japan 0.4 2.8 (2.6) 1.8 (1.7) 1.5 3.2 3.3 3.1 3.2 1.0 1.0
Korea 1.3 2.4 (1.9) 3.3 (2.6) 1.1 2.2 2.8 3.3 3.6 3.5 3.2
Malaysia 2.1 3.2 (3.3) 3.3 (3.6) 3.5 3.5 3.2 2.5 2.0 3.5 3.8
Philippines 2.9 4.2 (4.1) 4.3 (3.8) 4.1 4.1 4.5 4.1 4.0 4.3 4.4
Singapore 2.4 2.4 (2.5) 3.2 (2.7) 1.0 2.9 2.7 2.7 3.2 3.3 3.2
Sri Lanka 6.9 6.0 (6.2) 7.2 (6.7) 4.2 4.3 6.6 8.8 9.0 8.2 6.2
Taiwan 0.8 1.4 (1.2) 1.6 (1.7) 0.8 1.2 2.0 2.0 1.5 1.6 1.6
Thailand 2.2 2.3 (2.4) 2.5 (2.8) 2.0 2.1 2.5 2.7 2.6 2.6 2.5
Vietnam 6.6 5.1 (6.0) 7.3 (6.9) 4.8 4.5 4.9 5.8 6.5 6.7 6.8
Asia 2.6 3.3 (3.2) 3.3 (3.1) 2.5 3.3 3.0 3.2 3.4 2.9 2.9
Asia x JN 3.6 3.5 (3.5) 3.9 (3.7) 3.0 3.4 2.9 3.2 3.6 3.7 3.7
Asia 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 4.4
ASEAN 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
China 1.8 2.4 2.0 2.5 -0.2 0.2 -0.1 0.2
Hong Kong 3.9 3.9 4.6 0.1 0.3 0.4
India (WPI) 5.7 4.7 5.2 0.5 0.2 -0.3
India (CPI) 8.6 8.3 8.0 8.8 0.7 0.8 0.4 0.2
Indonesia 7.3 7.3 7.7 8.2 0.4 0.4 0.4 0.5
Japan 1.6 1.5 1.4 0.0 0.0 -0.1
Korea 1.5 1.3 1.0 1.1 0.1 0.0 0.1 0.2
Malay sia 3.5 3.5 3.4 0.3 0.3 0.4
Philippines 4.1 3.9 4.1 4.2 0.2 0.1 0.1 0.5
Singapore 1.2 0.4 1.4 0.3 0.1 0.2
Sri Lanka 4.9 4.2 4.2 4.4 0.6 0.5 0.2 0.1
Taiwan 1.6 1.6 0.0 0.8 0.2 0.5 0.4 0.1
Thailand 2.4 2.1 2.0 1.9 0.1 0.1 0.1 0.3
Vietnam 4.4 4.4 4.6 5.5 0.2 0.0 -0.2 0.2
1Q14 4Q13 3Q13 2Q13
Australia* 2.9 2.7 2.2 2.4 0.5 0.9 1.0 0.6
New 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-y
2Q13 1Q14 3Q13 4Q13
-2
0
2
4
6
8
10
-2
0
2
4
6
8
10
% 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)


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

China 1.6 1.7 1.7 2.0 0.0 0.1 0.0 0.3
Hong Kong 3.9 4.0 5.0 0.0 0.0 0.5
India (Core WPI) 3.5 3.1 3.0 0.4 0.2 0.3
India (Core CPI) 7.8 7.8 7.9 8.2 0.5 0.7 0.5 0.7
Indonesia 4.7 4.6 4.6 4.5 0.4 0.3 0.4 0.4
Japan 0.6 0.7 0.6 -0.1 0.1 -0.1
Korea 2.3 2.1 1.7 1.7 0.2 0.2 0.2 0.1
Malay sia 2.6 2.5 2.3 0.2 0.3 0.2
Philippines 2.9 2.8 3.0 3.2 0.2 0.1 0.2 0.3
Singapore 1.9 1.7 2.4 0.2 -0.1 -0.1
Sri Lanka 3.4 3.4 3.1 3.5 0.3 0.5 0.2 0.9
Taiwan 1.2 1.0 -0.2 1.0 0.2 0.7 -0.7 0.4
Thailand 1.7 1.3 1.2 1.0 0.3 0.1 0.2 0.2
Vietnam 5.1 5.7 5.9 6.5 0.1 0.2 0.1 -0.1
1Q14 4Q13 3Q13 2Q13 1Q14 4Q13 3Q13 2Q13
Australia* 2.6 2.6 2.3 2.3 0.5 0.9 0.7 0.6
New Zealand* 1.6 1.6 1.1 0.9 0.3 0.6 0.3 0.3
-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-14
% y -o-y % y -o-y
-1
0
1
2
3
4
5
6
7
8
-1
0
1
2
3
4
5
6
7
8
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 1.83
Bangladesh -0.15 -0.35 -0.05 0.65 -0.05 -0.25 0.05
China 3.70 3.40 3.60 3.30 3.00 2.90 2.80
Hong Kong -3.60 -3.53 -3.70 -3.50 -3.40 -3.70 -2.90
India -0.40 0.55 0.82 1.69 0.22 0.03 0.13
Indonesia -0.31 0.06 3.01 1.99 2.83 2.65 2.51
Japan -1.49 -3.12 -3.27 -3.08 -3.14 -0.95 -0.99
Korea 1.40 0.32 -0.07 -0.29 -0.36 0.03 0.59
Malaysia -0.50 -0.50 0.25 0.95 1.47 -0.03 -0.31
Philippines -0.63 -0.31 -0.48 -0.10 0.04 -0.33 -0.37
Singapore -0.70 -2.50 -2.40 -2.30 -2.80 -2.90 -2.80
Sri Lanka 3.80 3.66 1.41 -0.84 -0.52 0.50 2.57
Taiwan 1.08 0.68 -0.13 -0.13 0.50 0.55 0.60
Thailand 0.01 -0.38 -0.76 -0.99 -0.83 -0.31 -0.25
Vietnam 0.17 0.47 0.11 -0.77 -0.50 -0.72 -0.75
Source: Central Banks, CEIC, HSBC.
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
Taiwan 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
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
Taiwan 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
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
0
5
10
15
20
25
30
35
40
0
5
10
15
20
25
30
35
40
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
Australia
6.6 7.1 6.6 7.4 7.8 7.7
New Zealand
5.0 6.8 7.0 7.2 5.8 4.6
China
13.2 12.0 13.3 13.2 14.0 13.1 12.3 12.1
Hong Kong
12.1 12.8 9.6 11.6 12.8 13.0
India
10.7 9.3 9.6 11.1 9.8 10.0 9.6 9.9
Indonesia
10.0 10.9 11.6 7.1 6.2 6.8
Japan
3.4 3.6 4.0 4.3 1.6 3.0 4.2 4.7
Korea
5.0 5.7 5.5 7.3 6.8 6.1
Malay sia
6.3 6.4 6.8 2.9 2.1 0.9
Philippines
34.8 36.1 37.3 23.9 24.7 31.9
Singapore
2.0 2.4 3.6 4.8 3.1 1.3
Sri Lanka
16.1 17.8 12.6 13.3
Taiwan
5.9 5.8 6.1 4.4 3.8 4.3
Thailand
6.4 7.4 7.4 6.0 6.9 6.2
% y-o-y % 3m/3m saar

20
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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 2.83
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: 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/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
-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 PH
Over 6 months Over 12 months
bps bps

21
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Asian Economics
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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 0.84
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 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 6.9
New Zealand n/a 12 n/a -2.9 -3.8 19.6 7.8 1.3
China 741 3,948 18.8 2.5 2.7 -8.0 10.0 12.0
Hong Kong 788 318 n/a 4.1 6.2 0.5 4.2 3.4
India 100 284 35.3 -2.2 -2.7 -2.0 8.0 8.7
Indonesia 52 106 49.1 -2.4 -2.0 -2.4 -3.8 3.6
Korea 151 356 42.3 4.6 4.7 5.2 8.1 13.5
Malaysia 35 118 29.4 5.4 7.4 4.1 4.5 8.4
Philippines 7 80 8.7 3.1 2.4 11.2 7.8 8.0
Singapore n/a 275 n/a 19.3 19.8 1.0 3.8 8.4
Sri Lanka 6 8 73.2 -5.2 -5.6 13.9 7.7 11.0
Taiwan 118 421 28.0 8.7 6.3 5.5 4.4 4.8
Thailand 68 167 41.0 1.0 1.2 -0.7 3.3 7.2
Vietnam 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 Taiwans export no.s; (3) USD export values are used. Source: HSBC, CEIC.

-25
-20
-15
-10
-5
0
5
10
-25
-20
-15
-10
-5
0
5
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) _________________
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) ____________________
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 _________________
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
-2
0
2
4
6
8
-10
-8
-6
-4
-2
0
2
4
6
8
Feb-04 Feb-06 Feb-08 Feb-10 Feb-12 Feb-14
G-3 Retail Sales
% y -o-y % y -o-y
-15
-5
5
15
25
95
97
99
101
103
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)
% %
0.65
0.90
1.15
1.40
1.65
1.90
2.15
2.40
2.65
0.65
0.90
1.15
1.40
1.65
1.90
2.15
2.40
2.65
Apr-06 Apr-08 Apr-10 Apr-12 Apr-14
US 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


Philly Semiconductor Index US Semiconductor shipments worldwide


US electronic imports Japan, Korea and Taiwan electronic exports

-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 14
US 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
-10
0
10
20
30
40
-40
-30
-20
-10
0
10
20
30
40
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 14
US 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 14
Korea Electronic Exports Taiwan Electronic Exports
Japan Electronic Exports
% y -o-y % y -o-y

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Macro
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Asia Major Events

Major Events
Source: Bloomberg, HSBC.
China
South Korea
Taiwan
I ndia
Hong Kong
Sri Lanka
Vietnam
Philippines
Thailand
I ndonesia
Malaysia
Singapore
Japan
Australia
New Zealand
I ndia
State Council
announces new
capital market
reforms for the
next five years
Sewol ferry
incident
PM Yingluck found
guilty by
Constitutional
Court of abuse of
power in 2011
transfer of security
head
Opposition party
PDI-P wins most
votes in April 9
legislative
elections

26
Macro
Asian Economics
15 May 2014
abc
Australia

News Highlights
Australias 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 reports 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 Australias 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
0
1
2
3
4
5
6
7
8
0
1
2
3
4
5
6
7
8
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 paulbloxham@hsbc.com.au
Adam Richardson, Economist
HSBC Australia Limited
+612 9006 5848 adamrichardson@hsbc.com.au
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

27
Macro
Asian Economics
15 May 2014
abc
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
47
48
49
50
51
52
53
54
55
47
48
49
50
51
52
53
54
55
PMI Manufacturing Business Activity Index
Apr-14 Mar-14 Feb-14
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
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
>50 + rising >50 + falling <50 + rising <50 + falling
PMI Manufacturing
Output
New Orders
Inventories
New Orders - Inventory
Output Prices
Input Prices
Output Prices - Input Prices
New export orders
Employment
51.4 51.9 51.0
50.3 51.7 50.8
New Business 51.4 51.3 51.4
Input Prices 51.2 52.8 51.6
Outstanding Business 49.7 49.8 48.6
Business Expectations 60.7 63.1 62.2
Business Activity
Employment
Qu Hongbin, Economist
The Hongkong and Shanghai Banking
Corporation Limited
+852 2822 2025 hongbinqu@hsbc.com.hk
Julia Wang, Economist
Corporation Limited
+852 3604 3663 juliarwang@hsbc.com.hk
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

28
Macro
Asian Economics
15 May 2014
abc
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 Chinas interbank market and
trade-related activities are also among the reasons for the increase, according to Arthur Yuen, the HKMAs 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


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


-16
-12
-8
-4
0
4
8
12
16
-12
-9
-6
-3
0
3
6
9
12
46
48
50
52
54
56
58
46
48
50
52
54
56
58
PMI New Orders Index
-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
%
49.7 49.9 53.3
49.4 49.2 55.1
50.3 49.1 54.8
50.0 52.0 53.4
0.3 -2.9 1.4
51.5 51.2 54.4
55.5 53.5 56.2
-3.9 -2.3 -1.9
47.2 50.5 54.1
49.5 51.1 50.4
PMI
Output
New Orders
Inventories
Output Prices
Input Prices
New Business from China
Employment
John Zhu, Economist
Corporation Limited
+852 2996 6621 john.zhu@hsbc.com.hk
Rini Sen, Economics Associate
Bangalore
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

29
Macro
Asian Economics
15 May 2014
abc
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


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
44
46
48
50
52
54
56
58
60
44
46
48
50
52
54
56
58
60
PMI Manufacturing 51.3 51.3 52.5
Output 51.7 52.2 54.0
New Orders 52.5 52.7 54.9
Inventories 52.7 51.4 51.4
-0.2 1.3 3.5
50.9 51.0 51.4
54.6 57.2 61.0
-3.7 -6.2 -9.6
New export orders 53.0 56.8 54.1
Employment 50.2 50.2 50.2
Output Prices
Input Prices
48.5 47.5 48.8
49.8 51.2 50.1
New Business 48.4 47.6 49.5
Input Prices 53.9 53.2 53.9
Outstanding Business 52.1 52.2 48.2
Business Expectations 65.8 66.0 63.4
Business Activity
Employment
Leif Eskesen, Economist
Corporation Limited, Singapore Branch
+65 6658 8962 leifeskesen@hsbc.com.sg
Prithviraj Srinivas, Economics Associate
Bangalore
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

30
Macro
Asian Economics
15 May 2014
abc
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 countrys 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


Indonesia Inflation v/s Policy rate HSBC Indonesia manufacturing PMI


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
47
48
49
50
51
52
53
54
47
48
49
50
51
52
53
54
3
6
9
12
15
0
5
10
15
20
05 06 07 08 09 10 11 12 13 14
% y -o-y
%
PMI 51.1 50.1 50.5
Output 49.8 49.8 50.3
New Orders 52.7 51.2 50.3
3.2 1.4 1.4
56.0 55.4 57.4
60.3 60.0 65.7
-4.3 -4.6 -8.3
Output Prices
Input Prices
Su Sian Lim, Economist
+65 6658 8963 susianlim@hsbc.com.sg
Abanti Bhaumik, Economics Associate
Bangalore
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

31
Macro
Asian Economics
15 May 2014
abc
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


Japan Inflation v/s Policy rate Japan manufacturing PMI


-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
44
46
48
50
52
54
56
58
44
46
48
50
52
54
56
58
-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
% y -o-y %
PMI 49.4 53.9 55.5
Output 46.2 54.2 58.4
New Orders 47.4 54.9 56.2
-2.6 4.5 5.6
50.1 49.8 51.8
55.3 57.8 58.5
-5.3 -8.0 -6.6
Input Prices
Output Prices
Izumi Devalier, Economist
Corporation Limited
+852 2822 1647 izumidevalier@hsbc.com.hk
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

32
Macro
Asian Economics
15 May 2014
abc
Korea

News Highlights
The 16 April Sewol ferry disaster is expected to weigh on Koreas 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 Koreas 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


Korea Inflation v/s Policy rate HSBC Korea manufacturing PMI


-18
-9
0
9
18
-9
-6
-3
0
3
6
9
42
44
46
48
50
52
54
56
42
44
46
48
50
52
54
56
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
% y -o-y
%
PMI 50.2 50.4 49.8
Output 49.8 50.4 49.7
New Orders 50.0 50.4 49.9
0.4 1.9 2.2
47.7 48.3 48.2
47.9 47.8 49.8
-0.2 0.5 -1.6
Output Prices
Input Prices
Ronald Man, Economist
Corporation Limited
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

33
Macro
Asian Economics
15 May 2014
abc
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 governments 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 BNMs 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


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


-15
-10
-5
0
5
10
15
-12
-8
-4
0
4
8
12
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
% 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
Bangalore
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

34
Macro
Asian Economics
15 May 2014
abc
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 RBNZs 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 Zealands 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


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


-6
-4
-2
0
2
4
6
8
10
-6
-4
-2
0
2
4
6
8
10
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
0
2
4
6
8
10
0
2
4
6
8
10
05 06 07 08 09 10 11 12 13 14
% y -o-y
%
Mar-14 Feb-14 Jan-14
PMI 58.4 56.5 56.4
Output 60.5 59.0 59.7
New Orders 60.5 57.0 59.9
New Orders-Inventory 9.4 7.7 11.2
Paul Bloxham, Economist
HSBC Bank Australia Limited
Adam Richardson, Economist
HSBC Bank Australia Limited
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

35
Macro
Asian Economics
15 May 2014
abc
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


Philippines Inflation v/s Policy rate Philippines Overseas Remittances


-12
-9
-6
-3
0
3
6
9
12
15
-12
-9
-6
-3
0
3
6
9
12
15
-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
% y -o-y %
-12
-9
-6
-3
0
3
6
9
12
-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
Corporation Limited
+852 2996 6975 trinhdnguyen@hsbc.com.hk
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

36
Macro
Asian Economics
15 May 2014
abc
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


Singapore Inflation v/s Policy rate Singapore PMI


-18
-12
-6
0
6
12
18
24
30
36
-18
-12
-6
0
6
12
18
24
30
36
46
47
48
49
50
51
52
53
54
46
47
48
49
50
51
52
53
54
-1
0
1
2
3
4
-2
-1
0
1
2
3
4
5
6
7
8
05 06 07 08 09 10 11 12 13 14
% y -o-y
%
PMI 51.1 50.8 50.9
Output 52.3 51.5 51.9
New Orders 52.4 50.8 51.2
1.9 0.9 0.4
50.8 50.2 50.5
Output Prices
Input Prices
Bangalore
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

37
Macro
Asian Economics
15 May 2014
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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


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


-2
0
2
4
6
8
10
12
14
16
-2
0
2
4
6
8
10
12
14
16
-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
% y -o-y %
5
10
15
20
25
-15
0
15
30
45
05 06 07 08 09 10 11 12 13 14
Domestic credit: Private (LHS) M2 (RHS)
% y -o-y % y -o-y
Bangalore
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

38
Macro
Asian Economics
15 May 2014
abc
Taiwan

News Highlights
In a bid to contain soaring property prices, the Legislatures 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 Taiwans 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 Taiwans 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
Taiwans 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
CBCs comfort zone.

Taiwan GDP Taiwan PMI Manufacturing


Taiwan Inflation v/s Policy rate HSBC Taiwan manufacturing PMI


-20
-15
-10
-5
0
5
10
15
20
25
-20
-15
-10
-5
0
5
10
15
20
25
42
44
46
48
50
52
54
56
58
42
44
46
48
50
52
54
56
58
PMI Manufacturing New Export Orders Index
1
2
3
4
-3
-2
-1
0
1
2
3
4
5
6
05 06 07 08 09 10 11 12 13 14
% y -o-y
%
PMI 52.3 52.7 54.7
Output 54.0 54.3 57.2
New Orders 54.5 54.1 57.8
5.7 2.9 7.4
48.2 48.1 49.2
52.2 52.5 54.4
-4.0 -4.3 -5.3
Input Prices
Output Prices
John Zhu, Economist
Corporation Limited
Rini Sen, Economics Associate
Bangalore
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

39
Macro
Asian Economics
15 May 2014
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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)


Thailand Inflation v/s Policy rate Thailand Business Sentiment Index


-40
-30
-20
-10
0
10
20
30
40
50
60
-20
-15
-10
-5
0
5
10
15
20
25
30
-20
-10
0
10
20
30
40
-50
-25
0
25
50
75
100
Investment Index (LHS) Consumption Index (RHS)
% 3m/3m saar % 3m/3m saar
0.00
0.75
1.50
2.25
3.00
3.75
4.50
5.25
6.00
-6
-4
-2
0
2
4
6
8
10
05 06 07 08 09 10 11 12 13 14
% y -o-y
%
Mar-14 Feb-14 Jan-14
Business Sentiment Index 46.4 46.0 45.5
New Orders 45.3 46.1 44.9
-1.1 -0.1 1.9
44.9 42.5 42.4
38.0 40.4 37.1
6.9 2.1 5.3
Output Prices
Input Prices
Bangalore
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

40
Macro
Asian Economics
15 May 2014
abc
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


Vietnam Inflation v/s Refinancing rate HSBC Vietnam PMI


2
4
6
8
10
2
4
6
8
10
GDP y-o-y
% y -o-y % y -o-y
40
42
44
46
48
50
52
54
56
40
42
44
46
48
50
52
54
56
4
6
8
10
12
14
16
0
5
10
15
20
25
30
08 09 10 11 12 13 14
Inflation (LHS) Refinancing rate (RHS)
% y -o-y
%
PMI 53.1 51.3 51.0
Output 53.7 52.3 51.4
New Orders 54.9 53.0 51.8
4.5 4.8 8.6
49.3 49.5 50.0
55.6 53.9 54.4
-6.3 -4.5 -4.4
Output Prices
Input Prices
Trinh Nguyen, Economist
Corporation Limited
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

41
Macro
Asian Economics
15 May 2014
abc
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. Its 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
Corporation Limited
Bangalore

42
Macro
Asian Economics
15 May 2014
abc
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


Industrial Production

Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14
China
Hong Kong
India
Indonesia
Japan
Korea
Malaysia
Philippines
Singapore
Sri Lanka
Taiwan
Thailand
Vietnam
Asia
Asia ex JN
Asia 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-14
China
Hong Kong
India
Indonesia
Japan
Korea
Malaysia
Philippines
Singapore
Sri Lanka
Taiwan
Thailand
Vietnam
Asia
Asia ex Japan
Asia ex Japan & China
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-14
China
Hong Kong
India
Indonesia
Japan
Korea
Malaysia
Philippines
Singapore
Sri Lanka
Taiwan
Thailand
Vietnam
Asia ex JN & HK (simple)
Asia ex JN & HK (weighted)

43
Macro
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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

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-14
China
Hong Kong
India
Indonesia
Japan
Korea
Malaysia
Philippines
Singapore
Sri Lanka
Taiwan
Thailand
Vietnam
Asia ex JN (simple)
Asia ex JN (weighted)

44
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15 May 2014
abc
Income inequality is a challenge in
Asia, too
Click here for PDF
Books on economics rarely become instant best-
sellers. But Thomas Pikettys 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
professors 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, whos the
biggest?
Click here for PDF
Plenty of headlines about it over the past couple
of weeks. According to new data, Chinas
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 its 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.

Best of Asian economics
research

45
Macro
Asian Economics
15 May 2014
abc
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 theres already
plenty of cash in the system. The money train has
left Tokyo station: it may not run at shinkansen
speed, but itll arrive soon enough.
Asia Economics Comment:
Decoupling, still
Click here for PDF
Last week brought several painful reminders that
stronger growth in the West isnt providing much
of a lift to Asia. Over the coming days, expect the
data to reinforce that message. Asian exports,
including Japans, 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 thats 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
doesnt really need it: capital spending hasnt
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, havent really fired up. But,
as weve argued for a while, it is bank lending and
FDI, especially into ASEAN, where the effect is
really felt. And theres plenty of liquidity still on
its way to keep the region afloat for a while.
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

46
Macro
Asian Economics
15 May 2014
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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.
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 Japans 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

47
Macro
Asian Economics
15 May 2014
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its 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 BoJs 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 BoJs 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
Koreas 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.
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

48
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Asian Economics
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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
Aprils 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

Asian Economics Desk Reference 12 May 2014

For inquiries please contact Asian Economics Team:
asianeconomics@hsbc.com.hk, Phone: +852 2822 4556

abc
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 0.75
Eurozone 0.25 0.25 0.15 0.15 0.15 0.15 0.15 0.15
UK 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 6.9
New Zealand n/a 12 n/a -2.9 -3.8 19.6 7.8 1.3
China 741 3,948 18.8 2.5 2.7 -8.0 10.0 12.0
Hong Kong 788 318 n/a 4.1 6.2 0.5 4.2 3.4
India 100 284 35.3 -2.2 -2.7 -2.0 8.0 8.7
Indonesia 52 106 49.1 -2.4 -2.0 -2.4 -3.8 3.6
Korea 151 356 42.3 4.6 4.7 5.2 8.1 13.5
Malaysia 35 118 29.4 5.4 7.4 4.1 4.5 8.4
Philippines 7 80 8.7 3.1 2.4 11.2 7.8 8.0
Singapore n/a 275 n/a 19.3 19.8 1.0 3.8 8.4
Sri Lanka 6 8 73.2 -5.2 -5.6 13.9 7.7 11.0
Taiwan 118 421 28.0 8.7 6.3 5.5 4.4 4.8
Thailand 68 167 41.0 1.0 1.2 -0.7 3.3 7.2
Vietnam 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 Taiwans 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


abc
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 budgets 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.


abc
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 governments 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


abc
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

Economic Calendar EM Asia May 2014


abc
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


abc
Main EM Asia economic indicators calendar
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

Economic Calendar DM May 2014


abc
Main DM economic indicators calendar
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


abc
Main DM economic indicators calendar
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 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 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

49
Macro
Asian Economics
15 May 2014
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Notes

50
Macro
Asian Economics
15 May 2014
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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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services for or relating to those companies. This material may not be further distributed in whole or in part for any purpose. No consideration has been given to
the particular investment objectives, financial situation or particular needs of any recipient. (070905)
In Canada, this document has been distributed by HSBC Bank Canada and/or its affiliates. Where this document contains market updates/overviews, or similar
materials (collectively deemed Commentary in Canada although other affiliate jurisdictions may term Commentary as either macro-research or
research), the Commentary is not an offer to sell, or a solicitation of an offer to sell or subscribe for, any financial product or instrument (including, without
limitation, any currencies, securities, commodities or other financial instruments).
Copyright 2014, The Hongkong and Shanghai Banking Corporation Limited, ALL RIGHTS RESERVED. No part of this publication may be reproduced,
stored in a retrieval system, or transmitted, on any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior
written permission of The Hongkong and Shanghai Banking Corporation Limited. MICA (P) 066/04/2014, MICA (P) 171/04/2014 and MICA (P) 077/01/2014

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Stephen King
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Karen Ward
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James Pomeroy
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Chief Economist
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Central America
Lorena Dominguez
Economist
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Global Economics Research Team

20140515-HSBC-On Top of The Data Following The Flow in Asia

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