Economy

Gross domestic product (GDP) for the October-December quarter was 0.6% higher than the preceding three months on a seasonally adjusted basis, according to the Bank of Korea (BOK).That compares with an expansion of 0.6% in the prior quarter and a median 0.5% increase tipped in a Reuters survey.A breakdown of the GDP figures showed exports expanded 2.6%, while imports rose 1.0%, bringing net growth contribution of 0.8 percentage points. Private consumption climbed 0.2% and facility investment jumped 3.0%, but construction investment dropped 4.2%. Government spending was 0.4% higher. On an annual basis, Asia’s fourth-largest economy in the fourth quarter grew 2.2%, after a gain of 1.4% in the third quarter and compared with a 2.1% rise expected by economists. That was the fastest since the third quarter of 2022.Exports out of the trade-reliant economy grew for a third straight month in December, led by improving chip sales, although weak demand from China remained a drag. The Bank of Korea hinted this month that it may pivot towards monetary easing along with its global peers, as the central bank held interest rates steady for an eighth meeting. In 2023, South Korea’s economy grew 1.4%, a three-year low after gains of 2.6% in 2022 and 4.3% in 2021. The economy is expected to grow 2.1% in 2024, according to the BOK. More

(Reuters) – A look at the day ahead in Asian markets.The focus for Asian markets on Thursday will be on whether the improvement in investor sentiment toward China and Hong Kong continues, following the Chinese central bank’s latest move to inject liquidity and support asset prices.The regional economic data calendar is light and will be dominated by the first estimate of South Korea’s fourth quarter gross domestic product growth, ahead of which the Korean won just chalked up its biggest rise against the dollar in a month.The dollar is trading softer across the board, weighed down by lower U.S. bond yields and a rebound in market expectations that the Fed could cut interest rates as early as March. That alone should help whet investors’ risk appetite in Asia on Thursday, as should the rally in China and Hong Kong on Wednesday that was sparked by the People’s Bank of China decision to slash bank reserves by the most in two years. The move, which will inject about $140 billion of cash into the banking system, and PBOC Governor Pan Gongsheng’s pledge to unveil policies on improving commercial property loans extended this week’s bounce in risk assets and the yuan.The Shanghai Composite’s 1.8% rise was its biggest since July, the CSI 300 index of blue chip shares is now poised to snap a three-week losing streak, and the Hang Seng jumped 3.6%. Beijing’s actions on Wednesday came hot on the heels of a Bloomberg News report that authorities are weighing up a 2-trillion yuan ($278 billion) funding package of measures to support the country’s creaking markets. And with strong U.S. earnings reports, especially from Netflix (NASDAQ:NFLX), and rising chipmaker stocks lifting the S&P 500 to yet another record high, the mood at the open in Asia on Thursday should be bullish.Official figures from Seoul, meanwhile, are expected to show that South Korean growth slowed in the final three months of 2023 to a seasonally adjusted 0.5% quarter-on-quarter pace, according to a Reuters poll of economists, down a touch from 0.6% in the previous quarter.Year-on-year growth, however, is expected to have accelerated to 2.1% in the fourth quarter from 1.4% in the preceding quarter. The benchmark KOSPI index has had very weak start to 2024, and is down 7% so far this year. For comparison, the MSCI Asia ex-Japan index is down 4.5% slide, China’s CSI 300 index was outperforming that even before this week’s stimulus, and Japan’s Nikkei is up 8%.Here are key developments that could provide more direction to markets on Thursday: – South Korea GDP (Q4 advance estimate)- Hong Kong trade (December)- Bank of Korea manufacturing survey (February) (By Jamie McGeever) More

According to a notice jointly issued by the central bank and the financial regulator, by the end of this year banks will be able to provide commercial property loans to eligible developers to allow them to pay off debts that are not necessarily related to the project pledged as collateral.Commercial property loans are given by banks to developers that operate profitable and completed commercial real estate, such as shopping centres and hotels. At present, the loans are only able to be used to supplement the property’s operating capital, or to repay debts generated by the construction of the project, or acquisition of the property, used as collateral.The measure was released after central bank Governor Pan Gongsheng said at a press conference on Wednesday afternoon that policies on improving commercial property loans will be announced. The remarks may give hope to investors who have been frustrated by China’s efforts to put a floor under a real estate sector that underpins consumption and household wealth.The debt crisis emanating from China’s beleaguered property sector is one of the main headwinds to the country’s economic growth, and it has led to downfall of some of the biggest real estate developers including Evergrande Group and Country Garden. Banks should, based on factors such as the operating conditions of the property, assessed value, and the borrower’s debt repayment ability, reasonably determine the loan amount, the regulators said.The term of the loans shall generally not exceed 10 years, and the maximum term shall not exceed 15 years, they said. The value of loans should in principle not exceed 70% of the appraised value of the property. More

(Reuters) -The Federal Reserve on Wednesday said a funding lifeline created for banks last year after the collapse of Silicon Valley Bank threatened to spark a wider financial crisis would close as scheduled in March. The Fed also will immediately raise the interest rate on new loans from the Bank Term Funding Program (BTFP) for the remainder of its life, effectively ending what had become a popular and profitable arbitrage opportunity for U.S. lenders.The sun-setting of the program on March 11 had been signaled by Fed officials as fear in the banking system abated.The BTFP “was really designed in that emergency situation,” Michael Barr, the Fed’s vice chair for supervision, said earlier this month, referring to the banking sector panic triggered by SVB’s rapid collapse. “It was designed for that emergency to say, We want to make sure that banks and creditors of banks and depositors (in) banks understand that banks have the liquidity they need.”The Fed launched the BTFP amid a historic run on deposits and other market stress after SVB and Signature Bank (OTC:SBNY) failed in lightning-fast fashion, tapping emergency lending powers the central bank can roll out – with the approval of the Treasury secretary – under “unusual and exigent circumstances.”While the Fed said it would continue making new loans until the program concluded, it also announced that on Thursday it was raising the interest rate banks would pay for any new Fed lending.Effectively immediately, the Fed said the interest rate on new loans would be no lower than the interest rate on reserve balances on the day of the loan. The end result is a nearly 50-basis-point jump in new borrowing costs; the BTFP loan rate was 4.93% on Tuesday, while reserve balances currently reap 5.40%.Prior generous terms helped drive use of the program, as usage ground steadily higher despite no real signs of market distress. Loans outstanding as of Jan. 17 stood at $161.5 billion, according to Fed data, and the average weekly increase over the last six weeks of nearly $5.6 billion is the highest since early May. But it also meant banks could borrow from the BTFP and deposit funds back at the Fed, earning a higher rate from the interest the central bank pays on reserve balances.Steven Kelly, associate director of research at the Yale School of Management’s Program on Financial Stability, said before the expiration was announced he suspects the Fed was “not happy” with the current state of BTFP activity. “And just because there’s a genuine economic need (for some), and it’s nice to get a hedge from the Fed, the Fed shouldn’t necessarily be in the business of providing hedges outside of crisis time, and we’re not really in crisis time, Kelly said. More

BUENOS AIRES (Reuters) -Argentina’s largest union started a 12-hour strike on Wednesday with tens of thousands of workers demonstrating in the heart of Buenos Aires against tough economic austerity measures and reforms by new libertarian President Javier Milei.The action, hitting sectors from transport to banks, is the biggest show of opposition to Milei’s plans for spending cuts and privatization since he took office last month, pledging to fix an economy reeling from 211% inflation and crippling debt.The strike was coordinated by the powerful umbrella union the General Confederation of Labor (CGT) and comes amid major scrutiny of Milei’s two major reform pushes: an “omnibus” bill going through Congress and a “mega-decree” deregulating the economy.”The first cut this government is making is to the workers,” Pablo Moyano, leader of the powerful truckers union, said at the main union event in downtown Buenos Aires. “Their labor reform aims to take away workers’ rights.” But even as the strikes, which started at noon local time, took a toll on transport, banks, hospitals and public services, Milei’s government vowed to stick to its reform plans.Local airlines said they had been forced to cancel hundreds of flights. The CGT had already used the courts to temporarily suspend some measures relating to labor in Milei’s decree. The omnibus bill was approved by a committee in the lower chamber of deputies early on Wednesday, one of many steps as it works its way through a divided Congress. It faces opposition from the powerful Peronist opposition bloc.Milei, an economist and former TV pundit who pulled off a shock election win last year, is balancing stabilizing the South American country’s economy and reducing a deep fiscal deficit with triple-digit inflation and with two-fifths of the population living in poverty.The new government says the austerity measures are needed after years of over-spending that have left Argentina with huge debts to local and international creditors, including a shaky $44 billion deal with the International Monetary Fund.”There is no strike that stops us, there is no threat that intimidates us,” Milei’s security minister and former presidential election rival Patricia Bullrich wrote on X. “It’s mafia unionists, poverty managers, complicit judges and corrupt politicians, all defending their privileges, resisting the change that society chose democratically.” More

Increasing expectations about a soft landing for the U.S. economy – a scenario where inflation decreases without causing unemployment to go up – has buoyed markets in recent months, boosting Ameriprise’s fee-based income.The company’s management and financial advice fees rose 7% to $2.28 billion in the quarter, while net investment income surged 54% to $888 million.Total client assets at its advice and wealth management segment rose 19% to $900.5 billion.Ameriprise’s total assets under management and administration rose 15% to $1.36 trillion in the quarter compared with a year earlier, on the back of strong client net inflows and market appreciation.Adjusted operating earnings rose to $761 million, or $7.20 per diluted share, in the three months ended Dec. 31, from $732 million, or $6.57 per diluted share, a year earlier. More

SINGAPORE (Reuters) – Singapore’s central bank is widely expected to leave its monetary policy unchanged this month and hold off from easing its settings until it sees more evidence that inflation is falling consistently.All 13 analysts polled by Reuters expect the Monetary Authority of Singapore (MAS) to hold off making changes to its policy in the scheduled review, which is due to be announced on Jan. 29.”We do not believe this is the timing for MAS to loosen its monetary policy,” HSBC economists said in a research note.”After all, MAS will need to see more evidence that inflation will consistently decelerate to its comfort zone before making the first easing move,” they said, expecting policy to be eased in April.Inflation in the Asian financial hub remains sticky. It came in at 3.2% in November and 3.3% in December, inching down from a peak of 5.5% at the start of 2023.The trade ministry and the central bank said in a joint statement in December that prices could remain volatile in the near-term thanks to an increase in a sales tax and swings in premiums paid for cars.The government raised the goods and service tax (GST) to 9% from 8% at the start of 2024.For 2024, core inflation is expected to be 2.5 to 3.5%, the trade ministry and central bank said on Tuesday.”The recent additional 1% GST hike and other price adjustments … may mean somewhat stickier prices in the near-term,” OCBC chief economist Selena Ling said.Major central banks are grappling with persistent inflation alongside a highly uncertain economic outlook, making them hesitant about moving too soon to relax monetary policy.”Until they are convinced that inflation is on a sustained path to their targets, central banks want rates to stay elevated for an extended period, and will keep countering the market’s impatience in bringing forward rate cuts,” said DBS analysts.’GRADUAL YET FRAGILE RECOVERY’Singapore is often seen as a bellwether for global growth as its international trade dwarfs its domestic economy.Its economic growth plunged from 3.6% in 2022 to 1.2% in 2023. The trade ministry projects growth of 1% to 3% in 2024.While the economy has shown some green shoots in what DBS economists call a “gradual yet fragile external-led recovery”, the global environment remains uncertain and challenging.DBS economist Chua Han Teng said high interest rates in advanced economies, China’s uncertain outlook and geopolitical tensions were risk factors.Singapore Prime Minister Lee Hsien Loong said in a New Year’s Day message that Israel’s war on Gaza, the war in Ukraine, tensions in the South China Sea and climate change will weigh on the global economy.”For some years to come, we must expect the external environment to be less favourable to our security and prosperity,” he said.The central bank left monetary policy unchanged in April and October last year, reflecting growth concerns, having tightened policy at five consecutive reviews prior to that.Starting this year, MAS will make monetary policy announcements every quarter instead of semi-annually, citing a need to “enhance monetary policy communications”.Instead of using interest rates, the central bank manages monetary policy by letting the local dollar rise or fall against the currencies of its main trading partners within an undisclosed band, known as the Singapore dollar Nominal Effective Exchange Rate, or S$NEER.It adjusts policy via three levers: the slope, mid-point and width of the policy band.The table below shows what economists at various institutions expect MAS to announce on Jan. 29.UOB No changes Bank of America No changes Barclays No changes OCBC No changes DBS No changes Goldman Sachs No changes Deutsche Bank No changes Fitch No changes Oxford Economics No changes HSBC No changes Maybank No changes Moody’s (NYSE:MCO) No changes MUFG No changes More

SEOUL (Reuters) -South Korea’s SK Hynix Inc said on Thursday it will focus on high-end chips for artificial intelligence this year, after strong demand for such semiconductors drove a surprise profit in the fourth quarter. The world’s second-biggest memory chipmaker reported a 346 billion won ($259.8 million) operating profit for the October-December quarter, versus a loss of 1.9 trillion won a year earlier and a 1.8 trillion won loss in the third quarter.The results beat expectations for a 192 billion won operating loss according to 23 analysts’ views compiled by LSEG SmartEstimate, weighted toward analysts who are more consistently accurate. “We achieved (a) turnaround … following a protracted downturn, thanks to our technological leadership in the AI memory space,” said CFO Kim Woohyun. He added that SK Hynix will strive to “grow into a total AI memory provider”. Hynix’s results outpaced market expectations as strong appetite continued for its advanced DRAM chips such as high bandwidth memory (HBM) chips used in generative AI. SK Hynix is expected to begin mass production of the next version of HBM, called HBM3E, in the first half of the year. The company had been ahead of rivals in developing the current version, called HBM3, and counts AI-chip leader Nvidia (NASDAQ:NVDA) as a key client. SK Hynix said its sales of HBM3 chips increased by more than fivefold on-year, adding it is also developing the next generation, called HBM4. Its lead in HBM chip development could help SK Hynix improve profitability and production yields of the high-end chips ahead of rivals, and outperform the market throughout this year, analysts said. Chinese mobile makers resuming chip purchases after using up their own chip inventory also helped memory chip prices rebound in the fourth quarter, buoying profit, analysts said. Its bigger rival Samsung Electronics (KS:005930) is also expected to flag improving memory chip demand when it reports detailed fourth-quarter results on Jan. 31. SK Hynix last posted an operating profit in the third quarter of 2022, before last year’s worst industry downturn in decades due to weak consumer demand.Revenue rose 47% on-year to 11.3 trillion won. ($1 = 1,331.9400 won) More