Quarterly Outlook
Q3 Investor Outlook: Beyond American shores – why diversification is your strongest ally
Jacob Falkencrone
Global Head of Investment Strategy
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Chart of the Week: Taiwan manufacturing business surveys
Christopher Dembik
Head of Macroeconomic Research
Summary: In the past few days, we got a bunch of data related to global trade that confirm global growth may surprise to the downside as a direct consequence of China’s slowdown and trade war.
Japan June preliminary Manufacturing PMI is out at minus 49.5 vs 49.8 prior, which corresponds to a three-month low. In addition, new orders are experiencing the fastest decrease since June 2016, which was a year of very low growth at the global level. Looking at other Asian countries, the trend remains widely negative and there is no sign of rebound. Latest Thai exports are contracting the most in the past three years.
In the chart below, we have plotted Taiwan’s manufacturing business surveys released by Taiwan National Development Council. Manufacturing PMI, new orders and manufacturing production have all contracted in May and based on preliminary data, contraction is expected to continue in June. What is happening in Asian export-oriented countries, that serves as proxy of global trade, tend to corroborate the need for fiscal and monetary stimulus in order to offset the negative trend that will weight on growth in coming quarters.
In the chart below, we have plotted Taiwan’s manufacturing business surveys released by Taiwan National Development Council. Manufacturing PMI, new orders and manufacturing production have all contracted in May and based on preliminary data, contraction is expected to continue in June. What is happening in Asian export-oriented countries, that serves as proxy of global trade, tend to corroborate the need for fiscal and monetary stimulus in order to offset the negative trend that will weight on growth in coming quarters.
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