High-tech goods to lead trade growth over next 15 years -- HSBC

WASHINGTON - Exports of high-tech products will grow more quickly than exports of other goods over the next 15 years as emerging Asia moves away from being a low-cost production hub for foreign brands and toward developing value-added local products, according to research from HSBC.

High-tech goods would make up more than 25 percent of goods traded by 2030 compared to 22 percent in 2013, HSBC said in its latest global trade report, which forecast trade would pick up only slowly in the near term.

The value of global goods trade would rise at an average rate of 8 percent a year from 2014 to 2030, with high-tech goods rising about 9 percent a year, HSBC said. Mineral fuels would rise 5 percent a year and raw materials about 6 percent.

World Trade Organization data show fuels and mining products were the fastest-growing export category between 2009 and 2012, followed by agricultural products. Exports of office and communications equipment rose 27 pct over the period.

HSBC said much of the future increase in high-tech trade would be driven by internationalization of supply chains, with parts for high-tech products crisscrossing national borders, but Asian firms would also snare market share from Western competitors.

HSBC forecast that by 2030, China would account for more than half the global trade in high-tech goods. Hong Kong and the United States would remain in second and third place, although with a lower market share, and Korea would displace Singapore as the fourth-biggest exporter of high-tech goods.

China, home of the world's third-biggest smartphone manufacturer, Huawei Technologies, and the biggest PC maker, Lenovo Group, is already ramping up spending on research and development, as is Malaysia.

"These two economies may have depended on foreign investment to fuel their early growth in high-tech exports, but they are now increasing their technological know-how and moving up the value chain to develop high-tech products of their own," HSBC said in the report, based on forecasts from Oxford Economics.

China, India and Indonesia are among 10 countries on a U.S. "watch" list for failing to protect U.S. companies' intellectual property rights, for example through lax rules against trade secret theft or poor patent protection.

The United States and European Union are also pushing China to resume talks on expanding a list of high-tech products covered by a 16-year-old pact that eliminated duties on products including personal computers, laptops and telephones.

The HSBC report showed China accounted for 36.5 percent of high-tech goods exports in 2013, followed by Hong Kong at 13 percent. The United States was in third place at 9.6 percent. In 2000, the United States was the world's biggest tech exporter with a market share of 29.2 percent.

HSBC said Asian countries also logged a high share of high-tech imports, as did the United States.

"This internationalization of supply chains explains why the United States - the designer of devices such as the iPhone and a country with an evident comparative advantage in the high-tech sector - operates a trade deficit in these goods," HSBC said.

"The outsourcing of production of high-tech goods by U.S. companies to serve the large domestic consumer market for these goods means that U.S. companies import a large quantity of assembled products that they have designed themselves."

The data highlight why the United States and other trading partners such as Japan, Canada and Korea are keen to restart talks on the WTO's Information Technology Agreement, or ITA, which reached an impasse in November.

China has said cutting all tariffs to zero would be unfair and wants some products excluded and others to have a long phase-in period, saying the pact has to take into account differing levels of development.

Michael Punke, U.S. ambassador to the WTO, on Monday urged China, as this year's chair of the Asia Pacific Economic Cooperation trade group, to take up calls to conclude an expanded ITA by the next regional trade ministers' meeting in May.

"We think this is a doable goal and we encourage China, as host country, to exercise leadership in helping to achieve this," he said in a statement.

The U.S. administration estimates expanding the ITA to drop duties on additional technology products could liberalize roughly $1 trillion in global IT and communications trade and increase annual global economic output by $190 billion.

The WTO has forecast global goods trade growth of 4.5 percent in 2014, below the average rate of 5.4 percent recorded from 1982 to 2012.

source: interaksyon.com

HSBC raises growth forecast for Philippines

MANILA - HSBC has upgraded its growth forecast for the Philippines on the back of government spending, loose monetary policy and an improving global economy.

In a research note, the London-based bank said it raised its forecast to 5.9 percent form the initial estimate of 4.9 percent.

HSBC said the Philippines would grow faster than initially predicted, given signs of recovery in Japan and the US, and of accommodative monetary policy around the world.

For the first quarter of this year, HSBC sees Philippine gross domestic product (GDP) growing 6 percent, slower than the 6.8 percent in the fourth quarter of 2012. Growth would further slip to 5.7 percent and 5.4 percent in the second and third quarters, respectively, before picking up to 6.5 percent in the fourth quarter.

This would bring full-year growth to 5.9 percent, or a tad lower than the government's full-year target of 6-7 percent.

Trinh Nguyen, HSBC economist, said the bank expects Philippine exports to benefit from "Abenomics," referring to the economic policies of Japanese Prime Minister Shinzo Abe.

Nguyen said domestic demand would remain the main prop for Philippine GDP, adding that remittances would stay steady this year and expand by 6.3 percent given more job contracts in the Middle East and Asia.

The country's growth story is also supported by positive political and macro news, with the Aquino administration gaining public trust, as shown by surveys, due to its fiscal consolidation and anti-corruption thrust, Nguyen said.

Because of the "sensible" fiscal and monetary policies, the country will likely earn an investment grade status from the major credit rating agencies by the second half of this year, she said.

While the Philippines has enjoyed strong portfolio inflows, the same cannot be said of the job-generating foreign direct investments (FDI), HSBC said.

It said foreigners are still wary of putting their money into factories and other long-term bets, as shown by the lackluster performance in the area of FDI, flows of which were flat in the first 11 months of last year at $1.2 billion.

"FDI inflows are more indicative of investors’ perceptions of the government’s progress in resolving long-standing challenges. While attaining an investment rating upgrade will likely have a positive effect on FDI inflows as funding becomes cheaper for corporations, foreign investors will be watchful of reform momentum such as improving electricity production, transportation, and most importantly easing restrictions on foreign ownership," Nguyen said.

She said reform in foreign ownership, for one, would take long in coming, the earliest in 2016 when President Benigno Aquino III "can afford to use his political capital to change the Constitution."

Another bane of the country is the underperformance of the Aquino administration's public-private partnership (PPP) scheme, leaving government to shoulder most of the infrastructure spending, which in turn would hinge on tax collection improvements, HSBC said.

In this regard, the Aquino administration would have no choice but to increase tax rates of expand the tax base, starting with the mining sector reform, the bank said.

"At the moment, both seem politically unviable. As such, FDI inflows will continue to underperform in the coming years," Nguyen said.

While surveys indicate that the upcoming mid-term elections would lean towards the administration party winning, HSBC said the more crucial signal is succession after Aquino steps down in 2016.

"What’s more noteworthy to watch is the replacement of President Aquino in 2016, which would signal whether the reform momentum in the Philippines will be sustained. While a foundation is laid, reforms to long-standing challenges are still required. With the international community cheering it on, this is an opportunity that leaders of the Philippines should not squander," Nguyen said.

source: interaksyon.com

HSBC sees BSP holding rates, remittances keeping economic growth within target

MANILA – HSBC on Tuesday said the resilience of remittances would enable the Philippine economy to grow within the government target of 5-6 percent this year.

“The acceleration of remittances is much stronger than expected, underpinning robust demand for Filipino workers as well the resilient nature of OFWs and their professions,” said economist Trinh Nguyen in HSBC’s latest research note issued a day after the release of official August remittance figures.

The Bangko Sentral ng Pilipinas last Monday reported that money sent home by overseas Filipino workers in August had risen by 8 percent year-on-year to $2 billion, with the eight-month tally growing 6 percent to $13.7 billion.

“This pickup stands in stark contrast to August's export contraction of 9 percent year-on-year,” Nguyen said, pointing out that exports contribute 21 percent to Philippine gross domestic product as against the 9 percent for remittances.

“The statistics underscore Philippines becoming an even more service-based economy supported by private consumption,” she said.

In the first half of this year, consumer spending grew 5.4 percent on the back of a 5.1 percent increase in remittances.

“The recent acceleration of remittances points to robust 3Q private consumption growth. At the same time, fiscal spending is also supporting public spending and investment. Growth, therefore, is expected to reach the government's 5-6 percent target,” Nguyen said.

HSBC forecast Philippine GDP expansion of 5.7 percent, which is well within the government target. In the first six months of this year, growth settled at 6.1 percent, or at the top end of the full-year goal.

The bank expects no pickup in inflation until the first quarter of next year, when “an unfavorable base effect and an anticipated recovery from China” will kick in.

Consumer price increases averaged 3.2 percent in the first nine months of the year, or near the low end of the BSP’s full-year target range of 3-5 percent.

“As such, we expect the BSP to continue to support domestic spending by keeping rates at a historic low while remaining vigilant on inflation,” Nguyen said.

“With global demand weak and inflation expected to be on target for the rest of 2012, the BSP has room to hold rates low at 3.75 percent to further spur spending at its next meeting,” she said.

The BSP’s policy-making Monetary Board has two more rate-setting meetings left for this year.

Other market observers, such as DBS, expect the BSP to deliver another 25 basis points reduction in policy rates before the year ends.

The BSP has cut policy rates by a combined 75 basis points so far this year, sending the overnight borrowing and lending rates to record lows of 3.75 and 5.75 percent, respectively.

source: interaksyon.com

HSBC launches ‘Mena bonds, sukuk platform’ for Qatar customers

HSBC has launched “Mena bonds and sukuks platform” offering relatively easy access for the bank’s retail customers in Qatar.

The offer provides a “comprehensive” wealth management proposition to HSBC customers and allows them to achieve a more balanced investment portfolio and diversify their investment risk.



“We have had a number of requests from our customers, our Qatari national customers in particular, to offer access to investment opportunities with potential for steady income streams from products such as bonds and sukuks. This offer addresses an important need in the Qatar market and provides our premier customers a new opportunity to diversify their investment portfolios,” said Kris Werner, HSBC Qatar head for retail banking and wealth management.

HSBC offers a comprehensive range of over 200 bonds and sukuks issued by governments and corporates in the Mena Region.

Bonds are typically issued in a minimum denomination of $100,000.

Bonds and sukuks offer customers an opportunity to potentially earn regular income through coupon payments.

source: gulf-times.com