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Asia Export Volumes to Shrink Further – Nomura & HSBC

Asia Export Volumes to Shrink Further – Nomura & HSBC

(22 August 2022 – Asia) Asia’s export boom is displaying warning signs that it will contract further into a deeper than expected downturn, both Nomura and HSBC warned in research notes.

The warnings from both group’s infers the lift in trade volumes that underpinned economic resiliency for the Asia Pacific (APAC) region through the pandemic is at an inflection point, matching warning signs that manufacturers have been reporting in 2022.

Nomura’s updated Asia export leading index “NELI” cautions Asia’s shipments may have reached a critical tipping point. The Japanese lender recently altered the index by circling out three indicators and replacing them with four new ones, for a total of nine, which are pointing to a deeper down turn in trade volumes.

“Compared to our previous 2020 vintage model, our retooled NELI is warning of a deeper slump in Asian exports. Asian exports are often a bellwether of global growth and NELI’s pointing to a darkening outlook” commented Nomura Head of Global Markets Research, Rob Subbaraman.

In HSBC’s latest research note “Plop’ - What the latest electronics indicators signal for Asia”, HSBC Chief Asia Economist Frederic Neumann warned that key indicators are showing a slump in new orders with demand for Asia made electronics clearly coming off the boil.

“Things are coming back down to earth…fast. True, the headline electronics PMIs, freshly released for July, don’t look quite so alarming at the surface. But dig deeper, and the stumble becomes apparent” Neumann said.

“The current situation is unique and quite different from the more isolated disruptions the world has experienced. The way in which the current congestion ultimately unwinds will also be different” stated World Shipping Council President John Butler.

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