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Global equities tumble following China stocks rout


Financial Markets

Global stocks tumbled on Monday, with sharp declines in Chinese shares triggering national trading halt.
Market analysts attributed the collapse to China’s disappointing manufacturing data, the coming removal
of a 6-month lockup period on share sales by major institutional investors, and the trigger of the circuit
breaker mechanism that came into effect Monday and was put to test immediately. China’s CSI 300
Index had initially fell 5 percent, prompting a 15-minute trading stop, and it took just 7 minutes for losses
to reach the threshold for a second suspension (7 percent) as soon as the market re-opened, halting the
trading for the day. Europe’s Stoxx 600 Index dropped 2.4 percent in afternoon trading and the S&P 500
Index fell 2.2 percent in morning session.

Oil prices rose amid concerns about growing tensions in the Middle East but weak economic data out of
China limited the gains. The advances came after Saudi Arabia on Sunday severed diplomatic ties with
Iran in the fallout from the embassy assault. Brent, the global benchmark, rose 4.3 percent to $38.88 a
barrel, and West Texas Intermediate (WTI), the U.S. benchmark, climbed 3.2 percent to $38.21 a barrel.


Advanced Markets

U.S. manufacturing continued to contract in December, according to the Purchasing Managers’ Index of
the Institute for Supply Management. The index fell further into contractionary territory at 48.2 in
December, from 48.6 in November. The index is at the lowest level since 2009, as manufactures face
headwinds from weak external demand in the context of a strong U.S. dollar.

In the Euro Area, the December manufacturing Purchasing Managers’ Index (Markit) showed the fastest
growth since July 2014, with the index rising to 53.2, compared with 52.8 in November. Manufacturing
expanded in all member countries, including Greece, helped by the European Central Bank’s stimulus
program.

GDP growth in Singapore picked-up to 2 percent (y/y) in Q4 of 2015, faster than the 1.8 percent growth
registered in Q3 and ahead of expectations. Services and construction continue to expand, while
manufacturing remains weak.


Emerging and Developing Economies

East Asia and Pacific

The highest since October 2014, consumer prices in South Korea rose 1.30 percent (y/y) in December
2015, following a 1.0 percent rise in November. The cost of housing & utilities and transport fell at a
slower pace while prices of food and clothing & footwear rose further.

Europe and Central Asia


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Expanding at the fastest pace in 13 months, the Istanbul Chamber of Industry manufacturing Purchasing
Managers' Index for Turkey rose to 52.2 in December from 50.9 in November. Positive contributions from
output, new orders, employment and stocks of purchases components supported the increase.

Latin America and the Caribbean

The Markit Manufacturing PMI for Brazil came in at 45.6 in December up from 43.8 in November,
showing contraction for the 11th straight month. Output and new orders dip at rates that, although slower,
remained sharp. Employment, buying levels and stocks also fell.

Sub-Saharan Africa

Kenya’s GDP advanced 5.8 percent (y/y) in Q3 2015, up from a 5.5 percent increase in Q2. It was the
highest growth rate since Q2 2014, as agriculture expanded sharply due to improved weather conditions.
Construction, financial activities, internal trade and transportation also contributed to growth while
accommodation sector continued to shrink.




January 4, 2016



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