December 2018
Emerging markets performed better than broader world markets during December, but underperformed global markets over 2018. Following a protracted war over trade tariffs, China and the US finally agreed to put new levies on hold for 90 days following talks at the G20 summit in Buenos Aires.
- China’s export activity slowed in November
- Brazil’s rate of inflation eased to a six-month low
- India’s central bank governor resigned unexpectedly
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Emerging markets performed better than broader world markets during December, but underperformed global markets over 2018. China performed particularly poorly over the year as investor optimism fell prey to concerns over economic growth and the possible impact of a trade war. The Shanghai Composite Index fell by 3.6% over December and by 24.6% over 2018.
“China performed particularly poorly over the year”
Following a protracted war over trade tariffs, China and the US finally agreed to put new levies on hold for 90 days following talks at the G20 summit in Buenos Aires. China’s export activity decelerated sharply during November, rising at an annualised rate of only 5.4%, compared with October’s rate of 15.6%. Imports rose by 3% in November, compared with October’s rise of 21.4%. Meanwhile, during the first 11 months of the year, exports rose by 8.2% year on year, while imports grew by 14.6%. Over the same period, exports to the US rose by 9.4% – a slowdown compared with the 13.3% growth achieved in the first ten months of the year. Elsewhere, retail sales in China continued to weaken, and industrial production continued to lose momentum.
Governor of the Reserve Bank of India (RBI) Urjit Patel unexpectedly resigned in December, citing “personal reasons” for his departure. He was replaced by Shaktikanta Das. India posted annualised economic growth of 7.1% during the second quarter of its fiscal year, compared with growth of 8.2% in the first quarter. Credit ratings agency Moody’s warned that a protracted period of economic weakness could jeopardise India’s “Baa2” rating. The CNX Nifty Index edged 0.1% lower over December but rose by 3.2% over 2018.
Brazil’s annualised rate of consumer price inflation slowed to 4.05% – its lowest level in six months – during November, giving policymakers at Brazil’s central bank the opportunity to maintain the key Selic rate at 6.5% at their December meeting. The Bovespa Index fell by 1.8% in December, but rose by 15% over 2018.
Members of Opec (Organization of the Petroleum Exporting Countries), alongside a Russian-led group of non-Opec countries, announced that oil production would be cut by 1.2 million barrels per day for six months from 1 January 2019 in a bid to support energy prices. Despite this, concerns over the outlook for global economic growth undermined the price of oil later in December, amid fears that a slowdown could dampen demand for energy.
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