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GLOBAL & REGIONAL DAILY (Tuesday, 13 August 2019)

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GLOBAL & REGIONAL DAILY (Tuesday, 13 August 2019) 


August 13, 2019

Global markets

Asian equities were in deep red on Tuesday on fears about a prolonged U.S.-China trade war, increasingly violent protests in Hong Kong and a currency crash in Argentina’s peso drove investors to safe assets like bonds, gold, and the yen. The Hang-Seng index tumbled by -2.1% to the lowest level of the last seven months, Japan’s Nikkei index lost 1.2% of its value trading at 20,455.44. Having reached a seven month high at 105.05/$, yen traded at 105.27/$ at the time of the writing. Argentina’s peso lost roughly 15% of its value to 52.15/$ while the main stock-market index MERVAL collapsed by -37.93% on Monday in the aftermath of the primary elections results, in which the incumbent conservative President Mauricio Macri was defeated by a margin much wider than expected.


According to ELSTAT’s data, the annual inflation rate (based on the HICP) increased to 0.4% in Jul-19 from 0.2% in Jun-19. Nevertheless, due to decreases in indirect taxation (i.e. VAT rates) ratified in May-19, it was lower by 0.3 ppts relative to its value a year ago. For the whole period of Jan-Jul-19, the inflation rate registered a value of 0.7%, higher by 0.2 ppts compared to its value in the respective period of 2019. EC’s forecast (summer 2019, interim) for the average annual inflation rate in 2019 and 2020 stands at 0.8%.


Serbia: The headline inflation rate increased on an annual basis to -0.2% MoM/+1.6% YoY in July vs. -0.3% MoM/+1.5% YoY in June down from +0.7% MoM/+2.2% YoY in May. The rise in vegetables (+7.7% YoY) and tobacco (+5.6% YoY) prices were the main drivers behind the increase on an annual basis. Fruits (-4.2% YoY) was the category which registered the largest decline. Core inflation (headline exclud-ing energy, food, alcohol and tobacco) remained unchanged at 1.5% YoY in an illustration of subdued inflationary pressures. Recall that in August 8, the National Bank of Serbia (NBS) cut interest rates by 25bps from 2.75% to 2.50% which is the lowest level in the inflation targeting regime of the Central Bank.

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