In 2013, Resolve to Follow the Money

By Frank Holmes
CEO and Chief Investment Officer
U.S. Global Investors

During these first days of January, many adopt an “out with the old, in with the new,” approach to shed bad habits or extra pounds. Washington opted for its same ol’ strategy when averting the “fiscal cliff,” as the addictive nature of “can-kicking is a transatlantic sport,” according to The Economist. The magazine suggests that the deal made in the 11th hour is “disturbingly similar to the eurozone’s.” The short-term fix did “nothing to control the unsustainable path of ‘entitlement’ spending on pensions and health care … nothing to rationalize America’s hideously complex and distorted tax code… and virtually nothing to close America’s big structural budget deficit.”

In the end, politicians agreed to end the payroll tax cut and raise taxes on the top earners; altogether, tax increases will total $162 billion in 2013. According to a Bloomberg article, it’s the first time since 1990 a Republican leader agreed to a boost on tax rates. The legislation also represents the largest tax increase in two decades, says the Wall Street Journal.

One negative consequence resulting from the new bill is an immediate hit to Americans’ spending cash. International Strategy & Investment (ISI) anticipates that the impact will occur in the first quarter of this year, with real disposable personal income (income after taxes and inflation) decreasing by 3.8 percent, says ISI. In addition, “real consumer spending is likely to remain sluggish at 1.5 percent,” says ISI.

Avoiding the “fiscal cliff” initially calmed the market, with equities and gold beginning to rally before the ink was dry. On January 3, I appeared on Fox Business to discuss the impact on gold and whether the yellow metal had the strength to increase for the 13th year in a row. I said that the combination of fiscal austerity with monetary reflation would keep fueling gold throughout 2013.

See the clip now.

However, the Federal Reserve poured a bucket of cold water on gold after its minutes were released this week, with some members documenting their wish to stop quantitative easing (QE) before the end of 2013. While this appears to be a negative for gold, keep in mind that the Fed has always been divided, but when opinions diverge, leadership prevails, says ISI’s Roberto Perli. Chairman Ben Bernanke, along with William Dudley and Janet Yellen, continue to hold the belief that more accommodation is required.

In addition, the conflicting comment was made in the context of the labor market, so if we see QE end by the middle of this year, “it will be because the economy is getting stronger, and that would be a bullish development,” says Perli.

Regardless, we are seeing developed countries’ central bankers adopting very unconventional monetary policies these days, and “the base case for investors must remain that, when the pressure is really on, the choice will be made for yet more easing and yet more bailouts,” says Christopher Wood from CLSA.

It’s likely that the latest round of easing by the Fed was because Bernanke anticipated a reduction in spending and wanted to offset the hit taken by the consumer due to the tax increases. And historically, during times of QE, money flows to riskier assets.

A few weeks ago, I showed how money was heading to emerging markets, and it’s worth repeating, as the trend has continued in the new year. Since QE3 began in September 2012, $37 billion has flowed into emerging markets. In total, during 2012, nearly $50 billion flowed into emerging markets, with three spikes occurring in January, February and December.

Back in April 2012, I suggested that if you apply the principle of mean reversion, history appeared to favor China’s H shares to land in the top half of emerging markets on an annual returns basis. With a new leadership in place and its economy improving, investors have begun to gain confidence in the Asian giant, and in response to the significant flows, equities in China began to outperform other emerging countries, ending the year as a top-half performer on the Periodic Table of Emerging Markets.

Resolve to Follow the Money
Is it part of your New Year’s resolution to improve your investment portfolio? To help you accomplish that task, join our Outlook Webcast on January 9 at 3 p.m. CT. Our team of experts will be discussing ways investors can find opportunity by following monetary and fiscal policies as well as seasonal and cyclical patterns occurring in global markets and natural resources.

Add to your calendar now.

Index Summary

• The major market indices all finished sharply higher this week. The Dow Jones Industrial Average rose 3.84 percent. The S&P 500 Stock Index increased 4.57 percent, while the Nasdaq Composite gained 4.77 percent. The Russell 2000 small capitalization index closed the week with a 5.65 percent gain.
• The Hang Seng Composite gained 2.93 percent; Taiwan rose 1.38 percent, while the KOSPI increased by 0.75 percent.
• The 10-year Treasury bond yield rose 20 basis points this week, to 1.90 percent.

Domestic Equity Market

The market roared back this week as policy makers were able to avert the fiscal cliff with a collective sigh of relief. The S&P 500 had its best week since December 2011, rising by 4.57 percent.

Strengths

• Every sector in the S&P 500 rose sharply this week with cyclical areas leading the way. The energy sector was the best performer, rising 5.47 percent this week, bouncing back from a poor performance last week. Oil rose 2.5 percent this week and positive manufacturing data out of China were the drivers.
• Financials were also strong, just trailing energy for the week. There also was broad-based strength in banks and insurance companies.
• Avon Products was the best performer in the S&P 500 this week rising 15.09 percent. The company was recently able to amend a credit facility covenant and also begun a restructuring program.

Weaknesses

• In a very strong week for stocks, there were a few negative outliers. UnitedHealth Group fell by more than 3 percent as a broker downgraded the stock on expectations of shrinking margins in 2013.
• Watson Pharmaceutical fell by more than 4 percent as a competitor unexpectedly announced approval of generic Concerta.
• Family Dollar Stores was the worst performer in the S&P 500 this week falling 9.65 percent. The company reported earnings that missed estimates and issued downside guidance for the current quarter and full year. The company cited gross margin pressure and increased expenses.

Opportunity

• With the fiscal cliff behind us, focus will begin shifting to earnings over the next few weeks. Alcoa, Monsanto and Wells Fargo report next week and will kick off this earnings season.

Threat

• The dysfunctional political process brings little hope for the U.S. to regain its AAA credit rating and more credit downgrades are possible if Washington remains acrimonious.

The Economy and Bond Market

Treasury bond yields rose sharply this week as the minutes for the December FOMC meeting indicated that some Fed officials wanted to slow or stop the $85 billion in monthly quantitative easing by mid-to-late 2013. The hawkishness of this news surprised the market, and was the primary catalyst for the sell-off. The 10-year treasury yield hit the highest level since May 2012.

Strengths

• The fiscal cliff came down to the wire but policymakers were ultimately able to reach consensus, at least for a month or two.
• December auto sales capped off a strong year, as full year sales rose 13.5 percent to 14.5 million units, which are the best results in five years. December retail sales positively surprised, rising 4.8 percent versus a year ago. As has been the trend in recent years, the low-end and high-end retailers fared the best.
• China’s manufacturing PMI was 50.6 in December, matching November’s report, but continues the trend of stronger data out of China in recent weeks.

Weaknesses

• Unemployment rose to 7.8 percent in December. Non-farm payrolls rose by 155,000, which was in-line with expectations but not enough to suspect a significant change to the jobs picture.
• Construction spending fell 0.3 percent in November, which was the first decline in eight months.
• Eurozone manufacturing PMI fell to 46.1 in December, down from 46.2 in November.

Opportunity

• While some Fed members expressed concerns over continued quantitative easing, the Federal Reserve still remains committed to an extremely accommodative policy until the economy improves.
• Globally, central banks are increasing their stimulative policies, as Japan’s recently- elected prime minister vowed to take on deflation and deflate the Yen.

Threat

• The fiscal cliff is over for the time being, but the debt ceiling and federal spending debate will be the next challenge for policymakers over the next few weeks.

World Precious Minerals Fund – UNWPX • Gold and Precious Metals Fund – USERX

Gold Market

For the week, spot gold closed at $1,655.65, down $0.20 per ounce, or -.01 percent. Gold stocks, as measured by the NYSE Arca Gold Miners Index, gained .72 percent. The U.S. Trade-Weighted Dollar Index gained 1.03 percent for the week.

Strengths

• The Shanghai Gold Exchange recently started a trial on interbank gold trading in order to increase the liquidity and flow of gold in China.
• Gold rebounded on Friday from heavy selling, rising from intraday lows to finish down less than 0.5 percent. Gold stocks also rebounded from their Friday lows.
• Bank of America Merrill Lynch picked Silver Wheaton as a top large-cap precious metals stock for 2013, viewing the company as the premier growth silver name with an above-industry average silver growth profile, rapidly growing free-cash flow and solid financial strength. Over the next four years Silver Wheaton’s production is forecasted to increase by some 70 percent, to 48 million silver-equivalent ounces.

Weaknesses

• Gold sold off immediately after the release of the December FOMC minutes, which revealed that “several” members of the committee were prepared to cease QE3 asset purchases “before the end of 2013.” Given the sharp market reaction in gold and other commodities, as well as in the dollar, this small section in the minutes was relatively unexpected so early into the QE3 process.
• Centamin’s Sukari mine again had a significant gold shipment held up in customs at Cairo airport before it could leave the country. This follows a similar episode only a few weeks ago, when a large 1.5 ton (48,000 ounces) gold shipment was held up.
• South African gold miner Harmony delayed the post-holiday reopening of its Kusasalethu mine following year-end violence and protests. The mine, 65 kilometers west of Johannesburg, had an underground sit-in just before Christmas when 1,700 workers refused to surface to protest the suspension of a colleague who had taken part in an illegal strike. According to Harmony’s website, Kusasalethu employed 5,756 people when it produced around 180,000 ounces of gold.

Opportunities

• Given that the current U.S. unemployment rate is still well above the Fed’s recently outlined 6.5 percent estimated threshold for halting asset purchases, it is unlikely that the Fed will cease QE3 in any hasty fashion. As of today’s data, U.S. unemployment stands unchanged at 7.8 percent.
• Aquarius Platinum Ltd. rose to a six-month high in Johannesburg after it sold off assets in Zimbabwe, and amid speculation that the South African supply of platinum will be lower during the first quarter.
• The past year was a tough one for the junior gold mining sector. However, according to Brien Lundin, CEO of Jefferson Financial, while junior resource stocks have been absolutely decimated over the past year, the result is bargains galore.

Threats

• Gold imports in India fell 31 percent for this period year-over-year, but the government is considering hiking the gold import duty again. Almost 80 percent of India’s current account deficit is attributable to gold imports. Officials said the government is considering a gold-import duty hike of 1 to 2 percent, from the current 4 percent to a possible 6 percent.
• Gold is now in a mature bull market, says Nadeem Walayat of MarketOracle.co.uk, whose story was picked up by Mineweb. Mr. Walayat believes that the best gold investors can likely achieve from here are gains of roughly 10 percent per annum. He predicts gold to trade in a range from $1,550 to $1,800 in 2013.
• Base metals are likely to outpace precious metals in 2013, says Hallgarten & Co’s Chris Ecclestone. As western economies strengthen, nearing pre-crisis levels, the outlook for base metals will continue to improve.

Energy and Natural Resources Market

Strengths

• Spot prices for seaborne iron ore ended the year at a seven-month high in the wake of aggressive buying amid improved Chinese demand and steel pricing.
• Colombia reached its oil production goal of 1 million barrels per day as increased pumping in the southeast region boosted output despite sporadic attacks to infrastructure.
• According to China’s National Bureau of Statistics, total iron ore inventory at 30 major Chinese ports amounted to 73.14 million tons, down by 670,000 week-over-week, the ninth straight decline, and 22.46 million tons lower for the same period year-over-year.
• The Baltic Dry Index climbed 0.3 percent to 700, the first rise since November, lifted by gains for the largest vessels as miners sought charters to export iron ore & coal from Australia. The average charter rate for Capesizes rose 2.2 percent to $4,973 per day. Panamax Vessels fell 1.4 percent to $5,348 per day, its lowest level since early October.

Weaknesses

• Preliminary Chilean customs data show a fall in refined copper exports to China in November, suggesting current LME prices are discouraging local buyers, who will instead draw from domestic copper stocks.
• Natural gas prices have traded down from $4 per thousand cubic feet (Mcf) in late November to around $3.2 per Mcf currently as the hope of a cold winter has met the reality of another mild winter (8 percent warmer than normal so far).

Opportunities

• Met coal data points continue to be supportive of stronger 2013 pricing. Admittedly, in rear-view mirror but global steel output and iron ore prices (November data) both showing incremental strength while met coal prices have been relatively flat the last six weeks. More time is needed to work through remnants of oversupplied market but good demand data points help move the equilibrium point nearer.
• Hyundai Heavy Industries Co. & Samsung Heavy Industries Co., the world’s two largest shipbuilders, forecast a jump in orders this year, helped by rising demand for offshore drilling and production units. Hyundai Heavy is targeting annual orders for ships, offshore products and plant construction to surge 52 percent to $29.7 billion, according to a regulatory filing. Smaller rival Samsung Heavy aims to win orders worth $13 billion, 35 percent more than last year.
• Bloomberg Industry research stated that coal port expansions in the U.S. could add 42 million tons of capacity by 2017. Most of that increase comes from the Gulf where expansion at five terminals would add most of that capacity. This is on top of the potential increases on those port applications in the Northwest that need approval from the Army Corps of Engineers.

Threats

• Southern Copper’s workers at main operations in Peru could go on strike. Workers plan to hold contract talks soon with the company but could strike after January 15 if negotiations break down. Union members are pressing for a 15 percent wage increase as well as better safety conditions and health benefits while the company has offered no more than 5.5 percent.
• The current spike in iron ore prices is likely to be temporary, according to Rio Tinto’s management, and the company is set to stick to its plans to aggressively target cost reductions despite the improving market. Platts IODEX 62 percent Fe iron ore price jumped 20 percent month-over-month to $146.5 per ton on January 2.

January 2, 2013 Readers’ Golden Nuggets Focused on Gold, Resources and Overcoming Negativity	December 27, 2012 The Year’s Surprises in Gasoline, Oil and Resources Stock Prices	December 26, 2012 Reader Favorites: A Countdown

China Region Fund – USCOX  •  Eastern European Fund – EUROX
Global Emerging Markets Fund – GEMFX

Emerging Markets
 

Strengths

• Dedicated emerging market funds registered another $3.37 billion of inflows for the week ending Wednesday, January 2, marking the 17th consecutive week of positive money influx. Since the Fed’s announcement of QE3, $37 billion has flown into emerging market funds cumulatively.
• China’s privately compiled HSBC Manufacturing PMI rose to a much better than expected 51.5 in December from 50.5 in November, highlighting a robust ongoing trend of strengthening industrial activity in the country.
• Hong Kong reported a better than expected 9.5 percent year-over-year retail sales growth for November, as jewelry and luxury goods sales made a strong recovery thanks to a 30 percent surge in Chinese visitor arrivals in the month from a year earlier.
• Macau announced record casino-gaming revenues of 28.2 billion pataca ($3.5 billion) for December, representing 20 percent growth year-over-year and 14 percent month-over-month, due to continued recovery in the VIP market especially after the leadership transition in mainland China.

Weaknesses

• Singapore’s Manufacturing PMI deteriorated to a lower than expected 48.6 in December from 48.8 in November, a sixth-consecutive month in contraction, driven by weak electronics demand.
• India’s current account deficit rose to a record high of 5.4 percent of GDP in the third quarter of 2012 from 3.9 percent in the second quarter, because of weaker exports and higher gold imports.
• Indonesia’s trade balance remained in deficit in November at $0.5 billion, albeit smaller than October’s $1.9 billion. In 2012, the country turned from a net oil exporter to net oil importer due to declining oil production and rising domestic demand aggravated by fuel subsidies.
• South Korea’s exports in December declined 8.8 percent year-over-year, worse than market expectations of a 0.8 percent gain, affected by fewer work days related to its presidential election.

Opportunities

• Despite the recent rise in Asian equities driven by improved sentiment towards China and associated fund inflows, their valuations are far from frothy levels. Measured by trailing price-to-book ratio, Asian equities are trading at around 1.7 times, compared with an 18-year average of about 1.8 times. Plenty of room remains for a further re-rating of valuations, if corporate fundamentals continue to improve.

Threats

• Increasing chatter about a return of pricing power for Chinese property developers in 2013 may bring back the specter of more government policy tightening towards the sector, as lower inventory levels, slower new construction starts, and declining land sales in 2012 put pressure on housing supply this year.

Leaders and Laggards

The tables show the performance of major equity and commodity market benchmarks of our family of funds.

Please consider carefully a fund’s investment objectives, risks, charges and expenses. For this and other important information, obtain a fund prospectus by visiting www.usfunds.com or by calling 1-800-US-FUNDS (1-800-873-8637). Read it carefully before investing. Distributed by U.S. Global Brokerage, Inc.

An investment in a money market fund is neither insured nor guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the fund.

All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor.

Foreign and emerging market investing involves special risks such as currency fluctuation and less public disclosure, as well as economic and political risk. By investing in a specific geographic region, a regional fund’s returns and share price may be more volatile than those of a less concentrated portfolio.

The Eastern European Fund invests more than 25 percent of its investments in companies principally engaged in the oil & gas or banking industries. The risk of concentrating investments in this group of industries will make the fund more susceptible to risk in these industries than funds which do not concentrate their investments in an industry and may make the fund’s performance more volatile.

Because the Global Resources Fund concentrates its investments in a specific industry, the fund may be subject to greater risks and fluctuations than a portfolio representing a broader range of industries.

Morningstar Ratings are based on risk-adjusted return. The Overall Morningstar Rating for a fund is derived from a weighted-average of the performance figures associated with its three-, five- and ten-year (if applicable) Morningstar Rating metrics. Past performance does not guarantee future results. For each fund with at least a three-year history, Morningstar calculates a Morningstar Rating based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a fund’s monthly performance (including the effects of sales charges, loads, and redemption fees), placing more emphasis on downward variations and rewarding consistent performance. The top 10% of funds in each category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars and the bottom 10% receive 1 star. (Each share class is counted as a fraction of one fund within this scale and rated separately, which may cause slight variations in the distribution percentages.)

Gold, precious metals, and precious minerals funds may be susceptible to adverse economic, political or regulatory developments due to concentrating in a single theme. The prices of gold, precious metals, and precious minerals are subject to substantial price fluctuations over short periods of time and may be affected by unpredicted international monetary and political policies. We suggest investing no more than 5 percent to 10 percent of your portfolio in these sectors. Investing in real estate securities involves risks including the potential loss of principal resulting from changes in property value, interest rates, taxes and changes in regulatory requirements.

Tax-exempt income is federal income tax free. A portion of this income may be subject to state and local income taxes, and if applicable, may subject certain investors to the Alternative Minimum Tax as well. Each tax free fund may invest up to 20 percent of its assets in securities that pay taxable interest. Income or fund distributions attributable to capital gains are usually subject to both state and federal income taxes. Bond funds are subject to interest-rate risk; their value declines as interest rates rise. The tax free funds may be exposed to risks related to a concentration of investments in a particular state or geographic area. These investments present risks resulting from changes in economic conditions of the region or issuer.

Past performance does not guarantee future results.

These market comments were compiled using Bloomberg and Reuters financial news.

Holdings as a percentage of net assets as of 09/30/12:

Avon Products, Inc.: 0.0%
UnitedHealth Group Inc.: 0.0%
Watson Pharmaceuticals, Inc.: All American Equity Fund, 2.44%; Holmes Growth Fund, 2.71%
Family Dollar Stores, Inc.: 0.0%
Alcoa Inc.: 0.0
Monsanto Co.: Global Resources Fund, 1.00%
Wells Fargo & Co.: Global MegaTrends Fund, 1.12%
Silver Wheaton Co.: Gold and Precious Metals Fund, 3.15%; World Precious Minerals Fund, 2.85%
Centamin plc: 0.0%
Harmony Gold Company Ltd.: Gold and Precious Metals Fund, 2.02%; World Precious Minerals Fund, 1.33%
Aquarius Platinum Ltd.: 0.0%
Hyundai Heavy Industries Co., Ltd.: 0.0%
Samsung Heavy Industries Co., Ltd.: 0.0%
Southern Copper Co.: Global MegaTrends Fund, 1.94%
Rio Tinto plc: 0.0%

*The above-mentioned indices are not total returns. These returns reflect simple appreciation only and do not reflect dividend reinvestment.
The Dow Jones Industrial Average is a price-weighted average of 30 blue chip stocks that are generally leaders in their industry.
The S&P 500 Stock Index is a widely recognized capitalization-weighted index of 500 common stock prices in U.S. companies.
The Nasdaq Composite Index is a capitalization-weighted index of all Nasdaq National Market and SmallCap stocks.
The S&P BARRA Growth Index is a capitalization-weighted index of all stocks in the S&P 500 that have high price-to-book ratios.
The S&P BARRA Value Index is a capitalization-weighted index of all stocks in the S&P 500 that have low price-to-book ratios.
The Russell 2000 Index® is a U.S. equity index measuring the performance of the 2,000 smallest companies in the Russell 3000®, a widely recognized small-cap index.
The Hang Seng Composite Index is a market capitalization-weighted index that comprises the top 200 companies listed on Stock Exchange of Hong Kong, based on average market cap for the 12 months.
The Taiwan Stock Exchange Index is a capitalization-weighted index of all listed common shares traded on the Taiwan Stock Exchange.
The Korea Stock Price Index is a capitalization-weighted index of all common shares and preferred shares on the Korean Stock Exchanges.
The Philadelphia Stock Exchange Gold and Silver Index (XAU) is a capitalization-weighted index that includes the leading companies involved in the mining of gold and silver.
The U.S. Trade Weighted Dollar Index provides a general indication of the international value of the U.S. dollar.
The MSCI Russia Index is a free-float weighted equity index developed in 1994 to track major equities traded in the Russian market.
The S&P/TSX Canadian Gold Capped Sector Index is a modified capitalization-weighted index, whose equity weights are capped 25 percent and index constituents are derived from a subset stock pool of S&P/TSX Composite Index stocks.
The S&P 500 Energy Index is a capitalization-weighted index that tracks the companies in the energy sector as a subset of the S&P 500.
The S&P 500 Materials Index is a capitalization-weighted index that tracks the companies in the material sector as a subset of the S&P 500.
The S&P 500 Financials Index is a capitalization-weighted index. The index was developed with a base level of 10 for the 1941-43 base period.
The S&P 500 Industrials Index is a Materials Index is a capitalization-weighted index that tracks the companies in the industrial sector as a subset of the S&P 500.
The S&P 500 Consumer Discretionary Index is a capitalization-weighted index that tracks the companies in the consumer discretionary sector as a subset of the S&P 500.
The S&P 500 Information Technology Index is a capitalization-weighted index that tracks the companies in the information technology sector as a subset of the S&P 500.
The S&P 500 Consumer Staples Index is a Materials Index is a capitalization-weighted index that tracks the companies in the consumer staples sector as a subset of the S&P 500.
The S&P 500 Utilities Index is a capitalization-weighted index that tracks the companies in the utilities sector as a subset of the S&P 500.
The S&P 500 Healthcare Index is a capitalization-weighted index that tracks the companies in the healthcare sector as a subset of the S&P 500.
The S&P 500 Telecom Index is a Materials Index is a capitalization-weighted index that tracks the companies in the telecom sector as a subset of the S&P 500.
The Bloomberg Gold Bear/Bull Sentiment Indicator charts the percent of respondents in a weekly Bloomberg News survey of traders, investors, and analysts predicting gold prices will rise the following week. The number of participants in the survey, which is completed every Friday, may vary.
The NYSE Arca Gold Miners Index is a modified market capitalization weighted index comprised of publicly traded companies involved primarily in the mining for gold and silver.
The S&P/TSX Global Gold Index is an international benchmark tracking the world’s leading gold companies with the intent to provide an investable representative index of publicly-traded international gold companies.
The NYSE Arca Gold BUGS (Basket of Unhedged Gold Stocks) Index (HUI) is a modified equal dollar weighted index of companies involved in gold mining. The HUI Index was designed to provide significant exposure to near term movements in gold prices by including companies that do not hedge their gold production beyond 1.5 years.
The Consumer Price Index (CPI) is one of the most widely recognized price measures for tracking the price of a market basket of goods and services purchased by individuals. The weights of components are based on consumer spending patterns.
The Producer Price Index (PPI) measures prices received by producers at the first commercial sale. The index measures goods at three stages of production: finished, intermediate and crude.
The Baltic Dry Freight Index is an economic indicator that portrays an assessed price of moving major raw materials by sea as compiled by the London-based Baltic Exchange.
The Euro-zone Manufacturing Purchasing Managers Index (PMI) assesses business conditions in the manufacturing sector. Because the manufacturing sector represents nearly a quarter of total Euro-zone GDP, the Euro-zone Manufacturing PMI is both a significant and timely indicator of business conditions and the general health of the economy. Results are quantified in an index in which values above 50 indicate an expected increase of business conditions and values below 50 signal an expected deterioration.
The China Purchasing Managers’ Index, a gauge of nationwide manufacturing activity, is issued by the China Federation of Logistics & Purchasing and co-compiled by the National Bureau of Statistics.
The MSCI AC Far East ex Japan Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of the Far East, excluding Japan. The MSCI AC Far East ex Japan Index consists of the following 9 developed and emerging market country indices: China, Hong Kong, Indonesia, Korea, Malaysia, Philippines, Singapore, Taiwan, and Thailand.
The Purchasing Manager’s Index is an indicator of the economic health of the manufacturing sector. The PMI index is based on five major indicators: new orders, inventory levels, production, supplier deliveries and the employment environment.
These market comments were compiled using Bloomberg and Reuters financial news.