2023-12-13 05:54

JAKARTA, Dec 13 (Reuters) - Indonesia will grant automakers that plan to build electric vehicle plants tax incentives on their imports of completely built-up EVs until 2025, a new presidential regulation showed as Jakarta seeks to attract more investment. Under the new regulation signed on Dec. 8 and released this week, companies that have invested in EV plants, are planning to increase their EV investments, or planning to invest would be eligible for the incentives. The new rules will remove the import duties and the luxury-goods sales tax on the built-up vehicles brought into the country and gives incentives on taxes collected by provincial governments. Earlier rules only granted these incentives to imports of knocked-down vehicles, which are delivered in parts and assembled in the country where they are sold. Indonesia is Southeast Asia's biggest auto market. However, the number of vehicles companies can import would depend on the investment size and development progress of the plant, and must be approved by the investment ministry. Speaking at a webinar on Indonesia's economic prospects on Wednesday, Rachmat Kaimuddin, a deputy at the Coordinating Ministry of Investment and Maritime Affairs, said the new decree would help automakers build their market in the country through EV imports. "We try to be progressive, because once we have created an EV industry in Indonesia, the battery (industry) will also come, and we already have the (raw) material and can create the supply chain," he said. The new regulations also delayed a deadline requiring companies to produce at least 40% of the content of EVs in Indonesia until 2026 from 2023. Also the decree delays an increase in the local content threshold to 60% to 2027 from initial target of 2024. Indonesia's government has set an ambitious target of producing some 600,000 EVs by 2030. That would be more than 100 times the number sold in Indonesia in the first half of 2023. Some companies including Hyundai have invested in Indonesia followed by investment commitments by China's Neta EV brand and Mitsubishi Motors. Indonesia is also wooing Tesla and China's BYD. https://www.reuters.com/business/autos-transportation/indonesia-relaxes-tax-rules-ev-imports-attract-investment-2023-12-13/

2023-12-13 05:32

A look at the day ahead in European and global markets from Rae Wee: The Federal Reserve's rate decision on Wednesday is all but a done deal, so that leaves Chair Jerome Powell's language and the central bank's dot plot of future policy as the main focus. The world's most powerful central banker has a tightrope to walk, with Tuesday's U.S. inflation print doing little to alter views for the timing of rate cuts next year. Some investors are hoping Christmas comes early in the form of a Fed pivot, and Wall Street on Tuesday notched fresh 2023 highs It's up to Powell then to convince markets - or not - that it is "premature to conclude" that the Fed's job is done. Market pricing shows a 75% chance of a cut in May, according to the CME FedWatch tool, and analysts at Goldman Sachs over the weekend brought forward their forecast of a first cut to the third quarter of next year from the fourth quarter previously. In Asia, China said it will step up policy adjustments to support an economic recovery in 2024 following an agenda-setting meeting of the country's top leaders, though those signals failed to excite investors and Chinese stocks declined (.CSI300). Still, with all eyes on Powell, tonight's events could be make or break for world stocks (.MIWD00000PUS), which are up more than 1% for the month thus far. December has historically been a good period for stocks, save for last year where the MSCI world equity index lost 4% and 2018, when it fell 7% during the month. The Fed hiked rates four times that year. The European Central Bank (ECB), the Bank of England (BoE), the Swiss National Bank and Norges Bank are next in line after the Fed, with steady outcomes expected for all on Thursday, though by just a margin for Norway. ECB hawk Isabel Schnabel told Reuters last week the central bank can take further interest rate hikes off the table given a "remarkable" fall in inflation, while British wage growth slowed by the most in almost two years, welcome news for the BoE. Investors will first have to cross Wednesday's hurdle before knowing if policymakers across the globe will take cues from the Fed. The ball's in Powell's court. Key developments that could influence markets on Wednesday: - UK GDP estimates (October) - Euro zone industrial production (October) - Federal Reserve policy decision https://www.reuters.com/markets/europe/global-markets-view-europe-2023-12-13/

2023-12-13 05:07

JOHANNESBURG, Dec 13 (Reuters) - Inflation in South Africa will slow next year as global trends weighing on prices' growth combine with weak domestic consumer spending, a Reuters poll found. From an estimated average of 5.8% this year, inflation is expected to decline to 5.0% next year and 4.5% in 2025, according to the median forecasts of 19 economists polled from Dec. 6-12. The latter would be right in the middle of the South African Reserve Bank's (SARB) comfort zone of 3%-6%. Jeffrey Schultz, chief economist at BNP Paribas, wrote in a note that prospects for disinflation next year are even more compelling than before. "On the supply side, we point out that easing global supply bottlenecks helping to push core goods prices lower in most regions, coupled with domestic input prices which entered deflationary territory back in July already, are likely to impact still sticky core goods prices into next year," he wrote. Schultz said he continues to see growing evidence of a lack of demand in the South African economy driving inflation down. Still, similar to last month's poll, the bigger risk on the timing of the first SARB interest rate cut is later rather than sooner, according to all but two of seven respondents to an extra question. The SARB is expected to wait until May before cutting its repo rate as policymakers try to navigate risks to inflation and the timing of interest rate reductions in major economies. The U.S. Federal Reserve will wait until at least July, according to a slim majority of respondents in a separate Reuters survey. After May, the SARB is forecast to cut in every quarter by 25 basis points in the forecast horizon until early 2025, eventually reaching 7.00% later that year. The repo rate is currently 8.25%. The South African economy is expected to expand 1.3% next year, according to the median forecast, the same as last month's poll and up from a 0.7% estimate for this year. Power shortages and logistical bottlenecks at ports are weighing heavily on economic output. The economy is expected to grow 1.7% in the following year. (For other stories from the Reuters global economic poll: (Full story)) https://www.reuters.com/world/africa/south-african-inflation-slow-2024-2023-12-13/

2023-12-13 03:31

BANGKOK, Dec 13 (Reuters) - Thailand's inflation is forecast to gradually speed up to within the targeted range of 1% to 3%, the Bank of Thailand said on Wednesday, with the rate expected to be low into early next year due to government subsidies but not reflecting deflation. Inflation expectations in the short and long-term remained well-anchored, the central bank added. The BOT forecast headline inflation of 1.3% this year from 1.6% projected earlier, while 2024 inflation was seen at 2.0%, not factoring in the impact of digital wallet spending, compared with 2.6% projected earlier. The BOT targets headline inflation in a range of 1% to 3%. The headline consumer price index (CPI) fell 0.44% in November, though core CPI rose 0.58% during the month. October and November headline inflation would have been +0.9% and +0.7%, respectively had it not been for government subsidies, BOT data showed. The government has cut energy and electricity prices to alleviate the cost of living. The country's economic recovery is intact but structural impediments could limit the positive impact of the global economy on exports, and credit quality must be monitored, minutes of the Bank of Thailand's Nov. 29 monetary policy meeting showed on Wednesday. The BOT said financial conditions had tightened and it was monitoring the credit quality of small businesses and households. At the meeting, the monetary policy committee unanimously voted to keep its one-day repurchase interest rate (THCBIR=ECI) unchanged at 2.50%, the highest in a decade, after hiking it by 200 basis points since August last year to curb inflation. The committee said the policy rate was appropriate for long-term growth, but it saw urgency in providing a lift to the economy including infrastructure investment and labour upskilling programmes, the minutes showed. Southeast Asia's second-largest economy grew much lower than expected at 1.5% in the July-September quarter from a year earlier, the slowest pace this year, on weak exports and government spending. Prime Minister Srettha Thavisin has said the economy is in a "crisis". The central bank will next review policy rates on Feb. 7, when most economists expect no policy change. ($1 = 35.6700 baht) https://www.reuters.com/markets/asia/thai-economy-recovering-financial-conditions-tightened-cbank-minutes-2023-12-13/

2023-12-13 03:00

MUMBAI, Dec 13 (Reuters) - The Indian rupee is expected to have a quiet opening on Wednesday after U.S. inflation came broadly in-line with expectations, with traders now awaiting the Federal Reserve's new forecasts on interest rates. Non-deliverable forwards indicate rupee will open broadly unchanged from 83.3875 in the previous session. U.S. core consumer price index (CPI) rose 0.3% month-on-month and 4.0% year-on-year in November, matching estimates. The headline reading was slightly firmer than expected at 0.1% on-month. "I doubt it would have mattered much (to USD/INR) if U.S. inflation numbers were a surprise on either side," a FX trader at a bank said. "(USD/INR) will keep knocking at 83.40 today. The main focus point on the Fed policy will be their dot plot for 2024." The Fed is set to make fresh forecasts for inflation, GDP and policy rates during U.S. trading hours on Wednesday. The path policymakers indicate will draw the most scrutiny considering how expectations regarding the Fed rate path have shifted. Investors are pricing in more than 100 basis points of rate cuts in 2024, most likely beginning from May. The possibility of a rate cut at the March meeting is near 40%. The median Fed projection for policy rate at end-2024 was at 5.125% in September. "We expect a fall of least 25 bps to 4.875% with a possibility of a larger decline to 4.625%," HSBC said in an note. "The median projection for end-2025 may be just as important to watch." HSBC said the projection for the end of 2025 could fall 50 bps to 3.375%. Investors be interested in any changes the Fed makes to the forward guidance of "the extent to which additional policy firming may be appropriate to return inflation to 2 percent over time." Asian currencies were mostly lower before the Fed decision and equities slipped. KEY INDICATORS: ** One-month non-deliverable rupee forward at 83.47; onshore one-month forward premium at 7 paisa ** Dollar index at 103.86 ** Brent crude futures at $73.4 per barrel ** Ten-year U.S. note yield at 4.20% ** As per NSDL data, foreign investors bought a net $104.6 mln worth of Indian shares on Dec. 11 ** NSDL data shows foreign investors bought a net $39.1 mln worth of Indian bonds on Dec. 11 https://www.reuters.com/markets/currencies/rupee-eyes-fed-rate-projections-after-in-line-us-inflation-data-2023-12-13/

2023-12-13 02:21

NEW YORK, Dec 13 (Reuters) - U.S. stocks surged to a sharply higher close on Wednesday and benchmark Treasury yields slipped to their lowest level since August after the Federal Reserve flagged the end of its tightening cycle and struck a dovish tone for the year ahead. All three major U.S. stock indexes jumped to fresh closing highs for the year after the Federal Open Markets Committee (FOMC) left its fed funds target rate unchanged at 5.25%-5.50%. The Dow notched a record closing high, confirming the blue-chip industrial average has been in a bull market since Sept. 30, 2022, by common definition. In its accompanying statement, the Fed acknowledged that inflation has eased and implied that the rate tightening cycle might be over. Its dot plot, which forecasts the potential path forward for monetary policy, hinted that lower borrowing costs could be in the cards in 2024. "The Fed delivered an early holiday present this year," said Greg Bassuk, CEO at AXS Investments in New York. "Investors are embracing change in Fed sentiment toward a more dovish stance. It really underscores the trade that investors have been making over the last few weeks; that rates are set to decline in the coming year." Economic data showed U.S. producer prices (PPI) were unchanged in November, further evidence that inflation continues to meander down toward the Fed's average annual 2% target. "Some of the factors we believe that drove this change in sentiment is this week's CPI and PPI data showing more consistency in inflation's downward trajectory," Bassuk added. "This allowed the Fed to gain greater confidence that its hawkish moves have begun to achieve their objectives." In a busy week for central banks, the European Central Bank and the Bank of England will announce policy decisions on Thursday. The Dow Jones Industrial Average (.DJI) rose 512.3 points, or 1.4%, to 37,090.24, the S&P 500 (.SPX) gained 63.39 points, or 1.37%, at 4,707.09 and the Nasdaq Composite (.IXIC) added 200.57 points, or 1.38%, at 14,733.96. European shares ended a subdued session with a nominal loss as investors largely avoided risky bets ahead of the Fed decision. The pan-European STOXX 600 index (.STOXX) lost 0.06% and MSCI's gauge of stocks across the globe (.MIWD00000PUS) gained 1.22%. Emerging market stocks lost 0.07%. MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) closed 0.03% lower, while Japan's Nikkei (.N225) rose 0.25%. Treasury yields tumbled after the Fed decision, with yields on 10-year notes dropping to their lowest since August, and two-year yields, which reflect rate expectations, touching their weakest level since early June. Benchmark 10-year notes rose 50/32 in price to yield 4.0183%, from 4.206% late on Tuesday. The 30-year bond rose 71/32 in price to yield 4.1795%, from 4.304% late on Tuesday. The dollar reversed its gains against a basket of world currencies (.DXY), dropping after the central bank projected interest rate cuts in 2024. The dollar index (.DXY) fell 0.93%, with the euro up 0.81% to $1.0879. The Japanese yen strengthened 1.72% versus the greenback at 142.99 per dollar, while Sterling was last trading at $1.2624, up 0.50% on the day. Oil prices bounced back after tumbling to near six-month lows on Tuesday in the wake of a larger-than-expected weekly withdrawal from U.S. crude storage and as an attack on a tanker in the Red Sea threatened Middle East oil supplies U.S. crude rose 1.25% to settle at $69.47 per barrel, while Brent settled at $74.26 per barrel, up 1.39% on the day. Gold jumped in opposition to the weakening greenback, breezing past the $2,000 per ounce level. Spot gold added 2.2% to $2,023.86 an ounce. https://www.reuters.com/markets/global-markets-wrapup-1-2023-12-13/