This chart paints a worrying picture on Asian trade in the months ahead

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  • Trade tensions between the United States and China appear to be thawing, raising hopes of a longer-lasting trade solution between the two warring sides.
  • Based on Nomura’s leading index of Asian exports, such an outcome cannot come soon enough.
  • It’s tumbling, logging the largest one-month decline in over three years based on latest leading indicators.

trade tensions between the United States and China appear to be thawing, increasing optimism that a long-lasting trade solution may soon be found.

Based on the chart below, and with clear signs the global economy is slowing, such an outcome cannot come soon enough.


It’s Nomura’s leading index of Asian exports, an indicator that aims to predict actual trade flows in Asia in the months ahead based on eight forward-looking components.

Nomura says it excludes Japanese data, meaning it is essentially a lead indicator on emerging market trade across the region. The bank says it has a three-month lead over aggregate exports, allowing it to predict outcomes out to January 2019.

As Nomura explains, based on the latest lead indicators, the news was not good.

“It fell in January 2019 for a fourth consecutive month to its lowest level in 27 months — the 4.2 point decline is the largest one-month fall in more than three years and larger than the last three monthly declines combined,” Rob Subbaraman and Michael Loo, Economists at Nomura.

“The warning of a plunge in Asian export growth early next year gels with our view of a deepening global electronics downturn, a cooling Chinese economy and payback from companies in China — and Asia’s supply chain — front-loading exports ahead of anticipated higher US tariffs.”

“Based on the current signals being generated by the index, Subbaraman and Loo say “Asian exports are riding a one-way ticket south into the new year, and we would not rule out negative year-on-year growth in Q1.”

So even if a trade truce or longer-lasting solution is found between the United States and China ahead of a hard deadline for US tariffs to increase on March 1, there could even weaker trade data to come from the region in the early parts of next year.

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