-
11 FEBRUARY 2016
INSIDE
Pacific News
Pacific region 2
Fiji 3
Cook Islands 3
Guam 3
Kiribati 3 New Caledonia 2
Samoa 3
American Samoa 3
Solomon Islands 3
Timor-Leste 3
Tonga 3
Vanuatu 4
Key Data Releases 5
Macro Forecasts 8
FX Market Developments 9 Commodity Market Developments 11
Important Notice 13
CONTRIBUTORS
[email protected] Glenn Maguire Chief Economist, South Asia,
ASEAN & Pacific [email protected] Devika Mehndiratta Senior
Economist, South Asia & ASEAN [email protected]
Eugenia F. Victorino Economist, ASEAN & Pacific
[email protected] Weiwen, Ng Economist, ASEAN & Pacific
[email protected] Eugin Lee Analyst, ASEAN & Pacific
[email protected] Daniel Hynes Commodity Strategist
[email protected]
Follow us on Twitter @ANZ_Research
PACIFIC MONTHLY
ANZ RESEARCH
HIGHLIGHTS
The 2016-17 Pacific currency outlook appears to be a heady one
for Pacific
currencies, with global and regional developments impacting
various currency
pairs unevenly. In particular, amid an uneven global backdrop,
the extent of
exposure of each economy’s trade, commodity and ‘services
industry’ will
determine the trajectory of its currency performance.
In January, the contrary performance between the USD and
commodity
currencies (AUD, NZD) has led to a divergence in their
respective
individual Pacific crosses, to varying degrees.
Commodity prices remain under pressure as oversupply and fears
of
stagnating demand permeate key commodity segments. In crude oil,
we
still see the possibility of prices dipping into the mid USD20s
per barrel
range in the coming months, with chances of coordinated
production cuts
by OPEC and Russia highly unlikely.
Economic data in the aftermath of Cyclone Pam reveals uneven
impacts
across the region. Vanuatu (which suffered the brunt of the
cyclone)
continues to see deep cuts in tourism arrivals, with nationwide
restoration
still underway. Interestingly, it seems that tourists are
diverting their
itineraries to other less-affected Pacific Islands (rather than
cancelling
plans altogether). The region (excluding Vanuatu) is seeing a
marked
improvement in arrivals with the approach of the peak tourism
season.
CHART OF THE MONTH – COULD OUTSOURCING EMERGE AS A NEW
DRIVER OF PACIFIC GROWTH?
A World Bank study suggests that the Pacific region (Fiji, Samoa
and Tonga,
in particular) has the potential to attract offshoring, online
outsourcing and
other IT-related industries. Arithmetically, this could add
between 0.4 to 3.5%
to their GDP over the next five years, creating thousands of job
opportunities
in the process. Indeed, Fiji is already showing promise as major
companies
(including ANZ Pacific) set up their offshoring operations to
its shores. The
report noted that the region’s young, cheap and tech-savvy
population is a
key strength, and its best bet would be to provide ‘nearshoring’
services to
corporations in Australia and New Zealand.
OPTIMISTIC CASE ESTIMATES OF INDUSTRY IMPACTS IN THE NEXT 5
YEARS
Source: World Bank, ANZ Research
mailto:[email protected]:[email protected]:[email protected]:[email protected]://twitter.com/ANZ_Researchhttp://twitter.com/ANZ_Researchhttps://anzlive.secure.force.com/servlet/servlet.FileDownload?file=00P1400000kgzTxEAI
-
ANZ Pacific Monthly / 11 February 2016 / 2 of 13
PACIFIC NEWS
Note to readers:
Due to resource constraints, we have
temporarily suspended PNG coverage as we
transition a new economist into covering this
important economy. We appreciate your
patience on this matter.
PACIFIC REGION
The United States government has officially
announced that it is pulling out of the
South Pacific Tuna Treaty, a move that will
take effect in 12 months, according to the
terms of the nearly 30-year-old deal with the
region. The cessation of the agreement is due to
a standoff between fishing licenses and treaty
payments. The move could strongly affect the
livelihoods of smaller Pacific islands that are
dependent on the tuna trade. (ABC news,
Marianas Variety)
A World Bank report said that up to 20,000
jobs could be created in the Pacific through
IT-enabled outsourcing industries. The
study noted that Fiji, Samoa and Tonga,
especially, have significant competitive
advantages, such as a young qualified labour
market, improving Internet infrastructure, and
strong political support. (Radio New Zealand
International)
FIJI
Fiji’s sugar cane farmers will be receiving
an advance payment of FJD2/t to cope with
drought, announced Prime Minister Voreqe
Bainimarama. The payment will then be
deducted from the Q3 and Q4 quarter payments.
(Fiji Times Online)
Fiji airways is operating four direct flights
from China to Fiji, in a move to bring in
tourism flows boosted by the Chinese New Year
holidays. The chartered flights are expected to
bring in 1,200 tourists amid a seasonal low point
in the country’s tourism industry.
(Fiji Times Online)
A new Tuvatu mining lease awarded to
Canadian Mining Company Lion One Metals
is expected to provide 200 employment
opportunities, according to Steven Mann, who
is in charge of the Tuvatu Gold Mine project. The
new mine is projected to generate USD414m of
revenue when it goes into operation.
(Fiji Times Online)
Fiji will host the 25th Asia-Pacific
Parliamentary Forum in January 2017,
according to an announcement made by the
Forum’s executive committee. (Fijilive)
COOK ISLANDS
The Cook Islands Tourism Corporation is
expecting strong tourism growth in 2016,
with the introduction of new seasonal flights and
intensive marketing and branding efforts.
(Cook Islands News)
The Cook Islands could be among the
richest countries in the world if its
resources are ‘wisely and sustainably
harvested’, according to the Prime Minister,
Henry Puna. The Cook Islands has the 20th
largest exclusive economic zone in the world and
vast quantities of fisheries and seabed minerals.
(Cook Islands News)
GUAM
Guam’s economy could grow 3-4% this
year, benefiting from higher military
spending and a surge in tourism arrivals,
according to the Chief Economist of the Bank of
Guam, Joseph Bradley, who noted that if growth
remains as envisaged, Guam should be well
positioned for another minimum wage increase.
(Pacific Daily News)
Guam’s tourist arrivals reached a record
1.4m last year, owing to a boost in South
Korean and Chinese tourists, according to the
numbers from Guam Visitors Bureau. Japanese
tourists, which are traditionally Guam’s largest
visitor market, have declined due a weaker yen.
(Pacific Daily News)
KIRIBATI
Kiribati’s Presidential election will likely be
held in March this year, according to the
Electoral Commission. The outgoing President
Anote Tong, is bowing out of politics after having
served the maximum of three terms.
(Radio New Zealand International)
NEW CALEDONIA
The New Caledonian government has
authorised nickel exports to Japan and
Australia in a bid to combat industry wide
losses. (Radio New Zealand International)
Lower planned investment and possible job
cuts are a new reality in New Caledonia’s
SLN nickel company, according to the Head of
SLN, Jerome Fabre. Mr Fabre expects that
suppressed nickel prices (which have already
slumped 40%) will persist till the end of 2017.
(Radio New Zealand International)
The Congress of New Caledonia has
approved the budget for 2016, with the
expectation that growth would weaken to
0.6%. (Radio New Zealand International)
-
ANZ Pacific Monthly / 11 February 2016 / 3 of 13
PACIFIC NEWS
SAMOA
An USD3.83m supplementary budget has
been introduced by the Samoa Government. In
summary, the funds are allocated to develop
woman in agriculture, supplement the overseas
disease scheme, support the Samoa Broadband
Highway Project and other education needs.
(Samoa Observer)
Talofa Airways is set to launch from Samoa
in April, serving the region with priority
given to in-demand routes between Samoa
and American Samoa. Currently, Locally-
owned Talofa is in process of acquiring two Twin
Commander aeroplanes and would likely
compete with regional air service providers
Polynesian Airlines and Samoa Air.
(Samoa Observer)
Affordable, high speed satellite internet
would soon be a reality in Samoa, following
multi-transponder contract signed between
Bluesky Pacific Group, the local leading
telecommunications provider and Satellite
operators A.B.S. The multi-year capacity deal
will offer expanded satellite connectivity services
across the Samoan islands and the Pacific.
(Samoa Observer)
The US CDC health agency declared a Zika
virus travel alert to Samoa, prompting a
reassurance announcement from the Samoan
government. The Ministry of Health had confirmed
three cases since last year although more recent
blood samples tests have returned negative.
Measures are currently put in place to control the
disease. Caretaker Prime Minister Tuila’epa
Sa’ilele Malielegaoi said that reports of Zika in
Samoa will have an adverse impact on the
tourism industry. (Radio New Zealand)
AMERICAN SAMOA
The US Interior has released the final
USD18.3m in grant assistance for fiscal
2016 to American Samoa. Funds would be
used to support the daily operations of the
American Samoa government. (Marianas Variety)
American Samoa is becoming a new Zika
Hotspot in the Pacific, with local doctors
reportedly diagnosing an average of six cases a
day. The Health Department has recorded 25
suspected cases although lab testing delays
have yet to confirm those cases. Nonetheless,
the US CDC health agency has announced a
travel alert to American Samoa. (Radio New
Zealand, US Centers for Disease Control and
Prevention)
SOLOMON ISLANDS
Solomon Islands’ economy is expected to
expand by 3.5% over the next year,
according to Moody’s. However, the uncertain
outlook of the logging industry, underdeveloped
state institutions and frequently changing
government could present downside risk to that
forecast. (Radio New Zealand International)
TIMOR-LESTE
The Export Import Bank of China has
granted a soft loan of USD50m to Timor-
Leste for Dili sewage system improvements,
said the Timorese Ministry of Finance. The
Finance Ministry described the loan terms as
‘favourable’ and divulged that the deal includes
a ‘donation equivalent to 27.76% of the loan
value’. (Macauhub)
French group Bolloré Transport & Logistics
has been appointed to build and manage
the deep-water port of Dili under a
partnership with the government, according
to a press release statement. The partnership
will be in place for 30 years and is expected to
generate 350 direct job opportunities.
(Macauhub)
TONGA
Tonga Airports (TAL) has declared a
TOP1.3m dividend payable to the
government for the financial year 2014-15.
The dividend payment represents 75% of TAL’s
profit after tax in a year where revenue
exceeded TOP10m mark for the first time.
(Matangi Tonga Online)
Vava’u will receive two new direct flights
from Nadi, Fiji starting 2 April this year,
according to an announcement by Fiji Airways.
These flights should facilitate international
tourism flows, especially for North American
tourists who prefer to transit in Nadi. Vava’u is a
popular tourist destination famous for its
Humpback Whales tourism activities. (Matangi
Tonga Online)
Australia has pledged up to $500,000 in aid
to Tonga to help combat the spread of the
Zika virus after an outbreak was declared last
week raised concerns in the region. The initial
focus on strengthening the fight against the
mosquito-borne virus would be in Tonga, Pacific
Minister Steven Ciobo said in a statement. He
said Australia would work with World Health
Organisation (WHO) officials and the Tongan
government to control the mosquito population
and increase access to testing.
-
ANZ Pacific Monthly / 11 February 2016 / 4 of 13
PACIFIC NEWS
Tonga declared an outbreak of the Zika
virus last week, after five cases were confirmed
and 259 suspected. The US CDC health
agency has issued a travel alert to Tonga.
(ABC News, US Centers for Disease Control and
Prevention)
VANUATU
Vanuatu recorded its third consecutive and
largest ever fiscal surplus last year,
according to Vanuatu’s caretaker Prime Minister
Sato Kilman. PM Kilman that the surplus of over
USD8m is extremely commendable in the face
of challenges caused by Tropical Cyclone Pam.
(Radio New Zealand International)
Air New Zealand (and subsequently,
Qantas and Virgin Australia) have decided
to suspend flights to Port Vila on concerns
about runway safety, according to Vanuatu’s
Civil Aviation Authority which conceded that the
runway may not be up to par. The suspension
has reduced tourism arrivals from Australia and
New Zealand significantly. Nonetheless, regional
airlines to other Pacific Islands are still
operating amid ongoing discussions to reinstate
flight services. (Radio New Zealand)
Vanuatu’s tourism is starting to return to
Pre-Cyclone Pam levels, with tourism veering
towards northern islands such as Espiritu Santo,
that were not affected by Tropical Cyclone Pam.
(Radio New Zealand International)
17 parties and 8 independent members
have been elected into the 52-seat
Parliament, following the country’s Jan’16 snap
elections. A Memorandum of Agreement has
been signed by more than two-third of
Vanuatu’s 52 MPs to commit to forming a
new coalition government. The new
government is expected to formally take shape
next week when Parliament sits on 11
February to elect a prime minister.
(Radio New Zealand International, Radio
Australia)
-
ANZ Pacific Monthly / 11 February 2016 / 5 of 13
KEY DATA RELEASES
New data are shaded.
For a more in-depth view on the data flow, please refer to our
August Pacific Quarterly here.
INFLATION LATEST PREVIOUS
Fiji CPI (y/y) Nov-15 1.8% 1.4%
Samoa CPI (y/y) Dec-15 -2.3% -0.5%
Solomon Is. CPI (y/y, 3mma) Oct-15 1.2% 0.1%
Timor-Leste CPI (y/y) Dec-15 -0.6% -0.1%
Tonga CPI (y/y) Nov-15 -1.9% -1.3%
Vanuatu CPI (y/y) Q3-15 -3.5% 5.7%
Source: The respective central banks and national statistics
offices. *Due to natural disaster distortion.
TRADE LATEST PREVIOUS
Fiji Exports (y/y, ytd)** June-15
-10.1% -6.2%
Fiji Imports (y/y, ytd)** June-15
-13 -13
-9.7% -9.7%
Samoa Exports (y/y) Oct-15 26.9% 76.9%
Samoa Imports (y/y) Oct-15 -9.8% 4.3%
Solomon Is. Exports (y/y) Nov-15 29.2% -10.4% 2 Solomon Is.
Imports (y/y) Nov-15 9.0% -5.7%
Timor-Leste Exports (y/y) Nov-15
2.0% 148%
Timor-Leste Imports (y/y) Nov-15
-13 -13
0.5% 43%
Tonga Exports (y/y) Nov-15 6.0% -8.7%
Tonga Imports (y/y) Nov-15 11.1% 13.4%
Vanuatu Exports (y/y) * Jul-15 -54% 54.7%
Vanuatu Imports (y/y) * Jul-15 20.2% 93.4%
Source: The respective central banks and national statistics
offices. *Due to natural disaster distortion. ** Excld Aircraft
POLICY RATES LATEST PREVIOUS
Fiji Overnight Policy Rate Sept-15 0.50% 0.50%
PNG Kina Facility Rate Feb-16 6.25% 6.25%
Samoa Official Interest Rate Nov-15 0.15% 0.15%
Tonga Wtd Ave Lending Rate Nov-15 8.07% 8.09%
Vanuatu Rediscount Rate May-15 5.25% 5.25%
Source: The respective central banks and national statistics
offices.
TOURIST REMITTANCES LATEST PREVIOUS
Fiji Visitor Arrivals (y/y, ytd) Nov-15 8.8% 8.7%
Samoa Tourist Arrivals (y/y) Nov-15 -3.9% 15.5%
Samoa Remittances (y/y) Nov-15 -11% %
3.3%
Tonga Tourist Receipts (y/y) Nov-15 12.1% 9.5%
Tonga Remittances (y/y) Nov-15 13.1% 10.7%
Vanuatu Tourist Air Arrivals (y/y) Q3-15 -20.3% -41%
Timor-Leste Visitor Arrivals at Dili Airport Q3-15 2.5% 5.2%
Source: The respective central banks and national statistics
offices.
https://anzlive.secure.force.com/servlet/servlet.FileDownload?file=00P1400000Yf1k2EAB
-
ANZ Pacific Monthly / 11 February 2016 / 6 of 13
KEY DATA RELEASES
MONETARY LATEST PREVIOUS
Fiji M3 - Money Supply (y/y) Oct-15 15.3% 12.9%
Fiji Domestic Credit (y/y) Oct-15 12.8% 12.1%
Samoa M2 - Money Supply (y/y) Nov-15 10% 9.9%
Samoa Public & Private Sector Credit (y/y) Nov-15 6%
8.11%
Solomon Is. Private Sector Credit, y/y Nov-15 16.7% %
18.8%
Solomon Is. M3 - Money Supply (y/y) Nov-15 11.3% 9.0% %
Timor-Leste M2 - Money Supply (y/y) Dec-15 7.1% 8.3%
Timor-Leste Private Sector Credit (y/y) Q4-15 7.9% 10.9%
Tonga Private Sector Credit (y/y) Nov-15 12.8% 14.4%
Tonga M3 - Money Supply (y/y) Nov-15 13.4% 15.0%
Vanuatu M2 - Money Supply (y/y) Q3-15 11.4% 10.2%
Source: The respective central banks and national statistics
offices.
RESERVES LATEST PREVIOUS IMPORT COVER
(MONTHS)
Fiji Foreign Reserves (USDm) Nov-15 902.4 915.9 5.9
Samoa Foreign Reserves (USDm) Nov-15 122.2 126.5 5.4
Solomon Is. Foreign Reserves (USDm) Nov-15 500 497 10.0
Timor-Leste* Foreign Reserves (USDm) Nov-15 16,650 16,770
n/a
Tonga Foreign Reserves (USDm) Dec-15
147.4 142.8 9.6
Vanuatu Foreign Reserves (USDm) Q3-15 261 221 7.6
* Petroleum Fund Balance. **ANZ’s estimate. Source: The
respective central banks and national statistics offices.
-
ANZ Pacific Monthly / 11 February 2016 / 7 of 13
MACRO FORECASTS
REAL GDP GROWTH (%) NOMINAL GDP (USDbn)
2013 2014F 2015F 2016F 2013E 2014F 2015F 2016F
Fiji 4.6 4.5 4.0 3.0 Fiji 3.4 3.7 3.9 4.1
Samoa** 0.0 1.9 2.4 2.5 Samoa** 0.8 0.8 0.8 0.9
Solomon Is. 3.2 1.0 3.3 3.0 Solomon Is. 1.1 1.2 1.3 1.4
Timor-Leste* 9.5 7.0 6.2 6.0 Timor-Leste* 1.4 1.5 1.7 1.8
Tonga -3.0 1.9 2.5 2.8 Tonga 0.5 0.5 0.5 0.5
Vanuatu 3.2 3.6 -0.5 4.0 Vanuatu 0.8 0.9 0.9 0.9
INFLATION (%) FISCAL BALANCE (% of GDP)
2013 2014F 2015F 2016F 2013E 2014F 2015F 2016F
Fiji 2.9 0.5 3.0 3.0 Fiji -2.8 -2.1 -2.7 -1.7
Samoa** -0.2 -1.2# 2.0 2.3 Samoa** -6.1 -4.8 -4.2 -3.9
Solomon Is. 5.8 4.8 1.8 3.0 Solomon Is. 2.3 -1.3 -3.5 3.0
Timor-Leste 9.7 1.5 3.1 3.3 Timor-Leste 39.7 21.0 22.5 19.0
Tonga 1.0 1.5 1.9 2.5 Tonga -1.1 -0.2 -0.1 -0.2
Vanuatu 1.4 1.0 3.0 3.0 Vanuatu 0.7 -2.1 -3.0 -3.0
CURRENT ACCOUNT BALANCE (% OF GDP) FOREIGN EXCHANGE RESERVES
(USDm)
2013E 2014F 2015F 2016F 2013E 2014F 2015F 2016F
Fiji -20.7 -10.0 -8.7 -8.9 Fiji 755 750 764 780
Samoa** -2.0 -5.4 -5.2 -5.0 Samoa 137 155# 156 160
Solomon Is. -4.0 -6.0 -5.1 -7.5 Solomon Is. 515 530 550 550
Timor-Leste* 45 22 12 12 Timor-Leste 15.0bn 16.5bn 18.2bn
19.0bn
Tonga -6.0 -4.8 -4.8 -5.0 Tonga 140 138 140 140
Vanuatu -6.2 -6.0 -7.0 -7.0 Vanuatu 189 212 228 228
Source:
Fiji: Reserve Bank of Fiji, ADB, IMF, ANZ Research
Samoa: IMF, ADB, ANZ Research
Solomon Islands: Central Bank of Solomon Islands, IMF, ANZ
Research
Timor-Leste: IMF, ANZ Research
Tonga: Reserve Bank of Tonga, IMF, ANZ Research
Vanuatu: Reserve Bank of Vanuatu, IMF, ANZ Research
* Real and nominal GDP pertain to non-oil GDP; C/A balance as %
of non-oil GDP.
** Samoa’s fiscal year runs from July–June.
^Actual figure.
-
ANZ Pacific Monthly / 11 February 2016 / 8 of 13
FX MARKET DEVELOPMENTS
The run of US data has been soft of late and calls for rate
hikes have thus eased significantly. Pacific currencies
have also reacted accordingly, with depreciation against the USD
slowing down in the past 30 days. However,
commodity currencies (AUD and NZD) have remained suppressed,
given the recent fixation towards low
commodity prices and the stability of Chinese assets. For the
Pacific economies, this has led to a divergence in
the USD/Pacific against the AUD/Pacific and the NZD/Pacific
crosses to varying degrees. For a detailed update
on our Pacific FX outlook, please read our note.
FIJI – FJD CROSS RATES
SOLOMON ISLANDS – SBD CROSS RATES
VANUATU – VUV CROSS RATES
TONGA – TOP CROSS RATES
SAMOA – WST CROSS RATES
Updated as of 18 January 2016. Source: Bloomberg, ANZ
Research
0.60
0.63
0.66
0.69
0.72
0.75
0.45
0.49
0.53
0.57
0.61
0.65
0.69
Jul 13 Jan 14 Jul 14 Jan 15 Jul 15 Jan 16
FJD-USD FJD-AUD FJD-NZD (RHS) FJD-SGD (RHS)
4.7
4.9
5.1
5.3
5.5
5.7
5.9
6.1
6.3
6.5
5.4
5.8
6.2
6.6
7.0
7.4
7.8
8.2
Jul 13 Jan 14 Jul 14 Jan 15 Jul 15 Jan 16USD-SBD AUD-SBD
NZD-SBD (RHS) SGD-SBD (RHS)
66
68
70
72
74
76
78
80
82
84
86
72
76
80
84
88
92
96
100
104
108
112
116
Jul 13 Jan 14 Jul 14 Jan 15 Jul 15 Jan 16
USD-VUV AUD-VUV NZD-VUV (RHS) SGD-VUV (RHS)
1.28
1.31
1.34
1.37
1.40
1.43
1.46
1.49
1.52
1.55
1.58
1.61
1.441.501.561.621.681.741.801.861.921.982.042.102.162.22
Jul 13 Jan 14 Jul 14 Jan 15 Jul 15 Jan 16
USD-TOP AUD-TOP NZD-TOP (RHS) SGD-TOP (RHS)
0.49
0.52
0.55
0.58
0.61
0.64
0.67
0.70
0.73
0.76
0.79
0.82
0.340.360.380.400.420.440.460.480.500.520.540.560.58
Jul 13 Jan 14 Jul 14 Jan 15 Jul 15 Jan 16
WST-USD WST-AUD WST-NZD (RHS) WST-SGD (RHS)
https://anzlive.secure.force.com/servlet/servlet.FileDownload?file=00P1400000kgzTxEAI
-
ANZ Pacific Monthly / 11 February 2016 / 9 of 13
FX MARKET DEVELOPMENTS
For an in-depth currency forecast commentary, please contact
your ANZ Representative.
Note: The source of FX data is Bloomberg and the respective
central banks in the Pacific. As the currencies are illiquid with
wide bid/offer spreads, the rates published are only
indicative.
* Overnight policy rate.
^ Discount rate.
Updated as of 25 January 2016.
-
ANZ Pacific Monthly / 11 February 2016 / 10 of 13
COMMODITY MARKET DEVELOPMENTS
FIGURE 1. COMMODITY PRICE INDICES
Commodity prices remain under pressure as
oversupply and fears about stagnating demand permeate key
commodity segments. In crude oil, we still see a possibility of
prices dipping into the mid-USD20s/bbl in the coming months, with
chances of coordinated production cuts by OPEC and Russia highly
unlikely.
Oil prices fell 15% during the first three weeks of January,
before finding some support late in the month from hopes of supply
cuts. A meeting between Russia and OPEC was touted, with Russia
suggesting it could join a potential coordinated approach on oil
output. A 5%
production cut had been raised at the last OPEC meeting.
We believe the likelihood of such action is extremely low.
Russia is heavily reliant on oil, which contributes to 40% of
budget revenue. Russia is also on track to reach a record high
10.9Mb/d in January and thus is unlikely to cut production.
Meanwhile OPEC remains steadfast in its strategy of maintaining
current output levels. There are
also political barriers in place, with Saudi Arabia and Russia
currently backing opposite sides in the Syrian conflict. We still
see the possibility of prices dipping into the mid USD20s per
barrel in the coming months. With Iran now able to boost exports
and inventories continuing to build in the US, fundamentals are
likely to
get worse before they get better.
Palm oil prices defied the broader sell-off in commodity markets
in January. Palm oil prices in US dollar terms rallied 6% m/m,
breaking key resistance levels and hitting a six month high.
Supporting prices in the second
half of January was the release of key statistics by the
Malaysian Palm Oil Board (MPOB),showing a 10% fall in the country’s
palm oil stocks as Crude Palm oil (CPO) production fell 15% m/m.
The El Nino, which caused dryness in South East Asia. is expected
to continue to reduce palm oil yields over the next six months in
both Indonesia and Malaysia and push prices higher still.
Global palm oil production is only expected to grow marginally
in 2016, a sharp contrast to the last five years when global palm
oil production grew at an average rate of 3 million tonnes pa.
Sugar prices fell in late January, breaking key support levels
established in the last quarter. Prices lacked any impetus to
rally, given that Brazil’s main cane producing region had finished
harvesting and rainfall in the country’s centre south region has
been above average – setting the stage for another large cane crop
in 2016.
Near term supplies are also ample in other key exporting
countries such as Thailand, where cane mills have operating at
high processing capacity for three weeks, allowing an early season
shortfall in production to be narrowed considerably.
FIGURE 2. COMMODITY PRICE INDICES
FIGURE 3. COMMODITY PRICE INDICES
*Fish prices are a proxy derived from shrimp prices.
Source: Bloomberg, World Bank, Haver, ANZ Research
*Updated as of 18 January 2016. Source: Bloomberg, ANZ
Research
30
50
70
90
110
130
150
Jan 13 Jan 14 Jan 15 Jan 16
(Avera
ge 2
013=
100)
Oil (Tapis) Gold Copper Silver
60
80
100
120
140
160
180
200
220
Jan 13 Jan 14 Jan 15 Jan 16
(Avera
ge 2
013=
100)
Coconut oil Palm oil Copra
60
80
100
120
140
160
180
Jan 13 Jan 14 Jan 15 Jan 16
(Avera
ge 2
013=
100)
Sugar Cocoa Coffee Rice Fish*
Price
changes*
Oil
(tapis)Gold Silver Copper Coc. oil
Palm
oilSugar Coffee Cocoa Rice Copra Fish
M/M 0.7% 3.4% 5.8% 0.6% 5.1% 0.3% 29.6% 11.0% -5.8% 5.0% -7.6%
-8.3%
3M/3M -16.8% 3.8% 7.8% -2.9% -1.0% -3.3% 12.1% -0.9% -6.8% -7.7%
5.7% -7.7%
Y/Y -44.6% -4.9% -7.1% -20.7% 0.7% -5.6% -13.3% -40.3% 0.0%
-13.0% -29.1% -19.5%
-
ANZ Pacific Monthly / 11 February 2016 / 11 of 13
COMMODITY MARKET DEVELOPMENTS
ANZ PACIFIC COMMODITY PRICE INDEX (PCPI)
The commodity slump continues to adversely affect
Pacific economies, with import and export indices
registering double digit y/y declines. On a sequential
basis, export prices posted slight gains on the back of
signs of stabilisation in agricultural prices. In
contrast, the import price indices continue to slide as
global energy prices are still struggling to find a floor.
Over the near term, ANZ commodity analysts expect
current trends to persist.
FIJI – COMMODITY PRICE INDICES
TIMOR-LESTE – COMMODITY PRICE INDICES
SAMOA – COMMODITY PRICE INDICES
SOLOMON ISLANDS – COMMODITY PRICE INDICES
TONGA – COMMODITY PRICE INDICES
Source: World Bank, Haver, ANZ Research
VANUATU –COMMODITY PRICE INDICES
Fiji Timor Samoa Sol. Tonga Van.
Export, y/y -23.4 -37.8 -30.6 -11.7 -23.6 -19.8
Export, m/m 0.3 -13.8 1.4 0.5 0.0 2.5
Import, y/y -33.5 -22.4 -26.3 -32.9 -17.9 -25.5
Import, m/m -7.7 -2.8 -5.4 -8.4 -1.3 -4.1
ANZ Pacific Commodity Price Index (ANZ PCPI) Dec 2015
50
60
70
80
90
100
110
120
130
140
150
50
60
70
80
90
100
110
120
130
140
150
Dec 09 Dec 10 Dec 11 Dec 12 Dec 13 Dec 14 Dec 15
2010 =
100
2010 =
100
Terms of Trade (RHS) Exports Imports
40
60
80
100
120
140
40
60
80
100
120
140
Dec 09 Dec 10 Dec 11 Dec 12 Dec 13 Dec 14 Dec 15
2010 =
100
2010 =
100
Terms of Trade (RHS) Exports Imports
60
70
80
90
100
110
120
130
140
60
70
80
90
100
110
120
130
140
Dec 09 Dec 10 Dec 11 Dec 12 Dec 13 Dec 14 Dec 15
2010 =
1002
010 =
100
Terms of Trade (RHS) Exports Imports
20
40
60
80
100
120
140
160
180
50
60
70
80
90
100
110
120
130
140
150
Dec 09 Dec 10 Dec 11 Dec 12 Dec 13 Dec 14 Dec 15
2010 =
100
2010 =
100
Terms of Trade (RHS) Exports Imports
80
85
90
95
100
105
110
115
120
70
80
90
100
110
120
130
Dec 09 Dec 10 Dec 11 Dec 12 Dec 13 Dec 14 Dec 15
2010 =
100
2010 =
100
Terms of Trade (RHS) Exports Imports
60
80
100
120
140
160
180
60
80
100
120
140
160
180
Dec 09 Dec 10 Dec 11 Dec 12 Dec 13 Dec 14 Dec 15
2010 =
100
2010 =
100
Terms of Trade (RHS) Exports Imports
-
IMPORTANT NOTICE
The distribution of this document or streaming of this video
broadcast (as applicable, “publication”) may be restricted by law
in certain jurisdictions. Persons who receive this publication must
inform themselves about and observe all relevant restrictions.
Disclaimer for all jurisdictions, where content is authored by ANZ
Research: Except if otherwise specified below, this publication is
issued and distributed in your country/region by Australia and New
Zealand Banking Group Limited (ABN 11 005 357 522) (“ANZ”), on the
basis that it is only for the information of the specified
recipient or permitted user of the relevant website (collectively,
“recipient”). This publication may not be reproduced, distributed
or published by any recipient for any purpose. It is general
information and has been prepared without taking into account the
objectives, financial situation or needs of any person. Nothing in
this publication is intended to be an offer to sell, or a
solicitation of an offer to buy, any product, instrument or
investment, to effect any transaction or to conclude any legal act
of any kind. If, despite the foregoing, any services or products
referred to in this publication are deemed to be offered in the
jurisdiction in which this publication is received or accessed, no
such service or product is intended for nor available to persons
resident in that jurisdiction if it would be contradictory to local
law or regulation. Such local laws, regulations and other
limitations always apply with non-exclusive jurisdiction of local
courts. Certain financial products may be subject to mandatory
clearing, regulatory reporting and/or other related obligations.
These obligations may vary by jurisdiction and be subject to
frequent amendment. Before making an investment decision,
recipients should seek independent financial, legal, tax and other
relevant advice having regard to their particular circumstances.
The views and recommendations expressed in this publication are the
author’s. They are based on information known by the author and on
sources which the author believes to be reliable, but may involve
material elements of subjective judgement and analysis. Unless
specifically stated otherwise: they are current on the date of this
publication and are subject to change without notice; and, all
price information is indicative only. Any of the views and
recommendations which comprise estimates, forecasts or other
projections, are subject to significant uncertainties and
contingencies that cannot reasonably be anticipated. On this basis,
such views and recommendations may not always be achieved or prove
to be correct. Indications of past performance in this publication
will not necessarily be repeated in the future. No representation
is being made that any investment will or is likely to achieve
profits or losses similar to those achieved in the past, or that
significant losses will be avoided. Additionally, this publication
may contain ‘forward looking statements’. Actual events or results
or actual performance may differ materially from those reflected or
contemplated in such forward looking statements. All investments
entail a risk and may result in both profits and losses. Foreign
currency rates of exchange may adversely affect the value, price or
income of any products or services described in this publication.
The products and services described in this publication are not
suitable for all investors, and transacting in these products or
services may be considered risky. ANZ and its related bodies
corporate and affiliates, and the officers, employees, contractors
and
agents of each of them (including the author) (“Affiliates”), do
not make any representation as to the accuracy, completeness or
currency of the views or recommendations expressed in this
publication. Neither ANZ nor its Affiliates accept any
responsibility to inform you of any matter that subsequently comes
to their notice, which may affect the accuracy, completeness or
currency of the information in this publication. Except as required
by law, and only to the extent so required: neither ANZ nor its
Affiliates warrant or guarantee the performance of any of the
products or services described in this publication or any return on
any associated investment; and, ANZ and its Affiliates expressly
disclaim any responsibility and shall not be liable for any loss,
damage, claim, liability, proceedings, cost or expense
(“Liability”) arising directly or indirectly and whether in tort
(including negligence), contract, equity or otherwise out of or in
connection with this publication. If this publication has been
distributed by electronic transmission, such as e-mail, then such
transmission cannot be guaranteed to be secure or error-free as
information could be intercepted, corrupted, lost, destroyed,
arrive late or incomplete, or contain viruses. ANZ and its
Affiliates do not accept any Liability as a result of electronic
transmission of this publication. ANZ and its Affiliates may have
an interest in the subject matter of this publication as follows:
They may receive fees from customers for dealing in the products or
services described in this publication, and their staff and
introducers of business may share in such fees or receive a bonus
that may be influenced by total sales. They or their customers may
have or have had interests or long or short positions in the
products or services described in this publication, and may at any
time make purchases and/or sales in them as principal or agent.
They may act or have acted as market-maker in products described in
this publication. ANZ and its Affiliates may rely on information
barriers and other arrangements to control the flow of information
contained in one or more business areas within ANZ or within its
Affiliates into other business areas of ANZ or of its Affiliates.
Please contact your ANZ point of contact with any questions about
this publication including for further information on these
disclosures of interest. Country/region specific information:
Australia. This publication is distributed in Australia by ANZ. ANZ
holds an Australian Financial Services licence no. 234527. A copy
of ANZ's Financial Services Guide is available at
http://www.anz.com/documents/AU/aboutANZ/FinancialServicesGuide.pdf
and is available upon request from your ANZ point of contact. If
trading strategies or recommendations are included in this
publication, they are solely for the information of ‘wholesale
clients’ (as defined in section 761G of the Corporations Act 2001
Cth). Persons who receive this publication must inform themselves
about and observe all relevant restrictions. Brazil. This
publication is distributed in Brazil by ANZ on a cross border basis
and only following request by the recipient. No securities are
being offered or sold in Brazil under this publication, and no
securities have been and will not be registered with the Securities
Commission - CVM. Brunei. Japan. Kuwait. Malaysia. Switzerland.
Taiwan. This publication is distributed in each of Brunei, Japan,
Kuwait, Malaysia, Switzerland and Taiwan by ANZ on a cross-border
basis. Cambodia. APS222 Disclosure. The recipient acknowledges that
although ANZ Royal Bank (Cambodia) Ltd. is a subsidiary of ANZ, it
is a separate entity to ANZ and the obligations of ANZ Royal Bank
(Cambodia) Ltd. do not constitute deposits or other liabilities of
ANZ and ANZ is not required to meet the obligations of ANZ Royal
Bank (Cambodia) Ltd. European Economic Area (“EEA”): United
Kingdom. ANZ in the United Kingdom is authorised by the Prudential
Regulation Authority (“PRA”). Subject to regulation by the
Financial Conduct Authority (“FCA”) and limited regulation by the
PRA. Details about the extent of our regulation by the PRA are
available from us on request. This publication is distributed in
the United Kingdom by ANZ solely for the information of persons who
would come within the FCA definition of “eligible counterparty” or
“professional client”. It is not intended for and must not be
distributed to any person who would come within the FCA definition
of “retail client”. Nothing here excludes or restricts any duty or
liability to a customer which ANZ may have under the UK Financial
Services and Markets Act 2000 or under the regulatory system as
defined in the Rules of the PRA and the FCA. Germany. This
publication is distributed in Germany by the Frankfurt Branch of
ANZ solely for the information of its clients. Other EEA countries.
This publication is distributed in the EEA by ANZ Bank (Europe)
Limited (“ANZBEL”) which is authorised by the PRA and regulated by
the FCA and the PRA in the United Kingdom, to persons who would
come within the FCA definition of “eligible counterparty” or
“professional client” in other countries in the EEA. This
publication is distributed in those countries solely for the
information of such persons upon their request. It is not intended
for, and must not be distributed to, any person in those countries
who would come within the FCA definition of “retail client”. Fiji.
For Fiji regulatory purposes, this publication and any views and
recommendations are not to be deemed as investment advice. Fiji
investors must seek licensed professional advice should they wish
to make any investment in relation to this publication. Hong Kong.
This publication is distributed in Hong Kong by the Hong Kong
branch of ANZ, which is registered at the Hong Kong Monetary
Authority to conduct Type
1 (dealing in securities), Type 4 (advising on securities) and
Type 6 (advising on corporate finance) regulated activities. The
contents of this publication have not been reviewed by any
regulatory authority in Hong Kong. If in doubt about the contents
of this publication, you should obtain independent professional
advice. India. This publication is distributed in India by ANZ on a
cross-border basis. If this publication is received in India, only
you (the specified recipient) may print it provided that before
doing so, you specify on it your name and place of printing.
Further copying or duplication of this publication is strictly
prohibited. Myanmar. This publication is
javascript:openPopupWindow('http://www.anz.com/documents/AU/aboutANZ/FinancialServicesGuide.pdf','fastlaunch',600,400,false)
-
IMPORTANT NOTICE
intended to be of a general nature as part of customer service
and marketing activities provided by ANZ in the course of
implementing its functions as a licensed bank. This publication
does not take into account your financial situation or goals and is
not Securities Investment Advice (as that term is defined in the
Myanmar Securities Transaction Law 2013). The contents of this
publication have not been reviewed by any regulatory authority in
Myanmar. If in doubt about the contents of this publication, you
should obtain independent professional advice. New Zealand. This
publication is intended to be of a general nature, does not take
into account your financial situation or goals, and is not a
personalised adviser service under the Financial Advisers Act 2008.
Oman. This publication has been prepared by ANZ. ANZ neither has a
registered business presence nor a representative office in Oman
and does not undertake banking business or provide financial
services in Oman. Consequently ANZ is not regulated by either the
Central Bank of Oman or Oman’s Capital Market Authority. The
information contained in this publication is for discussion
purposes only and neither constitutes an offer of securities in
Oman as contemplated by the Commercial Companies Law of Oman (Royal
Decree 4/74) or the Capital Market Law of Oman (Royal Decree
80/98), nor does it constitute an offer to sell, or the
solicitation of any offer to buy non-Omani securities in Oman as
contemplated by Article 139 of the Executive Regulations to the
Capital Market Law (issued vide CMA Decision 1/2009). ANZ does not
solicit business in Oman and the only circumstances in which ANZ
sends information or material describing financial products or
financial services to recipients in Oman, is where such information
or material has been requested from ANZ and by receiving this
publication, the person or entity to whom it has been dispatched by
ANZ understands, acknowledges and agrees that this publication has
not been approved by the CBO, the CMA or any other regulatory body
or authority in Oman. ANZ does not market, offer, sell or
distribute any financial or investment products or services in Oman
and no subscription to any securities, products or financial
services may or will be consummated within Oman. Nothing contained
in this publication is intended to constitute Omani investment,
legal, tax, accounting or other professional advice. People’s
Republic of China (“PRC”). Recipients must comply with all
applicable laws and regulations of PRC, including any prohibitions
on speculative transactions and CNY/CNH arbitrage trading. If and
when the material accompanying this document is distributed by
Australia and New Zealand Banking Group Limited (ABN 11 005 357
522) (“ANZ”) or an affiliate (other than Australia and New Zealand
Bank (China) Company Limited ("ANZ C")), the following statement
and the text below is applicable: No action has been taken by ANZ
or any affiliate which would permit a public offering of any
products or services of such an entity or distribution or
re-distribution of this document in the PRC. Accordingly, the
products and services of such entities are not being offered or
sold within the PRC by means of this document or any other
document. This document may not be distributed, re-distributed or
published in the PRC, except under circumstances that will result
in compliance with any applicable laws and regulations. If and when
the material accompanying this document relates to the products
and/or services of ANZ C, the following statement and the text
below is applicable: This document is distributed by ANZ C in the
Mainland of the PRC. Qatar. This publication has not been, and will
not be: lodged or registered with, or reviewed or approved by, the
Qatar Central Bank ("QCB"), the Qatar Financial Centre ("QFC")
Authority, QFC Regulatory Authority or any other authority in the
State of Qatar ("Qatar"); or authorised or licensed for
distribution in Qatar, and the information contained in this
publication does not, and is not intended to, constitute a public
offer or other invitation in respect of securities in Qatar or the
QFC. The financial products or services described in this
publication have not been & will not be: registered with the
QCB, QFC Authority, QFC Regulatory Authority or any other
governmental authority in Qatar; or authorised or licensed for
offering, marketing, issue or sale, directly or indirectly, in
Qatar. Accordingly, the financial products or services described in
this publication are not being, and will not be, offered, issued or
sold in Qatar, and this publication is not being, and will not be,
distributed in Qatar. The offering, marketing, issue and sale of
the financial products or services described in this publication
and distribution of this publication is being made in, and is
subject to the laws, regulations and rules of, jurisdictions
outside of Qatar and the QFC. Recipients of this publication must
abide by this restriction and not distribute this publication in
breach of this restriction. This publication is being sent/issued
to a limited number of institutional and/or sophisticated investors
(i) upon their request and confirmation that they understand the
statements above; and (ii) on the condition that it will not be
provided to any person other than the original recipient, and is
not for general circulation and may not be reproduced or used for
any other purpose. Singapore. This publication is distributed in
Singapore by the Singapore branch of ANZ solely for the information
of “accredited investors”, “expert investors” or (as the case may
be) “institutional investors” (each term as defined in the
Securities and Futures Act Cap. 289 of Singapore). ANZ is licensed
in Singapore under the Banking Act Cap. 19 of Singapore and is
exempted from holding a financial adviser’s licence under Section
23(1)(a) of the Financial Advisers Act Cap. 100 of Singapore. In
respect of any matters arising from, or in connection with the
distribution of this publication in Singapore, contact your ANZ
point of contact. United Arab Emirates. This publication is
distributed in the United Arab Emirates (“UAE”) or the Dubai
International Financial Centre (as applicable) by ANZ. This
publication: does not, and is not intended to constitute an offer
of securities anywhere in the UAE; does not constitute, and is not
intended to constitute the carrying on or engagement in banking,
financial and/or investment consultation business in the UAE under
the rules and regulations made by the Central Bank of the United
Arab Emirates, the Emirates Securities and Commodities Authority or
the United Arab Emirates Ministry of Economy; does not, and is not
intended to constitute an offer of securities within the meaning of
the Dubai International Financial Centre Markets Law No. 12 of
2004; and, does not constitute, and is not intended to constitute,
a financial promotion, as defined under the Dubai International
Financial Centre Regulatory Law No. 1 of 200. ANZ DIFC Branch is
regulated by the Dubai Financial Services Authority (“DFSA”). The
financial products or services described in this publication are
only available to persons who qualify as “Professional Clients” or
“Market Counterparty” in accordance with the provisions of the DFSA
rules. In addition, ANZ has a representative office (“ANZ
Representative Office”) in Abu Dhabi regulated by the Central Bank
of the United Arab Emirates. ANZ Representative Office is not
permitted by the Central Bank of the United Arab Emirates to
provide any banking services to clients in the UAE. United States.
If and when this publication is received by any person in the
United States or a "U.S. person" (as defined in Regulation S under
the US Securities Act of 1933, as amended) (“US Person”) or any
person acting for the account or benefit of a US Person, it is
noted that ANZ Securities, Inc. (“ANZ S”) is a member of FINRA
(www.finra.org) and registered with the SEC. ANZ S’ address is 277
Park Avenue, 31st Floor, New York, NY 10172, USA (Tel: +1 212 801
9160 Fax: +1 212 801 9163). Except where this is an FX-related
publication, this publication is distributed in the United States
by ANZ S (a wholly owned subsidiary of ANZ), which accepts
responsibility for its content. Information on any securities
referred to in this publication may be obtained from ANZ S upon
request. Any US Person receiving this publication and wishing to
effect transactions in any securities referred to in this
publication must contact ANZ S, not its affiliates. Where this is
an FX-related publication, it is distributed in the United States
by ANZ's New York Branch, which is also located at 277 Park Avenue,
31st Floor, New York, NY 10172, USA (Tel: +1 212 801 9160 Fax: +1
212 801 9163). Commodity-related products are not insured by any
U.S. governmental agency, and are not guaranteed by ANZ or any of
its affiliates. Transacting in these products may involve
substantial risks and could result in a significant loss. You
should carefully consider whether transacting in commodity-related
products is suitable for you in light of your financial condition
and investment objectives. ANZ S is authorised as a broker-dealer
only for US Persons who are institutions, not for US Persons who
are individuals. If you have registered to use this website or have
otherwise received this publication and are a US Person who is an
individual: to avoid loss, you should cease to use this website
by
unsubscribing or should notify the sender and you should not act
on the contents of this publication in any way. Vietnam. This
publication is distributed in Vietnam by ANZ or ANZ Bank (Vietnam)
Limited, a subsidiary of ANZ. Please note that the contents of this
publication have not been reviewed by any regulatory authority in
Vietnam. If you are in any doubt about any of the contents of this
publication, you should obtain independent professional advice.
V1.2016