The UK and Malaysia now have a free trade agreement for the first time. On Dec 15, the UK joined Malaysia and 10 other countries to become the newest member of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

The UK has always been a proponent of free trade. Its CPTPP journey started in 2018 when we first stated our interest in joining this “gold standard” agreement. Since then, the UK has been through political change, overcome supply chain issues caused by Covid-19, as well as navigated a changing global political landscape. But our commitment to free trade remains steadfast. We are grateful to Malaysia and other free trading nations in CPTPP for their support in making UK membership a reality.

In an era which sees rising protectionism and the fragmentation of global supply chains, we need to join together and push for free and fair trade, and membership of CPTPP is a big step in that direction.

There are obviously strong economic benefits from the UK’s CPTPP membership. With the UK joining, the combined gross domestic product (GDP) of the CPTPP members has increased from over £9 trillion (RM51 trillion) to around £12 trillion — or from around 12% to around 15% of global GDP.

With a market of 68 million consumers and the sixth-largest economy in the world, the UK is the second-largest economy in the grouping, making it an attractive market for Malaysia and all CPTPP countries.

Joining this existing trading group means that over 99% of current UK goods exports to CPTPP members will be eligible for tariff-free trade. For example, Malaysia will enjoy cheaper chocolate and cars from the UK while the UK will enjoy cheaper cocoa and electricals from Malaysia.

Tariff liberalisation and new Rules of Origin mean that supply chains can grow between our two countries — for example, we could see growth in Malaysian aerospace components being exported to top-tier aerospace manufacturers in the UK, or new investments by automotive companies in each other’s markets.

This trade deal also helps position British companies to expand into new markets and follow the likes of HSBC, AstraZeneca and Arup, who have been committed to their investments in Malaysia for decades. British and Malaysian businesses will also stand to operate more on a par with local firms. Red tape can be cut and data localisation requirements removed, leading to greater ease of doing business.

Not only is joining CPTPP crucial to the UK’s economic growth mission, it is also important to our security, and our interest in an open and stable international order. We are embedding ourselves deeper into an existing and emerging network of economic, diplomatic and security partnerships in the region. We want to play an active role in promoting free trade through CPTPP, and promote growth through our dialogue partnership with Asean — and we are looking forward to working with Malaysia as chair next year.

The UK’s membership also sends a very strong signal that CPTPP is an outward-looking group that wishes to welcome into its ranks all countries looking to trade freely and adhere to high standards and the rule of law. We will champion free and fair trade, fight protectionism and remove barriers to trade at every opportunity.

This is a time for businesses to prepare to take advantage of the agreement and boost our bilateral trade that currently stands at £5.7 billion. I urge companies to discover the opportunities created by the UK’s membership of the agreement and take advantage — before your competitors do it first.

Source: Theedgemarkets

Property price data continued to show encouraging signs

China's National Bureau of Statistics kicked off the last data dump of the year with November's 70-city property prices release. New home prices fell by -0.2% month-on-month, while used home prices fell by -0.35% MoM. These levels represented the smallest monthly declines since June and May of 2023 respectively, and bringing the decline from the peak to -9.6% and -16.1% respectively. Overall the data is another positive signal that China's property market could be bottoming out. 

Of the 70-city sample, 21 cities saw new home prices unchanged or move higher in November, which was far and away the highest proportion of the year. In the secondary market, 12 of 70 cities saw prices unchanged or higher. As expected, prices appear to be stabilising from the core tier 1 and 2 cities to start, while a recovery in lower tier cities will take some time and is likely to be uneven. 

The activity data unsurprisingly remained sluggish. Property investment continued to slump, edging down 0.1 percentage point to -10.4% year-on-year, year to date. New residential property starts and completions stayed heavily in contraction at -23.1% and -26.0% YoY ytd respectively. Real estate investment still likely faces some hurdles before it is no longer on a headwind on growth – prices have not yet stabilised, but property inventories are still relatively elevated at this stage, and property developer sentiment remains cautious. Recent supportive policy measures indicate that we should see the pace of state-owned enterprise and local government purchases of unsold homes pick up in 2025, which should help with the inventory situation. 

A second consecutive month of improving price data is a positive signal for the property market bottoming out, and we expect a trough to be established in 2025 and the start of an L-shaped recovery to take effect.

More cities saw property prices stabilise in November

Fixed asset investment softened slightly as caution persists

Fixed asset investment (FAI) growth edged down 0.1 ppt to 3.3% YoY ytd in November, the lowest level of the year. This bucked our and market expectations for a slight uptick on the month.

The slowdown was broad-based on the month, seen in both public (6.1%) and private (-0.4%) investment, both of which dipped 0.1 ppt on the month as well. In terms of industry subcategories, most slowed slightly as well, including the hi-tech FAI category which continued to comfortably headline growth at 8.8% YoY ytd, but nonetheless slowed 0.5 ppt on the month. The only significant category to see a pickup was water conservancy, environment & utility management, which is likely tied to a slight pickup of green infrastructure investment. 

As the FAI data is released in YoY ytd terms, volatility toward the tail end of the year tends to be very low, and as such it's likely that it will end the year within 0.1-0.2 ppt of the current level. This year's FAI has been constrained amid weak private sector sentiment but also limited room to operate for many local governments. We expect an acceleration of FAI in 2025 amid a more supportive fiscal policy stance. 

Retail sales unexpectedly slowed in November

Retail sales surprisingly slowed to 3.0% YoY in November, down from October's stronger-than-expected 4.8% YoY. This was the big disappointment of the month, as retail sales failed to build upon the momentum and came in well softer than both consensus and our forecasts.

We continued to see the beneficiaries of trade-in policies perform strongly in November, with household appliances slowing to a still impressive 22.2% YoY, and auto sales up to a 9-month high of 6.6% YoY. Amid the transition to electric vehicles, petroleum & related products (-7.1%) continued to see soft sales growth.

Discretionary consumption outside of these categories remained soft. Cosmetics (-26.4%), communications appliances (-7.7%), gold & jewelry (-5.9%), as well as garments (-4.5%) all remained well in negative territory. 

We also saw the "eat, drink, and play" theme which has solidly outperformed for most of the year start to fade, with catering (4.0%), alcohol and tobacco (-3.1%), and sports & recreation (3.5%) softening to around or below the headline growth rate.

A silver lining was seen in furniture sales, which rebounded to 10.5% YoY, the highest level of the year. This uptick of the last two months add another signal for the property market recovery.

Household confidence clearly remains soft, and it remains to be seen if the "vigorous support" for consumption promised next year will be effective in stimulating a recovery. We expect the rollout of supportive policies could take some time, but overall retail sales growth should recover in 2025.

Retail sales slumped as discretionary consumption drag persists

Value added of industry edged up

Value added of industry edged up by 0.1 ppt to 5.4% YoY in November, which was in line with market expectations, and the only of three main activity indicators to see an uptick in November. Recent survey data has indicated that domestic activity might be recovering, and there could also be a near-term uptick in export frontloading ahead of potential tariff hikes in 2025. 

In terms of subcategories, hi-tech manufacturing (7.8%), auto (12.0%), rail, ship, and aeroplanes (7.9%), and chemicals (9.5%) comfortably outpaced the headline. In terms of products, electric vehicle production accelerated to 51.1% YoY, while industrial robots (29.3%), semiconductors (8.7%), and solar panels (10.9%) continued to outperform but saw slower YoY growth in November. 

Export demand has been a contributor to solid industrial production growth in 2024, but this factor is expected to weaken somewhat in 2025 as tariffs set in. The silver lining is that for China's main areas of growth, the US market is not a major area of focus. Additionally, China's domestic demand is expected to improve to help fill some of this gap as stimulus policies roll out, but the impact remains unclear. 

Value added of industry has been stable for the last few months

Policy support looks set to ramp up in coming months

Despite data coming in a little softer than expectations, with only one month of data still to come, China will likely manage to complete its "around 5%" growth objective for 2024. We maintain our forecast of 4.8% YoY growth in 2024. 

The Politburo meeting and Central Economic Work Conference from last week signalled that we will see a strong policy support push next year, in line with our expectations laid out in our 10 questions for China in 2025 article. The key language on fiscal and monetary policy direction turned more supportive – from "proactive fiscal policy" to "more proactive fiscal policy" and from "prudent monetary policy" to "moderately loose monetary policy."  The fiscal deficit target and the special government bond issuance targets were both raised, which along with November's RMB 10tn debt package should create more room for fiscal stimulus in 2025. 

The speed and scale of domestic stimumlus will likely play the biggest role in determining whether or not China's economy will be able to maintain stable growth. The eventual growth target setting at next year's Two Sessions meetings in March will give a better indication of how confident policymakers are in terms of growth stabilisation. 

Once considered a starting point for building assets, installment savings accounts are increasingly falling out of favor with customers.

Although these accounts promise high interest rates, much like add-on certificates of deposit in the U.S., they often come with terms, making customers feel the returns aren't worth the effort. The recent surge in retail investing in stock and cryptocurrency markets has also contributed to this trend.

According to Korea's five major banks — KB Kookmin, Shinhan, Hana, Woori and NH NongHyup — the total balance in these accounts stood at 39.54 trillion won ($27.5 billion) in November, marking a decline of more than 12 percent compared to the same period last year. In contrast, during the same period, the balance of deposits increased to 948 trillion won, growing by more than 9 percent from 868 trillion won.

This was the first decrease in three years. From 2021 to 2023, the balance of installment savings accounts increased steadily each November, rising from 35 trillion won to 45 trillion won. Interest rate hikes, which caused a downturn in the stock market, had driven investors toward savings accounts and deposits.

Market watchers attribute the decline partly to the Bank of Korea moving into a cycle of rate cuts, which has encouraged a surge in retail investment. At the same time, many have turned to the crypto market, driven by Donald Trump’s presidential victory in the United States and market optimism. According to Coinbase, a major cryptocurrency exchange, the price of Bitcoin recorded $105,087 on Sunday, surpassing the $105,000 mark for the first time.

Others point to the complicated criteria for earning higher interest rates. While banks advertise rates significantly above the policy rate, customers often must meet various requirements — such as issuing a new credit card, consenting to receive the bank's marketing information or participating in bank promotions — to qualify for those advertised rates.

Source: Koreatimes

More legislation on crypto could be coming

Silver (XAG/UD) kicks off the new week on a subdued note and consolidates last week's retracement slide from or over a one-month high. The white metal remains close to a two-week low touched Friday and trades around the $30.55 region, or the 100-day Simple Moving Average (SMA), during the Asian session.

From a technical perspective, acceptance below the 100-day SMA will be seen as a fresh trigger for bearish traders against the backdrop of last week's failure near the $32.35 horizontal resistance. Given that oscillators on the daily chart have just started gaining negative traction, the XAG/USD might then turn vulnerable to weaken further below the $30.00 psychological mark and test November lows, around the $29.70-$29.65 region. 

Some follow-through selling should pave the way for an extension of the downward trajectory towards the $29.10-$29.00 support zone en route to the $28.40-$28.35 region before the XAG/USD eventually drops to the $28.00 round figure. 

On the flip side, any meaningful recovery attempt now seems to confront stiff resistance and remain capped near the $31.00 mark. A sustained strength beyond, however, could trigger a short-covering rally and lift the XAG/USD towards the $31.75 horizontal barrier. The momentum could extend further towards the $32.00 round figure en route to the monthly swing high, around the $32.35 horizontal zone touched last week.

Silver daily chart

Silver FAQs

Why do people invest in Silver?

Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.

Which factors influence Silver prices?

Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.

How does industrial demand affect Silver prices?

Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.

How do Silver prices react to Gold’s moves?

Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.

Source: FXSTREET