Asia raises concerns on recovery

Thursday, 12 August 2010

The FashionUnited Top 100 Index closed yesterday in 1062.54 points, noting a loss of 3.06. This appears to be a dynamic week for stock markets worldwide, and the quoted apparel sector is not an exception.

As the US Federal Reserve's revised outlook pointed out yesterday, data from China and Japan reignited concerns that the global economy is recovering at a less robust pace than expected. Oil and copper futures dropped, while the dollar surged against the euro, British pound and other major currencies.

Most Asian stock markets ended lower and European equities posted broad-based losses in afternoon trading. German and U.S. bond yields fell sharply, as traders sought the perceived safety of government debt. In Japan, the Nikkei Stock Average ended down 2.7% after data on wholesale prices and machinery orders came in weaker than economists expected. However, the Japanese ‘triodes’ formed by Sanei International, Asics Corporation and United Arrows, keep on pulling the general apparel index performance.

Investors also digested a string of economic reports from China-- including retail sales and industrial output--that largely pointed to a cooling in the pace of the nation's economic growth. During the recession, many factories in China shut down as demand dropped. Now, decreased production capacity coupled with lower cotton output and higher prices of oil and labor are pressuring production costs. Aware of this new weakness, Chinese retailers and manufacturers are seeking for stronger bonds with regional partners, mainly Taiwan, on of their principal importers. With this prospect, Li Ning went 0.2% up and the Hong Kong located Esprit lost 2.04%.


In the meantime, the Indian apparel industry must reduce costs, improve productivity and comply with internationally-accepted social and environment compliance parameters, several exporters and industry experts said yesterday. These were some of the findings of the last seminar organized by the Indian Apparel Export Promotion Council (AEPC) that concluded setting an emphasis on the need to spread awareness on factory improvement, capacity building and productivity enhancement.

It should not be forgotten that major international analysts and financial firms are raising warnings on how ballooning raw material, labor and freight costs, can take manufacturers as Nike Inc ., VF Corp, Hanesbrands Inc., and Levi Strauss & Co to raise prices in fragile markets to maintain margins.

Retailing giant Macy's Inc. Gained 0.3% just after reporting earnings: it soared 4.70% to $20.29 after its second quarter financial results for this year reporting increased and cheerful earnings of 35 cents per diluted share as a result of higher-than-expected sales, improved margins, a reduced expense rate and well-controlled inventory management. Its niche market competitor, Saks Incorporated, fell 3.17% to $8.25 on high volume with the broader market. However, it rose 0.48% within the FashionUnited Top 100 Index. Third in this scope, Dillard´s, also saw increases yesterday, with a hike of 0.5%.

Related News