MARKET OUTLOOK - Deflationary Pressures Persist in China

Foreks - UOB economist Ho Woei Chen reported that deflationary pressures continued in China in December, despite the expansion of economic activity. Ho stated that the deflationary pressures in the industrial sector persisted due to a sharper contraction of output prices compared to input prices. The economist emphasized that the country's official manufacturing and non-manufacturing PMI data indicate that economic activities continue to expand. UOB noted that China's economy continues to stabilize thanks to government incentives and suggested that the front-loading of exports to the U.S. may have provided short-term support to the manufacturing sector.