Macro and Politics

* During the week of 8 – 15 August, foreign investors were net buyers of USD125mn in the equity market and USD1.1bn in the government bond market (excluding repo transactions), marking the strongest weekly foreign inflow into bond market over the past six weeks. Consequently, the foreigners’ share in total bond stock increased from 6.4% to 6.7%. Moreover, the residents’ FX deposits declined by USD934mn (excluding gold accounts and adjusted for the EUR/USD parity effect), while their total FX deposits (including gold, price adjusted) slid by USD901mn during the week of 8 – 15 August. As per the CBT’s reserves, gross FX reserves rose by USD2.1bn to USD176.7bn, net international reserves climbed by USD2.4bn to USD70bn and net reserves excluding swaps increased by USD2.3bn to USD52bn during the mentioned week.

* The consumer confidence index increased from 83.5 to 84.3 level in August. It is important to underscore that the consumer confidence index — which ranges from 0 to 200 — signals pessimism when it falls below 100, and optimism when it exceeds that threshold. A breakdown of the August consumer confidence index reveals the following: The sub-index reflecting the financial situation of household at present increased 68.2 to 70, while the sub-index measuring financial situation expectation of household over the next 12 months eased from 84.6 to 83.8. Moreover, general economic situation expectation over the next 12 months decreased from 79 to 78.4 and finally, the sub-index tracking assessment on spending money on durable goods over the next 12 months — a key indicator of domestic demand — rose from 102.3 to 104.8 level in August.