Chinese stocks lead Asia markets’ weekly losses amid China data, Fed signal on rate cuts
Economic data has been better than expected as official figures show that China’s retail sales beat forecasts
MAJOR markets across Asia-Pacific broadly fell this week as US consumer prices released showed that inflation stayed firm, and its central bank indicated it was in no hurry to cut interest rates.
Japan’s Nikkei 225 was down nearly 2.2 per cent for the week at 38,642.91, while Hong Kong’s Hang Seng index slumped around 6.3 per cent to 19,432.6. China’s CSI 300 fared better, falling 3.3 per cent. Australia’s ASX 200 turned in a slight decline to 8,285.2. Singapore’s Straits Times Index bucked the trend, rising 0.4 per cent for the week.
Overall, the MSCI Asia ex-Japan index chalked up a 4.3 per cent weekly loss by Friday (Nov 15) afternoon during Asia trading hours.
US Federal Reserve chairman Jerome Powell said on Thursday that inflation is not quite meeting the central bank’s 2 per cent goal yet, and the US economy stayed strong, as he signalled that the Fed will remain cautious on cutting rates.
One bright spot was the better-than-expected economic data out of China on Friday, with official figures showing that retail sales beat forecasts. However, data indicated that its industrial production growth edged down from the previous month.
Its new home prices released also on Friday showed that they fell the fastest in nine years, but officials said that those were bottoming out, reported Reuters.
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However, mainland and Hong Kong-listed shares were still muted by Friday’s close. Hong Kong’s Hang Seng index marginally rose only 0.04 per cent, while the mainland’s CSI 300 fell 1.8 per cent on the day.
DBS in a note on Friday said that China’s stimulus measures in recent months will help its economy, predicting that the Asian giant can maintain 5 per cent growth in 2024 and 2025. It added that consumption sentiment is showing signs of stabilisation after the stimulus measures.
“China’s economy will continue facing risks though, from property market to strained local government finance, from persistently weak aggregate demand to a very likely escalation of trade and tech war,” DBS economists wrote.
They also noted one risk was to the country’s exporters from likely increased US tariffs in a Trump administration.
“The actual impact may prove even less severe. First, it will take time for the US to execute the additional (tariffs) by phase if it happens. Also, the new US administration is likely to raise (tariffs) on other countries, which could dilute the specific effect on China,” the DBS economists added.
Khoon Goh, ANZ’s head of Asia research, said in a note on Wednesday: “A pickup in the Chinese economy backed by stimulus measures will be pivotal for the region to weather the challenging environment. We expect portfolio flows will remain volatile in the near term.”
Goh added that foreign investors took out US$13.6 billion from Asia markets excluding China in October, following stronger US data and increasing bets of a Trump win. Equity outflows in the first eight trading days of November totalled another US$5.7 billion.
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