While the Singapore market was shut yesterday, the Asian region was led lower by Hong Kong’s Hang Seng Index, which tumbled 1.4%. The Singapore SIMSCI futures was down 1% overnight. The lacklustre performance came on the back of weaker-than-expected Chinese CPI data which deepened concerns of deflationary risks and weakening consumer demand in China.
 
Today, investors await further clues on the extent of the Chinese slowdown as further data on China’s industrial production, fixed-asset investment and retail sales figures will be released…


Deepening concerns on China slowdown

The Hang Seng Index’s 1.4% drop on Tuesday was led chiefly by H-shares. The Hang Seng China Enterprises Index which measures the performance of H-shares, was down 1.8%. The Singapore market was shut.

The drop in Hong Kong came on the back of data on China’s consumer price index (CPI), which rose 1.3% in October compared to a 1.5% street consensus and was also lower from the 1.6% in September. The producer price index (PPI) fell 5.9%, the 44th successive month of deflation.

Tuesday’s inflation reading follows a tepid trade report released on Monday that suggested the world’s second-biggest economy is unlikely to get a near-term boost from global demand. Overseas shipments dropped 6.9% in October in dollar terms while weaker demand for coal, iron and other commodities from declining heavy industries helped push imports down 18.8%, leaving a record trade surplus of $61.6 billion.

For the third quarter of this year, China’s economy expanded 6.9% – the country’s slowest quarterly increase since the start of 2009. For the full year, growth is set to be the slowest since 1990. However, President Xi Jinping said last week that average annual growth should be no less than 6.5% in the next five years to realize the nation’s goal to double 2010 GDP and per capita income by 2020.
 
This afternoon, China will release further data on industrial production, fixed-asset investment and retail sales.

Source: Macquarie Research - 11 Nov 2015