Worsening Chinese Data Spooks Asian MarketsBy Lex Yaranu | Wednesday, August 26th, 2015
When China announced a new policy of slower but more sustainable growth with a 7% GDP target for 2015, many analysts lauded the new policy but wondered if the targets would be attained. Several months down the road, it seems that the central government was probably too optimistic with its projections.
In early Friday trading on August 21, 2015, China’s Flash PMI was seen to have fallen to a six-year low of 47.1. This is just the latest in a series of events which have shocked the markets and started to spook other Asian markets.
Asian equity markets lost ground, effectively carrying over the losses that were seen in offshore markets in the preceding US session. China’s stock market has been on a bearish run after striking new highs within the last two years. A series of interventions in the market, including the devaluation of the Chinese Yuan for three days last week, have only fueled speculation that all is not well with the world’s second largest economy.
Hers is a summary of the performance of Asian stocks during Friday trading:
– China’s Shanghai Composite reacted to the Flash PMI release negatively, plunging 1.5% on the news.
– The Hang Seng index lost 1.8% to continue a losing streak
– Japan’s Nikkei 225 fell 2.1%, falling below the 20,000 psychological support level in early trading.
– South Korea’s Kospi index is trying to recoup losses after it had hit 2-year lows, shedding 1.5% in the process.
– Australia’s ASX was down 1% as at the time of writing
– Malaysian stocks were down 0.3 percent
– Singapore’s Straits Times index was down to 6-month lows as well.
Active trading is still going on as at the time this piece was written. However, a clear trend is beginning to emerge. It does not seem that China is on track to meet its growth targets, and the risk-off sentiment may get the Feds rethinking any decisions to raise interest rates before the year runs out.
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