Asia stocks follow US shares amid China rout

By Money Times

Oct 15, 2015 04:56 AM EDT

Asian stocks continued to slide for the second session following the renewed concerns over the moderating inflation and slump in factory output in the China's economy.

The MSCI Asia Pacific Index dropped 1.1 percent as S&P 500 index fell from seven-week high following the drop in the Chinese exports. The discouraging numbers from quarterly results have also been impacting the share price movements in Asian bourse.

Investors were looking to the data on consumer and producer prices for next trigger for the market. Data on factory-gate prices indicated more weakness in the world's second-largest economy.

China's biggest lender Industrial & Commercial Bank of China's stock fell 1.6 percent in Hong Kong market. Great Wall Motor Co shares fell three percent. Great Wall Motor makes sport utility vehicles and has cut the price of its share placement. Nikon Corp shares fell over five percent in Tokyo exchange. Nikon reported 27 percent drop in operating profit during the first half of this year. 

The cautious investors are waiting for the announcement of the data on consumer and producer prices for next cues. The inflation in China will have a major impact on the global economy and financial markets. The weakness in the world's second-largest economy will also impact the outlook on the global economy.

The Shanghai Composite index fell 0.9 percent, Singapore Straits Times index dropped 0.5 percent on the bleak situation in the Chinese economy. Hang Seng fell 0.7 percent, Japan's Topix index dropped 22 percent, South Korea's Kospi index and Taiwan's Taiex index both dropped 0.5 percent. 

Economists observe that Singapore narrowly escaped the technical recession. The GDP growth rate of Singapore is better than expected. Singapore dollar marginally rebounded after easing for two sessions. Singapore government said that it'll marginally reduce the growth of currency appreciation against its trading nations.

Australia's S&P/ASX 200 index shed 0.1 percent, while New Zealand's S&P/NZX 50 index gained 0.4 percent. Malaysia and Indonesia markets were closed on account of holidays. The consumer-price index rose 1.6 percent in September from two percent growth in August, according to Bloomberg data.

Almost all the Asian major indices were trading lower or weaker while gold is hovering at three-month high. The government bond yields have turned softer. The latest inflation numbers indicate the ongoing slackness in the China's economy. The producers' prices dropped 5.9 percent as expected and they have been moving downwards for 43 months. 

Investors, funds and financial institutions are cautious and the current situation is likely to continue until a clear picture about the next level of growth in global economy emerges. The moderate inflation rate is reinforcing the deflationary pressure. Economists forecast that Chinese economy may be the largest risk on the global economy as it'll have major impact.

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