ALBAWABA – Asia markets continue to underperform on Monday, with the MSCI broad index, excluding Japan, slipping one percent last week, despite having increased 11 percent year to date.
Concerns over China’s sluggish recovery, in light of economic data reporting coming Monday, are weighing on Asian markets, according to Reuters.
Meanwhile, China’s consumer price inflation (CPI) in June is expected to hold steady at 0.2 percent, with the monthly rate at 0 percent, compared to -0.2 percent in May. Annual CPI in January exceeded 2 percent, Reuters reported.
Hopes that the Chinese government’s crackdown on tech companies was nearing an end sent the Hang Seng Tech Index up as much as 3.2 percent, before slipping slightly afterwards.
“It is clear that China is facing excess supply now,” Zhaopeng Xing, senior China strategist at Australia & New Zealand Banking Group Ltd, told Bloomberg.
“Demand side policies will be in need,” with the focus now shifting to expectations of fiscal stimulus before China’s July Politburo meeting, he said.
Deflation is set to continue in the coming months, the news agency claimed, with annual produce price inflation expected to drop to -5 percent, from 4.6 percent in May. This is the lowest rate of inflation; or highest deflation rate, seen in China since 2016.
Chinese banking stocks, measured by the Hong Kong-listed Hang Seng Mainland Banks Index, as reported by Reuters, plunged 10.5 percent last week.
That is the index's biggest fall in five years and third steepest since it was launched in 2011.
In the meantime, there is a slight but potentially significant deterioration in risk appetite as investors struggle with higher global borrowing costs and troubled US-China trade relations.
