Shanghai yesterday led most regional markets down after another round of disappointing Chinese data at the weekend, with investors concentrating on a crucial US Federal Reserve interest rate decision at the end of the week.
There was little reaction to news that Beijing intends to overhaul its vast state-owned firms in a bid to give a boost to the world’s No. 2 economy, while an earlier rally in some riskier assets petered out.
China on Sunday released another set of figures that underlined weakness in its huge economy — the main driver of global growth — following soft reports last week.
The government said growth last month in industrial production increased below expectations and retail sales accelerated a little more than forecast, while fixed asset investment from January to August grew at its slowest pace in 15 years.
A gauge of manufacturing this month showed the sector contracting last month, while inflation in consumer prices rose, but those at the factory gate fell at their fastest pace in six years, owing to slowing overseas demand and a slack property market.
While the data is soft, analysts said it could lead to further monetary easing following five interest rate cuts since November last year.
“The flood of August data shows that the Chinese economy is still struggling, despite efforts to provide policy support,” Bank of Singapore chief economist Richard Jerram said in a report. “Soft data should not be a surprise, as it was already implied by the August [manufacturing figures], but it could spur discussion of more aggressive fiscal policy measures to boost growth.”
In equities trade, Shanghai ended 2.67 percent down and Seoul shed 0.51 percent, while Hong Kong was 0.14 percent lower in late trade. Tokyo ended 1.63 percent lower, hit by big losses in telecommunications firms after the media reported comments from Japanese Prime Minister Shinzo Abe on the need to reduce mobile phone fees.
Sydney closed 0.5 percent higher.
Beijing on Sunday unveiled a broad set of reform guidelines to partly privatize its vast state-owned companies aimed at making them more competitive overseas and increasing transparency.
The move comes after leaders in 2013 said they wanted the market to play a greater role in the economy, easing government influence on key sectors such as transport, energy production and arms manufacturing.
Among the reported changes are efforts to modernize state-owned enterprises (SOE), improve management of state assets and diversify their ownership structures through “mixed ownership” — or the introduction of “multiple types of investors” — ultimately meaning more private shareholders or capital.
However, Wu Kan (吳侃), a Shanghai-based fund manager at JK Life Insurance, said: “The economic reports do not look good, so investors prefer to be on the sidelines. The SOE reform rules were widely expected by the market and are not very detailed, therefore the reaction is limited.”
The main focus this week is on the Fed’s policy meeting, with hopes it holds off hiking borrowing costs until later in the year.
The central bank is expected to announce a lift-off before next year, but its decision has been muddied by the latest global volatility caused by concerns about China’s economy and after Beijing announced a shock devaluation of its yuan last month.
“Trading will remain volatile ahead of the [Fed policy] meeting,” said Bernard Aw, a strategist at IG Asia in Singapore. “Sunday’s data reinforced concerns about China’s economy slowing down. Investors may expect more stimulus in the pipeline.”
US dealers ended last week on a high, with all three main indexes ending more than 2 percent higher.
An initial rally in higher-yielding investments in Asia gave way to a move to safety.
The US dollar edged down to ￥120.24 from ￥120.57 on Friday in New York, while the euro was at ￥136.60 against ￥136.64. The yen is regarded as a safe bet in times of crisis and turmoil, while the US dollar is also feeling the pinch from uncertainty over the Fed rate decision.
The greenback also eased against some emerging market currencies, with the New Taiwan dollar, the South Korean won and the Malaysian ringgit all strengthening.
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