Asian markets closed in red on Monday with China stock markets plunging over 8%, marking their biggest one-day drop in more than eight years, raising questions about the government’s ability to prevent a crash. Investors are worried about a possible withdrawal of stock market support by Beijing, and signs of a sharper slowdown in China’s economy. Japanese policymakers must be mindful of the potential negative impact that China’s economic slowdown could have on Japanese exports. Japan’s central bank Deputy Governor Hiroshi Nakaso warned of the risk that an expected interest rate hike by the US Federal Reserve could heighten global market volatility and hurt emerging markets vulnerable to capital outflows. He added that while China’s economy is expected to stabilize on stimulus measures taken so far, its slowdown may be prolonged by the huge slack in output and the property market. Japan’s Corporate Services Price Index (CSPI) fell to a seasonally adjusted annual rate of 0.4%, from 0.6% in the preceding month. Singaporean Industrial Production fell to an annual rate of -4.4%, from -1.7% in the preceding month.
Indonesia’s foreign direct investment (FDI) grew at the fastest pace since 2013 on yearly basis in the second quarter - a bright spot in an otherwise weak economic outlook. Annual growth in Southeast Asia’s largest economy was only 4.71% in the first quarter, the slowest since 2009, and Bank Indonesia predicted second quarter growth to be just as weak as domestic consumption wanes and exports fall. Last year was an election year, which tended to reduce investment and consequently its contribution to economic growth. But in April to June Indonesia recorded 92.2 trillion rupiah of realized FDI, up 18.2% from a year ago, and accelerating from 14% growth in the prior three months.
Asian Indices | Last Trade | Change in Points | Change in % |
Shanghai Composite | 3,725.56 | -345.35 | -8.48 |
Hang Seng | 24,351.96 | -776.55 | -3.09 |
Jakarta Composite | 4,771.29 | -85.31 | -1.76 |
KLSE Composite | 1,709.76 | -11.00 | -0.64 |
Nikkei 225 | 20,350.10 | -194.43 | -0.95 |
Straits Times | 3,313.42 | -39.23 | -1.17 |
KOSPI Composite | 2,038.81 | -7.15 | -0.35 |
Taiwan Weighted | 8,556.68 | -211.18 | -2.41 |
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