Band Nikhil Nainan
January 17 (Reuters) – A few Southeast Asian stock markets fell on Monday as Chinese data signaled the economic fallout from COVID-19 restrictions, prompting further monetary easing, while South Korean stocks fell more than 1% ahead of a highly anticipated mega-IPO.
Although China’s fourth-quarter gross domestic product beat forecasts, it was still at its weakest level in a year and a half, while retail sales in December disappointed, underscoring the impact of tight restrictions on the world’s second largest economy.
However, any spillover into riskier assets was limited by a surprise cut in some key rates by China’s central bank, which analysts said may just be the start.
“We expect Beijing to pursue a more decisive easing policy to generate a growth rebound to over 5.5% ahead of the Party Congress later this year,” HSBC analysts said.
Actions in Kuala Lumpur .KLSE, Jakarta .JKSE and Manila .PSI fell more than half a percent each, while other emerging Asian stock markets posted minor gains.
In the foreign exchange markets, the rupee RDI= and ringgit MYR= plunged, while the won KRW=KFTC fell 0.4%.
Chinese stocks .SSEC rose 0.6%, while the yuan CNY=CFXS edged higher.
“We believe that strong currency inflows could continue on the back of a high merchandise trade surplus and foreign purchases of CNY assets, and thus sudden CNY depreciation pressures and capital outflow pressures remain weak. “said Goldman Sachs analysts.
In South Korea, battery maker LG Energy Solutions has attracted record demand for its $10.8 billion IPO, with books open for retail investors between January 18-19 and the listing of the company scheduled for Jan. 27.
Scholarships in Seoul .KS11 fell 1.1% to a month-and-a-half low as traders trimmed positions ahead of the IPO.
Also weighing on South Korean equities, the central bank left the door open for further monetary tightening after raising rates to pre-pandemic levels last week to stem inflation risks. KRW/
Investors were also watching other central bank meetings in Asia this week.
The Bank of Japan is expected to revise its price forecast upwards and maintain its ultra-loose policy after a two-day meeting on Tuesday.
The central banks of Indonesia and Malaysia will hold their meetings later this week, although no policy changes are expected.
Investors are also bracing for the Federal Reserve’s decision following the January 25-26 policy meeting, after recent hawkish comments saw the market almost fully price in a first rate hike for March and 1 .0% by the end of the year. 0#FF.
**AirAsia AIRA.KL fell more than 4%, extending losses, as the airline continues to work to ‘straighten out’ its finances to shed the PN17 tag
**China’s Q4 GDP rises 4.0% YoY vs. 3.6% forecast in Reuters poll
**Indonesia’s trade surplus in December at $1 billion, weaker than expected
Asian stock indices and currencies at 06:44 GMT
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(Reporting by Nikhil Kurian Nainan in Bengaluru; Editing by Ana Nicolaci da Costa and Sherry Jacob-Phillips)
(([email protected]; Twitter: @NikhilKurianN;))
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