©Reuters. File photo: A staff member lowers a Chinese flag in front of a screen displaying indexes and stock prices outside Exchange Square in Hong Kong, China, on August 18, 2023.Reuters/Tyrone Siu/File photo
Written by Jamie McGeever
(Reuters) – Future outlook for the Asian market.
Last week, the MSCI World Index, Japan Index, Nasdaq Index, and European Index all ended at record highs, with Asian markets starting the new week on Monday with strong global tailwinds.
The resilience of the U.S. economy, slowing inflation and the enthusiasm for big tech powered by artificial intelligence are creating a positive mood globally and should provide momentum for Asian markets on Monday.
Korea’s industrial production, retail sales, and purchasing managers index data. Key events on the regional economic calendar will be New Zealand trade and Australian housing data, but investors’ attention will turn to China.
The annual National People’s Congress opens in Beijing on Tuesday, and what it decides could go a long way in determining the direction of assets in China in 2024. onwards.
Premier Li Qiang is expected to present the Chinese government’s annual growth and other economic goals and, most importantly, its plans to achieve them.
Mr Li is expected to set a growth rate target of around 5% for 2024, the same as last year, to put China on track to achieve President Xi Jinping’s goal of roughly doubling economic growth by 2035. ing.
If stimulus plans and measures are credible in the eyes of investors, the rebound in Chinese stocks from five-year lows a few weeks ago is likely to continue. If investors are not persuaded, we cannot rule out another test of the lows in the coming weeks.
China’s leaders are under pressure to take more drastic measures to strengthen the real estate sector, avoid deflation and restore growth. However, the exchange rate is depreciating due to capital outflows, and large-scale fiscal easing could exacerbate the destructive loop of currency depreciation caused by capital outflows.
To be sure, some recent numbers are encouraging. Last week’s Caixin Manufacturing PMI was enough to lift China’s overall economic surprise index to its highest level since mid-December.
Expectations have been sharply lowered in recent weeks as data have been weaker than expected, and it is unclear whether this reflects particularly strong economic activity itself. However, positive surprises are preferable to negative surprises.
In any case, Chinese stocks have regained their footing, rising about 10% from their lows and trending steadily since the start of the year.
Key calendar events looking ahead to the rest of the week in Asia include inflation figures for South Korea, Thailand, the Philippines and Taiwan, GDP figures for South Korea and Australia, China’s Caixin Services PMI, and interest rate decisions. From Malaysia.
Here are the key trends that could give further direction to the market on Monday:
– South Korea retail sales, industrial production and manufacturing PMI
– Australian housing sector data
– New Zealand Trade
(Written by Jamie McGeever; Edited by Josie Kao)
