(10 February 2020)DAILY MARKET BRIEF 1:Chinese inflation at 8-year high. Equities fall on spreading coronavirus.
Asian equity markets kicked off the week on a negative note as the spreading coronavirus was the major concern amid the virus took 900 lives and
infested more than 40’000 people with cases outside Chine rising. There are also doubts that the numbers in China may be higher than
reported.
China is back from its extended CNY holidays this week, but the activity will likely remain subdued for a couple of more weeks,
if not months until the dust settles.
The consumer inflation in China jumped to 5.4% in January. A mix bag of higher pork prices,
stronger Chinese New Year demand and the coronavirus outbreak pushed the Chinese inflation to the highest level in more than eight years.
The surge in inflation revived worries that the People’s Bank of China (PBoC) would have less freedom to ease its monetary policy to give
support to the Chinese economy hit by the coronavirus outbreak, following more than a year-and-a-half long trade frictions with the US.
Shanghai’s
Composite (+0.50%) and CSI 300 (+0.50%) reversed early gains on Monday as the PBoC released the first batch of special lending program to
help regional banks in areas affected by the virus, while Nikkei (-0.60%) and Topix (-0.72%) fell on news that cases in Japan, which is the
second most infected country after mainland China, reached 130.
By Ipek Ozkardeskaya
