After rallying for the last couple of days, Asian stock markets were dragged down today by doubts about the durability of recoveries in the region’s two biggest economies China and Japan. Investors are skeptic about the Abenomics as it does not seem to work and the powerhouse of the Asian economy may not recover as was expected from it by the end of the year.
The inflation data released by the Japanese government shows that the economic policies from the country’s Prime Minister Shinzo Abe’s are not working expectedly. His economic revitalization strategy that aimed to reverse two decades of stagnation and falling prices, does not seem to have the desired effect.
Today Japan’s Nikkei 225 shed 2.2 percent to 14,168.58. A similar trend was seen in Seoul’s Kospi which slipped 0.7 percent to 2,031.17. On the other hand, whereas Hong Kong’s Hang Seng fell 0.7 percent to 22,686.19, China’s Shanghai Composite Index was off 1.1 percent at 2,139.80.
A major blow for investors came in when the Chinese central bank refused to inject funds into money markets this week as the bank believes that it can curb frothy credit growth with the measure. Credit growth has sparked fears of a liquidity crunch and according to some market observers with bank-to-bank lending rates inching higher; it won’t be a welcoming situation.
Several market observers with detailed knowledge of the Chinese market say that though Chinese economy fared better than expected in the third quarter and there was a lot of improvement in the manufacturing sector for September, the measure from the central bank is a dent as it is discouraging investors.
Following the trend in the bigger economies of the region, benchmarks in Taiwan, Jakarta, Malaysia and Singapore opened low and continuing it till reporting.
Indian Stocks Down after Better Trading This Week
Indian stocks which were high flying this week opened lower today and India’s benchmark BSE index was down 0.13 percent and the broader NSE index down 0.27 percent. Bond market of India too does not fare well as its benchmark 10-year bond yield up 2 basis points at 8.60 percent.
Earlier yesterday the U.K. economy according to some estimates grew at 0.8 percent in the three months through September from the second quarter which is up from 0.7 percent in the previous period. However, it could not stop European stocks from sliding.
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