This week, the US Federal Reserve meets for the first time since the release of worse-than-expected job data. The Swiss National Bank, the Bank of England and the Bank of Japan (BoJ) are also holding meeting to further discuss monetary policy and global outlook.
In China, CSI 300 and SHCOMP declined respectively -2,78% and -2,90% since the beginning of the week. China announced the country will give a QFII quota of 250B yuan ($38B) to the US, the largest after Hong Kong. The move can be seen as an effort to liberalize the country’s capital markets ahead of MSCI decision on June 15th on the possible inclusion of the yuan-denominated A-shares into MSCI’s widely tracked global benchmark. China macroeconomic data for the month of May came out with industrial production gaining +6,0% year on year (YoY) and retail sales increasing +10,0% over the same period, both in line with estimates. Fixed asset investment grew +9,6% YoY, missing estimate of +10,5%, as manufacturing investment slowed down and real estate investment declined slightly from 7,2% to 7,0%.
Hang Seng index in Hong Kong declined -3,11% since last Friday’s closing, with China Mengniu Dairy Company (13.16 HK-$, -6,13%) and PetroChina (5.34 HK-$, -5,65%) weighing on the index. Great Wall Motors (6.26 HK-$, -2,19%), China’s largest SUV and pick-up truck manufacturers, announced that May sales rose +9,5% YoY.
South Korea’s Kospi index was down -2,26% since Friday. Last week, the Bank of Korea (BoK) announced to cut policy rate by 25 bps to 1,25%, a move that came out earlier than expected by the market. In the company news, Naver Corp (697000 Won, -3,19%) filed its LINE IPO on June 10th at 6,4 trillion Won. The popular messaging app is aiming for a July 15th listing in Tokyo. Japan led the retreat in North Asia with the Nikkei 225 index declining -4,47% from end of last week, as a fresh strength in the yen ahead of BoJ meeting pressured major exporters such as Toyota (5393 Yen, -4,16%), Nissan (1004 Yen, -4,65%) and Sony (2941 Yen, -3,61%).
In India, Nifty index was also down -0,75% over the reported period. Among weekly top performers, Dr. Reddy’s Laboratories (3099 INR, +1.08%) announced its plans to commercialize by 2017-18 at least four of the eight generic drugs acquired from Teva Pharmaceuticals. ASEAN markets overall followed the same Asia trend. However, large market capitalization companies in the Philippines such as SM Prime (25.10 PHP, +3,51%) or San Miguel Corp (79.80 PHP, 1,01%) performed well amid rising optimism towards the new government’s administration.
Guillaume Poncet, Analyst