The MSCI AC Asia Pacific ex-Japan Index fell 2.9% in USD and 1.8% in local currency terms last week.
The Shanghai SE A-share Index and the MSCI China were down 2.0% and 3.0%, respectively. Banks issued USD 78.7 billion in new loans in July, down from USD 89.1 billion in June. This contributed to slower growth in the money supply with M2 rising 17.6%, the least in 20 months.
China’s consumer prices were up 3.3% yoy in July due to higher food costs, accelerating from 2.9% in June. The National Bureau of Statistics insisted China could keep prices “basically stable” for the rest of the year and meet the government’s 3% inflation target.
Hong Kong’s Hang Seng Index returned -2.8%. The economy grew a more-than-expected 6.5% in 2Q’10 from a year ago, having registered a revised 8% growth in 1Q. The government revised up its 2010 GDP growth forecast to between 5% and 6%.
Following in the footsteps of China, the SAR last Friday also tightened mortgage lending rules and plans to increase the supply of land to curb rising housing prices (up by over 40% since the start of 2009) as the risk of property bubbles is rising because of low interest rates and money flowing into the economy from the Mainland.
Thailand’s SET Index edged down 1.5% despite the strong consumer confidence figures, which rose for a third straight month in July as the pace of economic recovery quickened, supported by rising exports and local demand.
Korea’s Kospi declined 2.1%. The Bank of Korea left its benchmark interest rate unchanged at 2.25%, but signalled future hikes as solid economic growth will boost inflation expectations. Consumer prices remain benign at 2.6% in July, within the official tolerance range of 2-4%.
Growth concerns also affected India, where industrial production grew at its slowest pace in 13 years in June, rising 7.1% from a year earlier, after an 11.3% yoy gain in May. However, India’s BSE National gained 0.4% as the nation’s biggest producer, Tata Steel, announced strong profits, which buoyed expectations that local corporate earnings can withstand a global economic slowdown.
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