Asian markets close mostly lower on weak China inflation

Data adds to fears over slowdown in world's No. 2 economy

A further slowdown in China's inflation compounded worries about the world's No. 2 economy, adding to selling pressure in Asian stock markets yesterday.

China's consumer price index, which came in at the weakest level since May, comes days after Beijing data showed a sharp fall in imports and exports, and is the latest in a string of reports pointing to a growth slowdown in the country.

Officials said prices rose 1.3 per cent last month, down from 1.6 per cent year-on-year in September.

Also, the producer price index, a measure of factory gate prices, fell 5.9 per cent, matching the previous two months and marking a six-year low.

The news will add to pressure on the government as it struggles to transform the nation's growth model to a more stable one driven by domestic consumption.

Mr Liu Li Gang, chief Greater China economist at ANZ Banking Group in Hong Kong, said the latest data "requires the People's Bank of China to engage in more aggressive policy easing".

Mr Liu Li Gang, chief Greater China economist at ANZ Banking Group in Hong Kong, said the latest data "requires the People's Bank of China to engage in more aggressive policy easing".

It also brought an end to a five-day rally in Shanghai, which had been boosted on Monday by news that the authorities will resume initial public offerings this month after a four-month hiatus caused by the summer stock rout.

The market ended 0.2 per cent down, although it pared early hefty losses. Meanwhile, Hong Kong dropped 1.4 per cent, while Sydney, where several firms that rely on Chinese trade are listed, closed 0.4 per cent lower. Tokyo gained 0.2 per cent

There was respite for emerging market currencies, which edged up slightly after being hit on Monday by last week's better-than-expected US job data that ramped up expectations of an interest rate hike by the Federal Reserve next month.

AGENCE FRANCE-PRESSE

A version of this article appeared in the print edition of The Straits Times on November 11, 2015, with the headline 'Asian markets close mostly lower on weak China inflation'. Print Edition | Subscribe