Bulls And Bears

More downbeat data dampens markets

Weaker than expected Chinese inflation data add to worries, raise spectre of deflation

Regional markets were again mired in the red yesterday as more downbeat data emerged to deepen concerns over the growth outlook.

The latest worries involved weaker-than-expected inflation data from China, raising the spectre of deflation. That data came a day after a 20.4 per cent slide in September imports to the mainland.

The soft data, along with third- quarter earnings woes, drove down the Dow Jones Industrial Average by 0.29 per cent overnight.

HSBC Greater China economist Jing Li said in a note yesterday: "Prolonged weak inflation will not only weigh on firms' profits and add to their debt burdens, but also lead to poor market expectations regarding incomes and prices... This may further exacerbate deflationary pressures in the coming months."

She said HSBC believed more decisive policy-easing is needed, forecasting a 25-basis-point rate cut and 150 basis points in reserve requirement ratio cuts for the rest of 2015.

But expectations for further easing did not help sentiment, with Shanghai paring 0.94 per cent and Hong Kong losing 0.71 per cent. Tokyo shed 1.88 per cent.

Singapore's benchmark Straits Times Index fell by a whisker - 0.96 points or 0.03 per cent to 2,983.92. It was another quiet session, with only $782.6 million worth of shares changing hands across the market.

Advance growth estimates showed the local economy narrowly escaped a technical recession with 0.1 per cent quarter-on-quarter third quarter growth. But a Monetary Authority of Singapore move to reduce the Singdollar's appreciation suggests a weak economy.

"We take the policy decision to suggest that the MAS believes that the growth outlook has deteriorated sufficiently to warrant a reduction in slope," Nomura said in a note.

Amid the uncertainty, Noble Group stood out as the most active counter, with more than 62 million shares done. It was also among the gaining blue-chip counters, up half cent or 1.06 per cent to 47.5 cents.

The embattled commodity firm again came under scrutiny in recent weeks amid media reports of several high profile departures. Chief executive Yusuf Alireza told The Straits Times yesterday that this resulted from the company's move to reallocate capital from metal to the more profitable energy businesses.

Global Logistic Properties gained five cents or 2.22 per cent to $2.30. Singapore Technologies Engineering was also up 2.22 per cent or seven cents to $3.22, after announcing on Monday that its aerospace arm has won $410 million worth of contracts in the third quarter.

Genting Singapore was the top losing blue chip counter, down 1.5 cents or 1.92 per cent to 76.5 cents.

Singapore Airlines lost four cents or 0.36 per cent to close at $10.98. The carrier created some buzz this week with the announcement that it will resume non-stop flights to the United States in 2018 using a new variant of Airbus A-350.

A version of this article appeared in the print edition of The Straits Times on October 15, 2015, with the headline 'More downbeat data dampens markets'. Print Edition | Subscribe