OPINION
Market Rating Before FOMC MeetingJan 31
Asian Assets’ Recent Performance
Markets started the first trading day of the week with intense macroeconomic data released in China and Japan, which are the two largest economies in the region.
According to National Bureau of Statistics of China , the total value added of the industrial enterprises above the designated size grew by 3.5 percent year on year, 0.4 percentage points faster than the previous month; the average two-year growth was 5.2 percent, 0.2 percentage points faster than the previous month. Index of Services Production increased by 3.8 percent year on year, with an average two-year growth of 5.5 percent, 0.2 percentage points faster than the previous month. Also, total retail sales of consumer goods reached 4,045.4 billion yuan, up by 4.9 percent year on year, 0.5 percentage points faster than the previous month; the average two-year growth was 4.6 percent, 0.8 percentage points faster than the previous month.
In Japan, one of the important countries of the region, according to the preliminary data of the Cabinet Office, gross domestic product (GDP) shrank by 0.8 percent in the third quarter compared to the previous quarter, and it contracted by 3.0 percent on an annual basis, well above the expectations of a contraction by 0.8 percent.
While the negative growth in the Japanese economy stood out in the first hours of the week, we believe that the strong depreciation of yen in the 3rd quarter, the concerns caused by the increasing number of cases due to new variants, election uncertainty and supply chain problems caused by the pandemic have been effective.
Following these data sets, Nikkei225 index retreated to 29 718 from 29 807 within the day, but recovered to 29 861. Meanwhile, USDJPY is hovering around 113.90 despite the depreciation of US dollar in international markets.
In China, the number of cases remains under control. Supply chain disruptions and supply bottlenecks due to the pandemic have a more moderate effect as the country is a producer of intermediate and investment goods. In this context, we believe that the data set, especially industrial production, signals a strong expansion. Accordingly, Shanghai Composite (SSEC) started the day at 3 542 and tested 3 550 level.
According to National Bureau of Statistics of China , the total value added of the industrial enterprises above the designated size grew by 3.5 percent year on year, 0.4 percentage points faster than the previous month; the average two-year growth was 5.2 percent, 0.2 percentage points faster than the previous month. Index of Services Production increased by 3.8 percent year on year, with an average two-year growth of 5.5 percent, 0.2 percentage points faster than the previous month. Also, total retail sales of consumer goods reached 4,045.4 billion yuan, up by 4.9 percent year on year, 0.5 percentage points faster than the previous month; the average two-year growth was 4.6 percent, 0.8 percentage points faster than the previous month.
In Japan, one of the important countries of the region, according to the preliminary data of the Cabinet Office, gross domestic product (GDP) shrank by 0.8 percent in the third quarter compared to the previous quarter, and it contracted by 3.0 percent on an annual basis, well above the expectations of a contraction by 0.8 percent.
While the negative growth in the Japanese economy stood out in the first hours of the week, we believe that the strong depreciation of yen in the 3rd quarter, the concerns caused by the increasing number of cases due to new variants, election uncertainty and supply chain problems caused by the pandemic have been effective.
Following these data sets, Nikkei225 index retreated to 29 718 from 29 807 within the day, but recovered to 29 861. Meanwhile, USDJPY is hovering around 113.90 despite the depreciation of US dollar in international markets.
In China, the number of cases remains under control. Supply chain disruptions and supply bottlenecks due to the pandemic have a more moderate effect as the country is a producer of intermediate and investment goods. In this context, we believe that the data set, especially industrial production, signals a strong expansion. Accordingly, Shanghai Composite (SSEC) started the day at 3 542 and tested 3 550 level.
