SINGAPORE: A few Southeast Asian stock markets fell on Monday as Chinese data signalled the economic fallout of the COVID-19 curbs, prompting further monetary easing, while South Korean stocks dropped more than 1% ahead of a highly anticipated mega-IPO.
Though China’s fourth-quarter gross domestic product beat forecasts, it was still at its weakest in 1-1/2 years, while December retail sales disappointed, highlighting the impact from strict curbs on the world’s second-largest economy.
Any fallout to riskier assets, however, was limited by a surprise cut to some key lending rates by China’s central bank that analysts say could just be the start.
“We expect Beijing to conduct more decisive policy easing to generate a growth rebound to above 5.5% ahead of the Party Congress later this year,” analysts at HSBC said.
Stocks in Kuala Lumpur, Jakarta and Manila fell more than half a percent each, while other emerging stock markets in Asia posted minor gains.
In currency markets, the rupiah and ringgit dipped, while the won dropped 0.4%.
Chinese stocks rose 0.6%, while the yuan edged higher.
“We think strong FX inflows might continue on the back of an elevated goods trade surplus and foreign buying of CNY assets, and thus, sudden CNY depreciation pressures and capital outflow pressures remain low,” Goldman Sachs analysts said.
In South Korea, battery maker LG Energy Solutions has attracted record demand for its $10.8 billion IPO, with books opening for retail investors between Jan. 18-19 and the company’s listing set for Jan. 27.
Stocks in Seoul fell 1.1% to a 1-1/2-month low, as traders reduced positions ahead of the IPO.
Also weighing on South Korean stocks, the central bank kept the door open for further monetary tightening after raising rates to pre-pandemic levels last week to stem inflation risks.
Investors were also keeping an eye on other central bank meetings in Asia this week.
The Bank of Japan is expected to upgrade its price forecast and keep policy ultra-loose when it concludes a two-day meeting on Tuesday.
Central banks in Indonesia and Malaysia will hold their meetings later this week, though no policy change is expected.
Investors are also bracing for the Federal Reserve’s decision following the Jan. 25-26 policy meeting, after recent hawkish comments have seen the market almost fully price in a first rate hike for March and rates of 1.0% by the year-end.
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