The Freeman

Asian markets fall on China growth concerns

-

HONG KONG— Asian stocks retreated Tuesday on concerns over the impact of China's Covid restrictio­ns on the world's second-largest economy as investment banks slashed their forecasts.

A strong rally on Wall Street, where the Dow closed 2.0% higher, did not carry over to Asia, and Beijing's announceme­nt of a fresh raft of measures to stimulate the economy did little to calm nerves.

The package announced on Monday includes more than 140 billion yuan ($21 billion) in additional tax rebates, bringing the total amount of tax relief this year to 2.64 trillion yuan, Xinhua news agency reported following a meeting of the State Council chaired by Premier Li Keqiang.

China's economy has taken a hit from Beijing's zero-Covid approach to the pandemic, which has resulted in lengthy lockdowns of major cities and mass testing of millions of people.

Prolonged virus lockdowns have constricte­d supply chains, dampened demand and stalled manufactur­ing.

Investment banks UBS Group and JPMorgan Chase cut their China economic growth forecasts due to the impact of the coronaviru­s strategy.

UBS on Tuesday cut its 2022 GDP growth forecast to 3.0% from 4.2% while JPMorgan on Monday trimmed its forecast to 3.7% from 4.3%, Bloomberg News reported.

"The lingering restrictio­ns and lack of clarity on an exit strategy from the current Covid policy will likely dampen corporate and consumer confidence and hinder the release of pent-up demand," UBS economists including Tao Wang wrote in a research note, according to Bloomberg.

China has targeted fullyear growth of around 5.5%, but data published in April showed that first-quarter growth slowed to 4.8% after its economy lost steam in the latter half of last year.

Concerns over the economic fallout from China's dogged pursuit of a zero-Covid approach and its knock-on impact on supply chains and the wider global economy spooked investors, with Asian markets well into the red on Tuesday.

Tokyo was off 0.5% while Hong Kong was down 1.5% after the city's leader

Carrie Lam said there would likely be no relaxation of quarantine travel restrictio­ns for the remainder of her term, which ends on June 30.

Shanghai and Seoul were both down 0.8%, while Taiwan, Bangkok, Sydney and Manila also retreated. Singapore was one of the few markets to post gains.

Later in the week, investors will be eyeing the minutes from the latest Federal Reserve rate-setting meeting for clues about further rate hikes aimed at reining in inflation. A raft of economic figures will also provide insights into the state of the US economy.

"If inflation remains sticky and the Fed needs to

be more aggressive, assets are not cheap enough yet -– in that world, more recession risk will need to be priced through lower earnings," said Stephen Innes of SPI Asset Management.

"However, if inflation does cool down, there are many compelling opportunit­ies, significan­tly if 'storm clouds' over the

economy dissolve."

Oil was lower, with both contracts down 0.4%.

"Energy traders see choppy waters ahead for oil prices as uncertaint­y persists with the global economic outlook and over the EU's progress with a ban on Russian oil," said Edward Moya of OANDA.

 ?? PHILSTAR.COM/PSE RELEASE ?? In this May 10, 2022 photo, the external display of the Philippine Stock Exchange building in Taguig City shows PSEi's closing a day after the presidenti­al elections.
PHILSTAR.COM/PSE RELEASE In this May 10, 2022 photo, the external display of the Philippine Stock Exchange building in Taguig City shows PSEi's closing a day after the presidenti­al elections.

Newspapers in English

Newspapers from Philippines