[B]Chinese Stock Markets Plunge Over 3 Percent, Fears Of Rate Hike Loom[/B]
Reversing the gains seen in yesterday?s session, Shanghai stock markets pulled back on increasing concern of monetary tightening by the People?s Bank of China. Speculation, this time around, was siding with a potential move over the weekend by central bankers as concerns of an overheating economy continue to surface at the governmental level. Already raising rates twice this year in attempts to cool a violent stock boom and rapid expansion in the economy, the PBoC has made pivotal decisions ahead of the weekend. The subsequent effects rippled through markets globally and locally, before gains could be further established. Incidentally, data has purported the rise in rate speculation as consumer prices continue to accelerate ahead of the 3 percent benchmark established by policy officials, in line with above 11 percent growth for the year. As a result, the CSI 300 index dipped 145.85 points or 3.5 percent to close just above the 4,050 figure. Subsequently, the yuan pulled back on the news as well, trading at 7.6220 against the US greenback.
[B]Inflationary Pressures In Hong Kong Slow[/B]
Property tax breaks passed by Finance Secretary Henry Tang has kept inflationary pressures in the Hong Kong economy under wraps for the most part. As a result, the economy?s inflation rate slowed to a three month low, rising by a tepid 1.2 percent on the annualized comparison. The report, according to government sources, showed that with the recent government waive on property rates, consumer price inflation has remained subdued. Additionally, food prices, usually associated with accelerated consumer prices, has remained on the low side. Vegetable prices, for one, have declined from the previous month?s high. However, given the volatile nature of this subcomponent, there is a decent likelihood that future increases will certainly add to the overall survey in upcoming quarters. Ultimately, the figures are somewhat of a surprise given the tightening labor market and scorching retail sales figures. However, the survey remains in line with growth figures slowing to 5.6 percent from last quarter?s 7.3 percent increase. Traders agreed with the notion, taking the Hong Kong dollar lower against the US dollar and paring the currency rate back to 7.8149.
[B]Regional Markets Fall Into Red[/B]
Asian markets were mixed overall with Hong Kong shares pulling ahead despite the overall bearish theme in the market today. Boosting the Hang Seng index were good vibrations underlined by the fact that the equity benchmark had its biggest weekly gain in approximately four years, in addition to the heaviest traded day on record. As a result, the overall index added 45.25 points to close at an all time record 21,999.91. For the week, the Hang Seng is now higher by 4.7 percent after touching the session high just above the ultimate 22,000 figure. Notably shares of Ping An, the second largest insurer in China, skyrocketed higher by 6 percent to HK$57.25 after yesterday?s decision by Chinese officials to allow investment abroad. Comparatively, however, the Singapore stock market declined from a record after profit taking plagued two stock darlings of late. Both Singapore Exchange Ltd. and Cosco Corp. stock was down for the day after investors began reducing risk exposure ahead of the weekend close. As a result, the Straits Times Index declined 24.11 points to close at 3,615.38.