Asian markets remain weak – an assessment by Deutsche Bank AG

SSE Composite

The stock markets in Asia have largely seen losses today, with Chinese markets being particularly weak. On a weekly basis, however, markets in the Asia-Pacific region have seen some gains.

The Japanese markets have held relatively well, with losses of less than one percent. This is despite the Bank of Japan continuing with its very loose monetary policy, in spite of rising inflation and the drastic weakening of the yen. This goes against the trend of monetary policy tightening that is happening globally.

The market strategists at Deutsche Bank also commented that the decision comes against the backdrop of consumer prices rising more than expected. The core rate has seen the biggest increase since 1989. Meanwhile, heavily indebted Japan is set to launch a multi-billion dollar stimulus package in order to offset the effects of rising inflation on the population. According to reports in Japanese media on Friday, the package will amount to 2.91 trillion yen (19.8 billion euros).

The outlook for earnings season in Japan is positive. “After executives have been conservative in their outlooks in recent quarters, full-year guidance could be raised,” speculated Ulrich Stephan, an investment strategist at Postbank. “Therefore, the risk of negative earnings revisions appears to be low in the short term, despite the slowdown in global economic growth. In addition, this year’s share buyback programs are on track to exceed pre-pandemic levels.”

The Japanese Nikkei 225 index closed 0.88 percent lower at 27,105.20 points. The losses in Australia were also relatively contained. The S&P ASX 200 index was down 0.87 percent at 6,785.72 points.

Chinese markets, on the other hand, have once again been weaker. The CSI 300 index of the 300 most important Chinese companies listed on mainland exchanges was down 2.37 percent at 3,544.99 points. The Hang Seng index of the Special Administrative Region of Hong Kong was down 3.82 percent at 14,838.53 points. This continues the weakness seen in recent days, in light of the less market-friendly developments in China that were outlined at the Communist Party Congress. In the past week, foreign investors have pulled out massive amounts of money. In addition, lockdown measures are taking their toll on important economic regions in China.

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