As on Sunday, 20 August, the People’s Bank of China (PBoC) slightly cut their 1-year prime loan rate by 10 bps to 3.45% and stood its ground on 5-years at 4.2%, a weaker move than expected as the market expected the central bank to cut 15 bps on 1-year loan and 15 bps on 5-year loan, which might help lessen the mortgage burdens. The Asian market’s response was mixed, but most of the Chinese indices were mostly negative over -1%. Still, there are many more inflation related numbers to be published this week which might give more insights on Asian markets future direction.
On Monday, 21 August, YoY Hong Kong CPI (Consumer Price Index) is expected at 2.0% compared to 1.9% last year which is the ideal level of inflation target for most central banks. The Bank of Japan (BOJ) would announce its YoY Core CPI on the next day (Tue 22 Aug). It is expected to cooled down to 2.7% from 3.0% last year.
On the same day, Japan’s both Manufacturing and Service PMI monthly surveys are expected at the same level compared to previous week at 49.6 and 53.8, respectively. The PMI under 50 gives a negative outlook on the overall economy and vice versa. Additionally, South Korean’s Manufacturing BSI monthly survey also expected at the same day and same level as a month before at 71. Korean’s BSI under 100 implied bearish outlooks on South Korean manufacturing and vice versa.
More South Korea numbers are expected on the next day (Wed 22 Aug), the YoY PPI (Producer Price Index), another indicator for inflation which weighted more on agricultural sector is expected to be further contract at -0.4% compared to -0.2% last month, meaning the agricultural products prices will drop more to counter inflation if the forecast is true. Meanwhile, the Bank of Korea (BoK) is expected its interest rate to remain stabilized at 3.5%.
Also, the same day, Singapore YoY CPI is expected to drop to 4.2% from 4.5% last month while the YoY Core CPI, which generally excluded food and energy cost, is expect to cooled down to 3.8% from 4.2% last month. This implied a good direction but still doubled the 2% general target.
Lastly on Thursday 24 August, the Reserve Bank of India will have a monetary policy meeting minutes which might contain any in-depth details that affected its interest rate decision. Also, Hong Kong is expected to publish its MoM export at -13.6% compared to -11.4% last month, and its MoM import at -8.2% compared to -12.3% last month. This means the slowing down of Hong Kong foreign trade would continue as the import would increasing at a smaller negative number but decreasing export as the negative number grows bigger, if the forecasts were true.
Finally, Japan’s YoY CPI (Aug) would be announced on the same day with no forecast data published to compared with 2.5% last year. Also, the only Tokyo CPI and its Core CPI are expected to publish at the same day at almost no changed at 3%.
