Global markets edgy ahead of China data

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SHANGHAI: Global stock markets will be on edge this coming week as China announces a slew of data investors will comb for clues about slowing growth in the world’s second-largest economy.

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The government is scheduled to release monthly trade and inflation figures, as well as industrial output, fixed-asset investment and retail sales in the coming days.

An official Chinese manufacturing survey last week sent world markets into a tailspin, as investors gave vent to worries China’s economy is headed for a “hard landing.”

Although analysts cautioned not to read too much into the monthly release of the Purchasing Managers’ Index (PMI), Chinese growth is clearly slowing and more weak data could be an excuse to sell.

“There is a risk [of overreaction]because investors’ confidence level is at a very fragile stage. Any data that’s not on the good side, investors will react more than they should,” Jackson Wong, associate director at Simsen International Financial Group in Hong Kong, told Agence France-Presse.

China’s economy expanded 7.0 percent in each of the first two quarters, slowing from 7.4 percent growth last year, which was its weakest since 1990.

But investors were alarmed by authorities’ surprise lowering of the yuan currency’s central rate against the US dollar by nearly 5 percent in a single week last month.

In a bid for more sustainable growth, Chinese policymakers are seeking a tectonic shift to domestic consumption and away from state-led investment.

“Pessimism over China’s short-term outlook is overdone and a growth pick-up in the second half is already in the pipeline,” ratings agency Fitch said in a report Friday.

AFP

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