Weekly Market Recap

Asia Pacific

20/09/2021

Week in review

U.S. CPI grew 5.3% y/y, 0.3% m/m
South Korea unemployment rate fell to 2.8%
Eurozone industrial production rose 1.5% m/m

Week ahead

U.S. federal funds rate, housing starts, PMI composite
Japan policy rate
Eurozone September PMI composite

Thought of the week

We are starting to see the economic impact of China’s Delta variant outbreak and their tighter curbs on the property market reflected in the data. The biggest disappointment from China’s economic data last week was the retail sales figure, which only rose 2.5% year-over-year (y/y) compared to consensus estimates of 7%, mainly due to strict virus lockdowns imposed over the summer. We are also starting to see the impact of China’s campaign to reduce financial risk by placing tighter restrictions on the property market. Construction investment shrunk by 3.2% y/y year-to-date. This had a ripple effect on the industrial economy, as China’s steel output fell to a 17-month low in August, while industrial output growth of 5.3% was slightly below expectations. We believe Chinese policymakers will maintain their measured approach and provide targeted support to the economy this year. As the virus lockdowns are gradually rolled back, this should provide support for Chinese equities.

China’s economy is slowing down

y/y growth

Source: FactSet, National Bureau of Statistics China, J.P. Morgan Asset Management.
Data reflect most recently available as of 17/09/21.

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