Asian Stock Market: Remains under pressure amid China’s economic woes

• Asian stock markets trade in negative territory on Wednesday.
• Chinese House Price Index for July fell to -0.1% versus 0% prior.
• Investors will keep an eye on the possible FX intervention by the Bank of Japan (BoJ).
• The Reserve Bank of New Zealand (RBNZ) kept the benchmark interest rates unchanged at 5.5%.
• Market participants will closely watch FOMC Minutes and the comments from Fed officials.

Asian stock markets remain under selling pressure and edge lower on Wednesday. The cautious mood is weighed down by stringer US Retail Sales figures and concerns over Chinese discouraging data.

At press time, China’s Shanghai falls 0.25% to 3,168, the Shenzhen Component Index slumps 0.22% to 10,655, and Hong Kong’s Hang Sang dips 1.39% to 18,323. India’s NIFTY 50 is down 0.46%, South Korea’s Kospi dips 1.43%, and Japan’s Nikkei loses 1.05%.

In China, all three stock indices declined for the fourth consecutive day. The latest data on Wednesday revealed that the Chinese House Price Index for July fell to -0.1% versus 0% prior. The data raises concerns about a possible property crisis in China, particularly as big developer Country Garden Holdings struggles to meet its debt obligations.

Furthermore, the People's Bank of China (PBOC) cut the one-year medium-term Lending Facility (MLF) rate from 2.65% to 2.50% on Tuesday. Meanwhile, Chinese Retail Sales for July came in at 2.5% YoY compared to 4.8% expected and 3.1% previously, while the country's Industrial Production fell to 3.7% YoY compared to 4.5% expected and 4.1% previously. More evidence of China's economic deterioration exerts pressure on the regional stock market and risk-sensitive assets.

In Japan, the Nikkei trades at its lowest level since July 12, despite the upbeat preliminary Gross Domestic Product (GDP) data on Tuesday. Japanese economic growth was 1.5% QoQ, compared to 0.8% expected and 0.5% previously. The annualised GDP increased to 6.0% from an estimated 3.1% and 2.8% previously. However, investors will keep an eye on the possible FX intervention by the BoJ. 

Finance Minister Shunichi Suzuki stated on Tuesday that rapid movements are "undesirable" and the government is "ready to respond appropriately," while emphasising that no particular levels are intended for intervention, per Reuters.

On Wednesday, the Reserve Bank of New Zealand (RBNZ) kept the benchmark interest rates unchanged at 5.5%, as expected. RBNZ Governor Adrian Orr also offered a hawkish signal to rein in rising inflation expectations.

Looking ahead, market participants will closely watch FOMC Minutes and the comments from Fed officials for fresh impetus. The events could provide hints for further Fed monetary policy and give a direction for riskier assets like equities, risk-sensitive currencies, etc. Also, the Japanese Trade data and the annual National Consumer Price Index for July will be released from the Japanese docket later this week.