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Asian Equities Mixed Amid Turkish Lira Crisis; China Data in Focus

Published 08/14/2018, 01:36 AM
Updated 08/14/2018, 01:36 AM
© Reuters.  Asian markets were mixed in afternoon trade on Tuesday

Investing.com - Asian markets were mixed in afternoon trade on Tuesday as the Turkish lira crisis began to ripple through other emerging markets. China data were also in focus as the country’s industrial data grew slower than expected.

China’s Shanghai Composite and the SZSE Component were both down 0.7% by 1:30AM ET (05:30 GMT) after data on Tuesday showed industrial output, retails and fixed-asset investments all missed estimates.

Industrial output grew 6% in July from a year earlier, according to official data, while analysts had expected the output to grow at 6.3%.

Fixed-asset investment growth on the other hand also slowed more than expected to 5.5% in the first seven months of the year.

Private sector investment, which accounted for about 60% of overall investment in China, rose 8.8% in the period of January to July, compared with an increase of 8.4% in the first half year.

Retail sales rose 8.8% in July from a year earlier, compared to the expected 9.1% and down from 9% in June.

Analysts believe an escalating trade dispute with the U.S. and recent tightening policies are likely to impact the outlook of China’s economy and that it may be at risk of a sharper slowdown than expected.

Hong Kong’s Hang Seng Index also fell 0.6%. Shares of China Yuhua Education Corp Ltd (HK:6169) plunged 37% on Monday, while other mainland education companies also tumbled as Beijing began seeking consultation over banning the expansion of education corporations, South China Morning Post reported on Monday.

Meanwhile, Japan’s Nikkei 225 outperformed its regional peers and traded 1.9% higher as the yen gave up some of its recent gains amid safe haven demand on uncertainty in Turkey.

Taiwanese contract manufacturer Foxconn Technology Co Ltd (TW:2354) received some focus after reporting worse-than-expected second-quarter earnings. Net profit came in at 14.49 billion Taiwan dollars, according to a statement, compared to an average estimate of T$21.94 billion.

Elsewhere, South Korea’s KOSPI edged 0.4% higher as LG Electronics Inc (KS:066570) retreated 3.4%. Down under, Australia’s S&P/ASX 200 gained 0.7%.

Turkey’s lira took center stage again on Tuesday after the currency pared some of its recent losses after the Turkish central bank moved to calm market nerves. The currency slumped over 20% in four trading days.

"The efforts announced by the Turkish central bank to stabilize the TRY (Turkish lira) appear to have assisted. The TRY has not endured further depreciation in overnight trade, but it has not substantially declined either," Richard Grace, chief currency strategist at Commonwealth Bank of Australia, said in a morning note.

Some analysts believed while the uncertainty in Turkey may continue, its correlation to the rest of the asset class may decline soon.

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