Catalysts Poised to Awaken Sleepy Asia Equity Markets This Week

(Bloomberg) -- Investors hoping for something to shake Asian markets out of their summer haze just might get their wish this week.

Asia has gotten off to a sleepy start Monday with the MSCI Asia Pacific Index slipping 0.3% on modest declines in Japan and Shanghai, extending a run of thin trading that has seen volumes coming in below the one-year average since July 4.

But things look like they will heat up fast with a slew of potential news catalysts on the docket:

• Economic data releases across the region include inflation readings for Hong Kong (July 22), Singapore (July 23), Malaysia (July 24) and Tokyo (July 26) as well as trade data for Hong Kong (July 25) and purchasing managers’ index releases in Japan and Australia (July 24)
• Singapore’s inflation reading is especially key with the recent run of weak economic data prompting speculation the Monetary Authority may feel compelled to make an unscheduled adjustment ahead of their next regular review in October
• South Korea is set to report second-quarter economic growth data July 25 amid an escalating trade conflict with Japan that’s hit stocks hard
• Japanese investors have earnings results from more than 200 stocks to contend with

Meanwhile, Japan’s Topix Index slipped 0.4% following upper house elections on Sunday, with Japanese Prime Minister Shinzo Abe’s ruling coalition securing their sixth straight victory, while failing to win a supermajority needed to launch a bid to change the constitution.

The win does appear to serve as a final decision on the anticipated tax hike, a result that could have a negative effect on stocks going forward, according to Tomochika Kitaoka, chief equity strategist with Citigroup Global Markets Japan.

“Topix has underperformed the S&P 500 over the six months following such decisions in the past,” Kitaoka said in a report to clients highlighting data going back to 1994. Japanese consumer stocks saw some selling pressure during early morning trading in Tokyo.

In contrast with a retreat in wider index gauges in Shanghai, the new Nasdaq-style Star board of tech startups got off to a positive start Monday, with all 25 stocks rising in their debut. Investors will also be watching if the new market can keep it up all week.

Stock-Market Summary

• MSCI Asia Pacific Index ex-Japan down 0.3%
• MSCI Asia Pacific Index down 0.4%
• Japan’s Topix index down 0.3%; Nikkei 225 down 0.3%
• Hong Kong’s Hang Seng Index down 0.9%; Hang Seng China Enterprises down 0.8%; Shanghai Composite down 1.1%; CSI 300 down 0.5%
• Taiwan’s Taiex index up 0.5%
• South Korea’s Kospi index little changed; Kospi 200 little changed
• Australia’s S&P/ASX 200 little changed; New Zealand’s S&P/NZX 50 up 0.2%
• India’s S&P BSE Sensex Index down 1.4%; NSE Nifty 50 down 1.5%
• Singapore’s Straits Times Index down 0.6%; Malaysia’s KLCI down 0.3%; Philippine Stock Exchange Index down 0.7%; Jakarta Composite down 0.3%; Thailand’s SET little changed; Vietnam’s VN Index little changed
• S&P 500 e-mini futures little changed after index closed down 0.6% in last session

To contact the reporter on this story: Eric Lam in Hong Kong at elam87@bloomberg.net

To contact the editors responsible for this story: Christopher Anstey at canstey@bloomberg.net, Lianting Tu

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