Asia: China and Japan anticipate further stimulus
Tokyo Nikkei +1.24%
Hong Kong Hang Seng -0.01%
Shanghai Composite +1.37%
Seoul Kospi -0.79%
Mumbai Sensex +0.63%
Asian stocks rose on the back of a hunch that weak Chinese manufacturing data would lead to further economic stimulation.
Shanghai's composite index surged to 15-month highs on Tuesday morning.
An interesting report from BoA Merrill Lynch's Asia economists noted that the predicted huge sales of Apple's iPhone 6, which will be ready for sale at end-September, could impact macro indicators in China and Taiwan.
"We found that the upcoming iPhone 6's release could add about 1% per month to China export growth for the rest of 2014, while Taiwan's export growth could be boosted by around 2% per month during August-October and 1% per month in November 2014 to January 2015," the economists wrote in a note.
Japan stimulus in balance
Likewise, despite its central bank's optimistic outlook on the economy of dampening expectations for further policy stimulus, Tokyo has risen due to a slew of weak Japanese economic data.
Rabobank strategist Jane Foley noted that most analysts expect further easing from the Bank of Japan (BoJ), some anticipating another announcement this year and others looking ahead to 2015.
In light of the major shrinking of the economy in the second quarter, she said: "It seems likely, therefore, that the Bank will revise lower its forecasts for growth next month.
"It hasn't all been bad news, however, because wages are on the increase. In his speech in Jackson Hole last week BoJ Governor Kuroda emphasised the importance of wage rises in breaking the deflationary cycle."
She noted Japan was still suffering from negative real wage inflation and that consequently consumption demand, and thus inflation, is likely to remain weak.
"In short, the BoJ may be forced to take further action to meet is 2.0% CPI inflation target."
Hong Kong, Korea, India
In Hong Kong the Hang Seng was down slightly as pro-democracy protesters were dispersed with pepper spray as Beijing refused to yield on its plans for electoral reform.
Opponents criticise China of creating a "sham" democracy because Beijing would have the ability to screen candidates in advance.
South Korea's Kospi faltered as weakness in Europe spooked investors in the trade-reliant nation's export prospects.
This muted Seoul's reaction to inflation declining to a five-month low, which some analysts said would give the central bank room to cut interest rates again to spur economic growth.
Over in Mumbai's indices continued to hit new heights on the back of sustained capital inflows and positive economic data.
India's GDP growth climbed to a 26-month high of 5.7% in the second quarter.
Japan also announced it was to double private and public investment in India to roughly $34bn over the next five years.
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