Asia: Indices all down following Western jitters

Asian indices were a sea of red overnight, following the sharp falls registered in the US and Europe.

Falls ranged from 2.2% in the Nikkei to near a six-month low, while the Kospi was down 0.4%, the Hang Seng off 1% and the Shanghai composite lower by 0.8%.

Chinese data showed that aggregate credit growth rose to a three-month high in September, with the improvement less than some expected.

Total new loans extended in China rose to a pace of 857.2bn yuan in August from 702.5bn yuan in the month before.

Barclays said the data was “further indication that August’s growth deceleration has been arrested”.

Danske Bank economists added: "The underlying picture remains that credit growth is slowing mainly due to a sharp slowdown in credit from shadow finance sources.

"So far it does not look like a severe credit crunch because the slowdown in loans from banks has been modest."

The slowdown in credit growth has been driven to a large degree by government policy.

"This suggests that companies dependent on shadow finance funding will continue to face difficult refinancing conditions and investment demand in China will continue to suffer," the Danish bank added.

"Asian credit spreads drifted wider given the broader risk off tone," noted Jim Reid at Deutsche, pointing out that the Bank of China’s US$6.5bn AT1 printed overnight and is now quoted higher at 100.40/100.65 after having dipped below par at the open.

M2 money supply growth has eased slightly in recent months but real money supply growth has been stable, with the current M2 money supply growth at 12.9% year-on-year in September close to the Bank of China's 13.0% target for 2014 and hence in isolation does not suggest the need for any major easing measures.

Power consumption in China also rose 2.7% year-on-year in September, a significant bounce back from the 1.5% fall in August but still the second worst reading in the last 18 months.