Emerging Asian shares were mixed on Monday as investors digested a slew of Chinese data and further monetary easing in the world's second-largest economy, while South Korea's stocks fell as investors prepared for a highly-anticipated mega-IPO. Though China's fourth-quarter gross domestic product beat forecasts, it was still at its weakest in 1-1/2 years, while December retail sales disappointed, highlighting the impact from strict COVID-19 curbs. Any fallout to riskier assets however was limited by a surprise cut to some key lending rates by China's central bank.
Stocks in Jakarta and Kuala Lumpur fell more than half a percent each, while the rest of Asia’s emerging stock markets posted minor gains. In currency markets, the rupiah and ringgit dipped 0.1% each, while the won dropped 0.4%. Chinese stocks rose 0.6%, while the yuan edged higher. “We think strong FX inflows might continue on the back of an elevated goods trade surplus and foreign buying of CNY assets, and thus sudden CNY depreciation pressures and capital outflow pressures remain low," analysts at Goldman Sachs said.
In South Korea, battery maker LG Energy Solutions has attracted record demand for its $10.8 billion IPO, with books opening for retail investors between Jan. 18-19 and the company's listing set for Jan. 27. Stocks in Seoul fell 1.3% to a 1-1/2 month low, as traders reduced positions ahead of the long-awaited initial public offering, while the won lost nearly half a percent.
Also weighing on South Korean stocks, the central bank kept the door open for further monetary tightening after raising rates to pre-pandemic levels last week to stem inflation risks. Investors were also keeping an eye on other central bank meetings in Asia this week. The Bank of Japan is expected to upgrade its price forecast and keep policy ultra-loose when it concludes a two-day meeting on Tuesday. Central banks in Indonesia and Malaysia hold their meetings later this week, though no policy change is expected.
The market will be spared speeches from U.S. Federal Reserve officials this week ahead of their Jan. 25-26 policy meeting, but recent hawkish comments have seen the market almost fully price in a first rate hike for March and rates of 1.0% by year end. While the prospect of tighter U.S. monetary policy could dent appetite for Asia's riskier emerging assets, regional assets have so far remained relatively resilient, analysts say.
