Asian Stocks Retreat as China's Inflation Data Miss Estimates

China's CPI Rises 1.6% In September

A customer purchases goods at a supermarket in Huaibei.

Photographer: ChinaFotoPress/Getty Images

Asian stocks fell, with the regional benchmark index extending a global selloff, after weaker-than-expected Chinese inflation data.

The MSCI Asia Pacific Index dropped 0.7 percent to 132.85 as of 4:40 p.m. in Hong Kong as China’s stocks halted a four-day rally. The consumer-price index in rose 1.3 percent in October from a year earlier, missing the 1.5 percent median estimate in a Bloomberg survey and down from 1.6 percent in September. Producer prices fell 5.9 percent, extending their streak of negative readings to 44 months.

“China is still the biggest risk,” said Isao Kubo, a Tokyo-based equity strategist at Nissay Asset Management Corp. The CPI data “reinforces what we’ve known for a while that China is slowing. But as long as policy makers take action and avoid a crash landing and avoid negative surprises,” damage to the market should be contained.

Shanghai International Port Group Co. dropped 2.3 percent after Goldman Sachs Group Inc. cut its rating on the harbor operator. MGM China Holdings Ltd. sank 5.5 percent in Hong Kong after Wells Fargo & Co. cut its forecast for November gross gaming revenue. Japan Post Bank Co. climbed 3 percent in Tokyo as Reuters reported the government is considering raising the deposit limit on savings accounts.

The Shanghai Composite Index lost 0.2 percent after falling as much as 1.1 percent. The Hang Seng China Enterprises Index of mainland shares in Hong Kong sank 1.8 percent, while the Hang Sang Index dropped 1.4 percent.

Deflation Risks

The Chinese inflation report is the latest data to show monetary easing failing to arrest a deepening economic slowdown, as exports declined for a fourth month in October and factory gauges signaled the nation’s manufacturing still hasn’t bottomed out amid faltering global demand. The lingering deflation risks, along with weakening trade, open the door for additional stimulus. The People’s Bank of China -- which has cut interest rates six times in the past year -- is seeking to stabilize the economy without fueling a renewed surge in debt.

Japan’s Topix index fell 0.1 percent, sliding from an 11-week high. South Korea’s Kospi index lost 1.4 percent, while New Zealand’s S&P NZX 50 Index slid 0.8 percent. Australia’s S&P/ASX 200 Index dropped 0.4 percent. Markets in Singapore and Malaysia are closed for a holiday.

OECD Outlook

The OECD trimmed its global economic forecasts for the second time in three months as slower growth in emerging markets spilled over into countries such as Germany and Japan. World output will expand 2.9 percent in 2015 and 3.3 percent in 2016, down from the 3 percent and 3.6 percent predicted in September, the Organization for Economic Cooperation and Development said in a semi-annual report published Monday.

Futures on the Standard & Poor’s 500 Index slipped 0.1 percent after the underlying measure dropped 1 percent on Monday as investors confronted the increased likelihood the Federal Reserve will boost interest rates this year. The prospect of tighter U.S. monetary policy is compounding concern about the global growth outlook as China’s expansion slows.

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