SYDNEY- Asian shares slid on Monday after a raft of Chinese data showed a surprisingly sharp slowdown in the engine of global growth, just as much of the world races to stem the spread of the Delta variant of COVID-19 with vaccinations.
Figures on July retail sales, industrial production and urban investment all missed forecasts, a trend that is only likely to get worse given the recent tightening in coronavirus restrictions there.
“Asia’s low vaccination rates and low tolerance for community spread suggest it is the region most at risk economically from the Delta variant,” said JPMorgan economist Bruce Kasman.
“China is in the midst of removing policy supports, which looks likely to restrain domestic demand growth and weigh on regional performance through the rest of this year,” he added. “With these drags building in recent weeks we have been lowering 2H21 regional growth forecasts.”
There was added uncertainty about the possible geopolitical implications of the sudden collapse of the Afghan government and what it mean for political stability in the region.
MSCI’s broadest index of Asia-Pacific shares outside Japan eased 0.5 percent, nudging back toward the lows for the year touched last month.
Chinese blue chips were hanging onto gains of 0.2 percent, perhaps in anticipation of a more aggressive policy easing from Beijing.
“The data will likely intensify speculation of further reserve requirement cuts in the weeks ahead and be positive for bonds,” wrote analysts at TD Securities in a note.
“The central bank is also unlikely to welcome appreciation of the CNY on a trade weighted basis, while limiting CNY appreciation vs USD.”
Japan’s Nikkei fell 1.7 percent, though economic growth topped forecasts for the June quarter.
