Indonesia Stock Market Update: China GDP & Oil in Focus
The spotlight is - as usual - on China today as the world's second-largest economy released various macroeconomic data and markets' reaction toward these data will determine where stocks are heading for today. Wall Street will not influence Asian markets because this US financial and investment community was closed for Martin Luther King Jr Day on Monday. Meanwhile, the crude oil price remains low around USD $29 per barrel.
China's fourth quarter gross domestic product (GDP) growth figure was 6.8 percent year-on-year (y/y), slightly below GDP growth in the preceding quarter (6.9 percent y/y in Q3-2015) but reasonably in line with analyst expectations. Generally, analysts expected China's economy to grow around 6.8 - 6.9 percent (y/y) in Q4-2015. Overall, China's economy expanded 6.9 percent (y/y) in 2015, the slowest annual growth pace since 1990, but in line with the government’s target (around 7 percent). With Q4-2015 GDP growth more-or-less in line with expectations, markets should not be too negatively influenced by the country's latest GDP growth figure.
However, other economic data from China were more disappointing. The country's December retail sales rose 11.1 percent (y/y), below the 11.3 percent forecast. China's industrial production expanded 5.9 percent (y/y) in December, below the 6.0 percent forecast. Lastly, China's fixed asset investment grew 10.0 percent (y/y), down from the 10.2 percent forecast.
China's GDP Growth 2008 - 2015:
| 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | |
| • GDP China (annual % change) |
9.6 | 9.2 | 10.6 | 9.5 | 7.7 | 7.7 | 7.3 | 6.9 |
Source: Bloomberg
Meanwhile, global crude oil prices remain under the USD $29 per barrel level on Tuesday (19/01) - 12 year lows - as Iran's production and export is expected to rise after the lifting of sanctions. Iran's oil exports had been cut by about 2 million barrels per day (bpd) to little more than 1 million bpd. Iran is estimated to have the world's fourth-largest oil and gas reserves.
After the release of China's latest economic data Asian stocks indices started to weaken. Japan's Nikkei 225 index was up 0.76 percent prior to the release of Chinese data but went into red territory within one hour after the release of the data. China's Shanghai Composite Index also fell but still remained in green territory (slightly) by 09:45 am local Jakarta time. Hong Kong's Hang Seng Index fell from +0.80 to +0.26 percent. Meanwhile, Indonesia's Jakarta Composite Index climbed 0.40 percent after opening but lost gains after the release of Chinese data. The index had lost 0.16 percent by 09:45 am Jakarta time.
The reaction of these Asian indices shows that investors reacted negatively toward China's latest macroeconomic data. However, losses remain somewhat limited (as China's latest numbers did not shock markets although being slightly below estimates).