— This is the script of CNBC's news report for China's CCTV on December 16, Monday.
Greater China markets in the red following the disappointing manufacturing PMI numbers out of China.
HSBC's preliminary survey showed factory activity on the mainland fell to an three month low of 50-point-5 in December. But the silver lining being the data continuing to hold above the 50-level separating expansiojn from contraction. Our next guest tells us how you should play the Chinese market:
[Soundbyte on tape by Louis Wong, Head Of Research, Phillip Securities] I advise waiting strategy, because this China, the reason is too upbeat. The market is a bit too upbeat, there's a lot of upward revision. A lot of banks have revised their economic growth rate for China. But I also concur with the view that China is cheap in terms of valuation and corporate earnings growth, and so China still looks attractive.
Other Asian markets mostly weaker with traders awaiting the outcomes of 3 central bank meetings this week. Let's start with the US where the Federal Reserve will conclude its two day policy revice on Wednesday. While the odds for a December tapering have increased, most analysts still expect the Fed to scale back its bond purchases only in the 1st quarter of next year:
[Soundbyte on tape by Vasu Menon, Vice President, Wealth Management Singapore, OCBC Bank] We still see the Fed tapering only in the first quarter of next year - in all likelihood, probably in March of next year. Employment numbers have picked up, but these numbers tend to be volatile, and if you look at the underlying numbers, I think part of the reason why the unemployment numbers have come off is because you've got people leaving the workforce. The underemployment rate in the US is still fairly high, and so some of the underpinnings are still not in place in the US, and I think the Fed knows that.
Over in Japan, the quarterly BOJ Tankan survey painting a mixed picture of the country's corprate sector. On one hand, business sentiment among large Japanese firms rose to a six year high. But despite of the improving mood, the companies have cut their investment plans to 4.6 percent. All in all, the Bank of Japan is expected to hold its powder dry this week, and combined with the Fed taper talk, this could mean some movements on the forex front:
[Soundbyte on tape by Ben Collett, Head of Asian Equities, Sunrise Brokers] Right now, and certainly this week, it's all about the yen. The Nikkei has been all about the yen for most of the year, and as it stands this morning, the only catalyts we can see is that there's some policy support for a weaker yen. Our desk belief is that this is going to continue to weaken. It's going to continue to weaken because this week we're going to see increasing risks - or at least the market is going to price in risk - of tapering.
Meanwhile India continues to struggle with high inflation, which led the country's finance minister and central bank governor to pledge to do all they can to keep a lid on prices. The widely followed wholesale price index rose at a faster than expected 7.5% in November, raising expectations that the Reserve Bank of India will hike benchmark rates for the third time in four months later this week.
[Soundbyte on tape by Ridham Desai, India Strategist & Head of India Research, Morgan Stanley] Growth is quite slow and inflation is quite high. It is stagflationary conditions like these which India needs to fix. These macroeconomic data points are of paramount importance to the equity markets. In my view, the market will largely trade macro economic factors between now and April. We expect the elections to happen between April and May, and a new government to come into play by end May. That's when the market will start responding to possible election outcomes. Its as good as a toss of a coin really - it's very hard to call Indian elections.
I'm Li Sixuan, from CNBC's Singapore headquarters.
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