Mixed Asia-Pacific Markets — China’s Inflation Cools as India’s Heats Up

This article is a rewrite of a report from October 2012.

In mid-October 2012, Asia-Pacific equities were mixed: a run of regional data mostly beat expectations but failed to convince markets. China’s second-largest telecoms equipment maker warned on profits, its shares sliding, as investors fretted over third-quarter earnings.

How to read China’s data?

Inflation at a two-year low, but markets waited on GDP. China’s September CPI eased from 2% to 1.9% year-on-year, in line with forecasts — a two-year low, as slowing food prices (+2.5% vs 3.4% in August) offset petrol-driven non-food inflation. September PPI fell 3.6% year-on-year, slightly worse than August’s 3.5%. No surprises overall; with base effects and recovering demand, CPI was expected to rebound gently. But markets still feared Thursday’s Q3 GDP might miss target.

What about India?

Stocks edged up, but hot inflation killed rate-cut hopes. Indian equities rose slightly on telecoms and healthcare, yet September wholesale prices accelerated from 7.6% to 7.8% month-on-month, above forecasts — diesel hikes pushed energy inflation from 8.9% to 11.9% year-on-year. With inflation risks rising, the Reserve Bank of India’s late-October rate cut looked less likely, keeping sentiment soft.

What is the lesson from 2012?

Good data does not mean market belief. In October 2012, Asia-Pacific data beat forecasts yet equities still fell — because markets price the future, not the past: China’s GDP print, the RBI’s next move. Investing is not about the numbers released, but about what the market fears next.