If over the weekend we got some terrible economic news out of China, then overnight it was turn for a major disappointment in capital flows, when Chinese Foreign Direct Investment in August crashed by 14%, far below the 0.8% increase expected, attracting just $7.2 billion in FDI, and the lowest in four years. This once again sparked fears of a Chinese hard landing and sent the Shanghai Composite tumbling 1.82%, the biggest drop in six months, after it had been up some 0.2% before the data release. The slump in FDI to -14.0% vs. Exp. 0.8% was a direct result of the anti-trust clampdown on multi-national corporations operating in China after scandals have engulfed the likes of GlaxoSmithKline in recent months.
In addition to China, there was the German ZEW Survey, which while beating expectations of a 5.0 print, dropped from 8.6 to 6.9 in August, the lowest since 2012. In fact, the gauge has decreased every month since December when it reached a seven-year high. And while there is not much other news today ahead of the blitz assault of data later in the week, including the Fed tomorrow, the TLTRO announcement on Thursday and the Scottish referendum results and the BABA IPO on Friday, we are stunned futures aren’t as usual, soaring.
As noted yesterday it wasn’t just China: Asian equities suffered their longest losing streak in 12 years now that fears of a hiking Fed are finally starting to manifest themselves in equity outflows. The weakness in China, coupled with caution ahead of tomorrow’s FOMC policy statement has weakened emerging markets, with emerging markets on track for the ninth consecutive daily decline – the longest losing streak since September 2001. Asian stocks fall with the Kospi outperforming and the Shanghai Composite underperforming. MSCI Asia Pacific down 0.5% to 144.3. Nikkei 225 down 0.2%, Hang Seng down 0.9%, Kospi up 0.3%, Shanghai Composite down 1.8%, ASX down 0.5%, Sensex down 1.2%. 0 out of 10 sectors rise with staples, industrials outperforming and financials, energy underperforming.
This post was published at Zero Hedge on 09/16/2014.