China’s rising pork prices worsens outlook of Asia’s largest stock market as scope to stimulate economy is reduced
- Pork prices surged 69 per cent in September, fuelling consumer inflation and reducing the likelihood of policy easing
China’s runaway pork prices spell trouble for the world’s second-largest stock market.
Traders’ hope of further policy easing was dampened when official data on Tuesday showed inflation had already touched the ceiling for the government’s annual target last month, making it harder for policymakers to unleash more liquidity into the economy.
Pork prices, which surged 69 per cent from a year ago in September, were mainly blamed for accelerating inflation, driving up consumer prices by 3 per cent in the month.
The benchmark Shanghai Composite Index fell 0.6 per cent to 2,991.05 at the close, posting the first decline in six days, as investors shifted attention to concerns about economic growth from a tentative China-US trade deal that was reached over the weekend.
Rising pork prices have put the government into a dilemma, as policymakers need to bolster growth, while containing inflation at the same time.
Even Premier Li Keqiang’s pro-growth comment failed to prevent a sell-off. He stressed on stabilising economic growth during a meeting with some provincial governors on Monday as downside pressure on the economy builds up.