The release of Chinese inflation figures will be closely watched. Consumer and producer inflation are both expected to moderate, which would ease concerns over further monetary tightening. However, we believe that pipeline inflation pressures remain and that continued tightening by the PBOC is most likely.
Higher-than-expected inflation readings out of China might even result in some medium-term negative effect on share market. Signs of continued pressures might see the market’s drop with rising global inflation resurface, and consequently see some inflation-hedge demand.
FBM KLCI index also will be effected.