Asian Inflation Takes its Toll

In response to growing inflationary pressure, Chinese officials increased banks' reserve ratio last weekend by 100bp to 17.5%. On Tuesday, the first day of trading following the weekend decision (Monday was a Chinese holiday), the Shanghai stock market fell 7.7%. In Asia excluding Japan, headline inflation for April rose to a nine-and-a-half-year high of 7.5%. As inflation pressures increase and tightening policies become necessary, Asian stock markets will continue to adjust downwards.

Snapshot asks, how much further do Asian equities have to fall as a response to increasing inflation?

Morgan Stanley - AXJ's Inflation Challenege
Bloomberg - Asian Economic Miracle Is at Risk All Over Again: William Pesek
Citigroup - Inflation Risk Invokes Divergence
Financial Times - Asia markets plunge as inflation looms