Aug. 5 - Markets await China inflation, Korea rate decision and HK earnings. Amid a faltering global economy, China and South Korea still face inflation pressures with the BoK set to tighten; Cathay Pacific and Li & Fung report earnings. Jon Gordon reports.
Just how important is a slice of pork? Very important, if you are a Chinese policy maker. The country reports CPI this Tuesday as surging food prices push up inflation. Analysts polled by Reuters expect some relief though -- predicting inflation will edge down to 6.3 percent in July. That would still remain near a three-year high, but some economists worry China may pause its tightening campaign... looking instead to growing worries about the weakness in the global economy. SOUNDBITE (English) SILK ROAD ASSOCIATES' MD BEN SIMPFENDORFER SAYING: "The central bank may worry about the impact of a global slowdown on china's own economy... And yet the challenge is that inflation pressures are broadening, and if we don't see rate hikes through the remainder of the year, inflation will continue to rise." South Korean policy makers are also facing a dilemma. President Lee Myung Bak has declared war on inflation - but analysts say an over-cautious BoK has not kept pace-- with real interest rates in negative territory. Bank Indonesia is in a better position. Inflation has moderated enough that some economist now expect the central bank to leave rates unchanged through the year. In Australia, employment data could give another indication of a 2-speed economy: the booming mining sector on one hand, but a soft domestic economy on the other. Finally, a stream of blue chip earnings from Hong Kong, including Li & Fung, Hong Kong Exchange and Cathay Pacific. Starmine data shows top-ranked analysts expect all three to underperform consensus estimates. Jon Gordon for Reuters in Hong Kong