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Asian markets fell on Thursday amid growing worries about global growth after China’s factory sector contracted for an eighth straight month, with economists telling CNBC it’s time for Asian policymakers to do more to boost growth.
On Wednesday, the U.S. Federal Reserve decided to continue to ease monetary policy by extending Operation Twist , under which it buys longer-dated bonds and sells shorter-dated ones, till the end of the year.
But the move, on top of rate cuts by China and Australia in recent weeks, hasn’t been enough to stem concerns about slowing growth, with investors selling stocks and seeking safe-havens. On Thursday, the Hang Seng Index and Australia’s ASX/S&P 200 closed down over one percent.
“I think Asian central banks are being slightly conservative at the moment,” Glenn Levine, Senior Economist with Moody’s Analytics in Sydney, told CNBC. “Korea and India should probably cut rates…The Chinese? Yes, they can and they should and indeed they will.”
Asia is highly dependent on exports to the West and is already feeling the knock-on effects of slowing growth in Europe and the U.S.
An early reading of China’s manufacturing activity in June from HSBC showed a contraction on Thursday, with the export orders sub-index dropping sharply to 45.9, the lowest level since March 2009.
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