Asia report: Markets pop as Beijing pledges more economic support

26th Sep 2024 08:39

(Sharecast News) - Asia-Pacific markets saw robust gains on Thursday, buoyed by a rally in Chinese stocks following positive signals from Beijing on stimulus measures.

Mainland Chinese markets led the charge, with the CSI 300 extending its winning streak to seven consecutive sessions, reaching its highest level in four months.

"Asian markets experienced a rebound on Thursday, defying volatility on Wall Street," said Patrick Munnelly at TickMill.

"The news of a potential capital injection into China's top banks provided a fresh impetus to optimism regarding the country's most recent stimulus packages.

"Bloomberg reported that authorities are contemplating a $142bn infusion to assist large lenders, just two days after policymakers announced a series of measures to rescue the nation from its deflationary state."

Munnelly said the most recent actions suggested that authorities were feeling "a sense of urgency", as Beijing's 5% economic growth objective for the year started to elude them.

"Nevertheless, investors found cause for optimism - after months of market anticipation, the Chinese authorities are finally acknowledging the significant amount of work needed to relaunch the world's second-largest economy.

"The Japanese market is significantly higher on Thursday, reversing the losses from the previous session.

"Index heavyweights and technology equities are driving gains across most sectors, propelling the Nikkei 225 higher."

Markets pop on news of fresh China stimulus

In mainland China, the Shanghai Composite surged by 3.61% to close at 3,000.95, while the Shenzhen Component advanced by 4.44%.

The strong performance in Shanghai was driven by gains in property and technology stocks, with Suzhou HYC Technology climbing 11.87%, Greenland Holdings up 10.26%, and Red Star Macalline Group rising 10.2%.

Hong Kong's Hang Seng Index also recorded significant gains, rising 4.16% to end at 19,924.58.

Property stocks soared after China's top leaders affirmed their commitment to supporting the economy.

Longfor Properties jumped 28.32%, China Resources Land increased by 21.51%, and Haidilao International surged 17.99%.

In Japan, the Nikkei 225 rose by 2.79% to 38,925.63, and the broader Topix index climbed 2.66% to 2,721.12.

Technology stocks were the major drivers, with Tokyo Electron gaining 8.01%, Ebara Corporation rising 7.79%, and Isetan Mitsukoshi Holdings up 7.66%.

South Korea's Kospi 100 jumped 3.52% to close at 2,686.19, buoyed by strong performances in the technology sector.

SK Hynix saw a notable increase of 9.44% after announcing it had started mass production of the world's first 12-layer HBM3E chip, to be used in AI memory applications.

Other significant gainers included SKC and SK Square, both up 11.04%.

Australia's S&P/ASX 200 index rose by 0.95% to 8,203.70, with gains led by the energy sector.

Contact Energy surged 10.4%, Paladin Energy added 7.61%, and Tuas gained 7.35%.

The New Zealand market also posted solid gains, with the S&P/NZX 50 climbing 2.18% to 12,491.58.

Pacific Edge led the charge in Wellington with a 14.81% jump, while SkyCity Entertainment Group and Fonterra Shareholders Fund rose 5.88% and 4.87%, respectively.

In currency markets, the dollar was relatively stable on the yen, to last trade up 0.01% at JPY 144.77.

The greenback meanwhile weakened against its antipodean counterparts, down 0.57% on the Aussie to AUD 1.4572, and retreating 0.34% from the Kiwi, changing hands at NZD 1.5914.

Oil prices declined, with Brent crude futures last down 1.78% on ICE to $72.15 per barrel, and the NYMEX quote for West Texas Intermediate falling 1.88% to $68.38.

Chinese authorities pledge broad support for flagging economy

At the top of the agenda was China, where the country's leadership pledged to strengthen support for the domestic economy following significant stimulus measures introduced by the central bank earlier in the week.

President Xi Jinping chaired a meeting of the politburo on Thursday, where officials emphasised the need for robust fiscal and monetary policy measures to counter economic slowdown.

The politburo - the second-highest decision-making body in the Chinese Communist Party - highlighted the importance of stabilising the real estate market and fostering its recovery, according to state media.

A readout from the meeting called for increasing government bond issuance to boost investment and implementing "necessary fiscal spending" to achieve this year's economic growth target of around 5%.

The commitments came amid concerns over deflationary pressures and weakened consumer confidence, as spending declined and the property sector remained under strain.

Earlier in the week, the People's Bank of China announced its most substantial monetary easing measures since the Covid-19 pandemic.

That included a series of interest rate cuts and a CNY 1trn liquidity injection into the financial system to support economic activity.

Reports also indicated that the government could inject an additional CNY 1trn into major state-owned banks to enhance their capacity to support the struggling economy, potentially through new special sovereign bonds.

Reporting by Josh White for Sharecast.com.