Asian shares are on the rise today following China’s central bank announcement of plans to support the stock market through share repurchases. The Chinese economy experienced further slowdown in the last quarter, prompting expectations of increased government stimulus measures. The second-largest economy expanded by 4.6% annually in July-September, slightly down from the previous quarter’s 4.7%. Growth has averaged 4.8% so far this year, below the official target of about 5%, due to ongoing weaknesses in the property market.
To stabilise China’s share markets, the central bank issued guidelines for state banks to provide loans to companies and major shareholders for stock repurchases. These loans, offered by 21 designated financial institutions, will carry a maximum interest rate of 2.25%. The move aims to support China’s struggling share markets, which have been lacklustre in recent years.
In response to these developments, Shanghai’s Composite index surged by 2.1% to 3,232.14, while the benchmark in Shenzhen jumped by 3.2%. Hong Kong’s Hang Seng index also saw gains, rising by 2.2% to 20,519.78. Additionally, large state-run banks in China reduced their deposit rates, signalling further efforts to boost economic activity.
Elsewhere in Asia, Tokyo’s Nikkei 225 inched up by 0.2%, while the Kospi in Seoul decreased by 0.6%. Australia’s S&P/ASX 200 fell by 0.9%, but the Taiex in Taiwan and the SET in Bangkok experienced gains. However, India’s Sensex slipped by 0.2%.
In the US, stocks hovered around record highs on Thursday, with the S&P 500 finishing unchanged and the Dow Jones Industrial Average reaching a new high. Chip companies like Nvidia performed strongly, while Alphabet and Elevance Health faced declines. The bond market saw Treasury yields rise as data revealed positive trends in the US economy.
The European Central Bank reduced its main interest rate by a quarter of a percentage point, leading to stock index increases in France and Germany. In early Friday trading, US benchmark crude oil prices rose, with Brent crude following suit. Currency markets saw the dollar weaken against the Japanese yen and the euro strengthen.
Overall, global markets are responding positively to China’s efforts to support its economy and stock markets. Investors are cautiously optimistic about the economic outlook, with hopes for sustained growth and stability in the markets. As central banks worldwide adjust their policies to support recovery and growth, market participants are closely monitoring developments for potential investment opportunities.