Economic Stimulus Plan of China Encourages Asian Stocks – Asia Market Wrap
Asian markets rose after China’s central bank announced stimulus measures in an effort to meet this year’s economic growth objective and prevent a selloff in the stock market.
Hong Kong shares soared the highest, with key benchmarks up at least 3%, while onshore Chinese indices rose more than 2% as regulators suggested they are considering establishing a stock stabilisation fund. The MSCI Asia Pacific Index gained 0.8%. Most Asian currencies rose against the Dollar.
After the benchmark CSI 300 Index plummeted to more than a five-year low earlier this month, China plans to provide at least 800 billion Yuan ($114 billion) in liquidity assistance for stocks, allowing brokerages and funds to use the central bank’s money to buy equities. This was part of a broader package of economic measures aimed at reviving the economy, including a drop in a key short-term interest rate and lower borrowing costs on up to $5.3 trillion in mortgages.
Elsewhere in Asia, the RBA maintained its cash rate goal of 4.35% for the seventh consecutive meeting and reiterated that it is not “ruling anything in or out” on policy. The Australian currency maintained its early gains, but the yield on policy-sensitive three-year notes varied following the announcement.
Gold hit a new high of $2,636.16 per ounce during Asian market hours as several Fed members appeared to leave the door open for further big rate reduction. Oil prices rose after Israel began airstrikes on Lebanon, killing over 500 people and escalating regional tensions.
