Asian shares rise as China injects $141bn into economy

Tokyo: Asian shares were mostly higher on Thursday, with Chinese stocks extending gains after Beijing announced a raft of policies to support sagging markets. Hong Kong rose 1.8 per cent and Shanghai surged three per cent. Benchmarks inched higher in Tokyo and Seoul. US futures and oil prices advanced. Late Wednesday, the Chinese central bank announced a set of rules to govern lending to property developers. Earlier, it said it would cut bank reserve requirements to put about 1 trillion yuan ($141 billion) into the economy. The Chinese economy has slowed, with growth forecast below five per cent this year, its lowest level since 1990 excluding the years of the Covid-19 pandemic. A debt crisis in the real estate industry has compounded other longer-term problems.

Shares in Chinese property developers jumped Thursday, with China Evergrande Holdings up 5.4 per cent and Country Garden gaining 5.9 per cent. The Hang Seng in Hong Kong jumped 2.0 per cent to 16,219.04, while the Shanghai Composite index was up 2.9 per cent, at 2,902.85. Tokyo’s Nikkei 225 was little changed in afternoon trading, up about 10 points at 36,236.47. Speculation has been growing about the Bank of Japan ending its negative rate policy later this year, and investors are bracing for what that might mean for the nation’s inflation, as well as its currency.

South Korea’s Kospi edged up less than 1 point to 2,470.34 after the nation’s central bank reported the economy grew at a better-than-expected quarterly rate of 0.6 per cent in the last quarter of 2023. Sydney’s S&P/ASX 200 advanced 0.5 per cent to 7,555.40. On Wednesday, the S&P 500 added 0.1 per cent to 4,868.55, setting a record for a fourth straight day. Gains for tech stocks pushed the Nasdaq composite up 0.4 per cent to 15,481.92. The Dow Jones Industrial Average fell 0.3 per cent, to 37,806.39.

Stocks have broadly rocketed to records recently on hopes that cooling inflation will convince the Federal Reserve to cut interest rates several times this year. Treasury yields have already come down considerably on such expectations, which can relax the pressure on the economy and financial system.

The latest signal of economic strength arrived Wednesday morning, when a preliminary report suggested growth in output for businesses accelerated to a seven-month high. Perhaps more importantly for Fed officials, the flash report from S&P Global also said that prices charged by businesses rose at the slowest rate since May 2020.