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Asian markets mixed, Shanghai, HK rally on China stimulus hopes

Published : Friday, 26 January, 2024 at 12:00 AM  Count : 108

HONG KONG, Jan 25: Shanghai and Hong Kong stocks built on their recent rally Thursday as traders awaited fresh pledges of stimulus from Chinese officials a day after they announced a measure to boost bank lending, though other Asia markets fluctuated.

Another record close for the S&P 500 on Wall Street provided a positive lead for investors, while a string of data including on US economic growth and jobs could give some idea about the Federal Reserves plans for interest rates.

Hong Kong and Shanghai rose for a third straight day on hopes Beijing will put in place more help for the stuttering economy after Wednesdays decision to cut the portion of cash banks must keep in reserve, a move aimed at freeing them up to lend more.

The 50 basis point cut to the reserve requirement ratio (RRR) was the first since September and twice as big as usual, which analysts said showed officials were getting increasingly worried about the economic outlook.

Authorities also said they would unveil more support policies soon.

The cut added to an upbeat mood in the two cities that came on the back of reports that Alibaba co-founders Jack Ma and Joseph Tsai had bought about $200 million worth of shares in the firm in a signal of their confidence in the ecommerce titan.

Equities jumped more than one percent in Shanghai, while Hong Kong was also well up, having piled on around six percent in the previous two sessions.

"China is still worth watching given the valuations have come down so far," JPMorgan Asset Managements Kerry Craig told Bloomberg Television.

"There could be a near-term rally if we do see further policy announcements coming through."

However, there were warnings that the government needed to do a lot more to restore confidence in the worlds number two economy, which has been hammered by a debt crisis in the vast property sector and weak overseas demand for its goods.

"While the RRR cut triggered an impressive rally, markets will struggle to go higher as investors have their focus back to the economic fundamentals and uncertainties ahead of crucial political meetings in the coming two months," said Redmond Wong at Saxo.

And National Australia Banks Rodrigo Catril added that it was "hard to see how a modest decline in borrowing rates will trigger a boost in credit demand".

"Beijing still needs to address structural issues, particularly within the property sector, while more support is needed for the consumer to boost economic momentum."    —AFP

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