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Asia markets up as China data meets expectations

July 13, 2012

HONG KONG: Asian markets rose today after China reported its economy was slowing in line with expectations, quashing fears data would show a “doomsday” scenario of the country heading for a hard landing.

The economy expanded 7.6% in the second quarter of this year, the slowest pace for more than three years, but investors were relieved the figure was not worse and some focused on the possibility it would spur new stimulus.

Hong Kong rose 0.30% in afternoon trade and Shanghai edged up 0.16%, while Tokyo ended flat, rising 0.05%, or 4.11 points, to 8,724.12.

Seoul jumped 1.54%, or 27.50 points, to finish at 1,812.89, helped by the China data but also rebounding following a heavy loss yesterday after the Bank of Korea unexpectedly cut interest rates.

Sydney finished 0.35%, or 14.2 points, higher at 4,082.2.

“Chinese GDP data came in broadly in-line with official consensus numbers, but well ahead of the feared doomsday whisper numbers that had been circulating of something sub-7.0%,” said Cameron Peacock at IG Markets in Australia.

Markets had slumped yesterday as nervousness mounted ahead of the release of the figures from China, a key engine of growth for the faltering global economy at a time Europe and the US are in economic peril.

But there was relief after the data was released, with investors returning to the market after the heavy sell-off.

“The fact the numbers are not as bad as people had feared gives the market a boost,” Francis Lun, managing director at Lyncean Securities in Hong Kong, told Dow Jones Newswires.

“Also, the government is expected to further introduce monetary policies (such as a cut in banks’ reserve requirements),” he said.

China has since December made three such cuts, reducing the amount of money banks must hold in reserve. Such cuts are meant to free up funds for lending and thus boost the economy.

The government has also cut interest rates twice since the beginning of June.

The data from the National Bureau of Statistics showed that second-quarter expansion pulled down growth for the world’s second-largest economy to 7.8% for the first half of the year.

The 7.6% second quarter growth was the slowest since 6.6% in the first quarter of 2009 when China and the rest of the world were struggling to emerge from the financial crisis.

The government’s full-year growth target is 7.5 percent.

Growth in retail sales, the main gauge of consumer spending, continued to slow in June, the bureau said, as did output from China’s millions of factories and workshops.

But there was a sign that government measures to inject more vigour into the economy were starting to work, with China’s urban fixed asset investment rising 20.4% in the first half of 2012 compared with a year earlier, the bureau said.

Friday’s data capped a week of economic indicators from the world’s second-biggest economy, which mostly confirmed that economic growth is slowing.

On currency markets in Asian trade, the euro was under fresh selling pressure after ratings agency Moody’s downgraded Italy’s government bond rating.

The common currency bought US$1.2190 and 96.61 yen in Tokyo morning trade, from US$1.2203 and 96.75 yen in New York. The dollar fetched 79.24 yen against 79.28 yen.

Oil slipped on the data from China, which is the world’s largest energy consumer.

New York’s main contract, light sweet crude for delivery in August, fell seven US cents to US$86.01 a barrel in the afternoon and Brent North Sea crude for August delivery shed 16 US cents to US$100.91.

Gold was worth US$1,573.91 an ounce at 0700 GMT, compared with US$1,564.75 late yesterday.

In other markets:

  • Wellington fell 0.17%, or 5.99 points, to 3,495.41. Telecom Corp was down 1.2% at NZ$2.55, Fletcher Building was off 1.8% at NZ$5.98 and Chorus slipped 1.5%to NZ$3.28.
  • Taipei fell 0.37%, or 26.66 points, to 7,104.27. Taiwan Semiconductor Manufacturing Co was 0.13% higher at Tw$75.8 while China Steel fell 0.72% higher at Tw$27.4.

- AFP


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