Most Asian markets rally after a punishing October

China’s top brass has pledged measures to support the country’s stuttering economy, providing a lift to beaten-down equities (AFP pic)

HONG KONG: Most Asian markets rose again Thursday, tracking another rally on Wall Street and following a Chinese pledge to support the world’s number two economy.

The healthy gains to kick off November come as dealers look to put behind them one of the worst months in recent years, which saw billions wiped from valuations and confidence battered.

While markets still face myriad problems, including rising US interest rates, the China-US trade war and uncertainty in the European Union, equities in Asia are enjoying a much-needed bounce.

Beijing provided the boost to Thursday’s business, with the leadership saying it will introduce new measures to kickstart the stuttering economy following a string of weak data, including growth at its slowest pace in nine years during the third quarter.

The yuan is also down at a 10-year low and approaching 7 to the dollar as uncertainty about China’s economy leads investors to take their cash out of the country.

The Politburo, after a meeting chaired by President Xi Jinping, said Wednesday that China had “achieved overall economic stability with steady progress” in the first three quarters but more work needed to be done to help the private sector.

“The leadership is paying great attention to the problems, and will be more pre-emptive and take action in a timely manner,” it said.

“China should attach great importance to the current situation and be more proactive in taking measures to cope with the issues.”

The statement comes almost two weeks after the country’s top brass, including Xi, embarked on a full-throated drive to shore up confidence in the country’s stock markets and economy.

“Accepting slower growth has long been a challenge for Beijing, but now the rate of slowdown is firmly out of the comfort zone,” Katrina Ell, an economist at Moody’s Analytics in Sydney, said.

“In recent years the balancing act has been addressing risks in the financial system against pressure to stabilise economic growth. It appears the latter is again more of a priority.”

Rupee in focus

Iris Pang, Greater China economist at ING, suggested any stimulus would likely be bigger than the measures introduced during the financial crisis a decade ago.

Shanghai rose 0.1%, building on a more two percent rise since Tuesday, while Hong Kong climbed 1.7% in the afternoon while Singapore was up 1.2%.

Sydney added 0.2% by the end with Wellington 1.1% higher and Taipei climbing 0.4%.

However, Tokyo sank 1.1% on a stronger yen and profit-taking following a more than two percent surge Wednesday. Seoul gave up early gains to end 0.3% off.

The broad advance came after all three main indexes on Wall Street chalked up a second day of solid gains.

On foreign exchanges the more optimistic tone helped high-yielding and emerging market currencies edge up.

The pound edged up after Wednesday’s small gains, which came on the back of hopes for a breakthrough in Brexit talks with Britain’s Dominic Raab saying there could be an agreement by November 21.

However, Alfonso Esparza, senior market analyst at OANDA, said: “Despite the assurances from some politicians that a deal is very close, the probability of a no-deal exit has actually gone up (and) the market remains unconvinced given there have been few details on the actual agreement.”

The Indian rupee edged down with speculation swirling that the country’s central bank chief is preparing to leave over a row with the government, with reports saying Delhi had tried to influence policy.

Finance ministry officials have sought to calm the row, saying it respected the Reserve Bank of India’s independence, which helped temper a drop in the rupee but the unit remains close to record lows touched earlier this month.

The government and the bank are believed to be at loggerheads over a number of issues including interest rates and how to respond to the plummeting rupee.

The rupee is hovering just below 74 to the dollar, having started the year at 63.67.

Key figures around 0710 GMT

Tokyo – Nikkei 225: DOWN 1.1% at 21,687.65 (close)

Hong Kong – Hang Seng: UP 1.7% at 25,408.62

Shanghai – Composite: UP 0.1% at 2,606.24 (close)

Euro/dollar: UP at $1.1342 from $1.1322 at 2030 GMT

Pound/dollar: UP at $1.2852 from $1.2771

Dollar/yen: DOWN at 112.83 from 112.86

Oil – West Texas Intermediate: DOWN 36 cents at US$64.95 per barrel

Oil – Brent Crude: DOWN 44 cents at US$74.60 per barrel (new contract)

New York – Dow: UP 1.0% at 25,115.76 (close)

London – FTSE 100: UP 1.3% at 7,128.10 (close)