Markets mixed over China pledges

Tokyo and Sydney gain as China vows to maintain growth, but others remain gloomy.

Wen told China's National People's Congress that the government would maintain growth [AFP]
Wen told China's National People's Congress that the government would maintain growth [AFP]

Investors had hoped that Wen would announce a further increase in the amount of money the government would spend on propping up the economy.

But his speech contained no addition to the headline figure of $585bn already announced.

“Earlier gains made on China stimulus plan hopes were quickly lost as details and official announcements have yet to be made,” Kim June-kie, a market analyst at SK Securities in Seoul told Reuters news agency.

Recovery hopes

Wen’s speech also received a mixed reception among investors in Shanghai where the benchmark composite index fell into negative territory several times on Thursday after spiking a day earlier on hopes for an announcement of a new cash injection.

Nonetheless heavy trading by short term traders, buoyed by hopes of an early recovery, pulled the Shanghai market back up by the end of the session, with the index closing 1.04  per cent higher.

Shares in Hong Kong were also trading lower on Thursday afternoon following Wen’s speech, with the Hang Seng closing the day down 0.97 per cent.

Stocks in Taiwan however were given a lift after Wen also said Beijing ready to talk peace with the island which split from mainland rule following the communist takeover in 1949.

Taipei’s benchmark Taiex rose to a two-month closing high, up 2.11 per cent at Thursday’s close.

Tourism stocks were among the Taiwan shares lifted by Wen’s peace proposal and hopes of spin-offs from Beijing’s stimulus package.

“Positive effects from China’s stimulus package and the mainland’s subsidies in home electronics products and car purchases will continue to support related Taiwan stocks,” Karen Lin, a fund manager of Paradigm Asset Management, told Reuters.

‘Fully confident’

In his annual address to China’s National People’s Congress in Beijing, Wen said the government was “fully confident” that China would overcome the difficulties and challenges it faces, adding “and we have the conditions and ability to do so”.

That also gave a lift to stocks in Australia where shares in Rio Tinto and other miners led gains on hopes that increased spending in China would help lift its economy and that of the rest of the world.

Sydney’s benchmark S&P/ASX 200 index closed Thurday up 0.7 per cent, breaking a four day run of falls, which shaved 5.4 per cent off the index.

The state of China’s economy is particularly important to Australia as it is the nation’s second-largest export market, with minerals making up the bulk of exports.

“They certainly didn’t announce the stimulus package that everyone was looking for,” Juliette Saly, market analyst at Commonwealth Securities in Sydney told Reuters.

“The encouraging news though is that they are saying they will increase spending so that should counter the economic slowdown.”

Source: News Agencies


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