HONG KONG (AFP) – Markets mostly rose yesterday in Asia as investors tentatively returned to buying after recent losses, with Chinese property firms enjoying a much-needed lift on fresh easing measures by the country’s central bank.
Signs that Beijing was on a new monetary easing course also provided some crucial support to the tech giants who have been hammered in recent months as they were caught in the clutches of a wide-ranging, private-sector clampdown.
The People’s Bank of China yesterday lowered a key bank lending rate for the second time in as many months, days after slashing its policy rate for the first time since the pandemic struck.
The move was the latest aimed at boosting the world’s number two economy, which has been crippled by lockdowns to stem fresh COVID outbreaks as well as a sharp slowdown in the vast property sector, a key driver of growth.
Chinese property firms will be among the biggest winners as the easing improves their chances of accessing much-needed funds to repay monumental debts that have threatened their future and raised concerns of contagion in the broader economy.
However, the market mood remains grounded by concerns about the US Federal Reserve’s monetary policy plans as it battles soaring inflation, which has been stoked by a cocktail of surging demand, supply chain snarls, rising wages and a spike in energy prices.
Speculation is now growing that the bank will have to lift interest rates four times or more this year.
Some analysts are tipping a 50 basis-point hike in March, the first such move since 2000, while the bank has also said it plans to offload the bond holdings on its books that have helped keep costs down.
The inevitable end of the era of ultra-cheap cash – which helped fuel a near two-year equity rally and economic rebound – has weighed on global markets for months.
While some have managed to eke out record or multi-year highs, analysts warned that the next few months could see some gyrations.
One of the main losers has been the Nasdaq on Wall Street, which on Wednesday fell into a correction – a decline of greater than 10 per cent from its most recent peak – as tech giants are more susceptible to higher borrowing costs.
The Dow and S&P 500 have also suffered.
“The market is now facing uncertainty regarding both rate hikes and the balance sheet,” said Steven Englander at Standard Chartered Bank.
“We therefore see scope for the recent volatility to continue near term.”
Still, Asia was faring much better.
Hong Kong’s Hang Seng Index – one of the worst performers in the world last year – rallied more than three per cent thanks to a surge in tech giants including Alibaba, Meituan, Tencent and JD.com, while property firms also enjoyed healthy gains.
China Evergrande, which has been teetering for months, was up more than four per cent, while Sunac added more than 15 per cent and Country Garden gained more than four per cent.
Shanghai, however, was unable to maintain early gains and ended slightly lower.
“The new cycle of easing has come as expected,” Xu Chi, at Zhongtai Securities, said. “We should remain positive on the stock market” as risk appetite is set to improve.
Tokyo, Singapore, Sydney, Seoul, Bangkok and Jakarta also rose but Manila, Wellington and Mumbai were down.
London, Paris and Frankfurt also rose at the open.
Oil markets slipped after a strong run-up this week on the back of expectations for improved demand as economies reopen and as unrest in the crude-rich Middle East sparks supply concerns.
The International Energy Agency lifted its forecast for 2022 consumption to 99.7 million barrels per day, above the pre-COVID level.
Both main contracts are also homing in on the USD90 mark, having broken to seven-year highs earlier in the week, while some commentators are predicting Brent could bust past USD100 next year.