Asia’s stocks increase following China’s call for more assistance for its slowing economy
Date
10/14/2024 5:37:27 AM
(MENAFN) Asian shares experienced a notable uptick on Monday, with Chinese Stocks leading the way by rising over 2 percent following comments from the finance minister about the need for additional stimulus to address the slowing economy. This positive momentum was fueled by renewed optimism among investors after Finance Minister Lan Foan indicated over the weekend that the government is contemplating new measures to stimulate growth, although he did not provide specific details about a major stimulus plan. Analysts and stock investors are particularly hopeful for a substantial initiative, potentially amounting to up to 2 trillion yuan, or roughly USD280 billion.
In the U.S., futures remained relatively stable, while oil prices saw a slight decline. Generally, any hints of support from Chinese officials tend to boost share prices, with the so-called "national team" of major state-owned companies and financial institutions stepping in to purchase stocks, which helps stabilize the market. This intervention often leads to an increase in investor confidence, even in the absence of concrete plans.
However, some analysts are cautious about the implications of these announcements. Stephen Innes from SPI Asset Management commented on the situation, highlighting that the specifics of any potential stimulus are crucial, saying, “The devil, as they say, is always in the details — or in this case, the glaring lack of them.” He further noted that while there may be a temporary boost in market sentiment, the true test will come by mid-week to see if the current market enthusiasm is sustainable, and by the end of the month to determine if the government is indeed taking substantive action or merely providing superficial reassurances.
The Shanghai Composite index climbed 2.1 percent to reach 3,284.32, while the Shenzhen market saw an even larger increase of 3 percent. Conversely, Hong Kong's Hang Seng index fell by 0.9 percent, settling at 21,061.23. Additionally, China reported a decline in consumer inflation for September and a further drop in wholesale prices, signaling ongoing weakness in domestic demand. This has prompted the government to initiate a series of measures aimed at reviving slumping housing sales and overall consumer spending. Notably, large-scale military exercises conducted by China around Taiwan on Monday appeared to have minimal effect on market performance.
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