asia markets rally as china growth hits forecast
Last Updated : GMT 01:02:43
Arab Today, arab today
Arab Today, arab today

Asia markets rally as China growth hits forecast

Arab Today, arab today

Arab Today, arab today Asia markets rally as China growth hits forecast

Shanghai's stock market has plunged almost 20%
Hong Kong - AFP

News that China's economy grew in line with expectations last year lifted Asian stocks on Tuesday, providing some rare support at the start of a turbulent year that has seen global markets hammered.

However, while most bourses across the region enjoyed a strong rally, led by Shanghai, dealers remain cautious as the figure out of China marked the worst annual performance in a quarter of a century.

Beijing said gross domestic product expanded 6.9 percent, in line with the government's target of "about seven percent" and matching a forecast in an AFP survey.

However, it was much weaker than the previous year and highlights the job facing the country's leadership as it struggles to recalibrate the growth engine.

The sharp slowdown in China has sent shockwaves through markets from Asia to the Americas over the past six months, in a rout that has wiped trillions off valuations and fuelled fears of another global economic crisis.
The last three months registered growth of 6.8 percent year-on-year, the National Bureau of Statistics (NBS) said.

Shanghai's stock market, which has plunged almost 20 percent since the start of this year, ended up 3.2 percent in characteristically volatile trade that saw it swing in and out of positive territory.

However, there were reports that the government-backed "national team" investment group was buying state firms to prevent a market sell-off, with one eye on the upcoming Chinese New Year break.

Other markets also turned higher after sinking in the morning.

Hong Kong added 1.4 percent in the afternoon while Tokyo gained 0.6 percent by the close and Sydney added 0.9 percent.

Higher-yielding, riskier currencies also reversed morning losses as a semblance of confidence entered trading floors. Australia's dollar was up 0.7 percent against the greenback, the South Korean won added 0.5 percent and the Malaysian ringgit gained 0.4 percent.

- 'China isn't broken' -
"The market was pricing in much worse," Nader Naeimi, Sydney-based head of dynamic markets at AMP Capital Investors, said.

"The markets had intense fears over China... it shows that China isn’t broken."

Beijing is trying to transform the nation's growth model from investment and exports to one driven by domestic consumer demand.

But while officials said the transformation was under way Jackson Wong, associate director at Huarong International Securities in Hong Kong, said they would struggle to kickstart growth in the coming years.

"I would love to see how they are going to stimulate the economy now. As of now we’ve seen most of the things that they could have done -- infrastructure, (lowering bank reserve requirements) and interest-rate cuts and even depreciating the yuan. But we haven’t seen anything to make the economy significantly pick up."

The survey of analysts by AFP showed they expected growth to slow to 6.7 percent this year.

Investors remain on edge over the turmoil on oil markets, a day after Brent slumped below $28 to its lowest point since late 2003.

The contract edged up Tuesday but analysts warned of further downward pressure after Iran ordered the production of half a million extra barrels a day, soon after Western sanctions were lifted.

The move will add to an already flooded market at a time when demand is weak and the global economy is teetering.

"We’ve got Iran knocking on the door with a further 500,000 barrels a day and we think they’ll easily meet that target," David Lennox, an analyst at Fat Prophets in Sydney, told Bloomberg News.

"Nothing has really changed for the market, investors are still looking for producers to cut supply."

Brent rose 2.4 percent Tuesday and US benchmark West Texas Intermediate was 0.6 percent higher.

- Key figures around 0730 GMT -

Tokyo - Nikkei 225: UP 0.6 percent at 17,048.37 (close)

Shanghai - Composite: UP 3.2 percent at 3,007.74 (close)

Hong Kong - Hang Seng: UP 1.3 percent at 19,495.99

Euro/dollar: UP at $1.0866 from $1.0886 late Monday

Dollar/yen: DOWN at 117.93 yen from 117.36 yen

London - FTSE 100: DOWN 0.4 percent at 5,779.92 (close)

New York - Dow: Closed for a public holiday

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