Asia Pacific share markets advanced on Wednesday, December 05, 2012, led by Chinese bourses, after China’s think tank forecasted world second largest economy will grow at speed of more than 8% coming year and rumors of a further monetary stimulus there. Risk sentiments received further support from Euro zone economic news released today.
All Regional bourses, exception being New Zealand, rebounded today, after reversing initial losses, tracking cues from sharp gain in Chinese bourses. China’s market rallied on rumor that the Beijing will launch a new simulative package after statement issued after a politburo meeting presided by Xi Jinping, the newly-elected general secretary of the Communist Party of China, that the government will keep macroeconomic policies stable, making adjustments as needed to deal with difficulties.
China will continue to deepen reforms, improve macro control, expand domestic demand and adjust the economic structure, in an effort to improve people’s livelihoods and add vitality to the economic development, the statement said.
The Chinese Academy of Social Sciences (CASS) also said on Wednesday in its blue book report on China’s economy that China’s economic growth may quicken to 8.2% in 2013 from an expected 7.7% this year in response to official growth-promoting polices. The Chinese think-tank forecast China’s inflation would rise to 3.0% next year, with export growth at 10% and imports up 13.7% during the coming year. China’s annual consumer inflation eased to 1.7% in October from a year earlier, giving policymakers scope to further loosen monetary policy if needed to support growth. The CASS also said Beijing should boost budgetary help to the economy by borrowing and spending more and cutting taxes that hinder economic efficiency.
Policy easing speculation in China underpinned further after China’s services sector slowed for a second straight month in November, showing that conditions are cooling at a rapid clip, although they remain in expansion for now. The China services Purchasing Managers’ Index eased to 52.1 on a 100-point scale November, indicating conditions were weakening from October’s 53.5, HSBC said. The headline figure offered up the second weakest reading in 15 months. The reading, although technically positive, represents conditions at the lower band of the index’s historical range. Underscoring the slowing pace of growth, HSBC said only about 12% of respondents reported an increase in new business for the month.
Risk sentiments received additional support after latest economic data showed euro zone’s economic slump was a little less pronounced in November than previously thought although there are few signs the region will emerge from recession any time soon. Markit’s Euro zone Composite PMI, which gauges business activity across thousands of companies, rose in November to 46.5 from 45.7 in October – markedly higher than the preliminary reading of 45.8 reported 10 days ago. A reading below 50 indicates contraction.
Monday’s manufacturing PMIs told a similar story to Wednesday’s composite and services numbers. The composite new orders index saw a sharp upwards revision to 45.0 from 44.1 in the preliminary data but still showed company order books declining at a fast rate. The final services PMI was revised up a full point from the flash reading, to 46.7 and compared with October’s 46.0.
However, markets move on the upside capped due to news coming from the US. The US President Obama rejected the GOP’s proposal that is estimated to reduce as much as $2.2 trillion in 10 years as the plan entirely relies on spending cut without consideration of raising tax on America’s wealthiest people. Obama stated that the proposal by the House of Representatives Speaker John Boehner is still out of balance. Regarding tax hike, Obama insisted that we’re going to have to see the rates on the top 2% go up. And we’re not going to be able to get a deal without it.
Traders were hesitated to take aggressive risky position amidst fears that the US economy would fall into recession if no compromise is made before the year-end. The fiscal cliff, resulting from expiration of the tax holiday and automatic spending cut of the government since January 1, 2013, might lead to an economic crisis in the US as $600B might be removed from the economy.
In the Asia Pacific region, China’s market skyrocketed, pushing up the benchmark Shanghai Composite index 2.9% higher from nearly 47-month low to finish session at 2,031.91. Hong Kong’s benchmark Hang Seng index rallied 2.2% to 22,270.91, led by financials and realty shares on tracking strong rally in Mainland China bourses.
Australia’s benchmark S&P/ASX 200 index closed up 0.4% at 4520.4 after hitting an intraday high of 4525.1, led by high-yield stocks on hopes the Reserve Bank will continue cutting interest rates next year. Resources were firmer on hopes of policy stimulus in China.
Japan’s benchmark Nikkei Stock Average ended 0.4% higher at 9468.84, registering 12th winning session in the last 15 days, due to renewed weakling yen combined with gains were led by retailers, consumer goods, and machinery makers that managed to overshadow fall in automakers, realty, insurers, and transportation shares.
Singapore’s stock market finished higher, with the FTSE Straits Times Index (STI) increased by 13.80 points or 0.45% to close at 3,075.92, alongside most of the regional peers. Domestic shares rose, but Olam International fell more than 5% on persistent concerns about the commodities firm’s financial position despite a rights issue backed by state investor Temasek Holdings.
India’s stock market ended the session slight higher as investors remained cautious ahead of voting on retail FDI in Parliament scheduled later today. The 30-share BSE index Sensex was up 0.23% at 19,391.86.
Bucking the regional market trend, New Zealand’s share market closed today’s session with red ink, with the NZX 50 Index fell 0.2% to a two-week low close of 4007.24, following some weak signals from overseas markets and a slump in OceanaGold following news of its Canadian capital raising.
Elsewhere, Indonesia’s Jakarta Composite rose 0.4%, Malaysia’s KLSE Composite added 0.4%, South Korea’s Kospi Composite index jumped 0.6%, and Taiwan’s Taiex Weighted index grew 0.6%.
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