(ATF) Hong Kong: Asian markets were broadly firm after data showed industrial profits in China surged at the fastest pace since early 2017 but the mood remained cautious as the coronavirus pandemic burned its way across Europe and the US.
Globally, the infection count has exceeded 61 million with more than 1.4 million dead.
China's industrial profits surged 28.2% year-on-year in October, higher than the 10.1% rise in September. Profit margins for industrial companies expanded, with data suggesting upstream industries' profit growth continued to outperform downstream industries.
“Overall, we believe China’s economic recovery remains largely on track and maintain our real GDP growth forecast of 5.7% y-o-y for Q4, up from 4.9% in Q3,” said Ting Lu, Nomura’s Chief China Economist. “We firmly believe Beijing will maintain its policy stance.”
Confidence was further bolstered by the People’s Bank Of China’s (PBoC) Q3 monetary policy report overnight, which suggested the central bank was more certain about growth, and is more direct on normalising monetary and credit policies than it was in the previous quarter.
Monetary policy has been normalising in recent months from a significantly loose stance early this year, but has remained broadly supportive, reflected in slower but still decent credit growth, and stable policy rates, Goldman Sachs economists said in a report.
“The Q3 monetary policy report released suggested that this may continue in the coming months and the likelihood of tightening significantly (e.g., hike in policy rates) remains low in our view,” the report said.
Japan’s Nikkei 225 index advanced 0.40%, Hong Kong’s Hang Seng index edged up 0.28%, China’s CSI300 jumped 1.14% but Australia’s S&P ASX 200 eased 0.53% after China slapped new tariffs on Australian wine, the latest move in the countries’ long-running trade dispute. Regionally, the MSCI Asia Pacific index added 0.33%.
The yuan retreated after its recent gains easing 0.1% to 6.57 per dollar but the Chinese currency is still set for its sixth straight monthly gain, the longest winning streak since 2014. Goldman Sachs expects the yuan to strengthen against the dollar further to 6.3 in 12 months.
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- Japan’s Nikkei 225 index advanced 0.40%
- Australia’s S&P ASX 200 eased 0.53%
- Hong Kong’s Hang Seng index edged up 0.28%
- China’s CSI300 jumped 1.24%
- The MSCI Asia Pacific index added 0.33%.
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