Market Close Apr 07

Growth upgrade boosts sentiment 

Indian markets surge, rupee weakens after RBI soothes; China underperforms as cross strait tensions rise, PBOC reportedly asks banks to curtail loans   

Growth upgrade boosts sentiment 
The PBOC has, it's claimed, ordered major banks to limit lending for the rest of the year. Photo: Reuters

HONG KONG: Asian markets edged up after the IMF upgraded its global growth forecast but China’s markets underperformed amid growing cross-strait tensions and on concerns the central bank is tightening liquidity.

China said its carrier group is exercising near Taiwan and such drills will become regular, while Taiwan’s foreign minister said the island will fight to the end if China attacks.

Japan’s Nikkei 225 index edged up 0.12%, Australia’s S&P ASX 200 added 0.61% but Hong Kong’s Hang Seng index slipped 0.91% and China’s CSI300 retreated 0.71% amid growing tensions between Beijing and Taipei. Regionally, the MSCI Asia Pacific index inched up 0.25%.

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The PBOC has reportedly ordered major banks to limit lending for the rest of the year at a recent meeting joined by 24 major banks in the country, over concerns that financial bubbles are growing after China recorded 4.9 trillion yuan of new loans in the first two months – a 16% increase from the same period last year.

According to the central bank's official statement, the purpose of the meeting was to improve the credit and loan structure, particularly in the key sectors and weak areas, given the recovery of China's real economy is still uncertain in the view of policymakers.

“The central bank also reportedly told banks to keep this year's new credit at about the similar level last year, which was at 19.6 trillion yuan,” said Everbright Sun Hung Kai analysts in a note.

“However, with the bumper new loans already this year, we expect lending growth would slow to 11%, the weakest in more than 15 years.”

Indian stock markets rallied after the central bank kept interest rates untouched and “decided to continue with the accommodative stance as long as necessary to sustain growth on a durable basis.

'STATE GUIDANCE'

“The ‘time-based’ stance on accommodation – ‘at least until the end of FY221’ – has been replaced by a ‘state-based’ guidance – ‘as long as necessary to sustain growth on a durable basis’,” said ANZ economists Rini Sen and Sanjay Mathur. 

“In effect, this characterisation of the policy stance represents a durable commitment to policy accommodation.”

The NSE Nifty 50 index rose 1.1% and the S&P BSE Sensex was up 1.2% by mid-session. The Indian rupee weakened to 74.04 against the dollar after the rate decision, hitting its weakest level since November 27.

Central banks will remain in focus as the US Federal Reserve unveils minutes of its meeting of March 16-17 later in the day and the ECB releases details of its last meeting on Thursday.

US Treasuries remained steady as 10-year yield was unmoved at 1.65%. But gold rose 0.5% to $1,736 per ounce as the dollar eased 0.1% to 92.27 against a basket of currencies.

Asia Stocks

  • Japan’s Nikkei 225 index edged up 0.12%
  • Australia’s S&P ASX 200 added 0.61% 
  • Hong Kong’s Hang Seng index slipped 0.91%
  • China’s CSI300 retreated 0.71%
  • The MSCI Asia Pacific index inched up 0.25%.

Stock of the day

South Korean giant Samsung Electronics fell as much as 0.7%, underperforming the market after it announced an operating profit guidance of 9.3 trillion Korean won for the first quarter, which matched market expectations. The electronics behemoth accounts for a fifth of the KOSPI index which rose 0.33%. 

Also on ATF:

China crypto sector battered by claims of fake sales, energy use

IMF upgrades growth forecasts with China and India to lead rebound

RBI PBOC Taiwan Nikkei Hang Seng CSI300