Chinese stocks surged for a second day after the government promised to ease a regulatory crackdown on tech and other companies, while markets were also buoyed by reports of a potential ceasefire in Ukraine.
The rise in Hong Kong also came as the city’s leader, Carrie Lam, suggested the government would rethink tough coronavirus restrictions that have hit the economy, closed its borders and brought an emotional toll to the city’s 7.4 million residents.
China’s CSI 300 index of stocks listed in Shanghai and Shenzhen rose just 2%. Shares in the rest of Asia broadly followed Wall Street higher on Thursday after the US Federal Reserve raised interest rates for the first time since 2018.
China’s rally marked the second day of strong gains after China’s Financial Stability and Development Committee promised “substantial measures” to shore up growth and flagged other supportive actions, while adding there had been positive progress in talks on the issue of Chinese companies being delisted from US exchanges.
China’s Vice Premier Liu He, President Xi Jinping’s top economic advisor, said the government would “actively release policies favourable to markets.”
“Beijing is rolling out the most concerted effort since Nov. 2018 to restore market confidence,“ said Morgan Stanley analysts led by chief China economist Robin Xing in Hong Kong. “Credit easing, stock market intervention are unequivocal. Smoother ADR/tech cooperation and regulation are likely. Housing and covid policy turnaround are difficult but pathways are forming.’’
Investors took into account the long-expected start of US monetary tightening.
Treasury yields eased a little after spiking to nearly three-year highs overnight after the Federal Reserve on Wednesday raised the policy rate for the first time since 2018.
The Fed increased rates by a quarter-point, as expected, and telegraphed equivalent rises at every meeting for the remainder of this year to aggressively curb inflation.
Elsewhere in Asia, Japan’s Topix rose 2% while Australia’s S&P/ASX 200 gained 1.4% and South Korea’s Kospi rose 1.6%.
Global stocks have also been boosted by reports that Ukraine and Russia were making “significant progress” in negotiations for a ceasefire.
Speculation about a Russian withdrawal has intensified after Moscow’s heavy losses of men and equipment.
US president Joe Biden on Wednesday approved a new military aid package, valued at $1 billion, for Ukraine including anti-aircraft weapons and armed drones.
- George Russell, with Reuters