Asian Shares Rise on Stimulus Hopes -- 3rd Update
December 01 2015 - 3:52AM
Dow Jones News
By Chao Deng
Shares in Hong Kong led a rally across most of Asia Tuesday, on
expectations for more stimulus from Chinese authorities,
specifically in the property sector.
The gains follow fresh readings on China's economy, which showed
further signs of slowdown in manufacturing data released
Tuesday.
The Hang Seng Index rose 1.8% to 22381.35 and a gauge of the
property sector rose 2.6%. Chinese firms trading in Hong Kong
gained 1.6%.
Elsewhere, the Shanghai Composite Index rose 0.3%, Australia's
S&P/ASX 200 rose 1.9% and South Korea's Kospi gained 1.6%.
Japan's Nikkei Stock Average gained 1.3% to 20012.40, closing
above 20000 for the first time since Aug. 20.
The onshore Chinese yuan held roughly steady following the
International Monetary Fund decision to include the currency in its
reserve basket.
China Vanke Co. shares rose 7.1% in Hong Kong and by the 10%
daily maximum in Shanghai. Poly Real Estate Group. Ltd. gained by
its 10% daily upward limit in Shanghai.
Analysts said that Chinese officials could pursue a range of
measures to boost the property sector, including a reduction in
down payments for first time home buyers to 20% from 25% currently,
and lowering the capital gains tax on property.
While authorities haven't signaled any new measures, "more
policy loosening is likely imminent," said David Millhouse, head of
China research at Forsyth Barr Asia. He cited a local media report,
which said that officials might make mortgage payments tax
deductible, for leading the afternoon rally in the Chinese property
sector.
Building expectations for stimulus come amid another batch of
economic data signaling a still-murky outlook for China.
China said Tuesday its official reading on factory activity for
the month of November fell to 49.6, compared with 49.8 in October.
It marked the fourth-straight month the reading was below 50,
indicating contraction.
Separately, the Caixin China manufacturing purchasing managers
index, a private gauge, rose to 48.6 in November from 48.3 in
October.
China's manufacturing sector remains plagued by overcapacity,
falling prices and weak demand. The dimming view casts doubt that
the world's second-largest economy can achieve its target growth of
around 7% for the year. The central bank has cut interest rates six
times since last November.
Earlier Tuesday, the People's Bank of China fixed the onshore
yuan at the weakest level since late August, at 6.3973 to one U.S.
dollar.
The move came after a widely expected decision by the IMF
overnight to give the yuan reserve-currency status alongside the
dollar, euro, pound and yen. The IMF's move, which marks a
milestone in China's rise as a global economic power, could help
accelerate a mild pickup in international demand for the currency
when it becomes effective in October next year.
The onshore yuan, which can fluctuate 2% above or below the
fixing, last traded at 6.3985, roughly flat with its level late
Monday in Asia. HSBC predicts that the onshore yuan will weaken by
the end of the year to 6.50 to one U.S. dollar.
In Australia, the central bank kept rates on hold at a record
low of 2.0% at its last policy meeting of the year on Tuesday, as
expected.
The Reserve Bank of Australia didn't sway from its core message
that it sees signs of improvement in the non-mining economy. Still,
with low inflation gives the bank scope to lower interest rates
further if warranted.
The Australian dollar was last up 0.6% at $0.7271.
Other private readings of manufacturing activity in the region
showed contraction, too. South Korea's Nikkei PMI stayed unchanged
at 49.1 in November from a month earlier. Taiwan's rose to 49.5 in
November from 47.8 in October.
However, Australia's manufacturing sector expanded for the fifth
straight month, with the Australian Industry Group's Performance of
Manufacturing Index improving by 2.3 points to 52.5 in
November.
Brent crude oil, the global benchmark, rose 0.1% at $44.68 a
barrel. U.S. oil prices fell 0.1% on Monday after government data
showed U.S. production is falling more slowly than expected.
Gold prices rose 0.4% at $1,069.30 a troy ounce.
James Glynn contributed to this article.
Write to Chao Deng at Chao.Deng@wsj.com
(END) Dow Jones Newswires
December 01, 2015 03:37 ET (08:37 GMT)
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