Expectations for Central Real Estate Stimulus... Asian Stock Markets Rally Together

Major Asian stock markets are rallying together on the afternoon of the 11th amid expectations of economic recovery following news of the Chinese government's efforts to boost the real estate market.

As of 2 p.m. Korea time on the 11th, the Hong Kong Hang Seng Index is up 1.68% compared to the previous session, while the Shanghai Composite Index and the Shenzhen Composite Index are showing modest gains of 0.47% and 0.61%, respectively.

The Chinese stock market started the day higher and at one point in the morning rose more than 1%. Japan's major indices also started higher but are showing mixed trends. At the same time, the Nikkei 225 is up 0.03% from the previous close, while the TOPIX is fluctuating around a slight decline of 0.20%. South Korea's KOSPI index is rising by 1.30%.

The simultaneous rally in Asian stock markets was driven by news that Chinese authorities have stepped up support for real estate developers. The People's Bank of China and the National Financial Regulatory Administration jointly announced that they will extend the maturity of some outstanding loans due before December next year by one year.

The government's rescue measures for the real estate industry, which has been both a foundation for China's high economic growth and a cause of delayed recovery, are being interpreted as a sign of the government's commitment to stimulus, raising expectations for economic recovery.

Cecilia Chan, Chief Investment Officer (CIO) of HSBC Global Asset Management Asia Pacific, told Bloomberg, "The economic recovery in China has not reached the level we expected, but we remain optimistic," adding, "We expect the Chinese government to introduce more stimulus measures in the future."

[Image source=AFP Yonhap News]

Meanwhile, gloomy indicators released the previous day are clouding the outlook for economic recovery. China's National Bureau of Statistics reported that the consumer price index (CPI) inflation rate for June was 0.0% year-on-year, falling short of both the previous month's 0.2% and market expectations of 0.2%.

China's second-quarter gross domestic product (GDP) growth rate will be announced on the 17th. Experts forecast that the second-quarter GDP growth rate will exceed 6%, continuing a stronger growth trend compared to the first quarter's 4.5%. The Chinese government's annual GDP growth target is around 5%.