Shares rallied again in Asia on Thursday following reports that China plans to spend billions of dollars to help rebuild the capital of state-run banks.
Bloomberg and other reports cited unnamed sources as saying that the Chinese government would spend 1 trillion yuan ($142 billion) on capital injections for lenders. Earlier this week, Li Yunze, head of the National Financial Regulatory Commission, told reporters in Beijing that regulators would increase capital at six large banks, but he gave no dollar amount.
Banks interest margins and profits have shrunk, so “It is necessary to coordinate various channels such as internal and external channels to replenish capital,” Li said.
The government also announced “living allowance,” or cash handouts for the poor ahead of next week’s National Day holidays. While subsidies to ordinary people are uncommon, the ruling Communist Party sometimes marks special occasions with payments to families in difficulty.
The amount of the payments was not given. But they might help address a weak point for the economy — faltering consumer spending.
Earlier this week, Beijing announced a raft of measures to help revive China’s ailing property sector, such as reduced interest rates and down payment requirements for some mortgages. Defaults by real estate developers are another factor weighing on the banking sector.
Hong Kong’s Hang Seng jumped 3.5% to 19,794.33, and the Shanghai Composite index added surged 3.3% to 2,993.46.
The slowdown in China’s economy has weighed on trade and growth in the region, and the blasts of stimulus have lifted markets this week, though the rally lost momentum by midweek.
The Nikkei in Tokyo advanced 2.8% to 38,925.63.
South Korea’s Kospi jumped 2.9%, to 2,671.57 after semiconductor maker SK Hynix launched production of a new memory chip for artificial intelligence. SK Hynix shares jumped 9.4%.
In Australia, the S&P/ASX 200 picked up 1% to 8,203.70.
“Asian stocks shrugged off Wall Street’s stumble and surged ahead on Thursday, riding high on renewed optimism over China’s stimulus push. It seems like China hasn’t run out of kitchen sinks just yet,” Stephen Innes of SPI Asset Management said in a commentary.
On Wednesday, the S&P 500 slipped 0.2% to 5,722.26, a day after setting an all-time high for the 41st time this year.
The Dow Jones Industrial Average dropped 0.7% to 41,914.75 after likewise setting a record the day before. The Nasdaq composite edged up by less than 0.1%, to…
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