HONG KONG, June08(ABC): Asian markets rallied Wednesday, building on a hearty performance on Wall Street and helped by the reopening in China, though analysts continue to warn of near-term volatility caused by surging inflation, rising interest rates and the Ukraine war.
Equities have enjoyed some respite in recent weeks from a painful sell-off caused by central bank monetary tightening — particularly by the Federal Reserve — and a spike in prices that is beginning to hit consumers, raising concerns of an economic slowdown or recession.
A retreat in US Treasury yields provided a lift to New York traders, as did a jump in Chinese firms listed there fuelled by growing optimism that Beijing is to ease back on its long-running crackdown against the tech sector.
The improved mood around tech has come after a report this week said China was close to ending a probe into ride-hailing app Didi Global and restoring its main apps this week.
The Wall Street Journal also said investigations into two other firms — Full Truck Alliance and recruitment platform Kanzhun — were coming to a conclusion.
And on Tuesday authorities approved a second batch of 60 games in a further step to lightening their approach in the world’s largest mobile entertainment market.
Citi analysts said the “announcement will also send a positive signal of policy support to the overall China internet sector”.
Market heavyweights rallied in Hong Kong with Alibaba up more than six percent, Netease four percent higher and Tencent up more than three percent, helping the Hang Seng Index climb more than one percent.
Shanghai, Tokyo, Sydney, Seoul, Wellington, Taipei and Manila were also well in positive territory.
The moves come as Beijing relaxes its strict Covid lockdown measures, allowing the world’s number two economy to edge back into life after months.
“The bounce in risk sentiment is due to a more positive China tilt where the outlook is set to brighten up as Covid restrictions ease, and state-owned banks are obliged to increase lending again,” said SPI Asset Management’s Stephen Innes.
“It certainly feels like the tide is turning on the Mainland, though the overall tone still leans more cautiously optimistic, with key emphasis on ‘cautiously’.”