The central bank recently announced unexpected cuts to interest rates in New Zealand, Thailand, and India. China has also made a decision to reduce the interest rate so that it can achieve massive growth in its economy. While this decision of the central bank and China has proved to be very beneficial for Asian Market as they have experienced a massive boost in their economy.
It is said that the People’s Bank of China has cut the main interest rate by 0.25 percentage points to 4.6%; it is estimated that they have put this effort to calm stock markets and after furthering a global trend of monetary policy easing. China’s move has paved the way for multiple policy actions, including for Asia. By taking such a decision, China is definitely trying to protect the slowing economy.
Advancement in the Asian Market Due to China’s Cut of in Key Interest
Most of the markets in the Asia Pacific bagged the highest score when the central bank cut down its interest rates to a record low. This cut-off has affected the Asian markets broadly; many of the investors are trying to digest the news about recent trade talks creating a buzz in China’s market.
Many of the investors are very disappointed by the economic data which they explored in the recent report about China and Hong Kong. Japan’s Nikkei (N225) report increased by more than 1.8%, whereas South Korea’s Kospi (KOSPI) is estimated to reach 0.6% while China’s Shanghai Composite and Hong Kong’s Hang Seng ended with 0.5%.
China’s move has also boosted global share; London’s FTSE 100 is expected to jump by 3% while Germany’s Dax has experienced a jump of around 5%, whereas Paris Cac rose is estimated to reach high by 4.1%. It has also affected multiple European markets like Madrid, Milan, Lisbon, Moscow, and many others closed very high due to the cut of interest by China.
The stock indexes have increased a lot due to the cut of interest by China; the Dow Jones index ended up with 1.3%, while the S&P 500 decreased by 1.4% drastically due to interest cut off. The People’s Bank stated that the cut of interest rate has affected the social cost of financing and developing apps and much more to a great extent, it has also affected the way of promoting and supporting the health and sustainable developments in this real economy. It has even affected and has increased the flow of money in this digital economy.
Market Climb
Most Asian investors welcomed the interest cut down with open hands. A report by the Wall Street Journal represents that China and the United States both are actively considering tariff rollbacks. The United States is one among others who have stepped ahead for assessing current tariffs.
Even the commerce department of the U.S. economy stated that the modest growth rate had reached around 1.9% in the July-September quarter. However, this rate is enough to represent the economists’ growth for weaker growth. Meanwhile, the Chinese a monthly gauge of factory activity represented more than expected decrease due to the tariff war with Washington and also due to weak consumer demand.
The China Federation of Logistics and Purchasing, who is the Purchasing manager index of an official trade group, declined around 49.3 from September as it was found around 49.8 on a 100-point scale through which the below 50 show activity contracting. It has continuously shown up and down in the market due to interest cut down during the recent era.
Chinese economic growth has been affected dramatically due to weak consumer demand as a shopper’s point of view. Many other reasons like job losses, jittery over the trade war, put off purchasing orders of cars, and other big vehicles are also responsible for the cut-down interest rate. While on the other hand, all this has opened a huge opportunity for the Asian marketer to achieve massive growth and win the market in no time.
Exporters are widely hurt by Donald Trump’s tariff hikes that the President has implemented on Chinese imports and even on Beijing’s fight over technology ambitions and also on the trade surplus that has greatly impacted the overall economy of the country and has limited their opportunities and scope. The latest data also suggest that there is a continuous improvement at the end of the previous quarter. It hasn’t marked a sustained recovery.
Even it was found that the manufacturing data plunged in Hong Kong. Five months ago, the massive protests hit the Hong Kong economy to a great extent, IHS Markit, a research firm, published a report that the latest purchasing managers index (PMI) reached around 39.3 during October, which was previously measured around 41.5 in September. This drastic change has undoubtedly pushed Hong Kong, among others, into the first recession, which has been caused due to the global financial crisis.
Gaurav Kanabar is the Founder and CEO of Alphanso Tech, an India based IT Consulting company that provides Linkedin clone development service and other app development services to individuals as per their specified demand. Besides this, the founder also loves to deliver excellent niche helping readers to have deep insight into the topic. Twitter || Linkedin.
Asian market stock photo by Chintung Lee/Shutterstock
*opinions are strictly those of author
