Stocks rallied Friday along with the rest of Asia following China’s decision to lower a key benchmark rate, injecting optimism among traders that it could boost the world’s second-largest economy from its COVID-battered knees.
The Philippine Stock Exchange Index rose 86.28 points, or 1.3 percent, to 6,746.33 on a value turnover of nearly P7.2 billion. Gainers overwhelmed losers, 131 to 62, with 43 issues unchanged.
SM Prime Holdings Inc. of the Sy Group advanced 4.3 percent to P37.80, while major property developer Ayala Land Inc. of the Ayala Group climbed 3.8 percent to P29.
Semira Mining and Power Corp. of the Consunji Group, the biggest coal producer, increased 3.2 percent to P32.50, while Universal Robina Corp. of the Gokongwei Group, the largest snack food maker, added 1.9 percent to P108.
The rest of Asian markets saw a sustained bump Friday.
Downcast earning reports from retailers this week have heightened uncertainty in the world markets at a time of rising interest rates, surging energy prices, China’s COVID lockdowns, and Russia’s ongoing war in Ukraine.
Wall Street took a beating Thursday, adding to its very bad week as the markets reacted to back-to-back earnings misses from Walmart and Target which revealed difficulties managing rising costs, as well as weaker-than-expected Chinese economic data.
On Friday morning, China’s central bank announced it would lower its five-year loan prime rate—a key interest rate governing how lenders base their mortgage rates—from 4.6 percent to 4.45 percent.
The move will help reduce mortgage costs, serving as a boost for demand as China undergoes a property slump and its economy bleeds from stopped ports and factories due to COVID lockdowns.
It is “without doubt a positive in terms of raising the market’s sentiment,” Niu Chunbao, fund manager at Shanghai Wanji Asset Management, told Bloomberg.
Tokyo, Seoul, Singapore, and Sydney all saw a sustained one percent boost, while Hong Kong’s Hang Seng led the rally—up by more than 3 percent in the afternoon.
A strong fiscal stimulus “is also expected” from the central government given persistent headwinds to growth, said Chaoping Zhu, a Shanghai-based global market strategist with JP Morgan Asset Management.
“In addition to the conventional approaches including infrastructure investment and tax deduction, direct subsidies or cash payout to consumers may be adopted to stabilize domestic demand and employment,” he said.
Data released this week from China showed the extent of economic pain inflicted by Beijing’s strict zero-COVID policy, with retail sales and factory production slumping to their lowest in over two years.
The unemployment rate also climbed in April to 6.1 percent—the highest in more than two years.
Leading indices in recent weeks have see-sawed at even the slightest anticipation of volatility—or relief—and the risk of a global recession is “top-of-mind” for investors, said Stephen Innes of SPI Asset Management.
“But as the procession to recession shortens, growth concerns are rising, leaving equities vulnerable to the negative feedback loop,” he added. With AFP