HONG KONG: News that China’s economy grew last year in line with expectations lifted Asian and European stocks on Tuesday, providing some rare support at the start of a turbulent year that has seen global markets hammered.
However, while most bourses across the region enjoyed a strong rally led by Shanghai, dealers remain cautious as the China figure still marked the worst annual growth performance in a quarter of a century.
Beijing said gross domestic product expanded 6.9 percent, in line with the government’s target of “about 7 percent” and matching a forecast in an Agence France-Presse survey.
However, it was much weaker than the previous year and highlights the task facing the country’s leadership as it struggles to recalibrate the growth engine.
The sharp slowdown in China has sent shockwaves through stock markets from Asia to the Americas over the past six months, in a rout that has wiped trillions off valuations and fuelled fears of another global economic crisis.
Shanghai’s stock market, which has plunged almost 20 percent since the start of this year, ended up 3.2 percent in characteristically volatile trade. Analysts said the gains were boosted by expectations of government stimulus measures to kickstart growth this year.
Others said the government-backed “national team” investment group was buying shares to prevent a market sell-off, with one eye on the upcoming Chinese New Year break.
“The sharp rise today is, without a doubt, supported by the ‘national team’ as this is a good window for them to swoop in,” Phillip Securities analyst Chen Xingyu told Agence France-Presse. “Only they have the resources to lift the market this fast.”
Other markets also turned higher after sinking in the morning.
Hong Kong added 2.1 percent while Tokyo gained 0.6 percent by the close and Sydney added 0.9 percent.
In early European trade London rose 1.6 percent, Frankfurt added 2.1 percent and Paris gained 1.9 percent.
Higher-yielding, riskier currencies also reversed morning losses as a semblance of confidence permeated trading floors. Australia’s dollar was up 0.8 percent against the greenback, the South Korean won added 0.4 percent and the Malaysian ringgit gained 0.7 percent.
“The market was pricing in much worse,” said Nader Naeimi, Sydney-based head of dynamic markets at AMP Capital Investors.
“The markets had intense fears over China . . . it shows that China isn’t broken.”
Beijing is trying to transform the growth model from investment and exports to one driven by domestic consumer demand.
But while officials said the transformation is under way Jackson Wong, associate director at Huarong International Securities in Hong Kong, said they would struggle to kickstart growth in the coming years.