Asian markets wary after east Ukraine vote

Guy Bentley
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Asian shares outside of Japan are on the rise as investors drew hope from the possibility of the Chinese government taking further action to boost the economy.

Last week, President Xi Jinping said the world's second largest economy needed to readjust to a "new normal". Restrictions on foreign investment in listed Chinese companies have been pared back, while capital flow quotas have been increased.

However, markets remained cautious after pro-Russian separatists declared victory in a referendum on the creation of two independent entities in east Ukraine. Close to 90 per cent of those who voted chose to secede from Ukraine, according to the referendum's organisers.

The EU and the US have threatened further sanctions against Russia should there be any interference in Ukraine's presidential election on 25 May.

Japan's current account deficit rose from 41bn yen in February to 783bn yen in March, the largest shortfall on record. March's deficit was higher than both the Bloomberg median and CE forecasts. However, London-based consultancy Capital Economics believe it will not be too long before Japan's current account returns to surplus.

Capital Economics say that if the experience of1997 is any guide, the overall improvement in the current account could be roughly one per cent of GDP in the coming year.