Strong Chinese loans prop up Asian markets
A MAJOR boost to Chinese lending in January buoyed Asian markets yesterday, even following Japan’s disappointing fourth quarter GDP data.
The Peoples’ Bank of China announced that 1.32 trillion yuan (£128.36bn) was distributed in new loans during January, the highest in over nearly four years, easily beating more bearish forecasts.
The news follows better than expected trade figures for January released last week, helping to ease fears that the world’s second biggest economy is slowing down. The Shanghai stock exchange composite index opened up and rose 0.92 per cent to 2,135.42 over the day.
“Seasonally, China typically has big bank lending numbers at the beginning of the year as the banks rush out financing before the government clamps down later in the year,” said a Commerzbank analyst.
The Nikkei shrugged off Japan’s lacklustre GDP figures, finishing up 0.56 per cent at 14,393.11. The country was expected to grow by about 2.8 per cent on an annualised basis in the final three months of the year, but only a one per cent expansion was recorded.
“Japan needs to open up its domestic economy to competition, reform the labour market and address its extremely weak demographics,” said Berenberg’s Christian Schulz.
The bank’s senior economist added: “The growth disappointment poses the risk that these reforms may be delayed or put off entirely and that the authorities will rely on even more monetary and fiscal stimulus for growth in the short-term. But that would seriously increase the risk that Abenomics ends up as an expensive flash in a pan.”
Japanese industrial production also came in slightly below expectations yesterday, with a 0.9 per cent increase recorded between November and December, less than the 1.1 per cent boost projected by analysts.
Production still demonstrates the strength of Japan’s upswing, having risen 7.1 per cent during 2013.