Source: TheGuardian
The turbulence buffeting global stock markets eased on Monday after positive data from China boosted confidence in the world second biggest economy.
China’s power usage, rail freight and property market have all shown improvement since August, indicating that the economy is stabilising, the country’s top economic planning agency said on Monday.
The effects of supportive policies, including interest rate cuts, property market stimulus, local government debt swaps, will feed into the economy over the next few months and help underpin growth, the national development and reform commission (NDRC) said on its website.
Investors were also hopeful that stock market purchases by government-backed agencies had helped to put a floor under prices.
China’s main stock market index, the Shanghai Composite, was in positive territory on Monday despite fears of more selling after trading resumed after a four-day break.
The Hang Seng in Hong Kong was up 0.22%, the Nikkei in Japan was also up 0.44% and Korea’s Kospi index was up slightly. A poor outlook for commodity prices and the downgrading of the mining company Rio Tinto sent Australian shares sharply lower but the improved picture from China dragged the S&P/ASX200 upwards to 5,015 points, down only 0.25%.
Chris Weston of IG Markets in Melbourne said it was not clear whether the Chinese market had reached a low or not but comments over the weekend by central bank governor Zhou Xiaochuan that the selloff was close to end had helped reassure traders.
“One day doesn’t make a bull market. However, when you hear that power usage, train freight and property markets are showing signs of improvement, domestic traders listen,” he said.
A flurry of recent soft indicators – and a collapse in China’s stock markets – had heightened fears of a hard landing for the world’s second-biggest economy and sent global financial markets into a tailspin.
But the NDRC said: “The power usage, rail freight, as well as real estate prices and turnover have all improved into August, indicating the economy is stabilising amid fluctuations.
“The economy is expected to maintain steady growth and we are able to achieve annual economic growth target.”
The NDRC cited data from the state grid as saying that China’s total power consumption in August rose 2.47% on the year – the fastest growth so far this year and steady growth was likely to continue in September.
The average daily rail freight volume rose 1.6% in August from July, the NDRC said
China’s exports are likely to swing into positive growth in August from a 8.3 percent drop in July, the agency said without giving specifics.
The customs office is due to release August trade figures on Tuesday. Analysts polled by Reuters expected exports to drop 6.0 percent in August compared with a year earlier.
China’s economy, which grew 7% in the first half compared with a year earlier, is headed for its slowest economic expansion in 25 years in 2015.
The recent downbeat data, however, has raised the risk the government could miss the full-year growth target.
The national bureau of statistics said on Monday that it had revised China’s growth rate for 2014 to 7.3% from the previously released figure of 7.4%.