Asian Markets Extended Gains On Monday, Hong Kong Index Soared

Arjun Pandit
04 Sep, 2023
Mumbai

Market indexes in Asia traded higher following gains on Wall Street in Friday's trading after the U.S. economy expanded at a moderate pace and jobless rate as more people joined the labor force. 

Moreover, China's additional stimulus measures to support property market and cut mortgage rates for first home buyers also  revived market sentiment. 

On Friday, China announced new measures to support property market and yuan.

Minimum down payments for mortgages will be cut to 20% for first-time home buyers and 30% for the second-time buyers, according to joint statements by the People’s Bank of China and National Administration of Financial Regulations.    

In addition, the central bank also lowered interest rates on new mortgage rates by 40 basis points for the premium to its benchmark loan prime rate. 

Regulators also said mortgage rates on existing loans can be renegotiated starting as early as September 25.

The lowered rates are likely to help 40 million home buyers, or about two thirds of housing loans in the country.  

The PBOC announced foreign exchange reserve requirements to 4% from 6% for banks, to support the weakening yuan which has been under pressure for the last five months.

The yuan has dropped around 6% as foreign investors pulled out of China amid deepening real estate crisis.

A private survey of manufacturing industry showed a surprise expansion in August, marking the highest level since February and significant improvement in factory activities. 

In Monday's trading, the Nikkei index increased 0.6%, the Shanghai SSE Composite index added 1.2%, the Hang Seng index jumped 2.4% and the KOSPI index added 0.6%.  

Country Garden soared more than 15% after the largest real estate company in China narrowly averted its first-ever bond default after investors granted a grace period of 30 days for a yuan loan payment.  

In August, the Nikkei index fell 2.6%, the SSE Composite index declined 5.2%, the Hang Seng index fell 8.2% and the KOSPI index decreased 4.2%.