China $585 Billion Stimulus, Asia Rallies

123jump.com Staff
10 Nov, 2008
New York City

Asian stocks rallied after China announced a $585 billion plan to stimulate economy, increase infrastructure spending and help farmers and small businesses. Resource stocks closed sharply higher in Australia. Heave machinery maker IHI in Japan lowered annual earnings outlook.

[R]9:15AM New York – Asian stocks rallied after China committed $585 billion to stimulate the economy.[/R]

Stocks in Asia closed higher and in Europe gained after China announced a fiscal stimulus plan to support the sagging economy. The size of the plan and need for a stimulus surprised the market.

China unveiled $585 billion in stimulus package focused at banking sector, farmers and small manufacturing companies that are taking the biggest brunt of the current economic slowdown. China plan will dedicated unspecified amount for infrastructure development.

The central bank in China last month relaxed loan standards for bank loans by removing caps on how much banks can lend and in the last two months lowered interest rate three times. The weekend announcement by China lifted markets in Asia and resource stocks in European trading.

Resource stocks ArcelorMittal, BHP Billiton, Rio Tinto, Antofagasta and Xstrata surged more than 10% in the early afternoon trading in Europe and resource stocks closed sharply higher in Australia.

HSBC Holdings Plc took additional reserve charge of $4.3 billion and indicated further deterioration in the housing markets linked loans in the U.S. The bank reported first half profit decline of 20% to $7.7 billion and wrote down $600 million in assets linked to credit linked assets and $1 billion in bad loans reserves.

The Japanese heavy machinery maker IHI Corp lowered its profit for the year ending in March 2009 and may lower or eliminate dividend.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 498.43 or 5.81% to 9,081.43, Hang Seng index in Hong Kong increased 501.20 or 3.52% closed to 14,744.63 CSI 300 index in China higher 123.84 or 7.38% closed to 1,801.66. ASX 200 index in Australia increased 56.50 or 1.39% to close 4,107.80. The KL Composite index in Malaysia higher 10.29 or 1.15% closed to 904.24.

The Kospi Index in South Korea increased 17.97 or 1.58% to close at 1,152.46. SET index in Thailand closed lower 7.37 or 1.59% to 456.44 and JSE Index in Indonesia increased 2.32 or 0.17% to 1,340.68. The Sensex index in India increased 571.87 or 5.74% closed to 10,536.16.

Europe Markets Review

In London FTSE 100 Index traded higher 154.33 or 3.54% to 4,519.29, in Paris CAC 40 Index increased 131.85 or 3.80% to 3,600.97 and in Frankfurt DAX index traded higher 185.64 or 3.76% to 5,124.10. In Zurich trading SMI increased 198.59 or 3.31% to 6,206.75.