Asian Markets Rebound as China Shares Rise on Stimulus Hopes

Volatile Shanghai shares, which descended to a 13-month low on Monday, rose over 2 percent in volatile trade.

• MSCI Asia-Pacific index rebounds from 4-yr low, up 0.8 pct
  
• Spreadbetters see European stocks opening higher
  
• China GDP posts slowest growth since 2009 as widely expected
  
• Uncertain China growth outlook limit gains in many Asian bourses
  
• Hong Kong dollar touches 4-year low
  
• Brent crude up modestly to pull away from 13-year trough
  

Asian shares were mostly higher on Tuesday as Shanghai stocks surged after data pointing to slower Chinese economic growth fanned stimulus hopes.

Experts predict Europe to follow Asia’s lead and forecast a higher open for Britain’s FTSE, Germany’s DAX and France’s CAC.

China’s economy grew 6.8 percent in the fourth quarter from a year earlier, Tuesday’s gross domestic product (GDP) data showed, the slowest growth since 2009. Industrial output in December rose 5.9 percent from a year earlier, compared with forecasts for a 6.0 percent increase.

MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.8 percent, rebounding from a four-year low touched earlier.

Volatile Shanghai shares, which descended to a 13-month low on Monday, swerved in and out of the red before gaining more than 2 percent.

Economic weakness has been largely priced in. This year, exports and consumption could remain weak. Investment, another driver of growth, really depends on government’s spending on infrastructure.

Gu Yongtao, Strategist, Cinda Securities

South Korea’s KOSPI was up 0.3 percent and Malaysian stocks rose 0.2 percent. Singaporean stocks and Japan’s Nikkei were nearly flat.

While headline growth looks fine, the breakdown of the figures points to overall weakness in the economy. All in all, we believe that China will experience a ‘bumpy landing’ in the coming year.

Zhou Hao, Senior Emerging Markets Economist, Commerzbank

The Australian dollar, often used as a proxy for China-related trades, was up a modest 0.3 percent at $0.6886. The Aussie was still firmly within reach of a seven-year low of $0.6827 touched last week amid a rout in commodity-linked currencies.

The Hong Kong dollar touched a new four-year low of 7.8045 versus the dollar, taking it to the lower end of its trading band.

Under a three-decade old currency peg regime, the value of the Hong Kong dollar is allowed to fluctuate within a band of 7.75 to 7.85. Capital outflows in the wake of recent volatility in the Chinese stock and currency markets have buffeted the Hong Kong dollar.

As risk appetite thawed slightly, the US dollar nudged up 0.3 percent to 117.64 yen after slipping last week to a 4-1/2-month low of 116.51 versus the safe-haven Japanese currency.