Asian equities experienced a rise as investors reacted to China’s stronger-than-expected economic data and new details regarding a stock buyback program announced by the country’s central bank. Shares in China and Hong Kong continued their upward trajectory following the People’s Bank of China’s (PBOC) establishment of a relending mechanism, which offers an initial quota of 300 billion yuan ($42.1 billion) for bank loans designated for stock buybacks. In addition, recent economic reports indicated that China’s gross domestic product (GDP), industrial production, and retail sales figures all surpassed market expectations.
The Asian stock index was poised for its first daily gain since last week, aided by robust performances from chipmakers, particularly Taiwan Semiconductor Manufacturing Co. (TSMC), whose shares surged as much as 6.3% in early trading. Japanese stocks also climbed, buoyed by a weaker yen.
According to Peiqian Liu, an Asia economist at Fidelity International, the PBOC is concentrating on “cutting the cost of financing for the real economy, which will support corporate and household leveraging” while enhancing liquidity measures. Liu shared these insights during an interview with Bloomberg TV.
In the US, futures remained stable after the S&P 500 index pulled back from an intraday record set on Thursday, ultimately closing the session with little change. Meanwhile, Treasuries stabilized following significant selling on Thursday, spurred by renewed signs of strength in the US economy, which led traders to adjust their expectations for future interest rate cuts.
The dollar index rose for the fourth consecutive session, reaching levels not seen since early August. Additionally, yields in Australia and New Zealand increased during early trading on Friday, mirroring these trends.
In Japan, headline inflation rose by 2.5%, aligning with forecasts. The yen showed modest strength after surpassing the psychological threshold of 150 per dollar on Thursday, raising the possibility of official intervention in the currency market.
China’s economic data released on Friday also revealed a deceleration in the rate of home price declines over the past month, indicating that Beijing’s supportive measures may be having a positive impact. Investors were particularly attentive to the PBOC’s relending mechanism, which features a one-year maturity rate of 1.75%, as outlined in the central bank’s statement.
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