Asian shares higher despite weak China data
10 Apr 2014
Asian shares closed higher today after a choppy session, with Chinese mainland shares beating the rest, despite lacklustre Chinese trade figures.
Chinese exports were down 6.6 per cent in March, well below estimates for a 4 per cent gain after February's dramatic 18 per cent drop. Imports meanwhile, were down an annual 11.3 per cent, well short of expectations for a 2.4 per cent increase.
After the announcement of the data, Chinese premier Li Keqiang said the government would not adopt any short term measures to deal with the economy's short-term volatility.
CBC quoted Nicholas Ferres, investment director, global asset allocation at Eastspring Investments as saying it was back to the twisted logic that bad news was good news. He said he suspected that despite premier Li's words, Beijing would be forced to ease.
He added he did not think Li may be telling the entire truth. He said the needed to ease as growth was relatively weak and easing could come in the form of a RRR cut, an interest rate cut or currency weakness.
Meanwhile, China's exports and imports were unexpectedly down in March as premier Li said the nation would roll out more policies to support growth while avoiding stronger stimulus.
Overseas shipments fell 6.6 per cent as against the earlier year, according to the customs administration, which attributed the drop partly to distortions from inflated data in early 2013. Imports were down 11.3 per cent, partly due to falling commodity prices, leaving a trade surplus of $7.71 billion.
Asian stocks as also the Australian dollar shed gains after the report added to worries that expansion in the world's second-largest economy would worsen.
The government was taking steps including railway spending and tax relief to support growth even as it avoided monetary measures such as cutting banks' reserve requirements or the scale of stimulus used to counter the financial crisis in 2008.
''Economic momentum may have stalled temporarily in March,'' Zhang Zhiwei, chief China economist at Nomura Holdings Inc in Hong Kong, said in a note today.
According to Zhang, the government might wait to see how the economy responded to the latest fiscal measures before taking additional action to aid growth. Zhang had previously worked at the International Monetary Fund.
