Chinese Stimulus Promise Keeps SE Asia Stocks Stable
Southeast Asian stock markets gained some valuable ground Tuesday as most of them managed to regain solid footing. Reuters reported that this meant China--its factories in particular--didn't do so well, but the whispers of a generous stimulus policy had done its job. The whole Southeast Asian region, in particular, gained from the Chinese announcement.
According to reports, the data collected by the government had yielded a measure of good. Manufacturing activity remained one of the Chinese economy's most important drivers, and the second-largest economy in the world was still expanding for the second straight month. It is moving at a much slower pace than expected, but analysts said that it is better than nothing.
Taye Shim, head of research at the Mirae Asset Sekuritas, looked at the situation and said that this definitely was good news in the long term. Most stocks in the region suffer when the Chinese market suffers. The indication of a stimulus package ready to be handed out by the government actually boosted the surrounding markets, not to mention the Chinese one.
Chinese reform, however, needs more than just a stimulus package, according to a central bank adviser. SCMP reported that Liu Shijin advised that China could avoid the 'middle-income' trap with a different economic policy that doesn't rely on stimulus alone. It could choose to rely on its economy once again, evident of the GDP growth of 6.4, which it posted recently.
The deputy head of Development Research Foundation instead recommended that China should make greater efforts in instituting structural adjustments and focus more on the removal of institutional obstacles. Liu added that taking this path would be better than just adding more economic stimulus packages to their policies in 'bailing out' China's economy,
Understanding the standard growth rate needed for China's economy to stabilize is a big part of creating this trend. According to the analyst, the trend should be something that China's economic overseers should abide by rather than resist entirely. He added that with economic activity likely to expand further this year, they shouldn't lose sight of the growth potential.
That being said, of the economies relying on the bounce back of China's economy, the Philippines performed the best out of its SEA neighbors, the stocks climbing 0.7 percent--its highest movement ever since April 11. The best performer among companies was SM Prime Holdings, Inc, holding a 2.4 percent position in the exchange, while Ayala Land Inc held 0.9 percent.