Hong Kong leads Asian markets rally as Evergrande fears ease

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Hong-Kong (AFP)

Asian markets rose on Thursday as concerns over the collapse of struggling real estate giant Evergrande faded for the time being, while investors were also encouraged by a plan by the Federal Reserve to reduce its ultra-accommodative monetary policy soon. .

Hong Kong has made strides as it reopens after a midweek hiatus to catch up with news that Evergrande had agreed to an interest repayment plan to its domestic bondholders, allaying concerns of a default that have given the Chinese economy a hammer blow.

And while Wednesday’s statement was loosely worded – without specifying how much and when it would pay – it was seen as a much-needed positive sign. Attention is now shifting to what she plans to do regarding the repayments to offshore bondholders, which are due on Thursday.

Observers pointed out that even if it does not meet its obligations, the company still has 30 days to provide the money. However, they will keep an eye on how he treats those dollar denominated notes.

“International investors will closely monitor new developments and any state reaction, and assess how contagious this can be for the rest of the economy,” said Bernard Shaw, Asian bond syndicate banker at Daiwa Capital Markets. Singapore.

Hong Kong rose more than 2% in initial trading before slowing down slightly, with Evergrande briefly rising by around 30% – although its shares are still down more than 80% this year. Gains were also recorded for other real estate developers as well as for banks with exposure to the company.

Sydney and Manila also grew by more than 1%, while Shanghai, Singapore, Wellington, Taipei and Jakarta recorded good gains.

The positive start to the day follows a rally of around 1% for the three major indices on Wall Street, where investors also welcomed a statement by the Fed on cutting its extensive bond buying program.

The central bank has said it expects to be “soon” ready to begin the gradual reduction of stimulus measures put in place at the start of the pandemic and which have been a key driver of the global economic and stock market rebound.

– Debt ceiling warning –

The world’s largest economy was now strong enough to slow down its bond buying program “if progress overall continues as planned,” he said in a statement after his political meeting.

“The Fed has officially announced that if the recovery continues as expected, a moderation in the pace of asset purchases could occur soon,” OANDA’s Edward Moya said, adding that investors “can now fully assess an official announcement. of reduction in November with a month of December. start date “.

He said traders were cheered because “the Fed has telegraphed that it is approaching a cut announcement and continues to show that it is in no rush to make interest rate hikes.” .

“The biggest risk to the stock market is an accelerated pace of tightening and the Fed is showing that this is something it will avoid unless it is completely wrong about inflation.”

However, bank boss Jerome Powell has warned US lawmakers to raise the country’s debt ceiling to prevent the government from running out of liquidity and repaying its bonds, which could lead to default. payment and trigger a financial crisis.

“It is just very important that the debt ceiling is raised in a timely manner so that the United States can pay its bills when due,” he said. Not paying is “just not something we can consider”.

His comments were supported by a group of former finance ministers – who served under Presidents Jimmy Carter, George W. Bush, Bill Clinton and Barack Obama – who told leaders on both sides that even a default of short duration could threaten growth.

“This creates a risk of disruption of markets and of undermining economic confidence, and it would prevent Americans from receiving vital services,” they warned.

In oil markets, the top two contracts built on a two-day rally after data showed U.S. inventories were at their lowest since 2018, raising demand optimism, even as the Delta Covid variant continues to cross populations, increasing infections.

– Key figures around 03:00 GMT –

Hong Kong – Hang Seng Index: Up 1.6% to 24,604.73

Shanghai – Composite: EN up 0.6% to 3,649.36

Tokyo – Nikkei 225: Closed for holidays

Dollar / yen: UP to 109.90 yen from 109.80 yen at 9:00 p.m. GMT

Pound / dollar: At $ 1.3626 vs. $ 1.3620

Euro / dollar: up $ 1.1698 from $ 1.1696

Euro / pound: up to 85.86 pence against 85.84 pence

West Texas Intermediate: EN up 0.1% to $ 72.33 per barrel

North Sea crude brent: up 0.2% to $ 76.34 per barrel

New York – Dow: UP 1.0% to 34,258.32 (close)

London – FTSE 100: Up 1.5% to 7,083.37 (close)

– Bloomberg News contributed to this story –

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