Asian stock markets rose en masse despite concerns over further U.S. interest rate hikes. The Chinese stock market is rising, with the Chinese stock market soaring 2% despite the People’s Bank of China’s rate freeze.
On the 20th, the Asian stock market closed up 0.07% for Japan’s Nikkei, 0.16% for Korea’s KOSPI, and 0.06% for Australia’s ASX index, respectively.
China’s Shanghai Composite Index is rising 2.02% and Hong Kong’s Hang Seng Index is rising 1.16%, respectively, in the Chinese stock market just before the closing.
Even though the People’s Bank of China froze interest rates on the same day, the Chinese stock market is rising all at once.
The People’s Bank of China froze the preferential interest rate on one-year loans at 3.65 percent and the preferential interest rate on five-year loans at 4.30 percent.
This is what the market expected. With the U.S. Fed leaving room for further rate hikes, if China implements its monetary policy in the opposite direction, the gap between the two countries’ interest rates will widen further. This is likely to cause side effects such as the outflow of foreign capital in China and the rapid devaluation of the yuan.
As a result, the market seems to have held a relief rally when the People’s Bank of China froze interest rates on the same day in Asian stock.
Meanwhile, Goldman Sachs, the world’s top investment bank, predicted that “the Chinese stock market will soar 24% by the end of the year.”
Goldman Sachs released a report on the 19th (local time) and predicted that “the Chinese stock market will surge by 24% from the present due to China’s economic resumption.”
“The main theme of the Chinese stock market will shift from economic resumption to economic recovery, and the economic recovery will improve corporate earnings,” said King Lau, a strategist who wrote the report.
In particular, he added, “The recovery in the service sector will be large.” Although China’s various service sector indicators are much lower than the pre-COVID-19 level in 2019, it is predicted that it will recover in earnest from the second half of the year and return to the 2019 level.