Asian Stock Markets React to Chinese Stimulus Program

24 September 2024 – Asian stock markets responded positively today to a recently announced stimulus program by the Chinese government, with some markets gaining over 4%. In Canada, steel producers are urging their government to expedite the introduction of upcoming tariffs on steel and aluminum.

Chinese Stimulus Measures

Today, China revealed a series of measures aimed at boosting economic growth. The People’s Bank of China (PBOC) plans to reduce the minimum reserve requirements for banks by 50 basis points to enhance liquidity. Additionally, the government announced a reduction in mortgage interest rates for existing loans in the real estate sector. Media reports indicate that liquidity support of at least 500 billion yuan (approximately USD 70.8 billion) will be provided.

These measures follow the PBOC’s decision to lower the short-term repo rate on Monday, further increasing liquidity and directly targeting economic growth.

Significant Stock Market Gains in Asia

Chinese indices, including the Shanghai Shenzhen CSI 300, Shanghai Composite, and Hang Seng Index, all rose by over 4% following the announcement. Other Asian markets also experienced gains today. Japan’s Nikkei 225 increased by 0.7%, while the TOPIX rose by 0.5%, buoyed by Purchasing Managers’ Index data that showed unexpected growth in the services sector for September. South Korea’s KOSPI climbed 1.1%, and the Taiwan Capitalization Weighted Stock Index increased by around 0.7%.

Rise in Base Metal Prices

Prices for key base metals rose in Asia today. On the SHFE commodity exchange, copper increased by 1.8%, lead by 1.5%, zinc by 1.4%, nickel by 1.2%, tin by 0.8%, and aluminum by 0.7%. A similar upward trend was observed for base metals on the European LME at the start of trading.

Canadian Steel Producers Push for Tariffs

In Canada, steel manufacturers are urging the government to expedite the introduction of tariffs (surtaxes) of 25% on Chinese steel, stainless steel, and aluminum imports. This call for action comes after the government announced its intent to implement these tariffs at the end of August 2024. Lobbying efforts by steel producers have increased significantly.

The Canadian government aims to finalize the tariffs on nearly all Chinese steel products by October 15, 2024. The consultation phase concluded on September 20, with a final decision expected on October 1, 2024.