Asia stocks rise, Shanghai recovers from China downgrade

AFP,HONG KONG:  Most Asian markets rose yesterday following a positive lead from the US and Europe, while Shanghai recovered from early selling fuelled by Moody’s decision to cut China’s credit rating on worries about its growing debt mountain.
The ratings agency said its downgrade on the world’s number two economy was prompted by the likelihood of a “material rise” in debt throughout the economy and as potential growth slows.
Beijing has tried to address a toxic brew of unregulated and risky lending, which is increasingly seen as a threat to global financial stability.
But analysts are unsure about leaders’ willingness to push on with the reforms since huge borrowing has been a key driver of the growth on which the Communist Party relies for political legitimacy.
China’s economy grew last year at its slowest pace in a quarter of a century and there are expectations it will continue to ease in coming years.
“It is a psychological blow that China will not take kindly to and absolutely speaks to the rising financial pressures in China,” Christopher Balding, an associate professor at the HSBC School of Business at Peking University in Shenzhen, told Bloomberg News.
The ratings cut was the first by Moody’s since late 1989 when it assessed the impact of the Tiananmen Square crackdown on China’s trade with the world.
Shanghai fell one per cent early on but reversed the losses to end up 0.1 percent, while the yuan also bounced back from initial losses against the dollar. Hong Kong rebounded to end 0.1 per cent higher.
Elevated concerns 
But elsewhere, investors tracked a Wall Street gain. Tokyo finished 0.7 per cent higher while Sydney put on 0.2 percent, Singapore gained 0.3 per cent and Seoul added 0.2 percent.
Wellington and Taipei were each comfortably higher.

Asia stocks rise, Shanghai recovers from China downgrade

AFP,HONG KONG: Most Asian markets rose yesterday following a positive lead from the US and Europe, while Shanghai recovered from early selling fuelled by Moodys decision to cut Chinas credit rating on worries about its growing debt mountain. The ratings agency said its downgrade on the worlds number two economy was prompted by the likelihood of a material rise in debt throughout the economy and as potential growth slows. Beijing has tried to address a toxic brew of unregulated and risky lending, which is increasingly seen as a threat to global financial stability. But analysts are unsure about leaders willingness to push on with the reforms since huge borrowing has been a key driver of the growth on which the Communist Party relies for political legitimacy. Chinas economy grew last year at its slowest pace in a quarter of a century and there are expectations it will continue to ease in coming years. It is a psychological blow that China will not take kindly to and absolutely speaks to the rising financial pressures in China, Christopher Balding, an associate professor at the HSBC School of Business at Peking University in Shenzhen, told Bloomberg News. The ratings cut was the first by Moodys since late 1989 when it assessed the impact of the Tiananmen Square crackdown on Chinas trade with the world. Shanghai fell one per cent early on but reversed the losses to end up 0.1 percent, while the yuan also bounced back from initial losses against the dollar. Hong Kong rebounded to end 0.1 per cent higher. Elevated concerns But elsewhere, investors tracked a Wall Street gain. Tokyo finished 0.7 per cent higher while Sydney put on 0.2 percent, Singapore gained 0.3 per cent and Seoul added 0.2 percent. Wellington and Taipei were each comfortably higher.