Chinese rate hike gets mixed reactions from Asian markets

By Danny McCord, AFP

HONG KONG — Asian shares were mixed on Thursday as Chinese data showed inflation in the world’s second-biggest economy jumped to its fastest rate in almost two years but growth had eased. Analysts said the figures indicated the economy was leveling off after blistering growth earlier in the year. Shanghai fell 0.68 percent, or 20.42 points, to 2,983.53 and Hong Kong rose 0.39 percent, or 92.98 points, to 23,649.48. Tokyo was flat, dipping 5.12 points to 9,376.48 while Sydney was also quiet, edging down two points to 4,622.9. Seoul added 0.23 percent, or 4.25 points, to end at 174.69. The dollar made big gains earlier in the day after comments by U.S. Treasury Secretary Tim Geithner that suggested he thought there was no need for the unit to fall any further. China’s National Bureau of Statistics said the closely watched consumer price index, a key measure of inflation, rose 3.6 percent year on year in September. The jump was the fastest since October 2008 and 0.6 percent higher than the previous month. The rate was above the government’s annual target of three percent and was mainly due to rising food prices after widespread flooding and unusually hot weather during the summer wiped out crops, the government said. The figures come two days after the central bank raised interest rates for the first time since late 2007 as it tries to cap inflation and rein in soaring property prices. Stocks had initially rallied after Thursday’s announcement, which also showed the economy grew 9.6 percent year-on-year in the third quarter, beating analyst forecasts for 9.5 percent growth. The figure was lower than the 10.3 percent growth in the second quarter and 11.9 percent in the first three months as Beijing started to withdraw stimulus measures introduced to combat the global crisis. “Policy measures put in place earlier this year appear to have helped steer the Chinese economy through a middle course between overheating and a serious downturn,” said Brian Jackson, a Hong Kong-based senior strategist at Royal Bank of Canada.

“Today’s data provide further confirmation that the slowdown in Chinese growth is very moderate and that conditions are stabilizing.” The dollar was changing hands at 81.18 yen in Tokyo trade, slightly higher than 81.12 yen in New York late Wednesday. The dollar, which hit a 15-year low of 80.85 in New York Wednesday, broke 81.80 yen earlier after the Wall Street Journal published an interview with Geithner in which he said major currencies were “roughly in alignment now.” The comment, which came on the eve of the G-20 meeting of finance ministers and central bankers in South Korea this weekend, stoked speculation that he sees no need for the dollar to weaken further. “The rally was ignited by reported comments by Geithner,” said Tsunemasa Tsukada, chief manager for forex sales at Mitsubishi UFJ Trust and Banking. But the dollar quickly lost steam with market players digesting the news. “After all, the market realized it wasn’t so strong a message,” Tsukada said. Gold closed at US$1,345.00-US$1,346.00 an ounce in Hong Kong, up from Wednesday’s close of US$1,342.00-US$1,343.00. In other markets: — Singapore closed down 0.49 percent, or 15.62 points, at 3,163.53. — Taipei was flat, edging up 6.61 points to 8,131.23. Textile company Far Eastern New Century rose 3.75 percent to NT$47.00 while Taiwan Semiconductor Manufacturing Co was flat at NT$61.0. — Wellington rose 0.68 percent, or 21.91 points, to 3,264.92 — Jakarta rose 0.25 percent, or 9.06 points, to 3,588.01. — Kuala Lumpur rose 0.29 percent, or 4.24 points, to 1,491.02. — Manila closed up 1.36 percent, or 57.21 points, at 4,249.17. — Bangkok ended flat, edging up 0.69 points to 988.80. — Mumbai closed up 1.95 percent, or 388.43 points, at 20,260.58.