Asian stocks were broadly higher on Friday, driven by strong gains in South Korean equities and a rebound in Chinese stocks. The KOSPI index in South Korea led the regional recovery, while China also showed signs of stabilizing after initial losses, driven by hopes of fresh stimulus measures from the Chinese government.
South Korean Stock Surge
The KOSPI index in South Korea posted a sharp 2% gain, marking a significant reversal after a five-day losing streak. The index managed to recover much of the losses accumulated earlier in the week and was heading for a weekly gain. The positive performance was largely attributed to policy measures announced by the South Korean government on Thursday. These measures are aimed at attracting foreign investment, stabilizing the financial markets, and stimulating domestic demand amid growing economic uncertainty in the country.
The political crisis in South Korea added an additional layer of complexity to the market, with President Yoon Suk Yeol facing impeachment and being suspended from office due to charges of insurrection and abuse of power. However, despite the political turmoil, investors seemed to welcome the government’s attempts to stabilize the economy, which helped lift market sentiment.
Regional Market Impact
The strong performance in South Korea lifted broader market sentiment across the region. Other regional stock markets followed suit with positive movements:
- The Philippines’ PSEi Composite Index rose by nearly 1%.
- Singapore’s Straits Times Index also edged higher on Thursday.
- In Australia, the S&P/ASX 200 gained 0.6%.
- India’s Nifty 50 Futures inched up by 0.2%.
While Japan’s stock market was closed for the New Year holiday and will remain shut through January 6, the overall sentiment across Asia was buoyed by the recovery in South Korea, which is considered a key economic player in the region.
Chinese Stock Market and Stimulus Hopes
Chinese stocks saw some early losses but managed to pare those declines amid renewed hopes of stimulus from the government. The Shanghai Shenzhen CSI 300 index and the Shanghai Composite index were both muted, with the latter closing just 0.2% lower. Earlier in the session, both indexes were down more significantly.
The Hang Seng index in Hong Kong, however, surged by 1%, reflecting investor optimism.
A key driver for the rebound in Chinese stocks was news that the People’s Bank of China (PBOC) is preparing to cut interest rates in 2025 from the current level of 1.5%. The central bank has already implemented several rate cuts in 2024, and market participants are hoping that further monetary easing will provide a much-needed boost to China’s sluggish economy. This follows a series of stimulus measures recently announced by the government to stimulate growth.
However, economic data from China showed that manufacturing activity grew at a slower-than-expected pace in December, signaling that the earlier stimulus measures may not have had the desired impact. The slowdown in manufacturing activity has heightened concerns over the effectiveness of the government’s economic policies in reversing the current slowdown.
Outlook for Asian Markets
The rebound in South Korea’s KOSPI index and the positive momentum in other regional markets suggest that investor sentiment is stabilizing despite political and economic uncertainties in several key countries.
In China, the hope for further monetary stimulus could provide additional support to equities, though concerns about weak economic growth persist. As for South Korea, if the government’s policy measures prove effective in stabilizing both domestic and foreign investment, the positive momentum could continue into the coming weeks.
Overall, while the region faces challenges—particularly in China and South Korea—the expectation of stimulus and policy interventions could provide a cushion for market performance in early 2025.
Related topics:
-
4 Stock Market Indexes: What You Need to Know