Most Asian markets yesterday rose for a second day after Greece submitted new debt reform plans and fears over a Chinese rout subsided as Shanghai stocks surged again.
The euro edged higher as investors bet that Athens’ new proposals will be enough to placate its creditors and get the green light at an EU summit at the weekend.
In China, the benchmark Shanghai Composite Index shot up 4.54 percent to 3,877.80 points, taking its two-day rise over 10 percent.
In a roller-coaster week, the Shanghai market gained 5.18 percent overall, after the government announced additional policies to avoid a market crash, but it is still down 24.9 percent from its closing peak on June 12.
The Shenzhen Composite Index, which tracks stocks on China’s second exchange, jumped 4.09 percent to 2,035.26 yesterday, still losing 3.01 percent over the week.
Shanghai’s gains also helped boost other Asian markets. Hong Kong was up 2.1 percent yesterday, adding to a near 4 percent advance in the previous session, while Sydney added 0.38 percent to 5,492.0 and Seoul put on 0.17 percent to 2,031.17.
However, Tokyo dropped by 0.38 percent to end at 19,779.83, giving up early gains.
Manila closed up by 0.20 percent to 7,392.59 and Wellington fell by 0.21 percent to 5,725.34, while Taipei was closed due to a typhoon.
Traders regained some risk sentiment yesterday, at the end of a week of tumult caused by a Greek referendum against austerity and a precipitous fall in China that fueled concerns about the world’s second-biggest economy.
“Market sentiment has definitely reversed significantly and started to stabilize, so it’s safe to say that the state’s measures have won initial success,” Phillip Securities Group (輝立證券) analyst Chen Xingyu (陳星宇) said.
“However, there is still a chance for the market to see a second withdrawal [of funds] after big rises like this, but it won’t be as lasting and as deep as earlier plunges,” he said.
Yesterday, more than 1,300 companies remained halted from trading on China’s two exchanges, nearly half of total listings, Bloomberg News reported.
Trading suspensions tend to slow market activity and defer risk until later.
Meanwhile, hopes that Greece will remain in the eurozone were boosted after the government laid out details of a new bailout plan that offers a pensions overhaul and tax hikes in return for debt relief and a rescue loan.
The package closely resembled an offer put forward by creditors before talks broke down last month.
However, there was no immediate word on whether it would be enough to put an end to the five-month crisis.
Eurozone officials are to study details of the package today, a day before the summit, which is to come a week after Greeks overwhelmingly voted to reject a fresh bailout package offered by the country’s creditor institutions.
“Signs that the proposal Greece has put together has concessions on long-standing issues and is similar to tabled proposals is reducing risk aversion,” Auckland-based ANZ Bank New Zealand senior currency strategist Sam Tuck told reporters.
Currency markets welcomed the news, pushing the euro up to US$1.1111 and ¥135.63 from US$1.1035 and ¥133.88 in New York late on Thursday. The US dollar rose to ¥122.09 from ¥121.34.
Sentiment also improved in commodity markets, with iron ore prices yesterday increasing by nearly 10 percent.
Oil prices also rose. US benchmark West Texas Intermediate for August delivery climbed US$0.91 to US$53.69 and Brent crude for next month advanced by US$0.97 to US$59.58 per barrel in afternoon trade.
Gold fetched US$1,162.65 compared with US$1,162.39 late on Thursday.
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