Asian markets rise on less bad China GDP data

Economy contracted 6.8% in Q1, lower than economists’ forecast

HONG KONG: Asian markets posted healthy gains on Friday after official data in China showed the coronavirus pandemic had not hit economic growth as badly as some had feared.

Authorities closed factories, halted construction work and imposed drastic lockdowns among other efforts to contain the outbreak after it emerged in the central industrial city of Wuhan late last year.

Life in China has since gradually begun returning to normal after the quarantine measures choked the world’s second-largest economy.

Official data showed a 6.8% contraction last quarter – the first negative growth reported since the country began logging quarterly data in the early 1990s.

The result was slightly better than the fall of 8.2% forecast by economists in an AFP poll, though analysts in China and abroad have long harboured doubts about the accuracy of official GDP figures.

A big economic contraction had already been priced into markets and Friday’s data was “within expectations”, said Yoshihiro Okumura of Chibagin Asset Management.

Other data showed a sharp drop in domestic demand, with many shoppers staying at home and avoiding crowds due to fears of resurgence in virus cases.

But on-year industrial production data, down just 1.1% last month, was a positive sign that the Chinese economy was returning to a position of strength, said AxiCorp chief market strategist Stephen Innes.

“The production side of the economy is normalising, and end-consumption will follow,” he said in a note.

Other experts have cautioned that Chinese growth is unlikely to rebound soon, with depressed demand for exports as the rest of the world grapples with the pandemic.

Fears of a second domestic outbreak are also weighing on local sentiment, with Oanda’s Jeffrey Halley warning that Friday’s data showed “a recovery in consumer spending remains elusive”.

Hong Kong finished 1.6% higher and Shanghai was up 0.7%, with all other major Asian bourses in positive territory.

London was up 2.5% an hour after the opening bell.

Tokyo closed up 3.2%, with investors buoyed by overnight news that Donald Trump had laid out guidelines for a phased reopening of the US economy.

The president faces re-election in November and has been impatient to lift a lockdown that has thrown 22 million people out of work in the world’s largest economy.

“We are having very productive calls with the leaders of every sector of the economy who are all-in on getting America back to work, and soon,” Trump said on Twitter.

But business leaders have said more widespread testing for Covid-19 is essential before the economy can move significantly towards normality.