As China eases and shows recovery, world stock markets also get much needed boost
San Francisco, CA -- (SBWIRE) -- 09/06/2012 -- This Monday turned out to be a green day as the world’s stock markets rose. The much needed boost came after the contraction in the manufacturing of China’s markets increased expectation to help more stimuli to help world’s second biggest economy.
One of the industrial groups in China, according to ABCnews.go.com, reported this weekend that,
“China's purchasing managers' index, which reflects manufacturing activity, fell to 49.2 in August from July's 50.1 on a 100-point scale. Numbers below 50 show a contraction. It was the group's weakest reading to date.”
The above statement has created a doubt in whether China has started recovering since the great global crises in 2008. According to latest research, China’s economic growth rate has fallen down to 7.6 percent. Despite of the stimulus measures by the government, corporate profits and other indicators have also faced a decline.
Francis Lun, Managing Director of Lyncean Holdings in Hong Kong said,
“The numbers were really bad, and many people believe that the government will have to do something to increase liquidity.”
The Friday speech by Federal Reserve Chairman, Ben Bernanke, has also consoled many investors as he suggested more central banking action to support the U.S. economy. Investors have also been looking forward to see whether Fed is going to buy more bonds (quantitative ease) in order to encourage lending and growth.
One of the analyst at Credit Agricole CIB in Hong Kong said,
"Although Fed Chairman Bernanke did not categorically state that a third round of quantitative easing or QE3 is on the cards ... the prospects are more likely than not for more Fed balance sheet expansion."
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