Asian stock markets rise: interest rate cuts bring hope back!

Asian stock markets rise: interest rate cuts bring hope back!

Asian stock markets rallied today following Moody's downgrade of the US credit rating. Loud nau.ch The Hang Seng Index in Hong Kong recorded a rise of 1 percent, while the Tokyo Stock Exchange also showed a firm trend. Experts see Moody’s decision as a short-term shock as markets remain optimistic.

In line with this general recovery, the Chinese central bank has cut interest rates for the first time since October. The one-year key interest rate (LPR) fell from 3.1 to 3.0 percent, while the five-year LPR was reduced by 10 basis points to 3.5 percent. Five major state-owned banks in China cut their deposit rates in parallel to stimulate lending and consumption.

Could cutting interest rates boost growth?

The interest rate cut is seen as an economic stimulus by Marco Sun, chief analyst at MUFG Bank (China). He emphasizes that this could stimulate economic activity. Xing Zhaopeng, senior China strategist at ANZ, also sees the interest rate cut as a preventive measure to improve banks' net interest margins. A further rate cut is expected by the end of July.

International investors are showing interest in Asian markets and are returning, resulting in an inflow of around $6.22 billion into stocks in many Asian countries in May. This return of investors is characterized, among other things, by optimism about progress in trade negotiations between the USA and China, which is easing fears of new tariffs. The markets are therefore benefiting from the prospect of growth-oriented economic policies in China and other Asian countries.

The role of Moody’s and its analysts

Sean Hung, Vice President and Senior Credit Officer at Moody’s Investors Service Hong Kong Limited, plays an integral role in analyzing financial markets in the region. He oversees a portfolio of banks and non-bank financial institutions in China. Prior to Moody's, Sean was an equity research analyst at Barclays Capital Asia Limited in Hong Kong, where he focused on Chinese banks and payments companies. He also worked in credit analysis and risk management at Visa Hong Kong, where he specialized in settlement risk for financial institutions in North Asia.

Sean Hung holds a Bachelor's degree in Financial Services from Hong Kong Polytechnic University and a Master's degree in Financial Engineering from the City University of Hong Kong. He is also a CFA (Chartered Financial Analyst) and FRM (Financial Risk Manager), which makes him an expert in the financial sector.