Asian stocks rise after Wall Street recovers

BEIJING (AP/Reuters) – Asian stocks rose Thursday after Wall Street soared overnight, breaking a six-day string of losses. The recovery brought a measure of relief to many investors, although experts warned that more volatility could be ahead.

The Shanghai Composite Index, whose sharp drop Monday triggered a global sell-off, rose 2.2 percent to 2,992.99 points, rebounding from several days’ declines. Tokyo’s Nikkei 225 was up 2 percent at 18,753 and Seoul’s Kospi gained 1.1 percent to 1,915.70.

The gains came after Wall Street rocketed up overnight. The Dow Jones industrial average soaring more than 600 points, or 4 percent. That was its third-biggest point gain of all time and its largest since Oct. 28, 2008.

Hong Kong’s Hang Seng advanced 2.3 percent to 21,573.56 and Sydney’s S&P ASX 200 gained 1.6 percent to 5,254.00. Benchmarks in Tai-

wan, Singapore, Bangkok and Jakarta also rose.

Traders were encouraged by comments from William Dudley, president of the New York Federal Reserve Bank, that the case for a US interest rate hike in September is “less compelling to me than it was a few weeks ago,” given China’s troubles, falling oil prices and weakness in emerging markets.

“Traders took the cue to buy,” said Nicholas Teo of CMC Markets in a report.

Following a six-year run-up in US stocks that has pushed major indexes to all-time highs, investors worry the economy could falter if the Fed raises rates too soon.

Panicked selling over the past week was triggered by declines in China, but analysts said it had no basis in economic developments. The Shanghai index has lost more than 40 percent of its value since soaring to a peak June 12 and then plunged despite a multibillion-dollar government intervention.

Analysts said there are probably more roller-coaster days ahead because of worries about China and a possible Fed rate increase.

The slide in the Dow over the past week wiped out some $2 trillion in stock value in the US.

The broader Standard & Poor’s 500 index jumped 72.90 points, or 3.9 percent, to 1,940.51. It was the S&P’s best day in percentage terms in nearly four years. The Nasdaq composite rose 191.05 points, or 4.2 percent, to 4,697.54.

Drop the fantasy

Chinese billionaire Wang Jianlin said the Chinese government needs to give up any “fantasy” maintaining high economic growth rates.

Speaking after his company Dalian Wanda Group bought World Triathlon Corp (WTC) for $650 million, Wang said the key was whether economic growth is “sustainable and safe”.

“China’s economy needs to transform from relying on investment and exports to consumption. That’s a painful process. If the transformation doesn’t happen now, it would be even more painful in the future,” Wang said.

“China needs to drop the fantasy of keeping a high growth rate of 7 or 8 percent and just accept 6, 7 or even 5 percent,” Wang said.

Fears that a deepening slowdown in China could hurt the global economy have rocked global commodities and stock markets.

China’s economy is officially expected to expand around 7 percent this year, the lowest in over two decades, but many observers believe it is growing at a much slower pace.