Asian shares rally as G20 meeting begins

AFP - Asian stocks rallied yesterday as China’s Central Bank chief said Beijing still has enough monetary firepower to keep the world’s second-largest economy on track as G20 ministers gathered in Shanghai.

Global equities looked set for their second straight week of gains, with major bourses across Asia pushing higher after US and European stocks rose overnight.
The rally came as officials from the Group of 20 industrialised nations gathered for a two-day meeting in Shanghai, with China’s sagging economy expected to loom over the discussions.

Shanghai rose almost one percent after the head of the People’s Bank of China said the economy was strong and signalled authorities could do more to help stimulate growth.
Battered industrial metal prices rebounded, while high yielding currencies including the New Zealand dollar jumped as sentiment improved.

Tokyo added 0.30 percent after data showing inflation fell to zero in January spurred expectations the central bank could ramp up its massive bond buying programme.
“Markets are rallying ahead of the G20 meeting, boosting risk assets,” Wei Wei, an analyst at Huaxi Securities in Shanghai, told Bloomberg News.

“The risk is that investor sentiment is disappointed by the meeting’s outcome.”
Shanghai plunged more than six percent on Thursday, hit by tightening liquidity and concerns a rally that has added 10 percent since mid-January was overdone.
Chinese shares have been on a rollercoaster ride since a debt-fuelled bubble burst last year, while cooling growth in the key importer of raw materials has sent commodity and energy prices spinning.
Oil also rose, with the US benchmark trading up five cents at $33.13 while Brent crude adding 53 cents to $35.24.

Pressure has been mounting for central bankers to let loose their monetary firepower to help stimulate growth and reassure investors after financial markets posted one of the worst starts to the year in living memory.

Japan has already adopted negative interest rates, the European Central Bank has embarked on a huge quantitative easing programme, and the US Federal Reserve has signalled possible delays to interest rate rises.

But Germany’s Finance Minister Wolfgang Schaeuble set the stage for disputes at the Shanghai meeting when he said Europe’s largest economy opposes any G20 fiscal stimulus package.
“Monetary policy is extremely accommodating to the point that it may even be counterproductive in terms of negative side effects,” he said.