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Tokyo Olympics win boosts Asian shares
by Himanshu Singh on Sep 09, 2013 at 04:10
Asian shares gained on Monday in late morning trade after Tokyo won the rights to host the 2020 Olympics, China’s exports beat estimates and Australia elected a new government.
The MSCI Asia Pacific Index increased 0.8% to 135 as of 11:08 a.m. in Tokyo. Japan’s Topix index jumped 1.8% after Tokyo won bid to host the 2020 Olympics, which may drive construction and tourism stocks higher and boost consumer confidence.
Meanwhile, a report today showed Japan’s economy expanded a revised 3.8% in the second quarter on an annualised basis, up from an original estimate of 2.6%.
The nation dragged itself out of recession in 2012 and today's huge upgrade is a ringing endorsement for Shinzo Abe's inflationary policies, dubbed 'Abenomics' and the Bank of Japan's aggressive stimulus programme.
An upgrade in capital expenditure from an original estimate of a 0.1% decline to a 1.3% increase was the major reason for the upgrade and provided a strong indication that business sentiment is improving.
The upgrade also increases the government's argument for a sales tax increase, proposed for next year.
Capital Economics' Japan specialist Marcel Theiliant said: 'The upward revision to Q2 GDP growth strengthens the case for the government to press ahead with the consumption tax hike.
He added: 'However, the ongoing large reliance on consumer and government spending suggests that fiscal stimulus measures may be needed to prevent growth from slowing too sharply.
The news boosted sentiment across Asia. South Korea’s Kospi index rose 0.7%, while Singapore’s Straits Times Index advanced 1.4%. New Zealand’s NZX 50 Index increased 0.4%.
Hong Kong’s Hang Seng Index gained 0.8% and the Shanghai Composite Index climbed 1.5% as reports today showed China’s consumer inflation stayed below target for an eighth month while factory-gate prices declined by the least in six months in August, reflecting an economic pickup.
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