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Asian markets boosted by US interest rate cut

The Federal Reserve slashed rates to a minimum of 0%; effectively ripping up decades of monetary policy-making, saying it would no longer set an explicit target for US interest rates and instead set a range of between 0.25% and 0%.

Hong Kong followed suit by lowering borrowing costs. The Hong Kong Monetary Authority lowered its base rate to 0.5% from 1.5% and asked lenders to do the same to help prop up the economy. Movements in Hong Kong rates typically track US credit policy because its currency is pegged to the dollar.

There was also much speculation that the Japanese central bank will also reduce interest rates this week. The government has been urging the Bank of Japan to do more to support the economy.
In response development companies led a recovery in Asian stocks which rose to a five-week high. Those who benefited included Sun Hung Kai Properties Ltd, Hong Kong's largest developer, Henderson Land Development Company and Mitsubishi Estate Company.

'This is a strong statement that the US is doing all it can to support the market and prevent a sharp economic deterioration,' said Masahiko Ejiri, who manages Asian equities at Tokyo-based Mizuho Asset Management Company. 'But it’s also a sign that things are getting worse. There will be less room for them to manoeuvre from here,' he added.

'You can see that Hong Kong is reacting and Japan is under a lot of pressure to follow suit in cutting rates,' said Scott Lim, chief executive officer of MIDF Amanah Asset Management in Kuala Lumpur. 'The whole region will follow suit,' he added.

In China the government said it will order banks to increase loans to developers of low-priced houses as well as ease ownership limits and lending caps, allowing owners of smaller- than-average apartments to buy a second apartment.