Asia: Shanghai higher despite World Bank critique

Asian bourses were a sea of green on Wednesday morning, with Tokyo's and Shanghai's stock markets leading the region higher following the gains in the US and UK.

The Nikkei closed up 1.46%, while the Shanghai composite rose 1.5% and the Hang Seng was 1.27% ahead.

This was despite the World Bank arguing China should cut its targets for economic growth next year to focus on reforms.

A report from the bank said the "ambitious" Chinese growth target for gross domestic products (GDP) in 2015 will hold back reforms and that setting a hard GDP growth target will only undermine the country’s reforms.

After China’s gross domestic product grew at 7.4% year-on-year in the nine months to September, the World Bank said a 7% GDP growth target for China would be sufficient to support its labour market.

“The current emphasis on meeting short-term growth targets will make it more challenging to implement the policies necessary to shift growth to a more sustainable medium-term path,” the bank said.

“The emphasis should be on reform rather than specific growth targets,” senior economist and report author Karlis Smits added later.

Japanese traders were bouyed as September's manufacturing output data surprising to the upside, coming hot on the heels of stronger retail sales numbers, although attention was focused on the Bank of Japan policy meeting, which concludes on Friday.

Industrial production in the world's third-largest economy rose by 2.7% month-on-month in September, well ahead of 2.2% expectations.

However, Jane Foley, senior currency strategist at Rabobank, cautioned that despite the improvement in Japanese data in September, "there is currently a lack of evidence that Japan can sustain a durable economic recovery".

Consequently, she sees "no sign of an end" to the central bank’s aggressive quantitative easing programme.

Deutsche Bank's Jim Reid added: "Asian credit markets are also on a firmer footing overnight with IG spreads around 1-2bp tighter across benchmark names while new issues are also being well absorbed."