Friday, 30 October 2015

Stocks little changed, China ends one-child policy

Stock markets were mostly little changed on Thursday.

Asia was an exception, with the MSCI Asia Pacific Index falling 1.1 percent. The Shanghai Composite Index, though, rose 0.4 percent.

For the longer term, however, the more significant event coming out of Asia on Thursday was the announcement that China will end its one-child policy and allow all couples to have two children.

The announcement was made at the close of a key Communist Party meeting that was focused on financial reforms and maintaining growth between 2016 and 2020.

The move by China has the potential to raise its birth rate, which will increase demand in the short term and supply in the long term, both of which are important for China to stabilise its economic growth.

It should be noted, though, that after a 2013 population reform that allowed couples to have a second child if one parent is an only child, just 6.7 percent of those eligible in Beijing applied to have a second child.

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