Hong Kong: Asian stocks rose and the yen fell on Tuesday, helped by increasingly aggressive efforts by governments that were pouring out cash and investment to stabilise markets and support their economies.
Japan’s central bank said it would buy $11.2 billion worth of badly performing shares off the books of the country’s struggling financial institutions, supporting equities and weighing on safe-haven US Treasuries.
“When taken alone, this is positive for shares and is likely to lead to an easing of risk aversion. It is a factor that is positive for stocks and negative for the yen,” said Tomoko Fujii, head of economics and strategy, Japan for Bank of America in Tokyo.
Technology stocks, some of whom were beaten down the hardest during the worst days of 2008, led the modest rally in equities, which in turn helped investor willingness to take risks and lift higher-yielding currencies such as the Australian and New Zealand dollars.
The MSCI index of stocks in Asia-Pacific excluding Japan rose 1.05%. The healthcare, materials and technology sectors were the biggest percentage gainers among the sectors in the region.
Australia’s benchmark S&P/ASX 200 index was one of the biggest gainers in the region, rising 1.5%. Shares of Commonwealth Bank of Australia Ltd provided a large boost to the index, up 8.9% after the bank provided a not-as-bad-as-expected profit forecast.
Japan’s Nikkei share average inched up 0.1%, after a 1.3% rise overnight in the Nasdaq inspired some bargain hunting among tech shares.
However, shares of Japan’s largest bank fell 1.9% after a newspaper reported Mitsubishi UFJ Financial Group will slash its annual forecast and join an increasing number of companies ratcheting down their expectations as the impact of global recession is fully felt.
Hong Kong’s Hang Seng index climbed 1.3%, helped by Chinese stocks, which were rising on speculation of further stimulus from Beijing.
Big government pay outs
Hopes the White House will in addition to pumping more than $800 billion of stimulus into the economy also create a new fund to house bad bank debt have been redirecting investors’ capital back into equity markets.
Last week equity funds around the world saw $1.56 billion in fresh money, bonds funds took in $35 million and money market funds received $6.8 billion, according to Boston-based EPFR Global, which tracks $11 trillion in total assets.
Among large emerging markets, investors continued to favour China by and far.
“Since the New Year there has been a clear split in the fortunes of the four BRICs markets, with investors gravitating towards China and Brazil at the expense of Russia and, to a lesser extent, India. China Equity Funds absorbed $43 million for the week, the eighth time in 10 weeks they have recorded inflows,” the firm said in a note.
In the currency market, the dollar rose 0.4% on the day against the yen to ¥89.80 and the euro climbed 0.5% to ¥115.60 on hopes the action by the Bank of Japan will help to stabilise the markets and ease risk aversion.