Hong Kong: Asia stocks rose on Thursday, as investors snapped up beaten down bank shares and pinned their hopes on policy action to support growth, but economic gloom held the yen near a 13-year high against the dollar.
European stocks rose 1.8% in early trade on Thursday to bounce back from two-month lows, led by rallying banks such as UBS AG and energy stocks that tracked firmer oil prices. “The market is yo-yoing again. The good news is it hasn’t touched new lows, and all the bad news is already priced in,” said Marc Touati, chief economist at Global Equities in Paris. “Stocks will start rallying as soon as the newsflow will turn out to be better than what people had feared.”
Though economic data remained dismal, analysts and fund managers also believe that massive government spending and tax cuts around the world will eventually trickle into economies, maybe later this year.
“Investors are looking to the future, seeking out industries that could benefit from government aid,” said Zhou Lin, analyst at Huatai Securities Co. Ltd in Nanjing.
Although risk taking among investors returned suddenly overnight, knocking down a closely followed market volatility index 18%, uncertainty about medium-term corporate earnings, global consumer demand and the banking industry kept the element of fear high.
A slew of reports in Asia showed a rapid drop in growth and collapse in export markets, suggesting it may be a while before a recovery takes hold and provides support for investor willingness to take risks. Chinese economic growth slowed to a seven-year low in 2008 and Japanese exports had a record decline in December.
“Across the region, a collapse in export growth has had direct flow-on effects to industrial production, and we are now seeing this start to impact employment, with household spending the next in line,” emerging market strategists at Royal Bank of Canada said in a note.
Sterling fell back, having risen overnight on speculation UK policymakers might be more aggressive in supporting the economy.
The MSCI index of Asia-Pacific stocks outside Japan rose 1.5% though it remained close to a one-month low touched earlier in the session.
Trading volumes were quickly thinning ahead of lunar new year holidays across Asia next week.
Japan’s Nikkei average closed 1.9% higher after a late jump, boosted by property stocks when the Bank of Japan said it would accept bonds issued by real estate investment trusts as collateral for short-term cash.
Hong Kong’s Hang Seng index climbed 0.6%, powered by a 3.6% rise in HSBC Holdings Plc. Shares of the largest European bank had plunged for eight consecutive sessions to a decade low on concern about the firm’s access to capital.
But sentiment remained fragile. For every positive development, there seemed to be two more negative ones.
International Business Machines Corp. (IBM) gave a rosier-than-expected outlook, though Intel Corp. said it was closing factories in Asia and cutting 6,000 jobs and Sony Corp. slashed its profit outlook for 2008-2009.
However, given how badly corporate credit and almost every stock market were sold off last year, some large asset managers have begun to sift through corporate bonds and equities in search of bargains.
Satomi Noguchi in Tokyo contributed to this story.