Asian stocks continue to ride on interest rate cut by China

Asian stocks continue to ride on interest rate cut by China
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First Published: Thu, Nov 27 2008. 11 12 PM IST

Interrupted: A blast site in Mumbai. The Bombay Stock Exchange and National Stock Exchange were closed following the terrorist attacks. Shirish Shete / PTI
Interrupted: A blast site in Mumbai. The Bombay Stock Exchange and National Stock Exchange were closed following the terrorist attacks. Shirish Shete / PTI
Updated: Thu, Nov 27 2008. 11 12 PM IST
Tokyo: Asian stocks advanced for a third day after China lowered interest rates by the most in 11 years to spur economic growth.
China Vanke Co., the country’s biggest builder, jumped 3.1% on speculation lower borrowing costs will encourage home purchases. BHP Billiton Ltd gained 5.7% in Sydney as commodities rallied for a second day. Komatsu Ltd, which controls 17% of China’s excavator market, added 4.4%.
Interrupted: A blast site in Mumbai. The Bombay Stock Exchange and National Stock Exchange were closed following the terrorist attacks. Shirish Shete / PTI
Markets in India didn’t open for trading after terrorists killed at least 100 people in Mumbai, the country’s financial hub.
The MSCI Asia Pacific Index gained 1.9% to 81.60 as of 7.07pm in Tokyo, a third consecutive advance. More than three stocks advanced for each that declined.
“Countries like China still have the weapons and flexibility to control the economy,” said Masahiko Ejiri, who manages Asian equities at Mizuho Asset Management Co., which oversees $26 billion (Rs1.3 trillion) in Tokyo. “For some countries the political risk seems too big, so I would avoid them even if I see value. It’s much safer to have exposure to stable countries.”
The People’s Bank of China on Wednesday cut its one-year lending rate by 108 basis points to 5.58%, less than three weeks after announcing a 4 trillion yuan (Rs29.36 trillion) economic stimulus plan.
China’s economy is deteriorating more quickly as the impact of the global financial crisis spreads, underscoring the need for “forceful” measures to support growth, the nation’s top planner said on Thursday, prompting stock indexes to pare gains. The country’s foreign exchange reserves topped $2 trillion for the first time, the statistics bureau’s chief economist said, giving the nation more resources to take action.
China is the largest trading partner for Japan, South Korea and Australia, and was the biggest contributor to global economic growth last year.
The Nikkei 225 Stock Average advanced 2% to 8,373.39, while China’s CSI 300 Index added 1.5%. All other equity benchmarks open for trading rose, except Vietnam, Thailand, Singapore and Indonesia. Taiwan, which counts China as its biggest market, posted the region’s steepest gain as Hon Hai Precision Industry Co. led a 4.3% advance in the Taiex index.
India’s S&P CNX Nifty Index futures for November delivery fell 3.5% in Singapore after terrorist attacks in Mumbai. Regulators in India closed the Bombay Stock Exchange and the National Stock Exchange, along with bond, foreign exchange, commodities and money markets following the violence in Mumbai.
US stocks jumped on Wednesday as the Standard and Poor’s (S&P) 500 Index erased an early decline to rally 3.5%, bringing its four-day gain to 18%. President-elect Barack Obama’s naming of former Federal Reserve chairman Paul Volcker to head an economic advisory board boosted investor confidence. Futures on the S&P lost 0.8% in Asian trading and the nation’s markets will be closed on Thursday for the Thanksgiving holiday.
Panasonic Corp., the world’s largest maker of consumer electronics, fell 4.7% to 1,284 yen (Rs681). After Japan’s market closed, the company reduced its annual net income target by 90% and operating profit estimate by 39%.
Fuji Heavy Industries Ltd, the maker of Subaru cars, plunged 10% to 287 yen after saying it will slash auto production by 40,000 units next quarter as demand slows.
South Korean stocks rose after the government posted a record current account surplus of $4.91 billion in October, which may help ease pressure on the won, Asia’s worst performing currency this year.
Additionally, the Bank of Korea said on Thursday it will receive $4 billion from the US Federal Reserve, using its currency-swap line for the first time to provide US dollars to local banks struggling to secure foreign funds.
Hyundai Motor Co., South Korea’s largest auto maker, gained 4.6% to 41,000 won, while Hynix Semiconductor Inc., the world’s No. 2 computer-memory maker, added 15% to 6,950 won.
In Taiwan, Hon Hai, the world’s largest contract manufacturer of electronics, rose 6.9% to New Taiwan dollar (NT$) 62.4 (Rs94) after denying reports it will cut staff at its Hong Kong-listed unit.
Leighton Holdings Ltd rallied 8.4% to A$22.12 (Rs718) after the Dubai unit of Australia’s largest building company won a A$3.75 billion contract to build a university campus.
In Thailand, the SET index fell 1.4%.
Motoko Kakizaki and Yuichi Kato contributed to this story.
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First Published: Thu, Nov 27 2008. 11 12 PM IST