Rate cuts, spending hopes help Asian stocks maintain tempo

Rate cuts, spending hopes help Asian stocks maintain tempo
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First Published: Mon, Jan 05 2009. 09 35 PM IST

 Good beginning: An investor looks at the share index at a bank in Kuala Lumpur, Malaysia. Lai Seng Sin / AP
Good beginning: An investor looks at the share index at a bank in Kuala Lumpur, Malaysia. Lai Seng Sin / AP
Updated: Mon, Jan 05 2009. 09 35 PM IST
Tokyo: Asian stocks rose for an eighth day, pushing the benchmark index to its longest streak of gains since 2004, on optimism that government spending and lower interest rates will alleviate the global recession.
Good beginning: An investor looks at the share index at a bank in Kuala Lumpur, Malaysia. Lai Seng Sin / AP
Baoshan Iron and Steel Co., China’s biggest maker of the alloy, surged 7.5% after the government said it will support the steel and automobile industries. India’s Sensex index advanced 3.2% after the central bank cut interest rates for a fourth time since October. Mizuho Financial Group Inc. soared 13% after a stock split and, as the Sankei newspaper said, Japan’s government may buy non-performing loans from banks.
The MSCI Asia Pacific Index rose 1% to 91.03 as of 8.50pm in Tokyo, set for the highest since 5 November. The benchmark has risen 5.2% in its longest string of advances since August 2004. It posted a record 43% slide last year, the worst annual performance in its two-decade history.
This year will be much better than 2008; at least it will be without the shocks, Liu Yang, who oversees about $2 billion (Rs9,680 crore) in China assets at Atlantis Investment Management Ltd in Hong Kong, said in an interview with Bloomberg Television.
Major stock markets in the region advanced, except in Australia. Japan’s Nikkei 225 Stock Average rose 2.1% to close at 9,043.12 in a half-day session, the highest since 10 November and the index’s best start to a new year since 2002.
Nintendo Co., which gets 40% of its sales from the US, led gains after officials said US President-elect Barack Obama may cut taxes by more than $300 billion and as the yen weakened. The nation’s markets had been closed since 30 December for New Year’s holidays. China’s benchmark CSI 300 Index snapped an eight-day losing streak.
The value of global equities fell by almost half last year as the collapse of the American housing market froze credit markets and triggered the first simultaneous recessions in the US, Europe and Japan since World War II.
US stocks rose to a two-month high on 2 January, with the Standard and Poor’s 500 Index gaining 3.2%, after General Motors Corp. received its first cash infusion from the government to keep it afloat and oil prices rallied. S&P futures retreated 0.1% today.
Equities are set to rally on risk appetite returning, Sean Darby, chief Asian equity strategist at Nomura Holdings Inc., wrote in the brokerage’s annual outlook for the region, released on Monday. We expect growth in 2009 to remain subdued and equities have already priced this in.
Baoshan Iron and Steel Co. rose 7.5% to 4.99 yuan. Chongqing Iron and Steel Co. jumped 10% to 3.80 yuan.
Premier Wen Jiabao said the government has finished drawing up policies to support the steel and automobile industries through the economic slowdown. Wen didn’t elaborate on the policies when he made the statement on state radio on 2 January.
Nintendo, maker of the Wii video-game machine, jumped 5.2% to 35,500 yen in Osaka trading. AU Optronics Corp., Taiwan’s biggest maker of liquid-crystal displays, added 6.9% to NT$26.4.
Obama is pushing for tax cuts that would amount to about 40% of a stimulus package he’s asking Congress to pass within the next several weeks, a transition official and a Democratic aide said. The measure may be worth as much as $775 billion, the Democratic aide says, meaning tax cuts may make up at least $300 billion of the legislation.
The yen depreciated to as low as 92.35 on Monday from 90.64 at the 11am close of stock trading in Tokyo on 30 December, boosting the value of repatriated overseas sales.
Government policies should support the market as investors try to come to grips with the worsening economic fundamentals, Tomochika Kitaoka, a Tokyo-based strategist at Mizuho Securities Co., said in an interview with Bloomberg Television. The yen’s depreciation is a tailwind for Japanese equities.
Mizuho, Japan’s No. 3 bank by market value, rallied 13% to 292 yen. Sumitomo Mitsui Financial Group Inc., the second biggest, soared 11% to 4,190 yen. Both were untraded in the final days of 2008 as they conducted 1,000-to-1 stock splits related to Japan’s move to a paperless stock system, making the shares more accessible to individual investors. Mitsubishi UFJ Financial Group Inc., Japan’s biggest bank, rose 4% to 571.
The Japanese government and central bank are considering buying corporate debt, stocks and derivatives from financial companies, the Sankei newspaper reported on 30 December. The Bank of Japan declined to comment.
Rio Tinto Group, the world’s No. 3 mining company, jumped 8.6% to 42.30 Australian dollars after copper and zinc prices soared. Alumina Ltd, partner in the world’s biggest producer of the material used to make aluminium, leapt 11% to A$1.55. Mitsui and Co., which generates more than half its profits from commodities dealing, gained 8.6% to 978 yen. Inpex Corp., Japan’s biggest oil explorer, added 3.3% to 721,000 yen.
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First Published: Mon, Jan 05 2009. 09 35 PM IST
More Topics: Rate | Stocks | Index | Gains | Government |