Asia stocks up for 5th day on China rate cut

Asia stocks up for 5th day on China rate cut
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First Published: Thu, Nov 27 2008. 11 01 AM IST
Updated: Thu, Nov 27 2008. 11 01 AM IST
Hong Kong: Asia stocks rose for a fifth day on Thursday, helped by hopes that policymakers’ efforts will ultimately prevail after a surprise and aggressive rate cut from China, though US data ominously reflected a deep recession.
Investor sentiment also improved after US stocks chalked up a four-day winning streak, their longest run since May, as shares in General Motors Corp and Ford Motor Co surged on expectations that Washington will bail out the car industry.
While investors cheered China’s policy moves, views on India, emerging Asia’s other titan, darkened after militants killed at least 86 peple in the financial capital Mumbai. India’s stock markets were shut for the day following the attacks.
Oil prices shrugged off the rise in Asian equities and fell more than $1 near $53 a barrel as investors shifted their focus back to distressed demand, after US government data showed a sharp buildup in crude stocks.
Two different camps of investors were emerging as the end of a wild, volatile year for markets approaches. One group believes global equity prices have already discounted a global recession and now there is value to be found in some beaten down sectors, like financials and consumer goods companies.
The other pack thinks the boost from trillions of dollars of government stimulus and aggressive central bank moves - like China’s surprising 1.08 percentage point cut in interest rates - will help down the line but the near-term drag from shrinking economies in Europe, Japan and the United States is inescapable.
Stocks in the Asia-Pacific region outside of Japan were up 2.7%, set for a fifth straight day of gains, according to an MSCI index Still the index is on track for a seventh month of declines, down about 9% in November.
Hong Kong’s Hang Seng index rose 2.9%, while Shanghai’s composite index rose 4.7%.
Bank stocks benefited from a drop in reserve requirements, with shares of China’s biggest bank, Industrial and Commercial Bank of China Ltd, up 4%.
In Japan, the Nikkei share average climbed 2.4%, supported by a rally in the technology sector, which globally has been a hard-hit because of its dependence of business and consumer spending.
US markets were closed on Thursday for a public holiday, but investors would undoubtedly be on the lookout for retail sales figures for the day after Thanksgiving on Friday. That is traditionally the busiest time for retailers but desultory economic conditions may encourage consumers to temper spending.
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First Published: Thu, Nov 27 2008. 11 01 AM IST
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