Asian shares end higher as Dubai fears fade, financial stocks up
Wednesday, 2 December 2009
SINGAPORE, Dec 1 (Dow Jones): Financial stocks were among the biggest winners in a broad Asian stock market rally Monday following Friday's sharp selloff, as investors found refuge in reassurance by the United Arab Emirates' central bank that it would support local and international banks with exposure to Dubai debt.
"Across Asia, regional markets have rebounded strongly this Monday as the United Arab Emirates' central bank pledged support for the country's local and foreign banks, in turn easing fears of contagion," said Ben Potter, a research analyst at IG Markets in Melbourne, in a note to clients.
Also, traders have come to the realisation that "the Dubai event, while serious, is not the beginning of a new phase of debt deflation greater than the real-estate crisis that started in 2007," said Richard Hastings, a consumer strategist at Global Hunter Securities.
Japan's Nikkei 225 closed up 2.9 per cent, Australia's S&P/ASX 200 rose 2.8 per cent and South Korea's Kospi Composite climbed 2.0 per cent. Hong Kong's Hang Seng Index added 3.3 per cent and China's Shanghai Composite tacked on 3.2 per cent.
India's Sensex climbed 2.1 per cent, also helped by data showing the Indian economy grew 7.9 per cent from a year earlier in the July-September quarter, driven mainly by the manufacturing and services sectors.
The growth was more than the 6.1 per cent expansion in the previous quarter and sharply higher than the median 6.3 per cent forecast in a Dow Jones Newswires poll of 13 economists.
India's surprisingly strong GDP has raised chances of a rate hike before the end of December, said Robert Prior-Wandesforde, senior Asian economist at HSBC. "We believe this to be the biggest rise the Indian economy has seen since the quarterly data began in 1996.
An extraordinary result and one which will no doubt make the RBI sit up and take notice," Wandesforde said, though he's still sticking to the house's call for rate hikes to start in January.
Singapore's Straits Times Index was down 1.1 per cent, however, playing some catchup on the downside after being closed for a holiday Friday.
Most financial stocks in the region advanced, rebounding from Friday's selloff. In Hong Kong, HSBC rose 4.3 per cent after ending Friday down 7.6 per cent. In Australia, National Australia Bank added 6.0 per cent, while in Japan, Mitsubishi UFJ Financial Group rose 8.6 per cent. In South Korea, Woori Finance Holdings surged 9.4 per cent after dropping nearly 16 per cent over Thursday and Friday combined.
"Investors are figuring out that...Asian bankers/brokers have very little exposure to the $60 billion default" in Dubai, said Tony Sagami, editor of Asia Stock Alert.
Bucking the trend, Singapore's banks lost ground in late afternoon trading, led by a 2.3 per cent decline in DBS Group Holdings, on concerns the lender may have the most exposure to Dubai's debt woes.
"Among Singapore banks, DBS is the only bank known to have direct lending exposure to the Middle East," CIMB said in a report after downgrading the stock to underperform from neutral.
"Across Asia, regional markets have rebounded strongly this Monday as the United Arab Emirates' central bank pledged support for the country's local and foreign banks, in turn easing fears of contagion," said Ben Potter, a research analyst at IG Markets in Melbourne, in a note to clients.
Also, traders have come to the realisation that "the Dubai event, while serious, is not the beginning of a new phase of debt deflation greater than the real-estate crisis that started in 2007," said Richard Hastings, a consumer strategist at Global Hunter Securities.
Japan's Nikkei 225 closed up 2.9 per cent, Australia's S&P/ASX 200 rose 2.8 per cent and South Korea's Kospi Composite climbed 2.0 per cent. Hong Kong's Hang Seng Index added 3.3 per cent and China's Shanghai Composite tacked on 3.2 per cent.
India's Sensex climbed 2.1 per cent, also helped by data showing the Indian economy grew 7.9 per cent from a year earlier in the July-September quarter, driven mainly by the manufacturing and services sectors.
The growth was more than the 6.1 per cent expansion in the previous quarter and sharply higher than the median 6.3 per cent forecast in a Dow Jones Newswires poll of 13 economists.
India's surprisingly strong GDP has raised chances of a rate hike before the end of December, said Robert Prior-Wandesforde, senior Asian economist at HSBC. "We believe this to be the biggest rise the Indian economy has seen since the quarterly data began in 1996.
An extraordinary result and one which will no doubt make the RBI sit up and take notice," Wandesforde said, though he's still sticking to the house's call for rate hikes to start in January.
Singapore's Straits Times Index was down 1.1 per cent, however, playing some catchup on the downside after being closed for a holiday Friday.
Most financial stocks in the region advanced, rebounding from Friday's selloff. In Hong Kong, HSBC rose 4.3 per cent after ending Friday down 7.6 per cent. In Australia, National Australia Bank added 6.0 per cent, while in Japan, Mitsubishi UFJ Financial Group rose 8.6 per cent. In South Korea, Woori Finance Holdings surged 9.4 per cent after dropping nearly 16 per cent over Thursday and Friday combined.
"Investors are figuring out that...Asian bankers/brokers have very little exposure to the $60 billion default" in Dubai, said Tony Sagami, editor of Asia Stock Alert.
Bucking the trend, Singapore's banks lost ground in late afternoon trading, led by a 2.3 per cent decline in DBS Group Holdings, on concerns the lender may have the most exposure to Dubai's debt woes.
"Among Singapore banks, DBS is the only bank known to have direct lending exposure to the Middle East," CIMB said in a report after downgrading the stock to underperform from neutral.