Asian stocks rise after Bernanke comments
Thursday, 26 February 2009
HONG KONG, Feb 25 (AP): Asian stocks rose Wednesday, taking their cue from Wall Street after United States (US) Federal Reserve Chairman Ben Bernanke said the government had no plans to nationalize hard-hit banks and the recession might end this year.
Gains across the region were modest compared with US markets, where the major benchmarks surged from near 12-year lows in a broad rally led by shares in financial companies.
Japanese shares snapped a three-day losing streak as the yen swooned to a three-month low against the dollar and amid speculation that the government may use public funds to buy stocks. The upswing came despite news the country's trade deficit hit an all-time high as global demand evaporates.
As in the US, investors found a measure of comfort in Bernanke's comments that formally nationalising the banks to ensure their viability 'just isn't necessary'. In recent days, the prospect of nationalization has weighed heavily on markets because of fears it would dilute share prices and turn over major decision to government regulators.
After Wall Street closed, President Barack Obama told lawmakers money would be needed to rescue troubled banks beyond the $700 billion already committed last year. While vowing to lead the country to recovery, he stopped short of laying out specifics about his administration's bank turnaround plan.
Analysts were skeptical gains in US and Asian equities would last.
The US government may end up nationalizing the banks, but do so piecemeal rather than in a single injection, said Dariusz Kowalczyk, chief investment strategist for SJS Markets in Hong Kong.
"The political difficulty of nationalization is hampering efforts to jump-start the recovery, and I think the rally (on Wall Street) Tuesday was only temporary," Kowalczyk said.
In Japan, the Nikkei 225 stock average rose 192.66 points, or 2.7 per cent, to 7,461.22. Investors there jumped back into the market amid reports the government may expand an entity that's currently limited to buying stocks held by financial institutions and their cross-held shares. Earlier this month, Japan's central bank announced its own plans to buy stock holdings worth billions of dollars from financial institutions.
The upbeat mood offset news Japan posted a record trade deficit in January, with exports tumbling 46 per cent from a year earlier. Its economy, the world's second-largest, shrank at its fastest rate in 35 years in the fourth quarter.
In Hong Kong, the Hang Seng rose 1.6 per cent to 13,005.08 even as the government predicted the local economy would shrink for all of 2009 in its first full-year contraction since the Asian financial crisis. South Korea's Kospi was up 0.3 per cent at 1,067.08.
Elsewhere, Shanghai's benchmark added 0.3 per cent, India's stock measure advanced 0.7 per cent and Taiwan's main index was 1.4 per cent higher.
Overnight in New York, the Dow rose 236.16, or 3.3 per cent, to 7,350.94. On Monday, the major indexes tumbled more than 3 per cent, including the Dow, which fell 251 points and hit its lowest close since May 7, 1997.
Broader stock indicators also rebounded Tuesday. The S&P 500 index jumped 29.81, or 4 per cent, to 773.14. On Monday, it logged its lowest finish since April 11, 1997.
Gains across the region were modest compared with US markets, where the major benchmarks surged from near 12-year lows in a broad rally led by shares in financial companies.
Japanese shares snapped a three-day losing streak as the yen swooned to a three-month low against the dollar and amid speculation that the government may use public funds to buy stocks. The upswing came despite news the country's trade deficit hit an all-time high as global demand evaporates.
As in the US, investors found a measure of comfort in Bernanke's comments that formally nationalising the banks to ensure their viability 'just isn't necessary'. In recent days, the prospect of nationalization has weighed heavily on markets because of fears it would dilute share prices and turn over major decision to government regulators.
After Wall Street closed, President Barack Obama told lawmakers money would be needed to rescue troubled banks beyond the $700 billion already committed last year. While vowing to lead the country to recovery, he stopped short of laying out specifics about his administration's bank turnaround plan.
Analysts were skeptical gains in US and Asian equities would last.
The US government may end up nationalizing the banks, but do so piecemeal rather than in a single injection, said Dariusz Kowalczyk, chief investment strategist for SJS Markets in Hong Kong.
"The political difficulty of nationalization is hampering efforts to jump-start the recovery, and I think the rally (on Wall Street) Tuesday was only temporary," Kowalczyk said.
In Japan, the Nikkei 225 stock average rose 192.66 points, or 2.7 per cent, to 7,461.22. Investors there jumped back into the market amid reports the government may expand an entity that's currently limited to buying stocks held by financial institutions and their cross-held shares. Earlier this month, Japan's central bank announced its own plans to buy stock holdings worth billions of dollars from financial institutions.
The upbeat mood offset news Japan posted a record trade deficit in January, with exports tumbling 46 per cent from a year earlier. Its economy, the world's second-largest, shrank at its fastest rate in 35 years in the fourth quarter.
In Hong Kong, the Hang Seng rose 1.6 per cent to 13,005.08 even as the government predicted the local economy would shrink for all of 2009 in its first full-year contraction since the Asian financial crisis. South Korea's Kospi was up 0.3 per cent at 1,067.08.
Elsewhere, Shanghai's benchmark added 0.3 per cent, India's stock measure advanced 0.7 per cent and Taiwan's main index was 1.4 per cent higher.
Overnight in New York, the Dow rose 236.16, or 3.3 per cent, to 7,350.94. On Monday, the major indexes tumbled more than 3 per cent, including the Dow, which fell 251 points and hit its lowest close since May 7, 1997.
Broader stock indicators also rebounded Tuesday. The S&P 500 index jumped 29.81, or 4 per cent, to 773.14. On Monday, it logged its lowest finish since April 11, 1997.