Asian stocks rise as investors wary of Fed move
Monday, 3 December 2007
Asian stocks rose last week, trimming the regional benchmark's biggest monthly decline in 1 1/2 years, as investors bet the US Federal Reserve will lower borrowing costs to bolster growth in the world's largest economy, according to report release on Internet.
Mitsubishi UFJ Financial Group Inc and Commonwealth Bank of Australia led gains by banks. BHP Billiton Ltd, the world's biggest mining company, tracked metals prices higher.
``A rate cut is being viewed as more likely,'' said Nicole Sze, a Singapore-based investment analyst at Bank Julius Baer & Co, which manages $350 billion in assets. ``That will provide short-term relief to the market because there have been concerns about the risks that might result if credit costs remain high.''
The MSCI Asia Pacific Index added 4.9 per cent to 161.92 this week, snapping a three-week, 8.4 per cent slump. The 1,055- member benchmark dropped 5.5 per cent in November, its worst month since May 2006.
Japan's Nikkei 225 Stock Average rose 5.3 per cent. The Hang Seng Index jumped 7.9 per cent, the region's biggest advance, as speculation Hong Kong's borrowing costs will be lowered boosted shares of Sun Hung Kai Properties Ltd and other developers.
China's Shanghai Composite Index lost 3.2 per cent, capping its steepest monthly drop in at least 12 years, on concern the government will impose further measures to rein in asset prices.
Mitsubishi UFJ, Japan's biggest publicly traded bank, surged 17 percent to 1,089 yen. Mizuho Financial Group Inc, the second largest, jumped 14 per cent to 595,000 yen. Japanese banks had 1.3 trillion yen ($12 billion) in investments tied to US sub prime mortgages as of September 30, Japan's chief financial regulator said November 22.
Commonwealth Bank, Australia's largest home lender, climbed 4.3 per cent to A$59.65. DBS Group Holdings Ltd, Singapore's biggest bank, added 5.8 per cent to S$20.10.
``The Fed's taking out insurance on the economy and trying to pump margin into the balance sheets of banks and businesses,'' said Donald Williams, who helps manage the equivalent of $1.3 billion at Platypus Asset Management in Sydney.
The Standard & Poor's 500 Index rose 0.8 per cent Friday, taking its weekly gain to 2.8 per cent, after Fed Chairman Ben S Bernanke said on November 29 policy makers must decide whether the risks between growth and inflation have shifted.
The previous day, Vice Chairman Donald Kohn said decision makers must be ``flexible and pragmatic'' in response to a credit market ``deterioration.'' Federal funds futures show traders expect a reduction in the benchmark US rate on December 11.
Sun Hung Kai, Hong Kong's biggest developer by market value, surged 15 per cent to HK$161.20, the most since the five days ended August 24. Cheung Kong (Holdings) Ltd, controlled by China's richest man, Li Ka-Shing, jumped 10 per cent to HK$146.30.
Hong Kong's interest rates typically move in step with those in the US because the city's currency is linked to the dollar. Lower rates make mortgages cheaper, spurring demand for real estate.
BHP rose 6.7 per cent to A$42.98, snapping a five-week, 15 per cent drop. It sold cobalt, a metal used in rechargeable batteries, for a record price this week. Rio Tinto Group, fighting a takeover bid from BHP, rose 13 per cent to A$145.19.
A measure of six metals on the London Metal Exchange rose 4.0 per cent, its first weekly advance since the five days ended October 12.
Mitsubishi UFJ Financial Group Inc and Commonwealth Bank of Australia led gains by banks. BHP Billiton Ltd, the world's biggest mining company, tracked metals prices higher.
``A rate cut is being viewed as more likely,'' said Nicole Sze, a Singapore-based investment analyst at Bank Julius Baer & Co, which manages $350 billion in assets. ``That will provide short-term relief to the market because there have been concerns about the risks that might result if credit costs remain high.''
The MSCI Asia Pacific Index added 4.9 per cent to 161.92 this week, snapping a three-week, 8.4 per cent slump. The 1,055- member benchmark dropped 5.5 per cent in November, its worst month since May 2006.
Japan's Nikkei 225 Stock Average rose 5.3 per cent. The Hang Seng Index jumped 7.9 per cent, the region's biggest advance, as speculation Hong Kong's borrowing costs will be lowered boosted shares of Sun Hung Kai Properties Ltd and other developers.
China's Shanghai Composite Index lost 3.2 per cent, capping its steepest monthly drop in at least 12 years, on concern the government will impose further measures to rein in asset prices.
Mitsubishi UFJ, Japan's biggest publicly traded bank, surged 17 percent to 1,089 yen. Mizuho Financial Group Inc, the second largest, jumped 14 per cent to 595,000 yen. Japanese banks had 1.3 trillion yen ($12 billion) in investments tied to US sub prime mortgages as of September 30, Japan's chief financial regulator said November 22.
Commonwealth Bank, Australia's largest home lender, climbed 4.3 per cent to A$59.65. DBS Group Holdings Ltd, Singapore's biggest bank, added 5.8 per cent to S$20.10.
``The Fed's taking out insurance on the economy and trying to pump margin into the balance sheets of banks and businesses,'' said Donald Williams, who helps manage the equivalent of $1.3 billion at Platypus Asset Management in Sydney.
The Standard & Poor's 500 Index rose 0.8 per cent Friday, taking its weekly gain to 2.8 per cent, after Fed Chairman Ben S Bernanke said on November 29 policy makers must decide whether the risks between growth and inflation have shifted.
The previous day, Vice Chairman Donald Kohn said decision makers must be ``flexible and pragmatic'' in response to a credit market ``deterioration.'' Federal funds futures show traders expect a reduction in the benchmark US rate on December 11.
Sun Hung Kai, Hong Kong's biggest developer by market value, surged 15 per cent to HK$161.20, the most since the five days ended August 24. Cheung Kong (Holdings) Ltd, controlled by China's richest man, Li Ka-Shing, jumped 10 per cent to HK$146.30.
Hong Kong's interest rates typically move in step with those in the US because the city's currency is linked to the dollar. Lower rates make mortgages cheaper, spurring demand for real estate.
BHP rose 6.7 per cent to A$42.98, snapping a five-week, 15 per cent drop. It sold cobalt, a metal used in rechargeable batteries, for a record price this week. Rio Tinto Group, fighting a takeover bid from BHP, rose 13 per cent to A$145.19.
A measure of six metals on the London Metal Exchange rose 4.0 per cent, its first weekly advance since the five days ended October 12.