Jai Ho! Say Asian Markets

23 Feb 2009 | 17:13 Jai Ho! Say Asian Markets
Stock market in Asian region welcomed the news of US Government owning as much as 40%of Citigroup which helped bolster bank stocks to take drivers seat in leading the regionfor positive start of the week.

Most of the regional markets spurted after a report released by the Wall Street Journal,stating that the Citigroup executives are discussing with US officials a scenario in whicha substantial portion of the $US45 billion or A$69.2 billion in preferred shares held bythe US government, amounting to a 7.8% stake in Citigroup, would convert into commonstock.

Meanwhile on Wall Street, the U.S. stocks ended Friday's choppy trading session lower,amid new concerns over the U.S. banking sector and the government's long-term role in itsfuture. The Dow closed down 100 points or 1.34% at 7,366, the Nasdaq lost 2 points or0.11% to 1,441, and the S&P 500 fell 9 points or 1.14% to finish at 770.

In the commodity market, crude oil traded near $40 a barrel in New York as traders weighedthe risk of a deepening global recession against government measures to revive economicgrowth. Crude oil for April delivery was at $40.41 a barrel, up 38 cents, in after-hourselectronic trading on the New York Mercantile Exchange at 8.59 a.m. London time. Itearlier fell as much as 50 cents, or 1.3%, to $39.53 a barrel.

Brent crude oil for April settlement was at $41.80 a barrel, up 9 cents, on London'sICE Futures Europe exchange at 8.59 a.m. London time. It earlier declined as much as 39cents, or 0.9%, to $41.50 a barrel

Spot gold fell to $US986.20 per ounce, down 1.6% from New York's notional close on Friday.On Friday, gold rose as high as $US1007.70, the highest since 18 March 2008, as nervousinvestors piled into the yellow metal amid tumbling stock markets. Gold last topped $US1,000 in March as Bear Stearns failed and was rescued. Comex April gold futures jumped$US25.70, or 2.6%, to $US1, 002.20 an ounce after touching $US1, 007.70, the highest sinceMarch 18.

In the currency market, the Japanese yen was quoted at 93.035 against the US dollar.

The Hong Kong dollar was trading at HK$ 7.7528 against the dollar. Actually The Hong Kongdollar is pegged at HK$ 7.8 to the U.S. dollar but can trade between HK$ 7.75 and HK$7.85to the U.S. dollar.

In Sydney trades, the Australian dollar rose as investors sold the U.S. currency onspeculation President Barack Obama's government will increase its ownership ofCitigroup. Australia's currency rose 1.5% to 64.92 U.S. cents from 63.94 cents in NewYork late last week.

In Wellington trades, the New Zealand dollar ended the day at US51.25c from US50.92cduring the early hours and US50.36c on Friday.

The South Korean currency gained for the first time in 10 sessions on Monday as investorsentiment was eased by rising stock prices and Asian countries' agreement to expand aregional currency swap fund. The local currency closed at 1,489 won to the greenback, up17 won, or 1.1%, from the previous session's close. The Korean currency rose as high as1,480 won at one point with its value falling 15.4% against the dollar so far this year.

The Taiwan dollar pulled back from a near six-year low on Monday as exporters and foreignfunds took advantage of the weak local currency to buy in, while stable regionalcurrencies provided further support. The greenback closed the day at NT$ 34.685, afterdropping to NT$34.808 on Friday.

Coming back in equities, in Japan, stock market ended in the negative territory witnessesits second dip in a row on the first trading day of the week. Japanese Nikkei 225 StockAverage index dipped down 40.22 points, or 0.54%, to 7,376.16, while the broader Topixlost 4.25 points, or 0.57%, to 735.28.

In Mainland China, the equities ended higher led by property and banking shares. Thebenchmark Shanghai Composite Index, which covers both A shares and B shares on theShanghai Stock Exchange, rose 1.96% or 44.30 points to 2,305.78 points after fluctuatingbetween 2,313.59 and 2,219.71 points. The Shenzhen Component Index on the smaller ShenzhenStock Exchange extended 3.61% or 303.92 points to 8,727.70 points, after touching anintraday low of 8,372.56 points.

In Hong Kong, stock market closed sharply higher, as investors concentrated on the reportsthe U.S. government might expand its stake in troubled banking giant Citigroup to ease thefinancial crisis. The Hang Seng Index continued to move upward as it ended sharply higher475.93 points, or 3.75%, to 13,175.10, while the Hang Seng China Enterprise Index, whichtracks H shares of Chinese companies, shoot up by 240.69 points, or 3.41% to 7,307.01.

On the economic front, Hong Kong's inflation rate in January, including the impact oftemporary waivers on public services, jumped to 3.1%, but the increase was mainly due to adistortion caused by a waiver on property rates. Underlying inflation, which excludestemporary factors, eased to 4.5% from 4.6% in January, the government said. As aconcession on rates, a form of property tax was in effect in January 2007 and January2008, but not in December 2007, inflation jumped from 2.1% in December.

In Australia, the stock market started a week with a little optimism, as market tried torecover from early lows after news of US Government may end up owning as much as 40% ofCitigroup helped bolster bank stocks. The benchmark S&P/ASX200 ended the day down51.20 points, or 1.5%, to 3,351.20, while the broader All Ordinaries decreased 48.90points, or 1.50%, to 3,304.10.

On the economic front, the markets have very little economic reports to digest in today'strading.

In New Zealand, equities fell down to commence the first trading session of the week inthe negative region registering its sixth consecutive loss. The benchmark NZX50 fell down1.49% or 38.394 points to close at 2538.286. The NZX 15 declined 1.45% or 69.533 points to4723.088.

In South Korea, stock market closed the session sharply higher, as investors picked upbeaten-down shares following a report that the U.S. government might increase its stakesin the troubled banking giant Citigroup, easing concerns over a looming financial crisis.The Korea Composite Stock Price Index jumped 33.60 points or 3.15% closing the day at1,099.55.

On the economic front, export price index fell by 3.4% while import price index decreasedby 1.8% month-on-month in January 2009. The export price index declined by 3.4% from theprevious month, as prices of metal products, transport equipment, electric equipment, andgeneral machinery and equipment went down due to a sustained decrease in demand affectedby global economic recession and falling exchange rates.

The import price index fell by 1.8% month-on-month, as prices of intermediate fell by 2.9%while consumer declined by 1.4%. Capital goods corrected by 0.8% and raw materials fell by0.1%. All declined in response to decreased demand resulting from falling exchange ratesand economic recession, offsetting a rise in global oil prices.

In other news, South Korea is unlikely to face another financial crisis similar to the onea decade ago, as the country's economic fundamentals are sound, a former U.S. treasurysecretary said Monday. I think that at least the probability of something weexperience in 1998 is way too low, Robert Rubin told in a press conference hereafter attending an international forum. Fundamentally, there are differences incircumstances.

In Philippines, equities ended the recent string of losses as the Asian markets eyed thelate rebound in the US stocks and marginal gains in select Asian markets. The PhilippineStock Exchange index rose 9.60 points or 0.51% to 1,891.04 while the all shares climbed5.09 points or 0.42% 1,223.77.

In Taiwan, stock market finished the session on a higher side, as DRAM makers such asPowerchip jumping after a report that the government will present a consolidation plan forthe battered industry this week. The financial sector stocks remained subdued as sharpdeclines of U.S. banking shares weighed and due to concerns that lower interest rates willfurther hurt company profits. The main Taiex share index ended higher by 40.84 points or0.92% at 4,477.78.

On the political economic front, the Vice Premier Chiu Cheng-hsiung said that Taiwan'splan to sign a comprehensive economic cooperation agreement (CECA) with China is purely aneconomic issue that is not necessarily directly related to politics. Chiu said the CECAplan, which comes under the portfolio of the Ministry of Economic Affairs, is aimed mainlyat enabling Taiwan to meet the challenges that would arise from the ASEAN Plus Chinaagreement set to take effect in 2010.

Meanwhile, Mainland Affairs Council Chairwoman Lai Shin-yuan said Sunday that Taiwan'splan to sign CECA with China is purely an economic matter and does not involve nationalsovereignty issues.

Economics Minister Yiin Chii-ming rejected opposition fears about a wide-ranging tradeagreement with China Monday by describing it as just another free trade agreement.

The opposition Democratic Progressive Party says signing a Comprehensive EconomicCooperation Agreement (CECA) with China amounts to giving away Taiwan's sovereignty.DPP critics have been quoting a Washington Post report describing CECA as a significantstep on the road to unification.

In India, the stock markets were closed on the account of public holiday.

Elsewhere, Malaysia's Kula Lumpur Composite index was down 0.21% or 1.88 points to 887.83,while Indonesia's Jakarta composite increased by 15.50 points or 1.19% to 1,312.44.In Thailand, the Thai Stock exchange added 0.32 points or 0.07% to 434.99.

In other regional market, banks helped Europe stocks on Monday bounce off the worst closein nearly six years, rising on reports that Citigroup wouldn't be fully nationalized andthat Royal Bank of Scotland would break itself in half. The U.K. FTSE 100 rose 1.7% to3,955.50, the German DAX 30 added 1.9% to 4,088.78, and the French CAC 40 rose 2% to2,804.25.