Asian-Pacific Shares Attain New Heights; Confidence in Outlook for the Region Lures Funds to Industrial and Consumer Stocks
Stock markets across the Asian-Pacific basin logged a strong start to the week, with several regional indexes closing at records. Shares were lifted by strong fund inflows amid rising confidence in the region’s growth outlook.
Indexes ended at records in Shanghai, Singapore, Wellington, Hong Kong, Sydney and Kuala Lumpur. In Tokyo, stocks rose to a nine-month high after the yen softened against the dollar.
Analysts said the advances were driven by fund managers directing investment flows from global portfolios toward the industrial and consumer-growth stories in Asia.
“There is less radicalism in Asian markets than there is in some other markets, so investors are rotating,” said Andrew Sullivan, head of sales trading at Daiwa Securities SMBC in Hong Kong. Fund managers likely were trimming exposure to markets in Eastern Europe and South America as growing protectionist policies and nationalization of natural resources and other assets spooks investors, he said.
In TOKYO, the Nikkei Stock Average rose 0.7% to 17424.18, its highest level since April. Exporters such as auto makers advanced because of the weaker yen, which inflates overseas earnings that are repatriated to Japan.
Investors also bought stocks sensitive to domestic demand, such as steelmakers, real-estate developers and securities companies, betting on upward revisions to fiscal-year-profit outlooks, traders said.
“We are coming to a transition from a recovery market to a bullish market,” said Nobuyuki Nagamori, general manager for investment information at Unimat Yamamaru Securities.
Steelmaker JFE Holdings rose 3.7%, and real-estate developer Mitsui Fudosan rose nearly 2%. Auto maker Nissan Motor climbed 2.2%.
In HONG KONG, the Hang Seng Index rose 444.50 points, or 2.2%, to 20772.22, eclipsing its previous record close of 20413 on Jan. 3.
HSBC Holdings climbed 1.7% after Credit Suisse reaffirmed its overweight rating on the shares, while China Mobile rose 4.3%, helped by data Friday showing that China’s dominant cellular operator added 4.8 million new users in December.
Shares of China’s Dongfeng Motor Group jumped 7.6% after the auto maker said it was in talks to bring Swedish truck maker Volvo into a joint venture. The Chinese insurance sector was led higher by PICC Property & Casualty, up 9.6% after it said 2006 pretax profits would rise more than 80%.
“The market’s upward momentum is very strong,” said Y.K Chan, a strategist at Phillip Capital Management (HK) Ltd., predicting the benchmark index could test the 20800 level shortly.
In SINGAPORE, the Straits Times Index rose 2.4% to 3145.20, closing at a record for the third session in a row. Shares rallied following a weekend report citing Minister Mentor Lee Kuan Yew as saying the city- state’s corporate-tax rate would be slashed by at least one percentage point from 20% in the budget coming in mid-February. Advancers were led by DBS Group, Singapore’s top lender, up 2.7%.
The region’s many commodities-oriented stocks fared well.
In SYDNEY, BHP Billiton rose 2.1%, and Woodside Petroleum jumped 2.5%, as industrial metals and crude-oil prices rebounded. Australia’s S&P/ASX 200 climbed 0.9% to 5726.60.
In SHANGHAI, China’s benchmark stock index rose 3.6% to a record after a government work conference on finance refrained from issuing policies to cool the red-hot stock market. Transportation and retail companies led the increase.
China’s stock market, most of which is off-limits to foreign investors, was one of the best-performing in the world last year, with the benchmark index more than doubling, thanks to the country’s booming economy and stimulatory policies from the government. Shares have continued to rise this year, and analysts had worried the government might move to rein in the market.
Shares also were helped by comments in state-run newspapers by China Securities Regulatory Commission Chairman Shang Fulin that the regulator would seek to attract mutual funds interested in long-term stock investments. Although the regulator didn’t specify plans, analysts read the comments as indicating his comfort with the market’s current levels.
European Stocks Fall
On Wall Street Decline
European stocks ended in negative territory as investors took their lead from a weaker Wall Street early session, with a drop in technology stocks offsetting modest gains by miners.
London’s FTSE 100 index fell 0.3%, while Paris’s CAC 40 fell 0.6% and Frankfurt’s DAX slid 0.9%. Nokia fell 1.3% and STMicroelectronics was down 2.1% after U.S. heavyweight technology shares tumbled.
In LONDON, airline stocks were lower, with British Airways down 1.6% as it sought to avert a strike by cabin crew, while Ryanair slid 3.3% after lawyers said it could be forced by the EU to sell its 25% stake in Aer Lingus. Online gaming firms suffered, with PartyGaming down 9.8% and Sportingbet down 8.7%. Those shares tumbled after news that U.S. prosecutors had launched a probe into Internet gambling. Pearson led a slide in media stocks with a 2.9% drop, despite tipping earnings at the top end of forecasts, as bid talk started to subside.
Chris Oliver. Wall Street Journal. (Eastern edition). New York, N.Y.: Jan 23, 2007. pg. C.5
