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Asian, Pacific markets open strong
Question of the Day
Asian and Pacific financial market trading opened strong Monday, as investors cautiously welcomed pending action by governments to try to shore up the tottering world financial system.
The MSCI Asia Pacific, excluding Japan Index, rose as much as 4.2 percent today, snapping last week’s 20 percent slump, after the U.S. Federal Reserve pledged to “consider every option” for restoring market confidence, and as Australia and New Zealand said they will guarantee bank deposits.
“The market was looking oversold so it was ripe for a bounce — it just needed a bit of good news,” said David Cassidy, chief equities strategist at UBS in Sydney.
Hong Kong stocks rose, with the benchmark index rebounding from a three-year low, after the city’s government said it may use all of its foreign reserves to stabilize its financial markets amid a global credit freeze.
The Hang Seng Index climbed 361.55, or 2.4 percent, to 15,158.42 as of 10:09 a.m. local time, rebounding from a 7.2 percent drop on Oct. 10 that dragged the gauge to its lowest close since Nov. 17, 2005. The measure tumbled 16 percent last week, the most since January 1998.
Singapore’s Straits Times Index rose 33.17, or 1.7 percent, to 1,981.50 as of 10:12 a.m. local time.
Australia’s benchmark S&P/ASX 200 index was up 3.2 percent, clawing back some of last week’s 16 percent decline, on a blanket guarantee of all bank deposits from the Australian government.
New Zealand share prices also posted healthy gains, increasing nearly one percent by mid-afternoon Monday. By mid-afternoon on the New Zealand Stock Exchange, the benchmark NZX-50 index was up 26.09 points, or 0.93 percent, at 2,831.41.
Not all Asian markets fared well, as Indonesian shares dropped 5.8 percent in morning trade Monday after being suspended for three days last week on heavy losses, dealers said. The Jakarta Composite Index plunged 86.09 points to 1,365.58, its lowest level since July 5, 2006, in moderate volume, with decliners leading gainers 81 to six.
Trading in Indonesia was suspended last Wednesday after shares dropped 10 percent in morning trade, bringing losses for the week to more than 20 percent.
But the overall strong showing in the Asian and Pacific markets was encouraging news to several Western governments who on Monday are expected to outline details on how they will carry out pledges to guarantee new bank debt and use public funds to keep troubled banks afloat.
The U.S. Treasury Department is expected to release details Monday morning of its proposal to buy stakes in financial firms. Treasury Secretary Henry M. Paulson Jr. said three days ago he wants to implement his new plan to buy stocks in a “broad array” of companies as soon as he can.
Britain may go as far as underwriting stock sales by four lenders.
“People have been looking for leadership and finally they are getting it,” billionaire investor George Soros told reporters in Washington on Sunday. “We’re in a full-fledged panic, and who knows how people behave in a panic?”
This article is based in part on wire service reports.
About the Author
Sean Lengell covers Congress and national politics and can be reached at firstname.lastname@example.org.
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