Asian Stocks Soar Reversing Four Straight Sessions of Steep Losses

Shanghai, Hang Seng Jumped More Than 9%

The stock markets across the Asian region closed the session and the week on sharply jump, reversing four straight sessions of steep losses, after Wall Street rallied overnight after central banks in major global economies injected billions of dollars to encourage financial institutions to continue to lend to each other, and regulators in the U.S. and the U.K. moved to temporarily halt short trading. Furthermore, lawmakers in the U.S. called for the government to create a new federal agency that gave relief to troubled savings and loans

On Wall Street, the U.S. market rallied yesterday on a report that U.S. Treasury Secretary Henry Paulson was considering creating an entity to absorb banks' bad debt. The Dow jumped 410 points or 3.9% to 11,019, the Nasdaq rose 100 points or 4.8% to finish at 2,199 and the broader S&P 500 gained 50 points or 4.3% to close at 1,206.

Oil held steady in Asian trading after the contract for October settlement closed higher on Thursday. Crude futures rose for a third day, adding as much as 149 cents to $99.37 a barrel by 5:39 a.m. ET. The contract for October delivery added 72 cents to settle at $97.88 a barrel on the New York Mercantile Exchange after hitting a high of $102.24.

In the currency market, the U.S. dollar rallied to trade in the mid 107-yen levels in late Tokyo deals, up from Thursday's close in the mid 105-yen range.

The Australian dollar closed at US$0.8112-0.8117, up about 1.3 U.S. cents from Thursday's close of US$0.7986-0.7990.

The New Zealand dollar's rally was interrupted by a resurgent U.S. dollar and weaker than expected current account balance data. The kiwi finished the session at US$0.6735, losing as much as US$0.0025 after the release of the data. The local unit finished Thursday's session at US$0.6640-0.6650.

The South Korean won gained against the greenback. The won closed at 1,139.7 a dollar compared to Thursday's close of 1,153.3 a dollar.

Coming back in Asian equity markets, investor sentiment was buoyed by Wall Street's rally overnight and hopes that the actions taken by the world's major central banks and the U.S. plan to create a repository for banks' bad debt would resolve the credit crisis. The Chinese market surged 9.3% and the Hong Kong market jumped 6.6%.

The Japanese market showed a strong rebound with the key Nikkei 225 index jumping 3.8% or 431 points to finish at 11,920. The broader Topix index of all First Section issues on the Tokyo Stock Exchange closed up 51 points, or 4.7%, at 1,149.

On the economic front, Japan's Ministry of Finance provided weekly capital inflows of stocks and bonds. For the week ending September 13, foreign residents were net sellers of Japan stocks for the second straight week, having dumped a net 401.2 billion yen worth of stocks. However, foreigners were net purchasers of Japan bonds and notes for the week, having bought bonds worth a net 878.5 billion.

Meanwhile, the final figures for Japan's leading index came in at 91.4 in July, recovering slightly from a dip that had taken the index down to 91.3 in June, the Economic and Social Research Institute said. Economists had been expecting the final figure to match the preliminary reading of 91.6. The research institute also reported that Japan's coincident index increased to 103.5 in July from the 101.6 reported in June.

The Chinese market closed sharply higher Friday, with the key Shanghai Composite index closing up 9.46% after regulators cancelled the stamp duty on share purchases and the sovereign wealth fund announced plans to buy shares in state-owned banks. Wall Street's rally overnight also added to the positive sentiment. Almost all stocks rose by the daily limit. The key index closed up 179.25 points at 2,075.09, recording its biggest single-day rise since October 23, 2001.

In Hong Kong, the Hang Seng Index rose even higher, finishing 9.6% up at 19,327.73 on a burst of late buying activity for its first up day in eight sessions.

The Australian market rebounded on Friday, ending a four-day losing streak. The market started off firm, tracking Wall Street's rally overnight following reports that the U.S. Treasury and the Federal Reserve are devising a plan to remove bad assets from corporate balance sheets, and finished near the day's high. Financial stocks rallied, with Australia's largest investment bank Macquarie Group jumping nearly 40%.

The benchmark S&P/ASX200 index surged 198.2 points, or 4.3%, to close at 4,805.5, posting the largest one-day gain since 25 January 2008. The index has moved back to March 2005 highs. The broader All Ordinaries index jumped 193.2 points, or 4.2%, to finish at 4,845.1.

The New Zealand market closed higher Friday, recouping a portion of the 3.5% loss that it posted on Thursday. The market started off higher after Wall Street rallied overnight following reports that the U.S. Treasury is considering creating a facility to take on financial firms' bad debts, but gave away some of the day's gains going into the close of the trading session. The benchmark NZX 50 index closed up 28.2 points or 0.9% at 3,187.1 and the broader NZX All Capital index advanced 23.2 points or 0.7% to finish at 3,211.3.

On the economic front, New Zealand's current account deficit fell more than expected to NZ$3.91 billion in the second quarter. Analysts expected a deficit of NZ$3.42 billion. The deficit for the first quarter was revised upward to NZ$2.11 billion from NZ$2.16 billion. According to the report by Statistics New Zealand, a rise in goods imports, mainly petroleum and petroleum products, contributed to the fall. Exports also fell slightly, with a reduction in dairy exports.

Among other data released, short-term visitor arrivals from overseas totaled 162,500 in August, down 1% from August 2007. For the full year to August, there were 2.48 million visitor arrivals, an increase of 7,300.

The South Korean market soared more than 4.5%, recouping more than yesterday's loss of 2.3%. The Korea Exchange, the nation's bourse operator, temporarily suspended program selling in the morning due to volatile futures prices. The benchmark Korea Composite Stock Price Index or Kospi surged 63.36 points to finish at 1,455.78.

On the economic front, a report from the Bank of Korea showed that South Korean corporate bankruptcies decreased to 178 in August from 209 in July, marking its lowest level since March. At the same time, the number of start-ups fell to 3,713 from July's 5,006. The central bank said the decrease in start-ups mirror economic slowdown in South Korea.

In India, frenzied buying in battered index pivotals along with short covering triggered a solid rally in the key benchmark indices. The BSE 30-share Sensex was up 764.28 points or 5.75% to 14,079.88, as per provisional closing. The Sensex opened with a huge 448.23-point upward gap at 13,763.83. At the day's high of 14,097.44 hit in late trade, the Sensex gained 781.84 points. At the day’s low of 13,674.96, the Sensex rose 359.36 points in early trade. The S&P CNX Nifty advanced 213.45 points or 5.29% to 4,251.60 as per provisional closing.

On the economic front, the wholesale price index showing inflationary level across the country rose 12.14% in the 12 months to 6 September 2008, marginally above the previous week's rise of 12.10%, data released after market hours on Thursday, 18 September 2008 showed.

Elsewhere, Taiwan's Taiex zoomed up 5.8% at 5,970.38; Singapore's STI gained 5.8% to 2,559.07; Malaysia's KLCI closed up 3.4% at 1,025.70 and Indonesia's Jakarta Composite index closed up 5.8% at 1,891.73.

In the other part of the world, European shares surged, with banks rallying massively as investors responded to efforts by regulators to crack down on the short selling of financial stocks and hopes for a longer-term solution to stabilize the financial sector.

Of national indexes, The U.K. FTSE 100 index jumped 6% to 5,176.60, the German DAX 30 index soared 4.1% to 6,103.56 and the French CAC-40 index climbed 5.6% to 4,177.7. At 11.38 GMT continued to gain further as U.K. FTSE 100 index increased by 8% to 5,266.90. The German DAX 30 index increased by 4.3% to 6,118.01, while the French CAC-40 index was up by 6.6% to 4,218.46.