Asian Markets Bounce Back

Hang Seng Lead The Gain As It Surged By 10.2%

The stock markets across the Asian region showed some recovery ending the first day of the week on a mixed note as the G7 and G20 meetings over the weekend restored a little confidence. In background stocks on Wall Street finished Friday's volatile session mixed amid concerns about the outlook for the global economy as a result of the current credit crisis. The Dow and the S&P 500 set new five-year closing lows. While the Nasdaq managed to close in positive territory, the Dow and the S&P 500 slid back into the red. The Nasdaq closed up 4.4 points or 0.3% at 1,649.51, while the Dow closed down 128.0 points or 1.5% at 8,451.2 and the S&P 500 shed 10.7 points or 1.2% to finish at 899.2.

In commodities, November crude-oil futures rose $3.73 to $81.43 a barrel in electronic trading recently, after dropping $8.89 to close at $77.70 a barrel on the New York Mercantile Exchange Friday.

In currency market the euro rose against the dollar and U.S. stock futures surged after the U.S. government said that it would take stakes in banks and European leaders initiated a plan that includes buying of debt that banks issue. The US dollar was quoted at 6.8298 yuan.

The New Zealand dollar was trading at US$0.6122 in early afternoon, up slightly from US$0.6019 in early deals. The kiwi closed Friday's session at US$0.5930.

The South Korean won jumped against the U.S. dollar on expectations that the government might step up intervention to support its currency and that global efforts to tackle financial turmoil might help increase liquidity in the local market. In early trade, the won was quoted at 1,250.3 a dollar, up 58.8 a dollar from Friday's close. The won fell to as low as 1,460.0 a dollar on Friday, its weakest level since April 1998, but ended the volatile session higher for a second straight day.

The gain in Asian equities was also powered by the statement issued by the Group of Seven (G7) issued in its meeting in Washington DC addressing the ongoing financial crisis. According to the statement released, " the G-7 agreed that the current situation calls for urgent and exceptional action. We commit to continue working together to stabilize financial markets and restore the flow of credit, to support global economic growth. The group agreed to take decisive action and use all available tools to support systemically important financial institutions and prevent their failure.

It has also decided to take all necessary steps to unfreeze credit and money markets and ensure that banks and other financial institutions have broad access to liquidity and funding.

It will ensure that our banks and other major financial intermediaries, as needed, can raise capital from public as well as private sources, in sufficient amounts to re-establish confidence and permit them to continue lending to households and businesses.

It will also ensure that our respective national deposit insurance and guarantee programs are robust and consistent so that our retail depositors will continue to have confidence in the safety of their deposits.

The group has urged to take action, where appropriate, to restart the secondary markets for mortgages and other securitized assets. Accurate valuation and transparent disclosure of assets and consistent implementation of high quality accounting standards are necessary.

All this steps helped the equities to regain their confidence. The Australian and South Korean markets rebounded, but are off their highs, after policymakers around the world took steps, including guarantees on bank deposits and direct injection of capital into banks, to stem credit crisis. The Japanese market remained closed on account of a public holiday.

In Mainland China, the Shanghai stock index interrupted a weeklong fall to finish the session 3.6% higher, on sharp rebound in banks and financials after policy makers around the world took more bold moves to stem the financial crisis. The Shanghai Composite Index was 72.99 points, or 3.6% higher to 2,073.56, off the day’s high of 2,073.81 and low of 1,931.59.

On the economic front, China's trade surplus widened to a record in September, boosting the currency reserves that may shield the world's fourth-biggest economy from the global crisis. Exports rose 21.5% from a year earlier to $136.4 billion after gaining 21.1% in August. The trade surplus climbed to $29.3 billion, a figure derived by deducting the value of imports from the number for exports.

In another release, the National Bureau of Statistics said China’s consumer confidence index was 93.8 points in the quarter ended September 2008, down from 94.1 in the second quarter. The consumer expectations index, which focuses on economic outlook, decreased to 96.2 in the third quarter from 96.7 in the second quarter.

The Ministry of Commerce of China said that the Chinese companies had contracts abroad to provide outsourced services totaling 1.9 billion US dollars in the first eight months, up 17% from the same period last year.

In Hong Kong, the stocks shot sharply higher, recouping some of the steep losses from the previous week amid efforts by governments around the world to find a solution to the global financial crisis. The Hang Seng Index surged 1,515.29 points, or 10.2%, to end at 16,312.16, after losing more than 16% in the previous week. The index is still down 41.4% in 2008. The Hang Seng China Enterprises Index flared up 13.3% to 8,083.43.

The Australian stock market closed sharply higher, as word spread over the weekend that the government had moved to guarantee all deposits made by individuals into banks, credit unions, and building societies, which total about A$700 billion. The benchmark S&P/ASX 200 index was up 220 points or 5.55% at 4,180.70, after closing down 8.34% on Friday. The broader All Ordinaries index was gaining 202.40 points or 5.14% to 4,141.90.

On the economic front, a report released by Australia and New Zealand Banking Corp. showed that advertised job opportunities in Australia declined in September by a seasonally adjusted 1.4% from August.

In the meantime, Prime Minister Kevin Rudd said on Sunday, 12 October 2008, that the government would guarantee deposits held in Australian financial institutions for the next three years. The government also doubled to A$8 billion the funds available to improve liquidity in the financial markets

The New Zealand stock market closed the day on negative side after very volatile trading day. The continued its losing streak for the seventh day. The benchmark NZX 50 index was down by 22.92 points or 0.82% at 2,782.39 following Friday's 5% plunge. Prime Minister Helen Clark's assurance Sunday that the Government will guarantee all savers' deposits, taking on a liability worth up to NZ$150 billion to reassure local investors spooked by the worsening international crisis, also boosted market sentiment.

On the economic front, retail sales in New Zealand grew modestly in August due to higher spending at supermarkets. Statistics New Zealand reported that overall retail sales increased a seasonally adjusted 0.4%, or NZ$20, million over July.

The South Korean market closed today trading session in green as bargain hunting following Friday's steep losses. The benchmark Korea Composite Stock Price Index or KOSPI was up 47.06 points or 3.79% closing the day at 1,288.53.

On the economic front, the Bank Of Korea said that the sluggish economy and depreciation of the Korean won caused overseas spending by local travelers to fall this year for the first time since 2003. According to the Bank of Korea, foreign spending was US$10.02 billion in the first eight months of this year, down 6.1% from US$10.67 billion in the same period in 2007.

In Singapore the stock index finished the session sharp 6.6% higher on sharp rebound in banks and financials after policy makers around the world took more bold moves to stem the financial crisis. The market opened on a positive note after policymakers around the world took increasingly bold steps to rescue the financial system, including guaranteeing bank deposits and taking stakes in banks. The benchmark Straits Times Index was 128.02 points, or 6.57%, higher to 2,076.35.

In Philippines the stock exchange showed signs of strength for the first time in the current month as the markets edged up at a measurable pace as the benchmark index rose by as much as 2.2 % in early trade. The benchmark index PSEi went up by 0.99% or 20.95 points to 2,118.75, after it experienced the biggest drop since June 2006 on Friday, while the all shares index gained 0.85% or 11.78 points to 1,382.86. All six-sub indices also went up with property shares advancing the most by 3.21% or 22.20 points to 711.94.

In Thailand, the benchmark SET index ended positive as it gained by 5.39% or 24.37 points to end the session at 476.33. The market has gained on Monday after a consistent fall in the last week. The SET 100 recorded an increase of 6.64% or 44.31 points to close at 711.68. Likewise, the Set 50 rose by 7.07% or 22 points ending the session at 333.16.

In India, the domestic markets showed no sign of weakness today gaining consistently almost throughout the day on firm global equities. The BSE Sensex provisionally climbed 7.58%. Finance minister P Chidambaram's statement that the government was working on more measures to infuse liquidity in the banking system and increase the confidence of depositors and investors, aided the rebound in equities.