Asian Markets Set A Tone For Rebound

Sensex, Seoul Regain From Their Low While Taiex, PSEi Close Lower

The stock markets across the Asian region have turned mixed after a firm starts. News that the United States will host a summit of Group of Eight and other major economies on the global financial crisis and South Korean government's $130 billion rescue package for banks and markets initially boosted investor sentiment, but lingering concerns about a global recession put a damper on early gains.

Meanwhile, the U.S. stocks finished lower on Friday. The Dow closed down 127 points or 1.4% at 8,852, the Nasdaq closed down 6 points or 0.4% at 1,711, and the S&P 500 closed down nearly 6 points or 0.6% at 940.

Oil rose for a second day on Monday amid hopes that OPEC would slash output to shore up prices. Crude oil for November delivery gained as much as $2.15, or 3 percent, to $74 a barrel in electronic trading on the New York Mercantile Exchange, and traded at $73.95 at 2:59 p.m. in Singapore.

In currency market, the U.S. dollar strengthened to trade in the lower 102-yen levels in late Tokyo deals from the mid 101-yen range in early trade and lower 101-yen levels late Friday

The Australian dollar closed firmer following a rally in the stock market. Traders also overlooked the highest quarterly producer prices index in a decade. The Aussie dollar finished the session at US$0.6993-0.6996, up from Friday's close of US$0.6888-0.6892.

The New Zealand dollar fell against the dollar ahead of inflation data and a hefty cut in official interest rates. The kiwi finished the local session at US$0.6120, down from US$0.6155 in early trade and US$0.6181 late Friday.

The South Korean won rose against the U.S. dollar. The won closed at 1,315.0 a dollar, up from Friday's domestic close of 1,334.0 a dollar, as government's measures to ease liquidity crunch lifted investor sentiment.

The US dollar jumped to its highest level in nearly one and a half -year against the Philippine peso. The dollar-peso pair reached 48.2650, its highest point since April 2007 during the trading session. Now the currency is trading at 48.11 against the US dollar

Coming back in equities, the Japanese stock market closed sharply higher, extending Friday's gains. The market started off higher despite a weak lead from Wall Street and the key Nikkei index closed above the 9,000 mark after bargain hunting picked up momentum in the afternoon session. Additionally, a weaker yen supported the exporters. The 225-issue Nikkei index closed up 311.77 points, or 3.6%, at 9,005.59, ending above 9,000 for the first time in 3 trading days. The Topix index of all the first-section issues advanced 33.08 points, or 3.7%, to 927.37 after gaining 29.77 points in the previous session.

On the economic front, Japan's Cabinet Office said in a final report that the leading index fell to 89 in August from 91.4 in July. The August reading was revised from 89.3 reported initially. Meanwhile, the coincident economic index logged a reading of 100.6 in August, down from an initially estimated 100.7 and 103.5 seen in the previous month. At the same time, the lagging index came in at 100.5 versus 100.2 reported previously. The index was also down from previous month's 101.

The Chinese stock market closed higher, extending Friday's gains, on expectations that the government would take necessary measures to boost the economy as third-quarter economic data released today confirmed a slowdown. The benchmark Shanghai Composite Index closed up 43.36 points or 2.25% at 1,974.01, after falling as low as 1,890.92 in morning trade.

Among a slew of economic data released today, China's GDP rose 9.9% on year in the nine months to September, and rose 9.0% on year in the third quarter. Growth slowed from 10.6% in the first quarter and 10.1% in the second. T

The National Bureau of Statistics also said that industrial value-added output rose 11.4% on year-over-year basis in September, slowing from the 12.8% increase in August.

In another release from the same house, the consumer price index (CPI)- the main gauge of inflation, rose 4.6% in September over the same period last year. The figure, compared with 7.1 percent in June, 6.3 percent in July, 4.9 percent in August and a nearly 12-year-high of 8.7 percent in February.

In the first nine months of this year, the inflation indicator rose 7.0 percent from the same period last year: 6.7 percent for urban areas and 7.7 percent for the countryside. The growth rate was 0.9 percentage points lower than that in the first half.

In Hong Kong, the Hang Seng Index jumped 5.28% to 15,323.01, while the Hang Seng China Enterprises Index soared 6.2% to 7,441.13.

The Australian stock market closed sharply higher, ending a three-day losing streak. The market started off higher, despite a weak lead from Wall Street, and extended its gains on bargain hunting following recent steep losses in the banking and resources sectors. The S&P/ASX 200 index climbed 171.5 points, or 4.3%, to 4,142.3 and the broader All Ordinaries index advanced 157.9 points, or 3.9%, to 4,098.7.

On the economic front, the Australian Bureau of Statistics said that producer price index for the third quarter rose 5.6% annually compared to a 4.7% gain in the second quarter. The report added that the producer prices grew 2.0% on quarter in the third quarter.

Meanwhile, the Department of Employment announced that annual wages in Australia climbed an average of 4.0% on year in the second quarter of 2008 from the 3.7% annual increase in the first quarter.

The New Zealand stock market closed sharply higher. The market opened sharply higher despite a weak lead from Wall Street and extended its gains for the second consecutive trading session. The benchmark NZX 50 index closed up 81.16 points, or 2.89%, at 2,889.92.

On the economic front, Statistics New Zealand reported Monday that the value of credit and debit card spending in New Zealand increased by a seasonally adjusted 0.8% in September compared to August, driven largely by non-retail industries. Retail transactions were flat. The core retail sales, which excludes motor vehicle related transactions, was down 0.4% in September following a 1.6% increase in August.

Meanwhile, businesses in New Zealand's services sector reported reduced activity for the third straight month in September, according to the latest Performance of Services Index reading. The Bank of New Zealand/Business New Zealand survey showed a drop of 1.0 point to an index reading of 46.9, with readings below 50.0 indicating contraction in the measured sector. It marked the second lowest reading for the index since the series began in April 2007.

The South Korean stock market closed higher, snapping a three-day losing streak. Seoul stocks rebounded from a three-year low hit on Friday as investors bought stocks following South Korean government's $130 billion financial rescue package for banks and stock market. The benchmark Korea Composite Stock Price Index or KOSPI finished a volatile session up 26.96 points, or 2.28%, at 1,207.63, as gains in the stock markets in the Asian region offset investors' doubts over the effectiveness of the government's financial stabilization package.

South Korea announced that it would provide $100 billion worth of state guarantees for local banks' foreign debts as part of efforts to ease the dollar shortage in the local financial sector and shore up market confidence. The government and the central bank will also provide $30 billion to local banks and exporters by using its foreign reserve holdings. Despite the sweeping measures the Kospi fluctuated, dipping 2.65% at one point.

On the economic front, South Korea's central bank said that the nation's economic growth is set to slow in coming months, as exports are likely to lose steam due to a global economic downturn amid sluggish domestic demand.

The Philippines stock market slid 1.68% to its lowest level in more than two years. The benchmark index PSEi went down 1.68% or 35.38 points to 2,062.88 - the lowest since 20 June 2006, while the all shares index retreated by 1.12% or 15.05 points to 1,328.62.

On the economic front, As of end-August 2008, the non-performing loans (NPL) ratio of universal and commercial banks (U/KBs) eased further to 3.88 % from the previous month's 3.98 % and year ago's 5.28 % ratios. The industry sustained an improving trend for the past 6 months and kept the NPL ratio below 4 % for the past 3 months.

The month-on-month improvement in the ratio occurred as the 1.07 % decline in NPLs was complemented by the 1.45 % expansion in total loan portfolio (TLP). NPLs went down to P91.53 billion from last month's P92.52 billion while TLP expanded to P2, 360.56 billion from P2, 326.82 billion.

Another release for the day showed the Philippines registering a budget deficit of 21.6 billion pesos ($449 million) in September as spending surged under government plans to spur growth to shield the economy from the global financial crisis.

In India, the Key benchmark indices pared large part of the earlier strong gains as index pivotals came off their highs in afternoon trade. The slide was in continuation of the trend witnessed in early afternoon trade when the market had pared gains soon after an initial surge triggered by the surprise announcement of a rate cut by the central bank.

At 15.30 IST, the BSE 30-share Sensex was up 312.26 points or 3.13% to 10,287.61. The index surged 562.70 points at the day's high of 10,538.05 in afternoon trade soon after the announcement of the rate cut by the RBI. The S&P CNX Nifty was up 2.14% to 3,140.05.

On the economic front, the Reserve Bank of India decided to reduce the repo rate under the Liquidity Adjustment Facility (LAF) by 100 basis points to 8.0 % with immediate effect.

In the adjoining statement, the Reserve Bank of India said that it has been continuously monitoring the monetary and liquidity conditions with a view to maintaining domestic macroeconomic and financial stability in the context of the global financial crisis. The Reserve Bank has taken a number of measures over the last one-month to augment domestic and forex liquidity.

In Taiwan, the stock markets continued to linger in red following a negative lead from Wall Street. The losses in financial sector amid a high-profile money-laundering probe related to former president Chen Shui-bian. However, the market recovered from a negative undertone as local authorities' move to extend the curbs on daily allowable falls in share prices. Taiwan's financial regulators said they have extended the effectivity of a 3.5% daily limit for downward movements of share prices by another week, until 24 Oct 2008. The usual limit is 7%.

Taiex - the benchmark index continued to remain below the key 5,000 points level breaching the five-year low level in the intraday transaction. The weighted index closed down 28.56 points or 0.58% at 4,931.8 - the lowest level since 30 June 2003 when it ended at 4,872.15 points. However, the index successfully crossed the five-year low by dipping down to 4,805.68 in the intraday transaction.

In other regional markets, European shares rose, as oil firms advanced, ING retook some of the previous session's heavy losses and investors welcomed earnings from Ericsson. Overall, the German DAX 30 index climbed 1.2% to 4,840.91, the French CAC-40 index rose 1% to 3,364.22 and the U.K. FTSE 100 index advanced 0.4% to 4,077.78.

On the economic front, U.K’s M4 money supply and M4 lending rose at a faster than expected pace in September. According to preliminary estimations by the Bank of England September show a 1.5% increase in M4, and a 12.2% increase from September last year. Market analysts had advanced a 11,3% year on year increase in September. M4 lending rose by 30.6 billion in September; an increase by 1.3% from August, and a 12.3% rise year on year.