Asian Markets Ends Nervous November On A Positive Note

Shanghi, Seoul, Sensex, Sydney lead gainers while Strait times bucks regional trend

Stock market in Asian region sidelined the worries pertaining to Dubai debt debacle as it decided to gushed ahead on Monday, 30 November 2009, as UAE central bank pronounced that it will stands behind" the debts owed to foreign banks by Dubai World while Abu Dhabi central bank also said a special liquidity scheme would be available to overseas banks, easing concern of about a possible default by state-owned Dubai World, helping investors to recoup their sentiments.

However, on Wall Street, concerns about a financial crisis in Dubai, weighted the stock markets on Friday. Stocks moved sharply lower at the open as traders reacted to news that Dubai World, the main investment arm of Dubai, has requested to postpone payment on nearly $60 billion in debt. The news raised concerns about the potential impact of a default by the company.

The Dow closed down 154.48 points or 1.5% at 10,309.92, the Nasdaq fell 37.61 points or 1.7% to 2,138.44 and the S&P 500 closed down 19.14 points or 1.7% at 1,091.49. For the holiday-shortened week, the Dow and the Nasdaq posted modest losses, while the S&P 500 was nearly unchanged. The Dow fell 0.1% for the week, while the Nasdaq lost 0.4%.

In the commodity market, crude oil rose above $76 a barrel in New York after the United Arab Emirates central bank said it would back the country’s lenders against a possible default by Dubai World.

Crude oil for January delivery climbed as much as 80 cents to $76.85 a barrel on the New York Mercantile Exchange. Prices were up 60 cents to $76.65 a barrel at 9:32 a.m. in London.

Brent crude oil for January settlement on the London-based ICE Futures Europe exchange traded at $77.77 a barrel, up 59 cents, at 9:25 a.m. in London. The contract earlier rose as much as 77 cents, or 1%, to $77.95 a barrel.

Gold declined for a third day on speculation that some investors locked-in gains from a rally to a record last week, as news of Dubai World’ plan to delay loan payments rattled global markets. Gold for immediate delivery weakened 0.4% to $1,172.62 at 8:39 a.m. in Singapore. The metal reached an all- time high $1,195.13 last week. February gold shed 0.1% to $1,173.80 an ounce on the New York Mercantile Exchange’s Comex division.

In the currency market, US Dollar retreated against majors that recovered from some of the last two day's losses.

The Japanese Yen gained versus the U.S. dollar and other major currencies after concerns with regard Dubai's debts, which caused a panic in markets last week, spurred demand for the yen as a refuge. The Japanese yen was trading at 8.3490 against the greenback.

The Hong Kong dollar was trading at HK$ 7.7501 against the dollar. Actually the Hong Kong dollar is pegged at HK$ 7.8 to the U.S. dollar but can trade between HK$ 7.75 and HK$7.85 to the U.S. dollar.

In Sydney trade, the Australian dollar rebounded from multi-week lows after investor fears that Dubai may not repay its multi-billion dollar debt abated slightly. The Australian dollar rose to 91.53 US cents at the local close, up over two cents from a 2-1/2-week low hit Friday.

In Wellington trade, the New Zealand dollar rose as the bout of risk aversion triggered by Dubai's financial woes subsided. The NZ dollar was at US72.11c at 5pm from US71.39c at 8am and US71.05c at 5pm on Friday.

The South Korean won closed at 1,162.8 won to the U.S dollar, up 12.7 won from Friday's close as eased jitters on the Dubai debt crisis whetted appetites for emerging assets and inflows of foreign stock funds boosted demand for the won.

The Taiwan dollar strengthened against the greenback. The Taiwan dollar was trading higher against the US dollar at NT$ 32.3450, 0.0990 up from Friday’s close of NT$32.2440.

In the equities, Asian share markets closed mostly higher on Monday, led by a rebound in most financial stocks after Friday's sharp sell off, as investors were reassured by indications over the weekend that any contagion from Dubai World's debt crisis will be limited.

In Japan, shares market rose as investors bought back export related stocks such as Honda Motor and financials stocks after the yen retreated from a 14-year high against the dollar marked last week and eased fear over the debt problem in Dubai, which triggered heavy sell off previous week. At the closing bell, the Nikkei 225 Stock Average index was at 9,345.55, grew 264.03 points or 2.91% from its previous close, while the broader Topix of all First Section issues on the Tokyo Stock Exchange gained 28.93 points, or 3.57%, to 839.94.

On the economic front, the Bank of Japan Governor Shirakawa said that they bank is paying due attention to the effects of the recent rapid appreciation of the yen on business sentiment. Also, he reemphasized that Bank of Japan will act promptly and decisively if judged necessary to ensure the stability of financial markets.

Over the weekend, Prime Minister Hatoyama ordered cabinet ministers to include in a supplementary budget for fiscal 2009 measures aimed at coping with the surging yen and declining Japanese stocks. There will also be a meeting between Shirakawa and Hatoyama as early as Wednesday for a discussion on risks to the fragile recovery in the Japan economy. But after all, yen pays little attention to the rhetoric and remains steady in range.

In Mainland China, share market bounced back recouping Friday losses as all ten sectors posted strong rally on broad based bargain hunting after government stimulus pledge and as concerns that Dubai World will default receded. Investors were buying back shares amid expectation the impact of the Dubai’s shock won’t spread.

The Shanghai Composite Index, measuring A shares and B shares on the Shanghai Stock Exchange, surged 99.04 points, or 3.2%, to 3,195.30, meanwhile the Shenzhen Component Index on the smaller Shenzhen Stock Exchange advanced 4.74% or 610.63 points, to 13,486.77. The CSI 300 Index, measuring exchanges in Shanghai and Shenzhen, spurted 3.82%, to 3,511.67.

In Hong Kong, the stock market bounced back on the back of strong gains in banks, properties, and commodity stocks, meanwhile other sector managed to trade above the line as concerns that Dubai World default receded. Gains were also strengthening after Beijing pledge to maintain stimulus package next year and as the Shanghai Securities News said China might extend preferential tax policies for car sales.

At the closing bell, the Hang Seng Index spurted 687 points, or 3.25%, to 21,821.5, meanwhile the Hang Seng China Enterprise, which tracks the overall performance of 43 mainland Chinese state-owned enterprises on the Hong Kong Stock Exchange, escalated 508.2 points, or 4.07%, to 12,980.33.

On the economic front, Centaline Property Agency said on Monday that Hong Kong’s weekend home sales fell 16% at major developments as concerns about Dubai World’s debt prompted buyers to slow purchases. Residential transactions at Hong Kong’s 10 biggest developments dropped to 32 between Nov. 28 and Nov. 29 from 38 the prior weekend.

In Australia, the stocks made a stellar recovery as investors bought back banks and financials and real estate stocks amid eased fears over the debt problems in Dubai, which triggered heavy selling on Friday after a move by the United Arab Emirates' central bank to offer banks support reassured investors. The United Arab Emirates’ pledge of support for banks eased concerns that losses from Dubai World’s possible default will escalate.

At the closing bell, the benchmark S&P/ASX200 index spurted 129.2 points, or 2.83%, to 4,701.3, meanwhile the broader All Ordinaries surged 118.3 points, or 2.57%, to 4,715.5.

On the economic front, the TD Securities-Melbourne Institute Monthly Inflation Gauge rose by 0.3% in November, following the 0.3% fall in October. The Housing Industry Association said new home sales in Australia dropped 6% month on month in October, after the 4.5% plunge in September. In October, the number of sales of detached houses fell by 6.9% on month, following the 4.3% decrease in the preceding month, while the number of apartment sales increased 2.4%.

In New Zealand, equities moved forward ending the first-trading day of the week in the positive terrain, with the benchmark index up almost 1%. The NZ share market however commenced the day weak on the back of global jitters from the Dubai debacle. It managed to gain momentum towards the end of the trading session in line with most of the Asian markets after reassuring news over the weekend that suggested contagion from Dubai World's debt crisis would be limited. The NZX50 advanced 1% or 31.09 points to 3125.52. The NZX 15 gained 1.22% or 69.27 points to close at 5685.73.

On the economic front, the number of new dwellings authorized in October was at its highest level in 15 months, when volatile apartment numbers are excluded. The figures published today by Statistics New Zealand (SNZ) suggest the construction sector is continuing to claw its way out from the depths of the building downturn.

In South Korea, stocks finished higher as foreign and individual investors went bargain hunting on eased jitters over Dubai debt problems. The benchmark Korea Composite Stock Price Index (KOSPI) advanced 31.10 points to end at 1,555.6, snapping a two-session losing streak.

On the economic front, South Korea's industrial output grew for a fourth straight month in October as factories produced more semiconductors and visual and audio equipment, amid signs of a faster-than-expected economic recovery. According to the report by the Statistics Korea, production in the mining and manufacturing sectors expanded 0.2% last month from a year earlier. This marked an advance for four straight months since July when production started to grow after a protracted slump.

In Singapore, stocks market bucked regional uptrend on concerns that Dubai World's troubles might hurt the global economy. Banks and properties witnessed heavy sell off, with DBS Group, which has some exposure to the Middle East, led the decliners, meanwhile City Developments, which has a joint venture with Dubai World in Singapore, weighed down other properties stocks. At the closing, the blue chip Straits Times Index was at 2,732.12, dropped 30.1 points or 1.09%.

In Taiwan, stock market bounced back, tracking stronger Asian cues amid receding fears over the impact of the Dubai debt crisis. The worries about the Dubai debt crisis subsided after the United Arab Emirates’ central bank eased credit for lenders and said it stands behind the country’s local and foreign banks as they face losses from Dubai World’s possible default. Further boosting sentiment was Taiwan's index of leading indicators, which rose 0.5% in October for the ninth straight month. The benchmark Taiex share index snapped its two days losing streak, by finishing higher by 91.30 points or 1.22% in a day, closing at 7582.21.

In India, key benchmark indices surged as the latest data showed the Indian economy expanding at a stronger-than-expected 7.9% pace in the second quarter. The barometer index BSE Sensex fell below the psychological 17,000 mark soon after a sharp surge took it above that level in afternoon trade. The BSE 30-share Sensex closed up 294.21 points or 1.77% to 16,926.22. The S&P CNX Nifty added 90.95 points or 1.84% to 5,032.70.

Elsewhere, Malaysia's Kula Lumpur Composite index finished lower at 1259.11 while stock markets in Indonesia’s Jakarta Composite index gained 22.32 points ending the day higher at 2415.84.

In other regional market, European shares dropped on Monday, with every sector under pressure, as markets remained jittery after last week's news of Dubai debt woes. On a regional level, the German DAX index declined 1% to 5,628.56; the French CAC-40 index lost 1.1% to 3,680.54 and the U.K. FTSE 100 index fell 0.8% to 5,203.30.