Asian Markets Starts Year With A Bang

Sensex, Seoul, Sydney advances while Shanghai, Hang Seng post losses

Stock markets in Asian region entered 2010 with enduring optimism, finishing Monday, 4 January 2010 higher, as investors indulge in buying activity after Chinese manufacturing showed some expansion in December and a stronger dollar boosted the earnings outlook for Japanese car and electronics manufacturers.

On Wall Street, stock markets were closed on Friday for New Year holiday.

In the commodity market, crude oil rose for an eighth day in New York on optimism fuel demand will increase amid freezing temperatures and improved prospects for an economic recovery in the U.S., the biggest energy consumer.

Crude oil for February delivery rose as much as 88 cents, or 1.1%, to $80.24 a barrel in electronic trading on the New York Mercantile Exchange. The contract was at $80 at 3:50 p.m. Singapore time.

Brent crude oil for February settlement rose as much as 93 cents, or 1.2%, to $78.86 a barrel on the London-based ICE Futures Europe exchange. It was at $78.55 at 3:50 p.m. Singapore time.

Gold advanced for a third day after swinging between gains and losses as the metal’s biggest monthly drop since October 2008 helped draw investors. Gold for immediate delivery, which touched an all-time high of $1,226.56 an ounce last month, jumped 0.6% to $1,103.43 at 1:53 p.m. in Singapore. The metal earlier fell as much as 0.4% to $1,093.42 an ounce. Gold for February delivery in New York rose 0.7%.

In the currency market, the US dollar rose against other major currencies in Asian trade on Monday, supported by growing optimism about prospects for the world's largest economy.

The Japanese yen traded near to four month low against greenback as sign the US economic recovery is cementing. Japan’s currency was quoted at 92.95 yen today in Asian deal from Friday’s quote at 93.02 yen per dollar in New York.

The Hong Kong dollar was trading at HK$ 7.7574 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 closed slightly firmer as firm equity markets in Asia underpinned the local currency. At the local close, the Australian dollar was trading at $US0.8978, up from Thursday’s close of $US0.8968. During the day, the local unit traded between $US0.8940 and $US0.8998. The local currency market was closed for the New Year public holiday on Friday.

In Wellington, the markets were closed for holiday.

The South Korean won ended at 1,154.80 won against the dollar, up 9.70 won from Wednesday's close, as offshore investors raised their holding of local stocks.

The Taiwan dollar strengthened further against the greenback. The Taiwan dollar was trading higher against the US dollar at NT$ 31.8320, 0.1980 up from Thursday’s close of NT$32.0300

In equities, most of the major Asian markets kicked off 2010 on a positive note Monday as strong manufacturing data from China and India helped support hopes for continued economic recovery.

In Japan, the share market kicked off 2010 on a positive note, with broad based gains across major sector heavyweights, buoyed by strong Chinese December manufacturing reports and softening yen against greenback to nearly 93 yen level. At the closing bell, the Nikkei 225 Stock Average index was at 10,654.79, advanced 108.35 points or 1.03% from Thursday’s close, while the broader Topix of all First Section issues on the Tokyo Stock Exchange grew 8.16 points, or 0.9%, to 915.75.

In the economic news, the Finance Ministry said Japan's general account tax revenues in November fell 25.6% from a year earlier to 5,297.14 billion yen with declines in most tax categories.

In Mainland China, the share market stumbled at the end of Monday’s trading session, snapping four days of winning streak, on rekindled worries about country’s inflation pressure. Materials and resources and energy shares traded lower on profit taking on cautious recent rally were overcooked. Financials were sluggish with steep sell off in properties and banks on concern the China will step up more measures to curb property speculation after the government tightened tax and mortgage rules.

At the closing bell, the Shanghai Composite Index, measuring A shares and B shares on the Shanghai Stock Exchange, fell 1.02%, to 3,243.76, meanwhile the Shenzhen Component Index on the smaller Shenzhen Stock Exchange shed 1.21% to 13,533.54. The CSI 300 Index, measuring exchanges in Shanghai and Shenzhen, has lost 0.46%, to 3,559.41.

On the economic front, the China Federation of Logistics and Purchasing (CFLP) said the Purchasing Managers' Index of China's manufacturing sector stood at 56.6% in December, 1.4% higher than that for November. It was the 10th straight month that the data stayed above 50, which indicated expansion. A reading below 50 signaled contraction.

In Hong Kong, share market ended the first trading session of the year 2010 slightly below the gains line, as investors continued to offload the stocks on concerns last year 52% index gains turns valuation stretched as compared earning and on cautious that US interest rates might rise sooner than expected after strengthening US job data and as Federal Reserve Chairman Ben Bernanke cracked the door open a bit more to the idea of raising interest rates if a new financial bubble emerges.

At the closing bell, the Hang Seng Index melted 49.22 points, or 0.23%, to 21,823.28, meanwhile the Hang Seng China Enterprise, which tracks the overall performance of 43 mainland Chinese state-owned enterprises on the Hong Kong Stock Exchange, dived 43.58 points, or 0.34%, to 12,750.55.

In Australia, the markets ended the 2010 first trading day slightly higher, driven by major madcap stocks as new money coming into the market. Energy shares spurted as crude oil prices were nearby $80 a barrel in Asian deal amid expectations the oil price will continue to improve this year. The materials and resources were steady after Chinese manufacturing grew. Financial stocks ended edged lower. Consumer related stocks closed in diverse terrain ahead of this week’s November retail trade numbers.

At the closing bell, the benchmark S&P/ASX200 index spurted 5.70 points, or 0.12%, to 4,876.30, meanwhile the broader All Ordinaries surged 7.10 points, or 0.15%, to 4,889.8.

In New Zealand, stock markets were closed for holiday.

In South Korea, stocks closed higher the first trading day of 2010, as investors snapped up tech and brokerage shares. After range-bound trading, the benchmark Korea Composite Stock Price Index (KOSPI) gained 13.37 points to 1,696.14. Foreign investors continued to scoop up local stocks, supporting the key index on the first trading session of the New Year.

In Singapore, the share market ended the year 2010 first trading session with marginal losses, after government said Singapore’s gross domestic product contracted by a seasonally adjusted 6.8% in the fourth quarter of 2009 as compared the 2.1% fall in the third quarter because weaker manufacturing output interrupted the island’s recovery from its deepest recession since independence in 1965. At the closing, the blue chip Straits Times Index was at 2,896.55, erased 3.07 points or 0.11%, off an intraday high of 2,896.68 and off an intraday low of 2,886.43.

In Taiwan, stock market in Taiwan extended its winning streak for third straight session, attaining a new nineteen month high, as investors shift focus from blue chip technology stocks to tradition industries like steel and construction. The investors also cheered on the news of formation of China Securities Index Company. The benchmark Taiex share index attained a new nineteen month high, by ending the day higher by 19.74 points or 0.24% at 8207.85 - the highest closing since 18 June 2008 when market finished the day at 8217.58.

On the economic front, Markit Economics reported that the Taiwan HSBC Manufacturing Purchasing Manager’s Index stood at a seasonally adjusted 58.7 in December, up from 58.4 in the previous month. A reading above 50 indicates expansion, while one below 50 suggests contraction.

Manufacturing output continued to rise in December led by a sharp increase in new order volumes. Incoming new business levels rose for the ninth successive month, reflecting the ongoing recovery in global economic conditions. Employment in the manufacturing sector increased at its fastest pace in twenty-three months, as manufacturers aimed to boost production capacity.

In Philippines, equities failed to hold on after a mixed opening and slid lower throughout the day. The investors continued to offload the stocks on the first session of the year even as the rest of the Asia nudged higher as the broad retreat witnessed in the market in the month of December extended further. At the concluding bell, the benchmark index PSEi lost 1.56% or 47.67 points to 3,005.01, while the All Shares index tumbled 1.13% or 21.78 points to 1,896.86.

In India, stocks kicked off 2010 on an upbeat note, with key benchmark indices hitting their highest level in 20 months as strong auto sales, a jump in manufacturing activity in December 2009, and the latest data showing a surge in exports in November 2009, underpinned sentiment. The BSE 30-share Sensex was up 93.92 points or 0.54% to 17,558.73. The Sensex gained 118.03 points at the day's high of 17,582.84 in mid-afternoon trade, its highest level since 5 May 2008. The S&P CNX Nifty was up 31.15 points or 0.60% at 5232.20. It hit a high of 5238.45, its highest level since 5 May 2008.

Elsewhere, Malaysia’s Kula Lumpur Composite index finished slightly higher at 1275.75 while stock markets in Indonesia’s Jakarta Composite index inched up 41.06 points ending the day higher at 2575.41.

In other regional market, European stocks started the New Year with gains on Monday, helped by a wave of deal activity, data indicating strong growth out of China and speeches from Federal Reserve officials hinting of no rate hike on the horizon. The German DAX rose 0.8% or 51.16 points to 6,009.05 to recapture the 6,000 mark, the French CAC 40 rose 1% or 40.10 points to 3,976 and the U.K. FTSE 100 added 0.6% or 34.10 points to 5,443.97.