Asian stocks surged after the US government proposed buying US$700 billion in bank assets and were led higher by financial and commodity companies.
Australia and Taiwan restricted the short selling of equities.
Mitsubishi UFJ Financial Group Inc and Macquarie Group Ltd rose more than 4 percent on the US Treasury’s plans to clean up bank balance sheets. Fortescue Metals Ltd jumped 25 percent after Australia’s regulator banned speculators from borrowing stocks and selling them to profit from falling prices. Bank of China Ltd (中國銀行) led Chinese shares higher after the securities regulator made it easier for companies to buy back stock.
“The positive thing about the Treasury plan is that it addresses the entire system, the bad debts and assets, rather than one by one,” said David Ng, who is buying financial shares for the US$1 billion in assets he helps manage at Hwang-DBS Asset Management Sdn in Kuala Lumpur. “The buying has been triggered by the short-selling bans. That’s been the main driver.”
The MSCI Asia Pacific Index gained 2.8 percent to 117.37 as of 5:23pm in Tokyo, extending Friday’s 5.5 percent jump.
The regional measure tumbled to the lowest in three years last week as the credit crisis forced Lehman Brothers Holdings Inc into bankruptcy. Japan’s Nikkei 225 Stock Average rose 1.4 percent today to 12,090.59.
The US dollar dropped against the yen on concern a US government plan to buy US$700 billion in troubled assets from banks will widen the country’s budget deficit.
The currency reached a three-week low against the euro before reports this week that may show tighter lending rules contributed to a drop in US home sales and durable goods orders.
The greenback also fell against the Swiss franc as two-year Treasury yields declined for the first time in three days on bets the US Federal Reserve will cut interest rates.
“Problems with the US deficit will haunt the dollar,” said Masanobu Ishikawa, general manager of foreign exchange at Tokyo Forex & Ueda Harlow Ltd. “Spending such a large amount on this rescue package will remind traders that the fiscal health of the US is set to worsen.”
The dollar fell to ¥106.05 as of 5:28pm in Tokyo, from ¥107.45 in New York late on Friday. The US currency declined to US$1.46 per euro, the lowest since Sept. 2, and traded at US$1.4575 from US$1.4466. The dollar declined to 1.0965 Swiss francs from SF1.1054. The euro bought ¥154.67 from ¥155.46.
Japan’s 10-year bonds fell on the US government’s plan to revive the country’s financial system by injecting as much as US$700 billion into markets, sending the Nikkei 225 higher for a second day.
The notes snapped two days of gains as the Nikkei 225 climbed 1.4 percent following a 4 percent increase in the Standard & Poor’s 500 Index on Friday.
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Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) market value closed above US$1 trillion for the first time in Taipei last week, with a raised sales forecast driven by robust artificial intelligence (AI) demand. TSMC saw its Taiwanese shares climb to a record high on Friday, a near 50 percent rise from an April low. That has made it the first Asian stock worth more than US$1 trillion, since PetroChina Co (中國石油天然氣) briefly reached the milestone in 2007. As investors turned calm after their aggressive buying on Friday, amid optimism over the chipmaker’s business outlook, TSMC lost 0.43 percent to close at NT$1,150
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