A leading Asia-Pacific stock index hit a record high yesterday as shares took their cue from gains on US markets late last week, though trading was light due to holidays in Japan, South Korea and Taiwan.
Ripples from the US Federal Reserve's interest rate cut last week continued to flow across markets, building some confidence among stock investors who are still highly vulnerable to fears about a credit crunch.
"Markets are still a bit edgy," head of strategy at Schroder Investment Management, Simon Doyle said. "The broader issue is still about the consequences of the credit tightening and the housing slowdown in the US and whether that flows on through to the economy."
PHOTO: AFP
Stocks have been a main beneficiary of the Fed confidence-building. MSCI's measure of Asia Pacific stocks excluding Japan was up 1.4 percent at 0621 GMT after touching a record high. The index has rebounded 28 percent from a trough during the market sell-off last month and is up 30 percent so far this year.
MSCI's main emerging market index also racked up a fresh record high, gaining 0.8 percent to eclipse its previous peak in July.
Funds have been pouring into emerging market equities in places like China, South Korea and the Middle East, attracted by strong profits and reassured somewhat about liquidity.
"The Fed rate cut was positive for Asian equities because that means global economic growth will not be jeopardized," said Michael Foo, Singapore-based head of portfolio management at Clariden Leu. "That's going to help sustain demand for raw materials. Mergers & Acquisition deals aren't likely to dry up either."
Energy and materials stocks led gains on the MSCI regional index. CNOOC (中國海洋石油), China's largest offshore oil explorer, climbed 5.4 percent to HK$12.58 (US$1.62). China Petroleum & Chemical Corp (中國石油化工), the country's biggest refiner, jumped 5.8 percent to HK$9.44.
The bullish tone spilled over into Australia, where the benchmark S&P/ASX 200 Index added 93.6 points or 1.5 percent to end the day at a record 6,451.5, helped by the mining sector as well as merger and acquisition speculation.
Rio Tinto Group, the world's No. 3 mining company, added 3.4 percent to A$106.68 (US$92.66), a record, while BHP Billiton Ltd, the world's largest miner, jumped 5.2 percent to a high of A$43.14 after the Herald Sun reported that the mining company may announce a large gold discovery.
Other markets advanced, except Sri Lanka. Hong Kong's Hang Seng Index closed up 708.16 points or 2.74 percent at 26,551.94 yesterday, off a low of 25,994.78 and a new all-time high of 26,635.27.
China's benchmark Shanghai Composite Index closed up 30.34 points or 0.56 percent at a fresh record 5,485.01, as index heavyweight Sinopec Corp (中國石化) drove energy stocks upward on expectations a PetroChina Co (中國石油天然氣) share sale will boost the sector. Sinopec closed up 0.68 yuan (US$0.09) or 3.71 percent to 18.99.
India's main share index climbed to a fourth record high in as many sessions, as banking stocks rallied on hopes lenders may lower interest rates and boost demand for loans.
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