Asian shares rose yesterday, with South Korean stocks hitting a six-month high after the country averted recession in the first quarter, as a Wall Street rally boosted risk demand around the region and dented the yen.
Many financial centers in the region were closed for a long weekend, making investors nervous that gains made now may not be sustained next week when many major US companies report quarterly earnings.
The Nikkei hit a three-month closing high for the second day in a row, though off the day’s peak, which reached above the psychologically key 9,000 level, as banks tumbled after Sumitomo Mitsui Financial Group (SMFG) warned of a net loss for the financial year just ended, reviving fears for other megabanks.
The benchmark Nikkei 225 index rose 0.54 percent to 8,964.11, extending Thursday’s 3.7 jump. South Korea’s KOSPI ended up 19.69 points at 1,336.04. Chinese shares closed up 2.70 percent while Taiwan share prices closed up 2.01 percent.
US shares rebounded after Wells Fargo said it expected to post a record quarterly profit of US$3 billion, topping analyst expectations that sent the sector — key to market sentiment — sharply higher, with the S&P financial index soaring 15.51 percent.
“The market was helped by Wells Fargo’s stronger than expected first quarter results estimate, fueling hopes of stabilization in US financial markets,” said Won Jong-hyuck, a market analyst at SK Securities in Seoul.
Global investors have been keenly awaiting US financial results, which move into high gear next week when Goldman Sachs, JP Morgan Chase and Citigroup are all set to report.
“If US banks show some signs of improvements and stabilization, the index could make a more meaningful rebound. Better numbers from banks will point to stronger economies in the second half,” said Lee Sun-yeob, a market analyst at Goodmorning Shinhan Securities.
But there was little joy for financials in Japan a day after its third-largest bank, Sumitomo Mitsui Financial Group (SMFG), said it faces a net loss of US$3.9 billion for the financial year just ended and would raise as much as US$8 billion through the sale of shares.
Shares of SMFG, the smallest of Japan’s three megabanks, faced a glut of sell orders and remained untraded for most of the day. The issue closed down 13.8 percent at ¥3,110 (US$30.96).
Its rivals weren’t doing much better.
Mizuho Financial Group Inc fell 9.6 percent and Mitsubishi UFJ Financial Group Inc retreated 1 percent despite overall market strength.
To bolster its capital base, SMFG filed a shelf registration to issue up to ¥800 billion in new shares.
“SMFG considers it necessary to enhance its capital base both in terms of quantity and quality in order to maintain its competitiveness notwithstanding any future changes that might occur in the global financial sector and to realize sustainable growth,” the company said in a statement.
Credit Suisse responded by downgrading its rating on SMFG stock to “neutral,” noting the high dilution impact of the new share issue and that it “will inevitably prove a negative incentive for the share price.”
Moody’s Investors Service highlighted capital woes at Mizuho Financial Group earlier this week when it cut the bank’s credit ratings.
In an unusual move, Japan’s central bank announced yesterday that it will offer ¥1 trillion in subordinated loans to commercial banks in need of a capital boost.
The Bank of Japan said the emergency measure is aimed at major banks and some regional lenders with overseas operations. The size of the loans and interest rate for the first five years will be set by auction.
NO-LIMITS PARTNERSHIP: ‘The bottom line’ is that if the US were to have a conflict with China or Russia it would likely open up a second front with the other, a US senator said Beijing and Moscow could cooperate in a conflict over Taiwan, the top US intelligence chief told the US Senate this week. “We see China and Russia, for the first time, exercising together in relation to Taiwan and recognizing that this is a place where China definitely wants Russia to be working with them, and we see no reason why they wouldn’t,” US Director of National Intelligence Avril Haines told a US Senate Committee on Armed Services hearing on Thursday. US Senator Mike Rounds asked Haines about such a potential scenario. He also asked US Defense Intelligence Agency Director Lieutenant General Jeffrey Kruse
INSPIRING: Taiwan has been a model in the Asia-Pacific region with its democratic transition, free and fair elections and open society, the vice president-elect said Taiwan can play a leadership role in the Asia-Pacific region, vice president-elect Hsiao Bi-khim (蕭美琴) told a forum in Taipei yesterday, highlighting the nation’s resilience in the face of geopolitical challenges. “Not only can Taiwan help, but Taiwan can lead ... not only can Taiwan play a leadership role, but Taiwan’s leadership is important to the world,” Hsiao told the annual forum hosted by the Center for Asia-Pacific Resilience and Innovation think tank. Hsiao thanked Taiwan’s international friends for their long-term support, citing the example of US President Joe Biden last month signing into law a bill to provide aid to Taiwan,
China’s intrusive and territorial claims in the Indo-Pacific region are “illegal, coercive, aggressive and deceptive,” new US Indo-Pacific Commander Admiral Samuel Paparo said on Friday, adding that he would continue working with allies and partners to keep the area free and open. Paparo made the remarks at a change-of-command ceremony at Joint Base Pearl Harbor-Hickam in Hawaii, where he took over the command from Admiral John Aquilino. “Our world faces a complex problem set in the troubling actions of the People’s Republic of China [PRC] and its rapid buildup of forces. We must be ready to answer the PRC’s increasingly intrusive and
STATE OF THE NATION: The legislature should invite the president to deliver an address every year, the TPP said, adding that Lai should also have to answer legislators’ questions The Chinese Nationalist Party (KMT) yesterday proposed inviting president-elect William Lai (賴清德) to make a historic first state of the nation address at the legislature following his inauguration on May 20. Lai is expected to face many domestic and international challenges, and should clarify his intended policies with the public’s representatives, KMT caucus secretary-general Hung Meng-kai (洪孟楷) said when making the proposal at a meeting of the legislature’s Procedure Committee. The committee voted to add the item to the agenda for Friday, along with another similar proposal put forward by the Taiwan People’s Party (TPP). The invitation is in line with Article 15-2