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Sun, Mar 21, 2010 - Page 10 News List

Fed pledge, BOJ lending boost Asian stocks

EXPECTATIONS Signs of improvement from the US and the Bank of Japan’s moves to stoke credit growth bolstered Asian markets as concern over Greece’s debt receded


Asian stocks rose for a fourth week after the US Federal Reserve pledged to keep borrowing costs near zero for an “extended period” and as the Bank of Japan (BOJ) expanded a bank-loan program.

Sony Corp, which makes Bravia televisions and the PlayStation 3 video-game system, gained 4.1 percent. Sony Financial Holdings Inc, a subsidiary, surged 12 percent after saying it will boost bond holdings. Kia Motors Corp, South Korea’s No. 2 automaker, jumped 14 percent in Seoul on speculation profit will beat estimates. BYD Co (比亞迪), a Chinese carmaker, advanced 11 percent in Hong Kong after brokerages lifted earnings forecasts for the company.

“It’s clear that the Fed is going to keep rates very accommodative to stimulate the growth recovery,” said Chris Hall, who helps manage about US$3.3 billion at Argo Investments in Adelaide, Australia. “The million-dollar question is the consumer’s ability to step up to the plate to support the economy.”

The MSCI Asia-Pacific Index climbed 1.4 percent to 124.92 this week. Stocks have rallied in the past six weeks as concern over monetary tightening and Greece’s debt receded, and as companies reported better-than-expected earnings.

Japan’s Nikkei 225 Stock Average rose 0.7 percent this week, compared with increases of 1.1 percent for Australia’s S&P/ASX 200 Index, 1.4 percent for South Korea’s Kospi index and 0.8 percent for Hong Kong’s Hang Seng Index. The Shanghai Composite Index advanced 1.8 percent.

The MSCI Asia-Pacific Index rose this week after the US Federal Reserve said it will leave its benchmark interest rate near zero to safeguard the economic recovery. Separately, a US Labor Department report showed first-time applications for jobless benefits dropped in the week ended March 13, while the Federal Reserve Bank of Philadelphia’s general economic index rose this month to the highest level this year.

“The US economy is improving day by day, and so is the global economy,” said Hiroichi Nishi, an equities manager at Nikko Cordial Securities Inc in Tokyo. “People are beginning to expect better corporate earnings.”

The BOJ on Wednesday doubled a lending program aimed at stoking credit growth after the government stepped up calls to arrest deflation that’s hampering the economic recovery. It also held the overnight lending rate at 0.1 percent.

“It’s good that the bank is showing its willingness to cooperate with the government to curb deflation,” said Hiroshi Morikawa, a senior strategist at MU Investments Co, which manages the equivalent of US$14 billion in Tokyo.

The MSCI Asia-Pacific Index has gained about 9.5 percent from its lowest level in more than two months on Feb. 8, as better-than-estimated US employment data and a pledge of support from French President Nicolas Sarkozy for debt-stricken Greece bolstered confidence in the global recovery. The average price of stocks in the index has risen to about 19 times estimated earnings from 18 at last month’s low.

In other markets on Friday:

Singapore was flat, ending 1.76 points higher from Thursday at 2,915.70.

Manila fell 0.12 percent, or 3.72 points, from Thursday to 3,097.23.

Wellington closed 0.30 percent, or 9.72 points, higher from Thursday at 3,230.40.

Mumbai rose 0.34 percent, or 58.97 points, from Thursday to end at 17,578.23.

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