Sun, Sep 18, 2011 page10

• Asian markets get a late boost

  UPBEAT MOOD: The news that central banks are going to work on Europe’s debt problems alleviated panic in the markets, which rose as investors’ confidence grew

  • Agencies, with Staff Writer
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  Asian stocks trimmed a weekly decline as joint action by central banks to tackle Europe’s debt problems boosted confidence that the region will avoid a financial crisis like the one that followed the collapse of Lehman Brothers Holdings Inc.

  HSBC Holdings PLC, Europe’s biggest bank by market value, pared losses after the European Central Bank (ECB) led a coordinated effort to lend US dollars to euro-area banks. Canon Inc, which depends on Europe for about a third of its sales, closed the week down 2.3 percent in Tokyo after earlier falling 6.3 percent. Esprit Holdings Ltd tumbled the most since 1997 after profit plunged at the clothier.

  “What these authorities are trying to do is preempt any panic over banks’ access to short-term funding,” said Prasad Patkar, who helps manage about US$1.1 billion at Platypus Asset Management Ltd in Sydney. “Anything that suggests they will act proactively to avoid another Lehman-style crisis will help equities, commodities and other risk assets because of how oversold they are, and how bearishly everybody is positioned.”

  The MSCI Asia Pacific Index fell 0.4 percent to 120.26, following a 2.7 percent drop the previous week. The gauge tumbled 8.6 percent last month on concern that Europe’s debt crisis would hurt the region’s banks and after Standard & Poor’s downgraded the US’ credit rating.

  Hong Kong’s Hang Seng Index fell 2.1 percent this week, while Australia’s S&P/ASX 200 Index slid 1.1 percent. Japan’s Nikkei 225 Stock Average and South Korea’s KOSPI both advanced 1.5 percent.

  Stocks on the Asian benchmark gauge fell early in the week on reports that Germany was preparing its banks for a Greek default. Shares also dropped after Chinese Premier Wen Jiabao (溫家寶) said the region’s nations must “put their own houses in order” rather than look to China for a bailout.

  The MSCI Asia Pacific Index pared declines on Thursday and Friday after French President Nicolas Sarkozy and German Chancellor Angela Merkel said that Greece would remain part of the eurozone and the ECB coordinated with the US Federal Reserve and other central banks to extend US dollar loans to the region’s lenders to ensure they have enough cash for the rest of the year.

  The TAIEX rose 191.72 points, or 2.59 percent, to 7,577.40 as of the 1:30pm close in Taipei on Friday. The benchmark dropped 0.4 percent this week.

  UBS Securities said on Friday it has cut its target for the Taiwan Stock Exchange capitalization weighted index (TAIEX) for this year to 7,800 points from 8,200 points to reflect uncertainty over the global economy.

  The local bourse is expected to encounter volatility amid concerns over the debt crisis in the eurozone before a mild rebound at year-end, according to the brokerage.

  It was another downgrade of the TAIEX target after UBS Securities lowered the forecast from 9,000 points to 8,200 points last month.

  In a report, William Dong (董成康), head of research at UBS Securities Taiwan (瑞銀證券), said recent depreciation of the NT dollar against the US dollar has helped local high-tech companies reduce risks in foreign exchange loss and enhance their bottom lines.

  A falling NT dollar was the result of outflow of foreign funds, which has created a market with falling liquidity and paved the path for lower share prices, Dong said.

  The NT dollar fell 1.94 percent against the US dollar since the beginning of this month.

  Dong said Taiwanese high-tech firms have been better prepared for the current global economic slowdown than they had been in 2008, by adopting effective measures to manage the supply chain and control inventory.

  However, if demand from end-users continues to slow, bellwether electronics stocks are unlikely to post significant gains and boost the broader market, he said. The high-tech sector serves as the backbone of Taiwan’s exports.

  In other markets:

  Manila was virtually unchanged, edging down 1.23 percent to 4,290.17. SM Investments dipped 0.9 percent to 555 pesos, Lepanto Mining shot up 6.1 percent to 1.39 pesos and SM Prime gained 0.7 percent to 13.00 pesos.

  Wellington closed 0.62 percent, or 20.18 points, higher at 3,292.68.

  Telecom jumped 1.8 percent to NZ$2.58 and Fletcher Building was up 1.2 percent at NZ$7.59. Sky City gained 2.1 percent to NZ$3.48.

  Mumbai rose 0.34 percent or 57.29 points to 16,933.83, shrugging off another interest rate hike from the central bank.
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