Asian Stocks Mostly Up!

June 2, 2008

Asian stocks mostly up at closing
HONG KONG - JAPANESE government bond prices dropped on Monday, hit by negative sentiment ahead of auctions this week and with global inflation on the rise, while oil prices held steady above $127(S$173) a barrel. Asian stocks edged higher.

Bond yields in the euro zone, Japan and the United States hit 2008 highs last week as investors scrambled to protect their portfolios from inflation with the worst of the credit crisis apparently over.

'With market sentiment still bearish, the supply this week will be a challenge for investors as to how much they can absorb,' said Mr Chotaro Morita, chief JGB strategist at Barclays Capital in Tokyo.

Japan's Nikkei share average was 0.2 per cent higher, with Sony one of the biggest gainers after Goldman Sachs upgraded shares in the company to 'buy.'

The MSCI index of shares in the Asia-Pacific region outside Japan added 0.1 per cent, while a pan-Asian index rose 0.4 per cent .

Nervousness about an upcoming 10-year note auction in the Japanese government bond market knocked down the cash market on Monday and sent 10-year futures to the lowest since August 2007.

June 10-year futures dropped 0.89 point to 133.56. The benchmark 10-year yield has surged about 50 basis points since mid-March, when the US Federal Reserve backed a plan to bail out Bear Stearns and accepted a wider array of collateral to provide liquidity to the market.

Fears about inflation also have investors growing impatient with low yields in their portfolios. Central banks around the world continue to be under pressure to contain price pressures.

Data on Monday showed annual inflation in Australia rose to 4.5 per cent, the highest in the 5-year history of the gauge and well above the Reserve Bank of Australia's 2-3 per cent target.

Long-term expectations for US inflation soared to the highest since April 1995, according to a report on Friday, heightening the danger that perceptions of high prices will become embedded within consumers.

Also, prices of soybeans and corn both rose last week, driven in part by fears over supply because of weather concerns and a strike by farmers in Argentina.

Crude oil prices were stable with the July contract largely unchanged at US$127.23 a barrel.

However, oil prices have climbed a third so far this year and futures prices have risen above the spot market, leading many analysts to believe energy costs will continue to increase for the forseeable future.

The US dollar rose against major currencies, tacking on more gains after posting its first back-to-back monthly rise since January 2007. The dollar was up 0.1 per cent at 105.43 yen, and the euro was down 0.1 per cent at US$1.5535 .

A stronger dollar is often viewed as a positive for many Asian economies that depend on US consumer demand for their export markets. Rising inflation in the world's largest economy sparked some worries about the knock-on effect in Asia, but evidence so far has been mixed.

SHANGHAI
Chinese share prices closed up 0.75 per cent on Monday as energy and power firms were boosted by hopes that the government would relax price controls, dealers said.

Telecom stocks also picked up steam ahead of China Unicom's expected announcement later on Monday of further details of its a merger plan with China Netcom Group, dealers said.

The benchmark Shanghai Composite Index, which covers A and B shares, closed up 25.69 points at 3,459.04 on turnover of 62.0 billion yuan (S$12.1 billion).

The Shanghai A-share Index added 26.95 points or 0.75 per cent at 3,629.61 on turnover of 61.8 billion yuan. The Shenzhen A-share Index was up 2.80 points or 0.26 per cent at 1,091.39 on turnover of 29.2 billion yuan.

TOKYO
Japan's Nikkei benchmark climbed 0.7 per cent to a nearly five-month closing high on Monday as Mizuho Financial Group and other financials surged on expectations of higher earnings and growing optimism that the credit crisis is fading.

Additional upward impetus came from Sony Corp and other exporters rising on a slightly weaker yen, with money also flowing into stocks from the Japanese government bond market after JGB futures plunged.

The Nikkei gained over 100 points to 14,440.14, its highest close since Jan 9. The broader Topix was up 1.2 per cent at 1,425.10.

KUALA LUMPUR
Share prices on Bursa Malaysia ended lower today on selling pressure, especially involving key plantation-related stocks like Sime Darby and IOI Corp, which dragged down the key index into negative territory throughout the day, dealers said.

At 5pm, the benchmark Kuala Lumpur Composite Index (KLCI) fell 13.61 points or 1.07 per cent to 1,262.49 after opening 1.55 points lower at 1,274.55 in the morning.

The Industrial Index was 26.63 points lower at 2,663.94, the Finance Index declined 73.07 points to 9,719.56 and the Plantation Index dropped 123.37 points to 7,872.99.

Of the FTSE-BM Index series, the FBMEmas fell 63.92 points to 8,455.70 and the FBM30 eased 59.49 points to 8,164.81. Others indices were also lower with the FBM2BRD decreasing 33.40 points to 5,752.83 and the FBM-MDQ declining 75.78 points to 4,784.71.

Losers led gainers by 440 to 211 while 256 counters were unchanged, 509 untraded and 31 suspended.

Trading volume declined to 390.595 million shares valued at RM911.13 million (S$385.4 million) compared with 818.408 million shares worth RM2.391 billion last Friday.

According to the dealers, market sentiment remained fragile following uncertainties in the US market.

They said that investors were reluctant to take heavy positions due to lack of fresh leads and concern over inflation in the country.

HONG KONG
Hong Kong share prices closed higher on Monday, up 1.22 per cent, as China stocks gained on bargain-hunting interest, dealers said.

China counters were also helped by hopes of favourable policy announcements from Beijing for coal and energy firms, they added.

The Hang Seng index closed up 298.24 points at 24,831.36, off a low of 24,453.79 and a high of 24,923.28. Turnover was HK$74.3 billion (S$12.9 billion).

China Mobile was up more than 2.5 per cent, continuing to rebound after sharp drops early last week on competition worries, while mainland insurers and oil firms also posted strong gains.

PetroChina and Sinopec were lifted by continuing hopes for more subsidies to cover their refining losses, while upstream oil play CNOOC was up after earlier drops following a retreat in crude prices.

China coal producers were lifted by speculation that Beijing may announce a new coal price regime, while mainland power firms were boosted by hopes for a tariff hike.

Utilities firm CLP Holdings fell more than eight per cent on profit-taking after surging nearly 10 per cent on Friday.
Source: REUTERS, AFP, BERNAMA