Asia Watch

By RAY HEATH
Updated:

 

ASIAN stocks bounced ahead today after a surprisingly strong surge in consumer confidence in the US. Only weeks ago this would have been seen as a barrier to lower interest rates, and a strong sell signal.

Today the rise in the consumer confidence index was taken as evidence that the US economy is not about to plunge into a recession that would drag down Asian exports and economies. Gains of more than 2% on Wall Street and the Nasdaq index provided further impetus which took Hong Kong stocks up nearly 2%, while Japan's Nikkei 225 gained 127.34 points to 13,765.67.

Hong Kong banks and property developers were among the biggest winners from the view that the threat of a slowing US economy to export earnings was weakening. The Hang Seng index looked set to challenge the 13,000 level as it rose 234.81 points to 12,942.71 in busy morning trade.

Index heavyweights HSBC Holdings, up 2.5%, and major developer Cheung Kong, up 3%, led the charge. Cheung Kong was also boosted by denials that it was about to raid the market for cash. Tokyo enjoyed an incestuous surge as the recent strength of the Nikkei, which has risen 12% in a week, will be good for profits of leading broking groups such as Nomura, which added more than 3%. Car giant Honda went sharply into reverse following news of its European problems, and lost almost 5%.

Taiwanese investors are still looking for early cuts in interest rates, whatever direction the Fed takes in the US, and moved in on bank shares, but technology stocks refused to join the party and the Weighted average reversed early gains to show a 42.55-point loss at 5841.78. Rising fears of the knock-on effect of the growing debt problems of Korean construction giant Hyundai Engineering offset gains among chip-makers and the Kospi index drifted off 0.05 points to 532.85. Hyundai fell the daily 15% limit as the company prepared to convince bankers to agree to a debt-equity swap, while shares in its creditor banks fell by as much as 5%.

Buyers were back for Singapore Telecom as they judged the recent drubbing that the shares received following its bid for Australia's Cable & Wireless Optus network had been overdone. A 2%-plus gain in Singtel and a rally in bank stocks combined to take the Straits Times index up 16.14 points to 1695.53.

Firm electronic stocks pushed Thailand's SET index up 1.78 points to 292.8. Yesterday's fiscal stimulus by the Malaysian government failed to ignite any enthusiasm, and the Kuala Lumpur Composite crept up 3.25 points to 666.72. Growing calls for the impeachment of Indonesian Prime Minister Abdurrahman Wahid failed to stir the market, and the Jakarta Composite index added 3.95 points to 373.26.

Australian stocks suddenly lost altitude in late morning trading following a profits warning from national carrier Qantas that sent its shares spiralling down almost 10%. The group is facing increased competition and fare discounting by rival airlines, including Virgin, which is cutting into yields and earnings. The impact wiped out an early 20-point gain by the All Ordinaries index, which closed the morning down 0.3 points at 3169.7.

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