Asia Watch

By RAY HEATH
Updated:

 

In a bizarre burst of optimism, Japanese banking shares bounced today on hopes that a downgrading in the country's credit rating by Standard & Poor's will provide the stimulus to tackle the increasingly unstable debt mountain.

S&P's decision to cut Japan's credit rating from AAA to AA+ was based on the government's lack of action over growing economic problems, said the ratings agency. The possibility that this will spur banking reforms propelled Mizuho, the world's largest bank by assets, by up to 4%.

The Nikkei 225 added 172.64 points to 13,246.00 as investors seemed desperate to grab at any silver lining among the dark clouds of potential debt defaults and repeated calls for unpopular Prime Minister Yoshiro Mori to stand down.

The main action in Hong Kong was a family affair - a deal between telecoms group Pacific Century Cyberworks, run by Richard Li, and Hutchison Whampoa, the flagship firm of his father, Li Ka-shing.

Two weeks ago, Li senior said he would not come to the aid of his son's company, the share price of which has plunged 80% in the past year. But now, PCCW has bought a satellite communications business from Hutchison for $103m (£71m) in stock, a deal that gives the ports-to-telecoms conglomerate a 0.83% stake in PCCW.

Hong Kong investors decided this was, after all, a sign that the father's billions could help his son and PCCW's shares climbed almost 5% to HK$4.575, enough to lift the Hang Seng 181.92 points to 15,280.56.

Rising unemployment in Taiwan has raised questions about the strength of the country's economic recovery in the face of continued weak demand for its computer chips, and the Weighted index lost 32.11 points to 5726.93. A 5% rise in SK Telecom helped stock prices in Seoul recover from Nasdaq-inspired losses, and the Kospi finished the morning session up 1.94 points at 583.52.

Singapore investors were waiting for today's annual budget, crossing their fingers that it would contain measures to stimulate corporate activity and the markets. Technology stocks fought off the effects of a 1% drop in the Nasdaq, and a rally in computer parts manufacturers pushed up the Straits Times index 2.99 points to 1947.61.

Modest buying of Malaysian blue-chips lifted the Kuala Lumpur Composite index but it fell back to 712.76, a drop of 0.72. Thai stocks bounced on expectations the government was set to launch a body to manage corporate debts, and, with bank shares sharply ahead, the SET added 12.28 points to 321.30.

The possibility of glitches appearing in the proposed deal between Britain's GKN engineering giant and industrial services group Brambles wiped 7% off the Australian company's stock. Sellers were concerned that poor half-year profits could prove an obstacle to the proposed merger of some of the operations of the two companies.

Elsewhere on Australia's markets, the All Ordinaries index survived a slump in shares of national airline Qantas on the back of disappointing profit figures, and ended up 1.10 points at 3241.40.

Indonesian stocks were marginally ahead in thin trade as the Jakarta Composite index rose 1.62 points to 438.65.

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