Sharp Weekly Gains in Asian Markets

123jump.com Staff
24 Aug, 2007
New York City

Asian markets rose sharply for the week even after a mild loss on the last day of the week. Shanghi and Hong Kong led the region with gains of 12%. The Bank of China fell in Hong Kong trading but rose in Shanghai trading after reporting exposure of $10 billion in subprime loans. Insurance Australia, largest auto insurer, fell 7% after reporting 31% decline in profit. For the week Australia rose 7.4% and Japan gained 6.4%.

[R]8:30AM New York, 8:30PM Hong Kong – Asian markets weaken today, but rose sharply for the week.[/R]

The end of the week and subprime mess in the U.S. was on the mind of traders.

Across the region most markets closed lower except in India, China, and Indonesia. Australia led the region with a loss of 1.02% followed by 0.7% decline in Philippines, 0.5% losses in Korea and Taiwan. Japan fell 0.4%, Hong Kong dropped 0.2%, and Thailand decline 0.1%. India led the region with a gain of 1.8% followed by rise of 1.5% in Shanghai trading, and 1.2% in Indonesia.

For the week Hong Kong led the region after soaring 12% followed by rises of 9.7% in Shanghai, 9.4% rise in Korea, 7.4% in Australia, and 6.4% in Japan. The CSI 300 index in China, for the week soared 13%.

The new funds from retail investors keep pouring in the stock market, despite a rise in bank interest rate this week. CSI 300 index is now up whopping 155%, the best performer among all world indexes.

The Bank of China fell 6.6% in Hong Kong trading but gained 1% in Shanghai. Industrial & Commercial Bank increased 0.7% as the CSI index reached a record close for the fifth day in a row. Shanghai Pudong jumped 5.5% and China Merchants Bank soared 4% in the bank sector rally. Shanghai Composite index rose 1.5% to close at 5,107.67.

The Bank of China led Hong Kong trading with a turnover of HK$5.6 billion followed by China Life with HK$3.8 billion, and China Mobile with HK$3.5 billion.

The Bank of China reported that it has subprime exposure of $9.7 billion and has placed in reserve $132 million to cover losses in the investment. The bank raised, in largest IPO in the world, $11 billion in the year 2006. While the bank contends that the portfolio of securities in subprime loans is highly rated, traders expressed skepticism. The quality of ratings from bond market rating agencies have become a suspect and several investors are worried that many of the so call high quality securities may not accurately reflect underlying deteriorating assets.

In Sydney trading stocks fell on Friday but closed higher for the week. The ASX 200 closed 1.02% lower and jumped 7.4% for the week. Mining and commodities stocks led the decline after comments from two executives at mortgage lending companies in the U.S. The comments sparked worries that housing market worries may lead to recession in the U.S. and slow down the demand for commodities from Australia. BHP Billiton fell 2.9% to A$36.60 and Rio Tinto lost 2.1% to A$89.10. Insurance Australia Group lost 7% after reporting second half profit decline of 31% to A$207 million. PaperlinX, largest local paper company, fell 3.6% after reporting annual profit decline of 23% to A$80 million.


[R]7:00AM New York, 8:00PM Tokyo-Japanese shares reverse earlier gains on fresh concern global stocks will resume their slide. Yen continues firm against American dollar. Trade Ministry to spend more on energy sources in 2008. Bank of Japan says company service prices hit 15-year highs.[/R]

Japanese shares fell on the worries that economic growth in the U.S. likely to slow. Comments from two executives at mortgage lenders sparked new round of worries. Tokyo lost 0.41% reversing yesterday sharp gains at 2.61%. Of the 225 Nikkei shares, 158 dropped, 58 gained and 9 were unchanged. Topix Index dropped 5.96 to 1,585.85.

In Tokyo trading Nikkei 225 dropped 0.41% or 67.35 to 16,248.97 in shaky trading, dragged by investor concerns that U.S. economy is heading for a slow growth period. Yen firmed to 115.90 against the dollar from 116.19 previously.

For the week Nikkei 225 jumped 6.4% and broader index Topix soared 7% after a week of volatile trading.

The Bank of Japan said Friday prices paid by companies for a variety of services such as transportation rose 1.6% in July from a year earlier. In June, Japan corporate price index stood at 1.5%. Analysts predict higher company costs will result in higher retail prices and higher inflation.

Japan, United States, and Australia in talks trying to host a first trilateral summit on the sidelines of a meeting of Asia-Pacific Economic Cooperation forum leaders, scheduled in Sydney for Sept 8-9 Japanese media reported Friday. Prime Minister Shinzo Abe, U.S. President George W Bush, and Australian Prime Minister John Howard are expected to confirm coordination on the issue of North Korea''s nuclear programs as well as on the abduction issue at the projected summit, the reports added.

The Social Insurance Agency said Thursday it began work Monday this week with a team of private-sector experts to identify over 50 million pension accounts with errors. The Agency said it will separate accounts with errors from accounts of dead pensioner.

Industrial, electric and bank shares fell. Of the stocks in Nikkei 225 index, Sekisui House led decliners dropping 3.4% followed by Nisshin Seifun down 3.11% and T&D Holding Inc fell 3.06%. Kumajai Gumi Co lost 2.99% while Yahoo Japan eased 2.89%. Financial shares Mitsubishi UFJ, Mitsui Trust Holdings, Chiba Bank and Marubeni Corp lost over 1%. Sumitomo Electric In, Yokogama Electric, Electric Industries and Toray Industries fell as well. Film manufacturing and motor stocks rose. Daikin Industries led gainers rising 3.83% followed by Nippon Sheet Gla up 3.70%. Canon Inc pushed higher 3.67% while Nikon Corp added 2.74%. Konica Minolta and Fujifilm rose over 1%. Hino Motors gained 3.30% while Isuzu Motors rose 1.99%.

Isuzu Motors Ltd and Toyota Motor Corp said Thursday they had concluded an agreement to jointly develop small diesel engines for the European market. Production of the 1.6-liter engine for Toyota vehicles sold in Europe is scheduled to begin around 2012, with Isuzu heading its development, production and supply. Toyota Motor Corp dropped 0.30%.