MW: Tokyo stocks pace gains, ignoring bad news, data
By V. Phani Kumar, MarketWatch
HONG KONG (MarketWatch) -- Japanese stocks soared Monday to lead Asian markets higher as investors brushed aside a survey showing business confidence plunged, on hopes for a U.S. interest-rate cut and after the Bush administration said Friday it would step in to prevent a failure of U.S. automakers.
The Nikkei 225 Average, which slumped 5.6% Friday, soared 4.8% to 8,627.45 in the afternoon, while the broader Topix index gained 3.7% to 843.44.
The advance ignored Bank of Japan's tankan survey, which showed business sentiment dropped sharply, with the headline diffusion index for large manufacturers deteriorating at its fastest pace since August 1974, falling 21 points to minus 24. The reading was the worst in nearly seven years. See full story.
Hong Kong's Hang Seng Index rose 3.5% to 15,271.19, also rebounding after losing 5.5% Friday, and shrugging off a report in the Financial Times that HSBC Holdings has a potential exposure of $1.5 billion to Bernard Madoff, a former chairman of Nasdaq, who was arrested last week and charged with securities fraud. An HSBC spokesman in Hong Kong declined to comment on the report.
Peter Pak, vice president at BOCI Research, said expectations that the U.S. government will find "an alternative plan to save the Big Three" automakers and that the Federal Reserve may cut interest rates by at least a half-point later this week contributed to the buoyancy in the markets.
"Investors are anticipating stimulus measures from China before the Chinese New Year [in January]. The expectation is that the government may revise taxes to increase disposable incomes and also raise infrastructure spending," said Pak.
China's Shanghai Composite rose 0.4% to 1,962.60, Taiwan's Taiex advanced 2.7% to 4,600.94 and Singapore's Straits Times Index gained 2.1% to 1,776.11.
Australia's S&P/ASX 200 rose 3.2% to 3,622.40 and South Korea's Kospi jumped 4.8% to 1,156.43, while New Zealand's NZX 50 index rose 0.3% to 2,683.80.
Regional detail
Shares of HSBC Holdings rose 3.5% in Hong Kong trading during the session, ignoring the report about its exposure to Madoff.
Nomura Holdings Inc. stock likewise in Tokyo trading, rising 0.5%, after the brokerage firm said it has an exposure of 27.5 billion yen ($302 million) in investments made with Madoff. Nomura said it considers the exposure "as non-material considering our capital base."
Shares of BOC Hong Kong (Holdings) dropped 4.5%, after the Hong Kong lender said its full-year profit was expected to "decrease considerably" from last year. BOC added that its parent Bank of China will extend a $2.5 billion subordinated credit facility to the bank to strengthen its capital base, provide "greater operating flexibility to meet its business development needs and to weather the economic uncertainties arising from the global financial turmoil."
Shares of Toyota surged 8.2%% and Honda Motor Co. spiked 7.5% in Tokyo, while Hyundai added 6.1% in Seoul.
The advance came after the U.S. Treasury Department said it stands ready to make funds available to automakers until lawmakers have time to consider a long-term rescue package next year. See full story.
Auto stocks tumbled in Asian markets Friday, with some including Toyota and Honda plunging more than 10% in Tokyo trading, after a $14 billion loan package proposal to the Big Three automakers fell apart in U.S. Senate.
Toyota's gains Monday came even as the Nikkei business daily reported Sunday that the auto giant plans to cut capital expenditure because of falling sales and a weak global economic condition. Furthermore, the company was also expected to further revise downward its group earnings projections for the second-half of the current financial year, Kyodo News reported Saturday.
Resource stocks jumped as January crude-oil prices rose as much as 96 cents to $47.24 a barrel in electronic trading, after gaining $1.70 Friday to end at $46.28 a barrel on the New York Mercantile Exchange.
Shares of BHP Billiton jumped 8.4% and Woodside Petroleum (AU:WPL: news, chart, profile) (WOPEY:
21.91, -0.04, -0.2%) rose 6.54 in Sydney. Commodities trader Marubeni Corp. (JP:8002: news, chart, profile) (MARUY:
35.00, -0.10, -0.3%) gained 5.1% in Tokyo and Cnooc (HK:883: news, chart, profile) (CEO:
95.61, +0.16, +0.2%) rose 6% in Hong Kong.
In Asian currency trading, the U.S. dollar bought 90.91 yen, compared with 91.35 yen late Friday.
On Wall Street, the Nasdaq Composite ($INDU:
8,629.68, +64.59, +0.8%) jumped 2.2% to 1,540.72, the Dow Jones Industrial Average ($INDU:
8,629.68, +64.59, +0.8%) climbed 0.8% to 8,629.68 and the S&P 500 index ($SPX:
