Asian markets buoyed to new highs

Asian stocks climbed strongly on Monday, with a number of the region’s indices hitting record highs and China’s market making further strong gains.

China’s benchmark Shanghai Composite gained 2.9 per cent to 4,253.35 amid relief that relief that the country’s monetary authorities refrained from taking steps at the weekend to cool the country’s economy and red-hot markets.

Many had expected an interest rate increase after Wen Jiabao, China’s premiere, said last week that monetary policy would need to be tightened to rein in the runaway economy.

Banks and insurers, stocks with the most exposure to equity markets, rallied sharply after no action was taken by the People’s Bank of China. Merchants Bank rose 8 per cent to Rmb23.98, while China Life Insurance gained 9 per cent to Rmb40.82.

Sichuan Changhong Electric climbed 10 per cent to Rmb10.92 after Microsoft of the US said it was paying Rmb94m ($12.33m) to take a small stake in the company and jointly develop digital entertainment products.

South Korea hit a record, with the benchmark Kospi index ending above the 1,800 level for the first time as brokerage stocks leapt after new capital markets legislation was approved by a parliamentary sub-committee.

The Capital Markets Consolidation Act, if made law later this month, will allow brokerages to sell a wider array of financial products and is also expected to drive consolidation in the financial services sector.

Hyundai Securities rose by its daily 15 per cent limit to close at Won27,00, and Tong Yang Investment Bank also surged 15 per cent to Won21,850. Daewoo Securities jumped 10.7 per cent to Won35,750, while Woori Investment & Securities climbed 8.2 per cent to Won35,100.

The Kospi index ended 2 per cent higher at 1,806.88.

There were new records too set in Singapore, Indonesia and the Philippines. Singapore’s Straits Times Index rose 1.2 per cent to 3,623.79. Hong Kong’s Hang Seng index also hit a new record, closing up 2.7 per cent to 21,582.89.

Malaysian shares rose 0.9 per cent to 1,372.28, led by plantation stocks on expectations its palm oil would become more attractive after Indonesia raised taxes on its exports of the product. IOI Corp rose 7.8 per cent to M$5.55.

Yen weakness and strong rises in property and shipping stocks helped push the Nikkei to its highest closing level in almost four months.

The Nikkei 225 rose 1 per cent to 18,149.52. The broader Topix advanced 0.9 per cent to 1,788.39.

The falling Japanese currency boosted export sectors such as electrical machinery, up 1.1 per cent. Canon, which relies on overseas markets for most of its sales, hit a record high, before falling slightly to end up 2.1 per cent at Y7,330.

The property sector rose 3 per cent. Mitsui Fudosan, Japan’s biggest property company, leapt 3.7 per cent to Y3,660.

Shipping, the star sector on the Tokyo bourse since last summer, jumped 3.8 per cent. Mitsui OSK Lines soared 5.3 per cent to Y1,621.

Both sectors have benefited from strong foreign buying over the past year, although their share price performance has been rather choppy recently.

On the Osaka Securities Exchange, Nintendo, the game machine maker, was up 2.5 per cent to Y43,100 after Mizuho Securities raised its target price for the video game maker to Y48,000 from Y44,000. The brokerage said operating profit was likely to reach Y45bn to Y50bn for April to June, compared with Y28.8bn a year earlier, judging by recent sales growth.

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