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Asian stocks rise on rescue plans
Phoenix News.Net
Sunday 12th October, 2008
Government measures announced over the weekend have received widespread support in Asia Monday as markets opened there for the first day of the trading week.
In an action-packed weekend G-7 ministers meeting in Washington unveiled a five-point action plan to tackle the financial crisis. This was followed by meetings of the G-20, IMF, and the World Bank where further measures were agreed.
European leaders on Sunday hatched a plan to secure the European Union's banks, while Britain began implementing the plan it revealed last week to support British banks. French President Nicolas Sarkozy said the European plan would refinance banks, guarantee interbank lending, ensure troubled banks do not fail, and protect deposits.
Individual countries including Australia, New Zealand, and the UAE introduced measures to protect bank deposits.
JP Morgan's future was secured over the weekend when UFJ Misubishi reaffirmed its commitment to subscribe to up to 21% of the company. The terms were renegotiated so UFJ Mitsubishi's initial investment would be wholly through preferred stock, rather than partialy in common stock as originally planned. The strike price is still believed to be in the order of $20 to $25, notwithstanding the 60% stock price decline last week.
Separately, 75% of troubled European bank Fortis, which was recently nationalised, was sold by the Belgium government on the weekend to French bank BNP Paribas in a deal worth an estimated 15.5 billion euros.
Australian and New Zealand markets were the first to open Monday and buyers swept through the markets sending the benchmark Australian index up more than 6%. At the close of trading Monday the Australian All Ordinaries was still up 5.14%. The New Zealand NZSE 50 was up nearly 2% early but closed down 0.82%. The Hong Kong Hang Seng roared up 8.58% in late trading. In South Korea the Seoul Composite was ahead 3.79%, while the Singapore Straits Times gained 5.85%. Stocks in Taiwan and Indonesia retreated. In India the BSE 30 was ahead 6.98%. In China the Shanghai Composite was up 3.66%.
Financial stocks across the boards, particularly banks, soared. Japan's markets were closed for a public holiday Monday.
The Australian dollar rallied sharply. It had touched .6340 cents on Friday in late New York trading. On Monday morning it rose above .6800 beore settling back at .6603 in late trading in Sydney.
The euro was a touch stronger at 1.3522. The pound too was being bought up. It was last quoted at 1.7017.
The Japanese yen, which rose as high as .9791 on Friday, was weaker at 100.00. The Swiss franc was also weaker at 1.1355. The Canadian dollar was stronger at 1.1750.
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