ASIAN stocks surged yesterday, led by financial and commodity companies, after the United States government proposed buying US$700 billion of bank assets and Australia and Taiwan restricted the short sale of equities.
Mitsubishi UFJ Financial Group Inc and Macquarie Group Ltd rose more than 4 percent on the US Treasury's plans to clean up bank balance sheets. Fortescue Metals Ltd jumped 25 percent after Australia's regulator banned speculators from borrowing stocks and selling them to profit from falling prices. Bank of China Ltd led Chinese shares higher after the securities regulator made it easier for companies to buy back stock, Bloomberg News reported.
"The positive thing about the Treasury plan is that it addresses the entire system, the bad debts and assets, rather than one by one," said David Ng, who is buying financial shares for the US$1 billion of assets he helps manage at Hwang-DBS Asset Management in Kuala Lumpur. "The buying has been triggered by the short-selling bans. That's been the main driver."
The MSCI Asia Pacific Index gained 2.8 percent to 117.35 in Tokyo, extending Friday's 5.5 percent jump. The measure's gauge of financial stocks, which ended last week at the lowest price-earnings ratio this decade, was the biggest contributor to yesterday's gains.
The regional measure tumbled to the lowest in three years last week as the credit crisis forced Lehman Brothers Holdings Inc into bankruptcy, the US government to take over American International Group Inc, and Merrill Lynch & Co to sell itself to Bank of America Corp.
Japan's Nikkei 225 Stock Average rose 1.4 percent to 12,090.59. NGK Insulators Ltd soared after lifting its profit forecast.
Most benchmark indexes in Asia advanced. The Karachi 100 Index was little changed as trading curbs prevented declines following a hotel bombing in Islamabad on Saturday that killed 53 people.
Fed to cut rates?
Standard & Poor's 500 Index futures fell 0.3 percent in after-hours trading. US stocks advanced on Friday, with the S&P 500 jumping 4 percent. Treasuries rose on speculation the Federal Reserve will cut interest rates to support the US rescue plan. The dollar dropped against the yen on concern the plan will widen the US budget deficit.
Mitsubishi UFJ, Japan's biggest bank, rose 4.2 percent to 898 yen (US$8.42), the highest since August 6. Sumitomo Mitsui Financial Group Inc advanced 2.6 percent to 676,000 yen. Kookmin Bank, South Korea's largest, added 4.7 percent to 58,500 won (US$51.78).
US Treasury Secretary Henry Paulson's rescue plan would allow the government to buy a variety of mortgage-related securities to relieve a freeze in credit markets. Democrats, who control both houses of the US Congress, pledged not to slow down its passage or tie it to an economic stimulus plan.