Asian Shares Surge; Exporters Lift Japan

By V. PHANI KUMAR IN HONG KONG AND COLIN NG AND WEI-ZHE TAN IN SINGAPORE

Asian shares ended on a strong note Monday as investors snapped up resource shares and exporters, encouraged by a positive finish on Wall Street and eased worries about Greece's sovereign debt.

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Associated Press

A man checks his mobile in front of at an electronic stock board in central Tokyo.

Investors bought back shares they sold down in the previous session in the wake of the U.S. Federal Reserve's discount rate increase, as U.S. shares themselves shrugged off the news to advance Friday, said analysts.

Japan's Nikkei 225 ended up 2.7% to 10400.47, Hong Kong's Hang Seng Index gained 2.4%, South Korea's Kospi added 2.1% and Australia's S&P/ASX 200 advanced 1.8% India's Sensex climbed 0.3% and Singapore's Straits Times Index finished flat. Dow Jones Industrial Average futures climbed 35 points in screen trade.

"Players overreacted Friday to the U.S. discount rate hike," and were covering their short sales positions, said Tachibana Securities operating officer Kenichi Hirano.

Still, trading activity in several regional markets was "very thin," said Yoji Takeda, head of Asian equities at RBC Investment.

Asian share markets rise as investors seem reassured the Fed isn't about to raise its benchmark policy rate soon, despite last week's discount rate hike, Dow Jones Newswires' Puja Rajeev reports.

"China might [still] see some other tightening measures, and the European situation is still fluid," said Takeda. Although the Japanese yen's weakness was a positive for the nation's exporters, Dai-Ichi Mutual Life Insurance Co.'s planned 1.08 trillion yen ($12 billion) initial public offering was a concern and could "soak up some capital from the market," he added.

He was referring to Japanese life insurer Dai-Ichi, which received approval to list on the Tokyo Stock Exchange on April 1. The IPO would be Japan's largest in more than a decade.

Taiwanese and Chinese markets reopened for trading after a long Chinese New Year holiday, with the Taiex rising 1.6% in Taipei. The Shanghai Composite dropped 0.5%, though gains across regional markets helped offset some of the impact of the People's Bank of China's credit tightening measure that were announced after the market closed on the final trading day before the Lunar New Year break.

"The economic growth picture, given the credit tightening in China and U.S., is not very clear. Investors are also cautious ahead of the legislative meeting, in which new policy changes may affect their investment decisions," said Wang Junqing from Guosen Securities.

China's National People's Congress is set to convene for consider future policy formulation over nearly two weeks starting early March.

Resources-related stocks were sharply higher on stronger commodity prices, with mining heavyweights BHP Billiton and Rio Tinto rising 2.8% and 2.1%, respectively, in Sydney. Sumitomo Metal Mining Co. added 2.6% and commodities trading house Marubeni Corp. jumped 3.9% in Tokyo, Aluminum Corp. of China added 3.5% and Cnooc climbed 3.5% in Hong Kong, and Hindalco Industries advanced 2.6% in Mumbai trading.

March Nymex crude-oil futures were up 32 cents at $80.13 per barrel. Spot gold gained $7.70 to $1,124.80 a troy ounce.

Shipping companies also edged higher on the positive sentiment, lifting Nippon Yusen K.K. by 3.1% and Mitsui O.S.K. Lines by 3.7% in Tokyo, China Cosco Holdings by 3.1% in Hong Kong and Neptune Orient Lines by 5.4% in Singapore trading.

Japanese exporters also contributed handsomely to gains in Tokyo after the U.S. dollar's recent gains against the yen. Sony advanced 3.4% and Toyota Motor added 1.2%, with Nikon rising 3.6%.

The region-wide market gains came as some analysts viewed the Fed move last week as an overall positive. "The fact that the Fed feels able to lift the discount rate is encouraging as it signals that the banking sector in the U.S. has improved enough to be weaned off the Fed," said ANZ bank senior economist Khoon Goh in a report.

Media and investment concern Seven Network's shares fell 5.2% in Sydney, reversing earlier gains as investors mulled a plan by billionaire Kerry Stokes to form a new group by merging Stokes' heavy equipment group WesTrac unit.

Sun Hung Kai Properties gained 2% in Hong Kong after the company said it sold about 900 flats in the city over the weekend for 4.2 billion Hong Kong dollars (US$541 million). The company also bought a Hong Kong site in a government land auction.

In Singapore, however, property companies underperformed on new government measures to cool the private residential market. CapitaLand fell 3.6% and City Developments lost 4.8%. Singapore's government introduced measures, effective Saturday, which stipulates that anyone selling a property within 12 months of buying it would have to pay 3% stamp duty. Additionally, home buyers now would be able to borrow up to only 80% of the property's purchase price from 90% previously.

In Seoul, STX surged 6.8% after it decided not to join the bidding for a stake in Daewoo Engineering & Construction Investors appear relieved as the decision meant the group has avoided being burdened financially by making such a purchase, said Lee Seung-woo at Daewoo Securities.

In foreign-exchange markets, the euro was higher against the U.S. dollar and the Japanese yen. "It seems that we may now be at a degree of extreme bearishness that a significant bounce in euro is more likely," said RBS Foreign Exchange Strategist Greg Gibbs.

The euro rose to 124.64 yen from 124.64 yen in late New York trade Friday, but fell to $1.3604 from $1.3613. The dollar was at 91.60 yen from 91.65 yen, after strong recent gains.

Lead March Japanese government bond futures were down 0.17 at 139.30, weighed by the Nikkei's gains. The yield on the benchmark 10-year JGB was up 1.5 basis points at 1.345%.

Write to Colin Ng at colin.ng@dowjones.com