Asia, European stocks rally on Soeharto news
Asia, European stocks rally on Soeharto news
SINGAPORE (Reuters): Asian and European stock markets soared
as Indonesian President Soeharto resigned yesterday, but many
bourses pared gains as investors contemplated his controversial
successor.
Only neighboring Singapore clung on. On a wave of buying,
Singapore's key Straits Times Industrials Index ended up 3.60
percent or 45.87 points at 1,319.65. Singapore banks, set to be
major players in the reconstruction of Indonesia, saw their
stocks rise sharply.
Malaysian shares also closed higher. Kuala Lumpur's key
Composite Index was up 4.29 percent or 24.43 points at 593.62,
after hitting a high of 596.09. Financial issues surged on news
that the Malaysian banking sector would be cleaned up.
Shares in Tokyo, Sydney and several other exchanges also
surged to intraday highs in the morning after the 76-year-old
Soeharto announced his immediate resignation after 32 years in
power.
But most fell back as investors digested the news that his
successor was Vice-President B.J. Habibie, who is widely
distrusted by the markets.
Jakarta's own stock exchange had soared on Tuesday as Soeharto
said he would step down but gave no time frame, but it was closed
yesterday for a national holiday. On the currency markets, the
beleaguered rupiah was little changed at around 11,000 to the
dollar in Singapore. Other regional currencies were also little
affected.
"Soeharto's gone, but I think it's going to create a few more
uncertainties given the market's poor perception of Habibie,"
said Andy Tan, an economist at MMS Standard and Poor's in
Singapore.
In Tokyo, the key 22-share Nikkei average ended at 15,845.25,
up 192.30 points or 1.23 percent, after hitting an intra-day high
of 15,972.88 in the morning.
"Indonesia managed to avoid disorder for now, but it is hard
to think that everything will go well," said Hiroshi Arano,
general manager at Dai-Ichi Kangyo Asahi Asset Management Co Ltd.
In Sydney, the All Ordinaries index closed only 10.3 points
higher at 2,733.5 after peaking at 2,747.7 soon after the
resignation.
"The market really needs a date for when they're actually
going to proceed with a new election, and will be hesitant until
that's announced," client advisor Helen Michael of Peake Lands
Kirwan said.
In his speech yesterday Soeharto said Habibie, 61, former
research and technology minister with a known penchant for
expensive mega-projects, would see out his term to 2003.
However, many analysts predicted Habibie's presidency would be
short-lived. Indonesia's rupiah plunged to a historic low of
17,000 to the dollar when he was first mentioned as Soeharto's
vice-president last January.
Elsewhere in Asia, Hong Kong's Hang Seng index closed at
9,670.45, up 121.27 points or 1.27 percent, after hitting a high
of 9,725.11.
Index heavyweight HSBC Holdings dominated the market as
investors looked for renewed exposure in Hong Kong and covered
short positions. HSBC gained HK$4.50 to HK$204.00.
The Korea Stock Exchange composite index ended down 1.86
percent or 6.87 points at 362.30 on disappointing first quarter
GDP figures, after climbing on the news from Indonesia.
The central Bank of Korea said yesterday that gross domestic
product contracted by a real 3.8 percent year-on-year in the
first quarter, against a 5.7 percent rise a year earlier.
Taiwan stocks ended up 1.23 percent or 101.83 points at
8,369.32, while in China foreign currency B-shares in both
Shanghai and Shenzhen both posted gains.
The Shanghai B share index rose 2.01 percent or 0.964 point to
48.968, while the Shenzhen B-index rose just 0.11 percent or 0.10
point to 91.40.
Manila's main share index jumped 2.30 percent or 48.32 points
to end at 2,148.61.
Thailand's SET index, which surged 2.31 percent on the news of
Soeharto's resignation, ended up just 0.40 point at 355.91.
European stock markets raced ahead early yesterday, sharing
Asian euphoria at the resignation of President Soeharto and coat-
tailing on a Wall Street rally overnight.
"We've got a lot to be happy about this morning with Soeharto
going and the Dow on the rampage again," said one London share
dealer.
The yen strengthened on Soeharto's exit from power, though
analysts said it was not clear how long controversial Vice
President Habibie would last.
Markets in France, Germany and parts of continental Europe
were closed for Ascension Day, reopening today.
The UK's FTSE 100 index was up more than one pct as world
markets celebrated the Asian rally after Soeharto quit and a late
sprint by the Dow to close 116.83 points or 1.3 percent higher on
Wednesday.
Weaker-than-forecast April UK retail sales data helped the
British rally, with futures trading suggesting a still stronger
Dow yesterday.
"It's generally good all round," said one head of trading at a
major London brokerage house. "You name it. We've got Soeharto
going, Wall Street strong and good UK numbers," he said.
The Milan bourse darted higher at the open, recovering
Wednesday's slim losses on relief over the resignation of
Soeharto and on domestic factors.
Russian shares also firmed in early trade as an easing of
domestic economic woes helped to support pre-opening positive
sentiment over Indonesia.