Asian markets get a breather from falls
Asian markets get a breather from falls
SINGAPORE (DPA): Led by Hong Kong and Bangkok rallies, battered Asian bourses got a breather yesterday from weeks of plunging shares, but analysts predicted the regional upturn would be shortlived.
Regional stock watchers expressed worries about late news that Hong Kong had intervened in the market yesterday for the first time in its history.
Hong Kong's market shot up 8.5 percent, rallying regional markets that have been battered for weeks by the falling Japanese yen and worries that China would devalue the yuan, further undermining the competitiveness of Southeast Asian exports.
However, Hong Kong's rally turned out to be due to government intervention in the market, a dealer revealed after the market had closed for a long weekend.
Hong Kong began using its vast exchange funds to counter speculative activities, said Finance Secretary Donald Tsang at a press conference. Reserves are almost US$100 billion.
"We do not tolerate attempts by speculators to manipulate our interest rates by engineering extreme conditions in the money markets", he said.
It was the biggest daily increase on the stock market in 23 years, but stock analysts labeled the intervention a dangerous move.
"It's disastrous," said Graham Ambrose, a stock trader based in Singapore. "It makes it look like there's not even any short- selling in the market."
He predicted the Hong Kong market would crash next Tuesday after the former colony's long weekend.
Meanwhile, in Bangkok shares soared 5.5 percent in a show of some optimism over the government's new round of financial restructuring measures and the good performance of some Thai firms, analysts said.
Bangkok's bourse rose steadily throughout the day after an early announcement by the Bank of Thailand (BOT) that the government had essentially taken over two ailing Thai banks and five finance and securities companies, forcing the previous owners to write down registered capital to one satang (0.02 cents) per share.
Takeovers
The takeovers were the first step in a major financial restructuring package scheduled to be announced yesterday evening, which was expected to include a series of measures to bolster Thailand's faltering banks and restore liquidity to the system.
"There was speculative trading in financial stocks going on Friday, but most big investors were taking a wait-and-see stance on the government's financial measures," said Chai Jirasaevinoopraphan, an analyst at ABN-AMRO Asia Securities.
The SET was also boosted yesterday by heavy buying of PTT Exploration and Production (PTTEP) stock after the national oil company announced an 8-per-cent boost in revenues for mid-year 1998.
Singapore stocks rose, led by Singapore Press Holdings Ltd. and Sembawang Corp., as prices fell to attractive levels relative to future earnings.
The Straits Times Industrial Index rose 8.37 points, or 0.87 percent, to 974.11, the first gain in a week.
The broader based DBS50 Index, which includes banks and property stocks, fell 0.35 points, or 0.11 percent, to 319.54.
Malaysian stocks were mixed amid optimism that some companies, including Rothmans of Pall Mall Bhd., have fallen enough to reflect any decline in earnings amid a slumping economy.
The benchmark 100-stock Composite Index rose 1.25 points, or 0.38 percent, to 327.98, after tumbling 19 percent in the past two weeks. The broader Emas Index gained 0.07 point, or 0.08 percent, to 84.44.
The gain was led by cigarette maker Rothmans of Pall Mall Bhd. Consumer product companies such as Rothmans are expected to weather an economic slump better than banks or real estate companies because there is still demand for consumer products.