Speculative trading boosts JSX shares

Speculative trading boosts JSX shares

HONG KONG (Reuters): Political risk dominated Asia's smaller
asset markets on Tuesday, feeding a speculative equity rally in
Indonesia but sending Thai stocks sprawling, while takeover talks
lifted Seoul stocks to an eight-month high.

Jakarta shares chalked up a fourth straight session of gains
on hopes that an anticipated impeachment and removal from office
of President Abdurrahman Wahid would be positive, making the
market Asia's best performer over the past week.

Jakarta stocks hit an 11-week high as investors snapped up
stocks from almost any sector on the eve of a parliamentary
debate on the future of President Wahid, speculating that the
prospect of a change in leadership would boost markets.

The Jakarta Composite Index jumped 3.5 percent on heavy
turnover of 1.02 trillion rupiah ($91 million).

Dealers said trading was mostly by local players who
speculated that parliament would push for a special session to
impeach the struggling Wahid.

The Indonesian parliament has censured Wahid twice over two
financial scandals. But attorney-general Marzuki Darusman on
Monday cleared him of any wrongdoing.

But Thai stocks stumbled down 2.5 percent after Prime Minister
Thaksin Shinawatra, backed by his cabinet, fired Bank of Thailand
governor Chatu Mongol Sonakul after he refused to bow to
government demands for the central bank to change its policy of
holding interest rates at extremely low levels.

Japan's key Nikkei 225 closed 0.26 percent higher to snap a
five-day losing streak after a rebound in battered banking issues
such as Sumitomo Mitsui Banking Corp.

The euro slipped against the yen on concerns about the
European economy. The Japanese currency seesawed against the
dollar at around 121 yen in thin trade following market holidays
in the United States and Europe.

Thailand's government fired central bank governor Chatu Mongol
Sonakul after a public row over monetary policy, spooking the
stock market but boosting the baht on expectations of higher
interest rates.

A government spokesman told reporters the new central bank
chief would be Pridiyathorn Devakula, president of Thailand's
Import-Export Bank and a leading supporter of the argument that
higher rates are needed to kick-start the economy.

Chatu Mongol was well respected in international financial
circles and analysts say his abrupt sacking raises doubts over
central bank independence.

Many analysts say higher rates may well do the flagging economy
more harm than good with individual banks themselves at
particular risk because of the government's stated desire to see
deposit rates hiked.

The Thai banking sub-index ended down 4.6 percent.

South Korea's benchmark stock index jumped 2.2 percent to
finish at a new closing high for the year as mounting hopes for a
potential General Motors takeover of beleaguered Daewoo Motor
fired-up auto parts makers.

GM's announcement it had agreed to begin formal negotiations
to acquire bankrupt Daewoo Motor pulled the market up further in
late trade.

The Korea Composite Stock Price Index (KOSPI) marked its
highest finish since September 15, 2000.