Business

Saturday August 1, 2009

Asian stocks soar to months’ high on Wall Street gains

By YVONNE TAN



yvonne@thestar.com.my

PETALING JAYA: Stocks across Asia jumped to multi-month highs yesterday, taking their cue from overnight Wall Street gains.

Tokyo’s Nikkei 225 advanced 1.89% to 10,356.83, Hong Kong’s Hang Seng Index jumped 1.68% to 20,573.33, Shanghai’s A share index surged 2.72% to 3,412.06 while Seoul’s Kospi Index climbed 1.47% to 1,557.29.

At home, the FTSE Bursa Malaysa KL Composite Index snapped its two-day losing streak to finish up 14.24 points, or 1.2%, to 1,174.90 – its highest since June last year.

Some 1.26 billion shares changed hands in trades valued at RM1.95bil. Market breadth was positive with advancing stocks beating declining ones, 485 to 207.

“An earnings and economic recovery in the second half was rather like a wishful thought,” Yoshinori Nagano, a senior strategist at Tokyo-based Daiwa Asset Management Co told Bloomberg yesterday.

“That’s getting more likely now and increasing investors’ appetite for risk assets.”

Investors cheered Thursday on upbeat corporate earnings in the West. Both Motorola and Goodyear’s quarterly results came in far better than analysts’ forecasts, reports said.

In Japan, Sony reported yesterday a smaller-than-expected loss following cost-cutting measures.

Locally, sentiment was given an added boost yesterday after Permodalan Nasional Bhd, the country’s largest asset manager, announced the establishment of the RM10bil Amanah Saham 1Malaysia.

“There is anticipation that the funds, once invested, will push the index higher,” Jupiter Securities head of research Pong Teng Siew said.

There was still “good liquidity” in the current market and any correction in the short term should be quickly absorbed, he noted.

Pong also said while valuations were still looking expensive at this point, improving earnings in August amid better economic conditions would help bring them down again.

“Probably not the best time to go in yet, if you’re a long-term investor,” he said.

He is keeping the nearest support level at 1,154 points but believes the index should be able to test the 1,190-point level by next week.

For the week ahead, all eyes will be on the US Institute and Supply Management data which is expected to show more evidence of statistical recovery.

Closer to home, trade numbers expected to be released Wednesday should indicate an improvement, month-on-month.

OSK Research head Chris Eng is still advising his clients to sell into strength.

“Selection of stocks is key in an overvalued market like this.

“Even though earnings should improve, we don’t expect to see enough earnings upgrades to justify the market’s current value,” he said.

Actively-traded stocks yesterday included KNM Group Bhd, newly-listed Handal Resources Bhd and Bumiputra-Commerce Holdings Bhd.

Major gainers included Cycle & Carriage Bintang Bhd and British American Tobbacco Malaysia Bhd while losers comprised, among others, Hong Leong Bank Bhd, Oriental Holdings Bhd and Public Bank Bhd.

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