theSun | TUESDAY JANUARY 6 2009
business
Asia stocks at two-month
high as risk taking rebounds
HONGKONG: Asian stocks rose to
a two-month high yesterday, with
expectations for a global economic
recovery later this year on the back
of massive government spending
prompting investors to venture back
into riskier assets.
Regional equities have risen for
six consecutive days, bolstered by
expectations that the big stimulus pack-
ages will revive growth and banks will
eventually lend to each other again.
European stocks gained in early
trading yesterday. At 0944GMT, the
FTSEurofirst 300 index of top Europe-
an shares was up 1.3% at 868.12 points
on hopes companies will benefit from
the collective efforts of central banks
and other policymakers.
Many market players are looking
for a large US spending package and
tax cuts to help support the world’s
largest economy.
US President-elect Barack Obama
will meet later in the day with senior
Congressional leaders to discuss the
plan, said to be worth as much as
US$775 billion (RM2.71 billion).
But economic reports from just
about every corner of the world reflect
sharply deteriorating conditions, par-
ticularly in the United States. Friday’s
Obama seeks US$310 billion
in tax cuts as deflation looms
SINGAPORE: US President-elect
Barack Obama is seeking as much as
US$310 billion (RM1.085 trillion) in
tax cuts as part of a massive stimulus
plan to counter what senior policy-
makers warned could be a prolonged
period of economic stagnation and
deflation.
Obama’s plan is the latest in a
series of measures aimed at tackling
a financial crisis that began with US
mortgage defaults in 2007 and has
now plunged major economies into
recession, reshaped the banking land-
scape and taken entire countries to the
brink of bankruptcy.
Over the weekend, both Janet Yellen,
US payrolls report for December is
expected to show the labour market
lost 500,000 jobs, bringing total job
losses in 2008 to 2.411 million – the
most since 1945.
“Risk aversion has eased in the last
week and this has sent both the Dow
and the Nikkei higher,” said Nagayuki
Yamagishi, a strategist at Mitsubishi
UFJ Securities in Tokyo.
“There’s quite a lot of expectations
for the government of Obama and the
policies he’s likely to enact, but when
he actually takes office this mood may
evaporate and a lot of problems still
linger.”
However, some analysts believe
the record drops that many stock
markets suffered in 2008 have already
gone a long way in anticipating the
global economy’s slide into recession
and the hit to corporate earnings that
will be reported in coming months.
The MSCI index of Asia-Pacific
stocks outside Japan climbed 1.6% to
a two-month peak, taking gains on
the first two trading days of 2009 to
nearly 3% after a record 53% plunge
last year.
Japan’s Nikkei average gained
2.1% in a shortened session to reach
a two-month high, led by Honda Mo-
president of the San Francisco Federal
Reserve Bank, and Lucas Papademos,
vice-president of the European Central
Bank, highlighted the risks of deflation
– an economically damaging spiral of
falling prices and demand.
Investors have, however, begun to
make tentative bets that the worst of
the turmoil triggered in September by
the collapse of investment bank Leh-
man Brothers is over.
Kicking off the first full week of
2009, they pushed up stocks, the dol-
lar and commodities while selling
safe-haven plays such as government
bonds and the Japanese yen.
Elsewhere there were signs of greater
33
tor Co and other exporters thanks to There’s
a weaker yen. quite
Hongkong’s Hang Seng index rose a lot of
1.8%, boosted by a 2.2% increase in
China Mobile. expecta-
Oil prices climbed US$1.36 a barrel tions
to US$47.72 as Opec production cuts for the
took effect and an Iranian military govern-
commander reportedly called for an
oil boycott over Israel’s ground of- ment of
fensive in the Gaza Strip to counter Obama
militant rocket attacks. and the
The US dollar was steady, holding policies
near a three-week high against the he’s likely
yen, receiving some support on hopes
for a big spending package from the to enact,
Obama administration. but when
The dollar edged up to ¥91.96, up he actually
from around ¥91.75 late on Friday in takes
New York. The euro dropped 0.2% to
US$1.3895 after a 10% pop last month. office this
The Australian dollar climbed to its mood may
highest in almost three months above evaporate
US$0.7160 before backing down a bit and a
to US$0.7141. lot of
Asian currencies continued to
be at risk of weakness as a result of problems
their economies’ exposure to slow still linger.”
global demand. Investors will likely – Nagayuki
be drawn to currencies where policy- Yamagishi
makers have been taking aggressive
steps to protect industry. – Reuters
South Korean auto maker
stability. South Korea, one of those coun- Consumers union calls for strike
tries that appeared to be on the brink saving SEOUL: The union of South Korea’s ailing Ssangyong Motor
of financial collapse, said its foreign yesterday called for its members to go on strike, in protest
exchange reserves rose in December for for rainy over potentially massive layoffs by its Chinese owner.
the first time in nine months. day: The union said in a statement that workers were voting
Helping increase the appetite for Survey yesterday and today to decide if they should stop work.
riskier assets, senior Democratic aides Ssangyong is falling into a financial crisis amid slow
said Obama planned to discuss his tax pg 34 auto sales and a dearth of operating funds from its parent,
cut and stimulus package plans with Shanghai Automotive Industry Corp.
Democratic and Republican leaders of The union said managers were forcing workers to sign
the Senate and House of Representa- up for a written resolution aimed at making job cuts easier
tives yesterday. and buying time to transfer auto technology to the Chinese
The tax relief proposals are de- parent company.
signed to attract support from fiscal “Only overwhelming support for strike can guarantee
conservatives in Congress, who prefer our survival. Only a landslide vote for strike can thwart
cutting taxes to increasing federal the conspiracy of the Shanghai capital,” read the union
spending. – Reuters statement. – AFP