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Thursday, June 21, 2007

Major Asian Markets Close With Gains; Weaker Yen Supports Japanese Export-Related Shares - Asian Commentary

6/21/2007 8:26:15 AM Major Asian markets evaded the effect of an overnight fall on Wall Street and settled in the green on Thursday. A weaker yen came to save the Japanese market, while the decision by the Chinese government to expand qualified domestic institutional investor program, which would allow mainland brokers and fund managers to invest in off shore stock markets, came as a boon to the Hong Kong market.

However, Wall Street losses overnight disarmed the Australian and the New Zealand markets and drained their gains. The South Korean market returned to profit after the government decided to enact a cut in policy lending easing fears of rate-hike on inflationary warnings.

Japanese shares rose with the Nikkei index climbing a seven-year high, as a weaker yen with hopes of providing bountiful earnings to export-related stocks bailed the Japanese market out from initial losses due to an overnight fall on Wall Street. The benchmark Nikkei 225 share index added 28.62 points or 0.2% to close at 18,240.30.

The broader Topix index of all First Section issues edged up 5.66 points or 0.32 percent to 1,789.38.A rise in chip prices lifted chipmakers. Advantest climbed 1.2% and Elpida Memory surged up 4.4%. Tokyo Electron and Toshiba rose 1.9% and 2%, respectively.Stocks of steel makers climbed after reports of a rise in exports of the alloy to Asia in May. Japan Steel advanced 0.7% and JFE Holdings gained 1.1%. Kobe Steel jumped 2.5% and Nippon Steel rose 1.2%. Sumitomo Metal Industries surged up 3.4%. Mitsubishi Corp. soared 4.6% and Mitsui & Co. grew 3%.

Ishikawajima-Harima Heavy Industries and Mitsubishi Heavy Industries increased 3.4% and 1.5%, respectively.The Hong Kong market rose sharply on higher fund inflows even as the Chinese government relaxed the qualified domestic institutional investor program to include mainland brokers and fund managers, which raised hopes for more flow of funds. The relaxation is effective July 5. The benchmark Hang Seng index rose 270 points or 1.3% to close at 21,954.67.

The Hang Seng China Enterprises Index climbed 302.49 points or 2.5% to 12,207.97.Among properties, Cheung Kong gained 1.2% on news that Li Ka-shing, the chairman of the company increased his stake in Cheung Kong to 39.72% from 39.65%. While Sino Land declined 1.1%, Hang Lung Properties gained 0.9%.Hong Kong Exchange shot up 7.2%, as hopes of robust trading volume increased. Petro China jumped 3.2%. China Unicom and China Netcom surged up 2.1% and 2.9%, respectively.

China Mobile soared 2.4%.China Life vaulted 6.3% after Citigroup backed its “buy” call on the stock with a target price of HK$30.50.Australian shares ended with marginal losses, as the market was unarmed against the impact of a fall on Wall Street overnight due to a rise in bond yields that raised questions about the future of the U.S. economy. Moreover, bond yields in Australia had also risen.The benchmark S&P/ASX 200 index shed 9.9 points or 0.2% to close at 6,387.

The All Ordinaries index lost 9.10 points or 0.1% to 6,411.90.Coles Group slipped 2.1% after a fail in talks left TPG-led buyout group to abandon its plan to buy Coles. Wesfarmers, the sole bidder for Coles now, climbed 1.4%. Among financial stocks, ANZ Bank and Commonwealth Bank lost 0.5% each. Macquarie Bank was down 0.1% and National Australia Bank dropped 0.4%.

In the mining sector, BHP Billiton jumped 1.6%, but Rio Tinto declined 1%. Fortescue Metals and Iluka surged up 4.4% and 4.6%, respectively.Brambles plunged 4.4% after Goldman Sachs opined differently against the company's expectations for progressive profitable current fiscal year.

Flight Centre jumped 3.2%, as the company announced a lucrative offer of A$16 per share to its shareholders through a share buyback after the sale of its assets to buyout firm Pacific Equity Partners. New Zealand shares ended with losses, as an overnight fall on Wall Street cast a blight on the New Zealand market.

The benchmark NZX 50 share index fell 22.60 points or 0.5% to close at 4,300.57. Tourism Holdings shed 0.4% after MFS Living and Leisure Group announced that it would neither increase its offer for Tourism Holdings nor extend the deadline of July 21.

Air New Zealand plunged 3.3% after the company reported a weak return from its investments due to a seasonal winter downturn. The company reported that year-to-date group yields in May grew 8.5%, compared to 9.6% in April year-to-date.Lower net migration and higher interest rates are seen as adversaries of housing market.

Kiwi Income Property and Macquarie Goodman Property ended flat. Property For Industry lost 0.7%, but ING Property Trust gained 0.8%.Sky City fell 1.6%. The company revealed the sale of its Metro cinema building in Auckland for NZ$55.1 million to Orchard Funds Management. Sky said it would lease back the property.

South Korean shares rose, as the government's decision to reduce policy lending by one-fifth to small and medium-sized companies seemed to console the market, which was gripped by fears of rate-hike after experts warned of inflationary pressures.The key Korea Composite Stock Price Index gained 10.45 points or 0.6% to close at 1,794.24 after moving between 1,770.17 and 1,802.91.

Woori Finance jumped 3.9% after the government sold a 5% stake in the company for US$990.3 million. Shinhan Group advanced 0.9%, but Kookmin Bank lost 1.1%. Hyundai Securities gained 3.3% and Samsung Securities climbed 5%. Shares of auto companies climbed after South Korea clarified at the U.S. International Trade Commission that the country's auto market remains open to international community.

Kia Motors jumped 3.1%. Reports said the company plans to offer benchmark-sized dollar debt of five-year bonds. S&T Motors surged up 7.7% and Ssangyong Motor increased 2.9%, but Daewoo Motor Sales shed 0.3%. Hyundai Motor improved 1.5%. The Chinese market rose on the strength of A-shares, which gained on financial and utility stocks.

The key Shanghai Composite Index rose 49.50 points or 1.2% to close at 4,230.82.China Life Insurance shot up 8.3%. Ping An Insurance jumped 4.6% after the company announced that its plan to merge two of its units was approved by the China Banking Regulatory Commission.

In the utility space, SDIC Huajing Power Holdings rose by its 10% daily limit and Beijing Jingneng Thermal Power too rose by the same level. Guangxi Guidong Electric Power also gained the 10% limit.

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