ASIA MARKETS: Asia Stocks Higher; South Korea Shares Soar As Interest Rates Hold Steady
May 25 2017 - 1:40AM
Dow Jones News
By Ese Erheriene
Stocks in South Korea soared to a fresh high Thursday, leading
broad gains across the region after the nation's central bank held
interest rates at a record-low in a vote of confidence in the
economy.
The Kospi Index was last up 0.9%, with gains accelerating after
the Bank of Korea's decision Thursday morning to hold rates at
1.25% for a 10th straight meeting. South Korea's stock market has
been on a roll, hitting record highs as strong local corporate
results and economic optimism propelled gains.
"Looking ahead, we doubt a rate change will come onto the agenda
any time soon," said Krystal Tan, Asia economist at Capital
Economics. "With the economy showing signs of improvement, there is
no urgency for rate cuts."
Equities elsewhere in the Asia-Pacific region also rose, as the
latest U.S. Federal Reserve minutes hinting at a June interest-rate
increase were no surprise to the market.
Investors were also positioning themselves ahead of the meeting
of the Organization of the Petroleum Exporting Countries, due to
begin later in the global trading day.
The Nikkei Stock Average was up 0.4% in afternoon trade, with a
stronger yen capping earlier gains after a fall in the dollar
overnight following the Fed minutes. The dollar has since
recovered, with the yen recently down 0.1% against the
greenback.
Elsewhere, the Taiex in Taiwan rose 0.5% to a fresh 17-year
high, while Australia's S&P/ASX as up 0.1%.
The Fed minutes
(http://www.marketwatch.com/story/seeing-another-rate-hike-soon-fed-outlines-plan-to-reduce-bond-holdings-minutes-show-2017-05-24)
were "not so different than what market expected," said Yujiro
Goto, global FX strategist with Nomura. The likelihood of a June
rate rise was at 83.1%, versus 78.5% on Wednesday, according to
data from CMEGroup.
Meanwhile, Hong Kong equities largely ignored the investment
rating downgrade late Wednesday by Moody's Investors Service,
mirroring a move earlier in the day by the ratings company on
China. Nonetheless, Moody's changed the outlook for Hong Kong to
stable from negative. The Hang Seng Index was up 0.6% at the midday
break to a 22-month high.
In China, stocks were mixed following the previous session's
swings in the wake of Moody's downgrade. The Shanghai Composite
Index added 0.4%, while the Shenzhen main board extended losses to
decline 0.7%, underscoring weakness in smaller cap stocks even as
large blue chips remain relatively resilient.
The concentrated flow of funds into financial heavyweights
reflects low risk appetite as margin debts dropped to a three-month
low. The tech-stock-concentrated ChiNext board--once sizzling
hot--was down 1.3%, the weakest level since February 2015.
Additionally, the onshore Chinese yuan abruptly surged late
morning, to a level 0.3% above Wednesday's close, before pulling
back some. The move came amid a broader pullback in the dollar, but
the yuan's jump attracted attention since the currency is tightly
controlled.
In commodities, oil prices rebounded from losses the previous
session as OPEC officials in Vienna suggested output cuts could be
extended into next year. Brent, the global crude oil benchmark, was
0.8% higher in Asia.
Among individual oil stocks, Hong Kong-listed Sinopec
(600688.SH) was up 0.6% and Australia's Woodside Petroleum (WPL.AU)
added 1.1%.
In Singapore, revised estimates released Thursday showed the
city-state's first-quarter gross domestic product contracted 1.3%
on a seasonally adjusted and annualized basis from the previous
quarter. This was less than previously estimated for the
three-month period, helped by strength in manufacturing and
construction. The country's benchmark index was last up 0.3%.
Embattled commodity trader Noble Group (CGP.SG) rose in
Singapore after five sessions of declines saw a further 45% slashed
from the firm's market value amid liquidity concerns. Shares were
last up 13%, but analysts remain cautious.
"For those thinking of picking up bargains here, be fully aware
that the obscurity surrounding Noble's outlook is further under the
blanket," said Nicholas Teo, a trading strategist at KGI
Securities.
(END) Dow Jones Newswires
May 25, 2017 01:25 ET (05:25 GMT)
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