Asian stocks surged, driving Japan’s Nikkei 225 Stock Average to its biggest gain on record, as the US and European governments agreed to buy stakes in banks to avert a collapse in financial markets. The yen fell.
The Nikkei jumped 14.2 per cent, rebounding from the worst week in its 59-year history, as people briefed on the plan said the US government will invest in nine of the nation’s biggest banks. Sony Corp, Toyota Motor Corp and Mitsubishi UFJ Financial Group climbed more than 14 per cent. National Australia Bank added 7.3 per cent after the government announced an economic stimulus package. Fortescue Metals Group rose 55 per cent as commodity prices rebounded.
Governments are “tackling the root of the problem,’’ said Christopher Wong, who helps manage about $25 billion in assets as investment manager at Aberdeen Asset Management Asia in Singapore. “They’re putting confidence back into the market by not just adding liquidity but adding strength to the banks that serve Main Street.’’
The MSCI Asia Pacific Index rose 9.5 per cent to 97.05 as of 7:06 pm in Tokyo, its biggest advance since 1998. About half of the measure’s 990 members gained by 9 per cent or more. The index has dropped 38 per cent in 2008 as concern that frozen credit markets will trigger a recession erased about $28 trillion in value from global stock markets.
The Nikkei added 1,171.14 to 9,447.57. Japan’s markets were shut for a holiday yesterday, when the MSCI World Index jumped 9.5 per cent on speculation state investments in banks will drive down money market rates. Australia’s S&P/ASX 200 gained 3.7 per cent, led by Babcock & Brown and Rio Tinto. Hong Kong’s Hang Seng Index rose 3.2 per cent, bringing its two-day advance to 14 per cent, as Cnooc climbed.
Standard & Poor’s 500 Index futures gained 1.3 per cent. The S&P rebounded yesterday from its worst week in 75 years with an 11.6 per cent advance, its steepest since 1939.
The Bush administration will invest about $125 billion in nine banks including Citigroup, Goldman Sachs Group and Morgan Stanley, said the people. France, Germany, Spain, the Netherlands and Austria have committed $1.8 trillion to guarantee bank loans and take stakes in lenders.
The yen fell 0.4 per cent to 102.46 per dollar, on course for its four-day drop since July.
Money-market rates declined. Singapore’s three-month dollar loan rate dropped 13 basis points to 4.66 per cent while Hong Kong’s local dollar rate lost 2 basis points to 4.42 per cent. The Libor-OIS spread, a gauge of cash scarcity, narrowed to 3.54 percentage points from 3.66 percentage points last week.
Sony, the world’s second-largest consumer electronics maker, gained 17 per cent to 2,785 yen, the most since at least 1974. Toyota, Japan’s largest automaker, jumped 16 per cent to 3,720 yen and Honda Motor gained 18 per cent to 2,485 yen.
Mitsubishi UFJ gained 14 per cent to 810 yen, the most since October 2003. The bank, Japan’s biggest, won an additional $300 million in annual dividends for its $9 billion investment in Morgan Stanley after shares of the US securities firm dropped. National Australia Bank, the country’s largest, jumped 7.3 per cent to A$24.03. Babcock & Brown, a manager of infrastructure assets, soared 39 per cent to A$1.79. Prime Minister Kevin Rudd said his administration will spend A$10.4 billion ($7.3 billion) to boost the economy.
