Asian Banks soar in Dubai aftermath, Buffett's BYD and other Chinese car companies post massive gains
Even as shares in Dubai and Abu Dhabi suffered their steepest drop in more than a year, Asian banks recouped some of Friday's massive losses after assessing their actual exposure to floundering Dubai World. In Hong Kong, HSBC (HBC), the most heavily weighted stock on the exchange, rallied 4.3% and Standard Chartered (SCBFF) gained 4.2%. A pledge by the Chinese authorities to continue financial stimulus measures sent shares in China- based banks upwards. Hong Kong-listed shares of Bank of China (BACHY) added 5.8% and shares in Industrial & Commercial Bank of China (IDCBY) rose 4.6%.
Shares in Macau casino operator Sands China plunged 10.2% on their first day of trading in Hong Kong. Billionaire owner Sheldon Adelson also runs parent company Las Vegas Sands, and hopes to raise enough cash to complete construction on his glitzy Macau resort. At the listing ceremony, he said he was not disappointed with the debut and was confident about the company's future, according to the Wall Street Journal.
Also in Hong Kong, Warren Buffett-backed BYD Co, surged 6.2% after recently falling out of favor as critics argued that electric cars will take years to penetrate the market. The car and battery company had its rating raised by Morgan Stanley, pushing shares higher. Last Thursday, the company also reported a 201% rise in earnings for the first nine months of the year, according to Reuters, attributing the increase to strong sales in China, helped along by government incentives.
In China, carmakers also escalated on reports that the government hinted that it may continue tax incentive schemes for new car purchases. Carmaking behemoth SAIC leaped 7.5% and Volkswagon partner FAW Car Co. skyrocketed 9.2%. Daimler's Chinese partner Beiqi Foton Motor leaped 6.1%, while Nissan's Chinese partner DongFeng Automobile (DNFGF) jumped 4.9%.
In Japan, banks also staged a massive recovery with investors seeming to bet that the Dubai calamity will be no more than a blip. Among the major banks, which slid precipitously on Friday's news, Mizuho Financial Group (MFG) soared 9.5% today, and Mitsubishi UFJ Financial Group (MTU) surged 8.6%. Sumitomo Mitsui Financial Group (SMFJY) rallied 8.8%.
Even Japanese building companies with enormous contracts in Dubai recovered today; Kajima Corp. (KAJMF) added 3.1% and Taisei Corp. (TISCF), which is designing an underwater tunnel linking the man-made Jumeirah Palm with the coast, climbed 4.1%. Ripples from the desert city will surely continue to be felt around the world for some time.