EU Deal Bolsters Asian Markets
European Union leaders, along with the International Monetary Fund, cobbled together a nearly $1 trillion emergency-loan package and a bond purchase program in order to put a halt to the debt-crisis contagion and protect the integrity of the euro. The combined loans will stave off speculators and be used to purchase government and private debt to stabilize the Euro Zone countries. Asian markets were bolstered by the news.
The crisis in Europe is a huge threat to blue-chip Asian companies exporting goods to E.U. nations. Investors were calmed by the agreement, and today Hong Kong clothing exporter Li & Fung surged 4.1% and Esprit Holdings, popular across Europe, rose 3.7%. Energy companies, which depend on demand from factories that run around the clock to manufacture goods for export, also saw gains today: China Shenhua climbed 4.4%, oil exploration company CNOOC rose 3.3%, Sinopec advanced 3.2% and Petrochina gained 2.9%.
Hong Kong shipping companies, seen endlessly transporting cargo containers across the South China Sea, headed north today. Cosco Pacific, which runs lines from Greece's Piraeus port, surged 5.5% and Cosco Holdings advanced 3.5%.
Huge gains were made by Hong Kong banks with HSBC rising 5.6% after announcing it had made its first profit in three years and that its first quarter earnings were higher than last year's. Standard Chartered rose 4.2% and Bank of China was up 2%.
Japanese shares got an additional boost from the announcement by the Bank of Japan that it would pump another 2 trillion yen ($21.6 billion) into the financial system to provide short-term liquidity in the hopes of putting the brakes on the downward spiral. The central bank also announced that its benchmark interest rate would remain at 0.1%, said Reuters.
Today Japanese exporters rose with Sharp climbing 4%, Clarion, a maker of car audio systems, surging 3.7%, Sony rising 2.5% and Canon adding 2%. Exporters of manufacturing parts were also in better shape today with Minebea, a maker of ball bearing and specialized motors, soaring 7% and GS Yuasa, which makes batteries for computers and cars, racking up a 3% increase. JX Holdings made a stellar gain of 10.2%. Through its subsidiaries, the company distributes petroleum, metals and electronic materials.
Bridgestone racked up a 4.7% gain and Yokohama Rubber surged 5.5%. Fuji Heavy Industries, which makes auto and aircraft parts as well as Subaru cars, soared 5.9%.
Clothing makers popular both at home and abroad climbed higher today after dismal performances last week. J. Front Retailing saw a 5.1% increase, and Fast Retailing, owner of Uniqlo, which makes trendy clothes from boxer shorts to colorful jeans, rose 3.3%. Japanese department store operators also rose, with Marui Group advancing 4.8%, UNY rising 3.1% and Takashimaya up 1.8%.
China specialists expressed hope that the market has corrected enough, according to Bloomberg, and today real estate shares rose. Gemdale, one of the country's larget residential developers gained 3.7%, Poly Real Estate advanced 3.2% and China Vanke added 1.1%.
Meanwhile, Chinese drug companies, which had weathered the storm well last week, were among the biggest losers today. Guangzhou Pharmaceutical tumbled 5.5%, Yunnan Baiyao Group dropped 4.9%. Even Shandong Dong-E E-Jiao, a hot company that makes a gelatinous blood remedy from donkey skin, sank 0.7% today.
Airlines also dragged the index lower with both Air China and China Southern Airlines plunging to the daily maximum of 10% and China Eastern Airlines losing 5%. It's anyone's guess which way the markets will go from here.