Japan PM Announces $11 Billion Stimulus Plan, Asian Markets Rise

Asian markets closed higher Friday. In Japan the Nikkei 225 Index climbed 1.5% to 9,239 and in China the Shanghai Composite Index inched up 0.3% to 2,663. Hong Kong's Hang Seng Index added 0.4% to end the day at 21,257.

Japanese Prime Minister Naoto Kan is revving up efforts to boost growth in Japan's flagging economy, and today announced a new $11 billion stimulus plan designed to promote job creation, coax shoppers back into stores, and stem the surge in the value of the yen. The government will lay out cash to provide consumer incentives for the purchase of environmentally friendly home appliances and home renovations. Funds will go to supporting low-carbon businesses and spurring job creation, including employment for recent graduates. The unveiling of this package is strategically timed, coming just days before Prime Minister Kan's faceoff with democratic challenger Ichiro Ozawa in the Nov. 14 election.

Japanese shares were also bolstered by a fall in the value of the yen. This was welcome news for exporters, which gained today. Sharp surged 3.5%, Sony climbed 1.7% and Pioneer rose 1.6%. Canon rocketed up 5.6% after the company announced a share buyback scheme.

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Japanese car companies advanced with Mazda surging 1.6%, Nissan gaining 1.1% and Toyota rising 0.7%. Suzuki rose 1.2% after a free trade agreement between Japan and India was outlined. The deal could be sealed as early as October, reports AFP. Suzuki's a popular choice of motorcycle throughout Asia, where the two-wheelers do the job of the family station wagon, transporting everything from entire families and household appliances to large plants and even livestock.

Fast Retailing, the operator of the chic Uniqlo shops and Japan's number one clothing retailer, soared 5.6% after news broke that China will allow foreign companies to begin selling online if they already have stores in the People's Republic.

In China, a rise in healthcare stocks outweighed losses in other sectors. Investors plowed money into pharmaceutical companies after the government raised the warning flag over the increase in cases of drug-resistant bacterial infections in hospitals. In 2003 the Chinese government was exposed after covering up SARS cases, in what was then thought to be the next pandemic. Another current health scare over an increase in a deadly tick-borne disease has also increased interest in drug companies. Shandong Lukang Pharmaceutical hit the 10% daily limit, China National Medicines and North China Pharmaceutical both gained 3%.

New data has been released indicating that China's property prices rose another 9.3% in August as compared to the same period last year, reports Bloomberg, stoking fears that the government could implement further measures to cool the market and hamper the activities of speculators, who have served to artificially prop up the market. China Vanke sank 2.9%, Gemdale tumbled 2.2% and Poly Real Estate fell 1.8%

In Hong Kong, better-than-expected U.S. jobs figures led to a gain among exporters. Li & Fung, supplier to the likes of Wal-Mart and Target, got a 2.9% boost while China Resources, a maker and distributor of food products and retail items, surged 2.7%. Esprit, which counts both Europe and the U.S among its customer base, inched up 0.3%.

Some property shares were also a good buy today in Hong Kong where Hang Lung Property advanced 2.2%, and Henderson Land added 0.6%. But some developers slid lower: New World Development slumped 1.4% and Wharf Holdings lost 0.6%. Among car companies Geely, the new owner of the Volvo brand, leaped 5.7% on increased sales. According to Bloomberg, Geely has high hopes for the future and is forecasting the sale of 50,000 of its new V60 sporty station wagons, which will be marketed in Europe.