Asian Markets Soar as Japan Springs into Action

In Asia Wednesday, Japan's Nikkei Index climbed 1.8% to 9,691 and Hong Kong's Hang Seng Index rose 1.1% to 22,880. Markets in China remained closed.

Japan's ruling Democratic Party has proposed yet another economic stimulus package. This one is for more than $58 billion, according to Bloomberg. Added to yesterday's move by the Bank of Japan to maintain interest rates at virtually zero, it's hard to dispute that Japan's leadership is working double-time to combat the deflation and rise in the value of the yen that's hampering the country's recovery.

The newly proposed stimulus package is not yet approved, but most will find it hard to argue against a proposal in support of, among other things, job creation and policies to encourage overseas investments that would take advantage of the strong yen.

The Democratic Party also proposes that Japan find new sources for commodities, a need highlighted by China's recent ban on rare earths exports to Japan after a Chinese fishing captain was detained by the Japanese when his ship collided with a Japanese Coast Guard vessel in early September (pictured). Japan is demanding that the fisherman pay a fine for fishing with explosives in the disputed territory in the East China Sea. In the meantime, Japan must find other sources for these commodities, which are vital to many of its industries, including hybrid vehicles and laptops.

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Today Nittetsu Mining rallied 8.1%, Sumitomo Metal Mining, which has products including gold, silver, copper and zinc, surged 7.2% and Mitsui Mining and Smelting soared 5%. Marubeni Corporation, a trading company with major iron and steel divisions, climbed 6% and Pacific Metals, which makes a range of products from ferronickel to metal powder, rose 5.1%.

Financial firms rallied today after regulators denied any imminent plans to increase capital adequacy requirements for banks, says Bloomberg. It had been suggested that the largest banks should hold more capital than the amount required under Basel rules to increase stability. Mizuho Financial Group soared 8.6%, Mitsubishi UFJ rose 2.6% and Sumitomo Mitsui Financial advanced 1.8%.

In the real estate sector, Tokyu Land leaped 7.4%, Sumitomo Realty & Development jumped 5.2%, Mitsubishi Estate gained 4.2% and Mitsui Fudosan saw a 3.5% increase.

In Hong Kong, banking shares also gained with investors hoping Japan's recent slashing of the benchmark interest rates would spur other central banks to follow suit. There were big gains for Bank of Communications, which climbed 3.1%, and at Bank of China, which advanced 2.6%. HSBC added 1.3%.

Among Hong Kong property companies, New World Development racked up a 4.9% gain after announcing that its earnings for the year were more than five times higher than last year. Hang Lung surged 4.6%, China Overseas leaped 4.5% and China Resources Land gained 4%. Cheung Kong rose 1.4% and Henderson Land advanced 1.1%. Today's heady gains pushed the Hang Seng to an 11-month high.