Positive Spin on Portugal Sends Asian Markets Higher


Asian markets closed higher Thursday. In Japan the Nikkei 225 Index advanced 0.7% to 10,590 and in Hong Kong the Hang Seng Index added 0.5% to end the day at 24,239. China's Shanghai Composite Index gained 0.2% to close at 2,828.

Asian markets reacted positively to yesterday's auction of Portuguese bonds. The country raised $1.6 billion, on which it will pay out interest at a rate of 6.7% -- slightly lower than was expected. The German Deputy Foreign Minister told Bloomberg that this was "good news," and showed that Portugal should not be forced to take a bailout. "The Portuguese do not believe that a bailout is necessary," he said. While Portugal is still in a precarious position, Asian investors are hopeful that the E.U. is still strong. "I don't think they'll let the E.U. collapse," a strategist at Hong Kong's Baring Asset Management office told Bloomberg. "The equity rally looks sustainable as the world economy continues to grow."

In Japan, financial firms contributed to gains, building on yesterday's advances. Sumitomo Trust & Banking rocketed up 5.3% and Chuo Mitsui Trust racked up a 5% gain. The two companies plan to merge their businesses early this year, which could make them Japan's biggest banking group. According to Reuters, the group is considering a dividend payout ratio of 30%.

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The banking industry is still in high spirits after Bank of Japan's governor, Masaaki Shirakawa (pictured), was recently appointed to the post of vice chairman at Basel's Bank for International Settlements. Most banking shares climbed higher with Mizuho Financial shooting up 2.4%, Sumitomo Mitsui surging 1.7% and Mitsubishi UFJ up 1.3%.

Among Japanese property developers, Heiwa Real Estate motored up 3.8%, Tokyu Land leaped 3.5% and Mitsubishi Estate jumped 3.3%. Prices in Japan are looking affordable in comparison with China's red-hot market. The sector is also receiving help from the Bank of Japan's asset-buying scheme, which will invest nearly $62 billion in a fund partially designed to prop up the flailing REIT market.

Japanese exporters also benefited from a more robust-looking E.U. Canon climbed 2.1%, Nikon gained 2%, Panasonic Electric advanced 1.3% and Pioneer added 1.1%. Car companies, which rely heavily on overseas sales, also headed north. Honda shot up 1.8%, Toyota zipped up 1% and Nissan Motor up 0.6%. Mazda, however, bucked the trend, losing 0.8%.

Banks in Hong Kong also headed higher. Industrial & Commercial Bank of China rose 1.5%, China Construction Bank climbed 1.4% and Bank of China advanced 1.2%. HSBC, the most heavily weighted bank listed on the exchange, gained 1.4%.

Shining performances in Hong Kong today included Tencent, which rallied 4.1%. The company's goal is to provide "one-stop online lifestyle services," according to its own website. The firm's QQ Instant Messenger service has become exceedingly popular in China, boasting more than 635 million users. Not bad for a company that only set up shop in 1998. China Unicom, another Internet provider also advanced, rallying 2.5%.

In China, big gainers included airlines, which have been rising amid speculation that passenger numbers will continue to rise. China Southern Airlines leaped 2.9%, Air China surged 1.6% and China Eastern Airlines jumped 1.3%.

But there were losers, too. Tianjin Zhonghuan Semiconductor plunged 6.9% and Sinovel Wind Group, a maker of wind turbines, tumbled 9.6% in today's IPO. Perhaps Sinovel picked an inauspicious day for wind technology stocks, since Shanghai Stock Exchange veteran Xinjiang Goldwind Science & Technology, another manufacturer of turbines, slumped 2.4%.