Thursday, April 9, 2009

Asian Stocks Posts Broad Gains on Thursday

. Thursday, April 9, 2009

By stockOzone team

In a pre-holiday turnaround, major benchmark indexes in Asia posted broad gains in thin trading on Thursday, on the back of Japan's record-setting stimulus plans and a surprise jump in machinery orders.

Japan's ruling Liberal Democratic Party proposed the government spend a bigger-than-expected 15.4 trillion yen ($155 billion) on economic stimulus, including tax cuts and subsidies. The package being drafted includes emergency aid to the unemployed, loan guarantees for small and medium businesses, subsidies for environment-friendly vehicles and residential solar power, and expanded health and child care.

The Nikkei 225 average climbed3.7%, or 321.05 points, to 8,916.06.

Japan may need to issue 10 trillion to 11 trillion yen ($100 billion to $110 billion) in government bonds to finance the new fiscal stimulus package, the top government spokesman said Thursday, leading investors to sell down Japanese bonds. Japan already has the highest level of public debt in the world at 172% of GDP as of 2008. The package is expected to be announced on Friday.

In a sign that the recession in Japan could be moderating, machinery orders posted an unexpected uptick in February of 1.4% from the previous month, breaking a five-month losing streak. However, Bank of Japan Governor Masaaki Shirakawa said that with exports deteriorating significantly, it was highly likely Japan's economy would keep worsening. Exports more than halved in February, compared with a year earlier.

Sumitomo Mitsui Financial Group ( SMFJY ) said it will sell 800 billion yen ($8 billion) worth of shares, after the mega-bank posted its first loss, of 390 billion yen ($3.9 billion) in 2008, in four years. Shares surged 5.3%, or 180 yen ($1.80), to 3,610 yen ($36.05).

On expectations that it will benefit from the stimulus package, construction equipment maker Komatsu ( KMTUY ) jumped 6.0%, or 70 yen (70 cents), to 1,235 yen ($12.33). Solar panel makers also got a boost due to measures in the stimulus package to support the growth of Japan's alternative energy industry. Sharp ( SHCAY ) soared 10.7%, or 87 yen (87 cents), to 900 yen ($9.00), while Kyocera ( KYO ) gained 4.5%, or 290 yen ($2.90), to 6,760 yen ($67.51).

The yen surrendered some of its gains, trading at 100.14 to the dollar compared with under 100 yen Wednesday.

In Seoul, stocks rose after the Bank of Korea decided to hold its key interest rate steady at a record low of 2.0%, as expected. The central bank said it saw signs that the economic downturn is moderating, but it wouldn't rule out making more cuts. The Kospi index jumped 4.3%, or 54.28 points, to 1,316.35.

Disclosure: Author does not own any of the stocks discussed here.

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