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Asian bourses stage recovery on hopes of Fed rate cut
Alvin Foo Wed, Mar 19, 2008 The Straits Times
MOST Asian bourses posted cautious gains yesterday in a nonetheless turbulent session as they recovered some of Monday's losses caused by the shock Bear Stearns news. Expectations of a hefty cut in a key US interest rate at last night's United States Federal Reserve meeting added some sparkle to Asian markets. But they endured a rough ride after Chinese Premier Wen Jiabao expressed doubts that China could meet this year's inflation target. He said the nation will take 'forceful' steps to fight rising prices - dampening investor sentiment, given fresh worries of rising interest rates in China.

This contrasted with Japan's Nikkei 225 Index - up 1.5 per cent - and Hong Kong's Hang Seng Index, which added 1.4 per cent.

Some analysts fear the worst may not be over for Asian equities.

Credit Suisse said: 'We expect Asian markets to correct by another 20 to 35 per cent before bottoming.' It advised investors to stick to defensive stocks such as telcos and utilities, while avoiding exporters and banks.

Back home, the Straits Times Index rose 40.83 points to 2,833.58, almost recovering all of Monday's losses.

It was boosted mainly by post-lunch gains in Hong Kong and bright US futures during Asian trading hours, which pointed towards a positive opening on Wall Street.

The volume was heavier than Monday's, with 1.58 billion shares worth $1.71 billion traded.

'We could be seeing a 'buy on anticipation' ahead of tonight's Fed meeting,' said a local dealer.

The charge was led mainly by the three bank counters. DBS Group Holdings was among the top gainers, surging 44 cents to $17.14. United Overseas Bank jumped 38 cents to $17.54, while OCBC Bank added 13 cents to $7.65.

Property counters ended mixed after data released on Monday showed last month's new homes sales in Singapore almost halved from the previous month. City Developments dipped four cents to $9.95, but CapitaLand gained 31 cents to $5.86.

Deutsche Bank noted: 'We expect the market to remain subdued in the near term with most launches to be held back until the second half...at the earliest.'

Also on the radar were palm oil plays, after palm oil futures in Malaysia slumped to their daily limit of 10 per cent yesterday - its biggest drop in a decade.

Wilmar International slumped 20 cents to $3.60, Golden Agri-Resources fell as much as 21.2 per cent before closing 9.5 cents down at 80 cents.

In contrast, Tri-M Technologies soared 223.8 per cent after it announced a share placement and plans to diversify into oil.

alfoo@sph.com.sg

'We expect Asian markets to correct by another 20 to 35 per cent before bottoming.'

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