World stock markets opened the year on a high note, with Hong Kong’s index up more than 4 percent, as investors shrugged off more dreary economic news to focus on government moves to ease the global slump.
With most investors away for the holidays and more than half the region’s markets still closed, trading volumes were extremely light, which exaggerates price moves. Chinese telecom firms surged after Beijing approved next-generation mobile licenses, and commodity companies were lifted by stronger prices for raw materials. European benchmarks followed Asia higher in early trade.
But many analysts found little reason to be optimistic about the world economy as a whole. After one of the worst years ever for global equities, many expect more volatility in the first half as the effects of falling exports and higher capital costs start showing up on company balance sheets.
John Mar, co-head of sales trading at Daiwa Securities SMBC Co in Hong Kong, said: “There will be trading opportunities, but I don’t think we’ve hit the bottom yet.”
“We should get more clarity when we see US earnings reports in 2 weeks time,” he said. “It’s pretty apparent that they won’t be good, but market reaction to these results will help indicate if current levels have priced in a bad earnings environment.”
Across Asia there were signs of further deterioration in local economies.
Singapore said yesterday its economy shrank for a third consecutive quarter, by 12.5 percent, and lowered this year’s growth forecast, saying the economy could contract as much as 2 percent or in the best case scenario grow just 1 percent.
China’s manufacturing sector, which accounts for 43 percent of the economy, contracted for a fifth straight month last month, a CLSA survey showed. South Korea, Asia’s fourth-largest economy, suffered a trade deficit for last year — its first in a decade.
For their part, South Korean investors seemed to ignore the downbeat news after South Korean President Lee Myung-bak said his priority in the new year would be combating the global economic crisis. Indian investors were awaiting a second economic stimulus package from the government, expected to be unveiled late yesterday.
As trading got under way in Europe, Britain’s FTSE 100 edged up 0.9 percent, Germany’s DAX rose 1.7 percent and France’s CAC 40 was 1.5 percent higher.
The three key markets had shed between 31 percent and 43 percent last year.
“The mindset may be that the turmoil of 2008 is now behind us and that 2009, although not set to be great, needs to start with a bang,” CMC Markets trader Jimmy Yates said.
In Asia, Hong Kong’s Hang Seng Index led the region’s session, vaulting 655.33 points, or 4.6 percent, to 15,042.81 points. South Korea’s Kospi added 2.9 percent to 1,157.40, Singapore’s benchmark rose 3.9 percent and Mumbai’s Sensex traded 0.6 percent higher.
Meanwhile, markets in Japan, China, Taiwan, Indonesia, the Philippines, Thailand and New Zealand were closed.
Among the top gainers were Chinese telecom firms after Beijing said on Wednesday it had approved licenses for next-generation mobile phone services. China Mobile Ltd (中國移動通信), the world’s biggest phone carrier by subscribers, gained 4.8 percent and China Unicom Ltd (中國聯通) soared 8.8 percent.
Shares in energy and metal producers were buoyed by a jump in commodity prices earlier this week, with Chinese upstream producer CNOOC up 4.8 percent and Australia’s Woodside Petroleum Ltd, the country’s No. 2 oil company, adding 1.7 percent.
In South Korea, Hyundai Motor Co soared 6.2 percent after Lee said the government would drastically increase spending and take steps to provide sufficient liquidity to the currency market, boost domestic demand, keep jobs and support smaller firms.
“I won’t neglect even for a moment checking the economic situation and drawing up countermeasures and implementing them,” Lee said. “It’s time for us to unite.”
It was not all positive news however, as Australian share prices shed 0.2 percent following falls in many financial stocks.
“With many traders still not back at their desks until Monday we will yet again see some thin volumes and maybe a degree of volatility,” Yates said.
On Wednesday in New York, Wall Street finished its last trading day of last year with a modest gain.
The Dow rose 108.00 points, or 1.3 percent, to 8,776.39, and the Standard & Poor’s 500 index gained 12.61, or 1.4 percent, to 903.25.
Dendra Lambert, analyst at Hilliard Lyons, said a two-day rally to close out the year was a positive sign.
“After experiencing the worst losses since the Great Depression, some onlookers believe bargain hunters were starting to emerge in the final days of trading of 2008,” she said.
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