Asian Shares Rally After Fed Cuts Rate

Source : The Straits Times, Sep 19, 2007

HONG KONG - ASIAN stocks rallied on Wednesday as investors cheered the US Federal Reserve's bold move to slash interest rates by 50 basis points.

The Fed lowered its benchmark fed funds rate to 4.75 per cent and said the move was 'intended to help forestall some of the adverse effects on the broader economy that might otherwise arise from the disruptions in financial markets and to promote moderate growth over time'.

SINGAPORE
Shares rose sharply higher on Wednesday, with the key Straits Times Index (STI) rising more than 3 per cent after US shares jumped overnight.

The US Federal Reserve slashed interest rates, raising hopes that Singapore's largest export market could rised out a turmoil in the credit market.

The STI rose 106.80 points or 3.07 per cent to 3,584.55, climbing the most in a month. Stocks like city Development, United Overseas Bank, Keppel Corp, Singapore Airlines and DBSBank led the market higher.

In the broader market, gainers beat losers 620 to 152 in a turnover of 1.45 billion shares.

KUALA LUMPUR
Share prices on Bursa Malaysia ended the morning higher on bargain hunting spurred by a surprise 50 basis points cut in US interest rate by the Federal Reserve, a dealer said.

At 12.30pm, the Kuala Lumpur Composite Index gained 19.63 points to 1,296.96.

In the broader market, gainers outperformed losers 566 to 187 while 222 counters were unchanged. Turnover amounted to 632.9 million shares worth RM957.2 million (S$412 million).

SEOUL
South Korean shares surged after US stocks jumped following a larger-than-expected interest rate cut by the Federal Reserve.

The Korea Composite Stock Price Index rose 57.75 points, or 3.1 per cent, to 1,896.36 in afternoon trading after rising as much as 3.5 per cent earlier.

Investors were heartened by the US central bank's move on Tuesday to cut its benchmark fed funds rate, aiming to keep a credit crunch from triggering a recession in the US economy, a key export market for South Korea.

'They did the right thing,' Joseph Han, a strategist at Daewoo Securities Co. in Seoul, said of the Fed's aggressive cut.

CHINA
Chinese share prices fell 1.09 per cent in Wednesday morning trade on a technical correction, dealers said.

They said the market was likely to fluctuate around 5,400 points after the main index hit a new intraday high of 5,458.58 on Tuesday.

Dealers also noted that investors chose to set aside their money for Shenhua Energy's upcoming 1.8 billion A-share subscription, which weighed down the market.

The benchmark Shanghai Composite Index, which covers both A and B shares listed on the Shanghai Stock Exchange, ended the morning down 58.91 points to 5,366.29.

The Shanghai A-share Index lost 62.38 points or 1.10 per cent to 5,631.93 and the Shenzhen A-share Index fell 16.83 points or 1.06 per cent to 1,567.55.

HONG KONG
The benchmark Hang Seng Index was up 934.51 points or 3.8 per cent at 25,511.36, smashing through the 25,000-point mark for the first time, dealers said. The Hong Kong Monetary Authority (HKMA) on Wednesday lowered the base rate charged through its overnight discount window by 50 basis points to 6.25 per cent.

The HKMA's move came after the US Federal Reserve cut benchmark interest rates by half a percentage point to 4.75 per cent to protect the economy from a housing downturn and jittery credit markets.

Hong Kong tends to track US rate moves because its currency is pegged to the US dollar.

JAPAN
Japanese stocks surged 3.36 per cent in morning trade on Wednesday after the Federal Reserve slashed interest rates by a bold half-point to try to calm recent financial market turmoil, dealers said.

The Tokyo Stock Exchange's benchmark Nikkei-225 index of leading shares jumped 531.49 points to 16,333.29 by the lunch break.

The broader Topix index of all first-section shares gained 53.13 points or 3.52 per cent to 1,564.08. -- REUTERS, AFP, BERNAMA