Thursday, January 23, 2014

Asia Up on Easing China Credit Crunch Worry

Asia ended mostly up as China credit crunch worries eased with the central bank pumping billions into the financial system. The People’s Bank of China injected CNY180 billion of 21-day and CNY75 billion of 7-day reverse repurchase agreements to tackle soaring demand for cash ahead of
the long Lunar New Year holidays. The PBOC’s action lent some confidence as concerns about potential default in wealth management products grow. China’s SHCOMP rose 0.9%, while Hong Kong’s Hang Seng ticked 0.5% up.

In corporate news, Lenovo, the world’s largest PC maker, is reportedly in preliminary talks with IBM to acquire its low-end server unit. This will be a part of Lenovo’s diversifying efforts after it was hurt by sluggish PC demand.

In Southeast Asia, Singapore’s STI rose 0.2%, while Indonesia’s JCI ended 0.5% up. Malaysia tacked on 0.4%.

Thailand’s SET ended 0.2% higher. The government declared a state of emergency starting today and lasting 60 days. Anti-government protestors have tried for over two months to overthrow the government. These protests are beginning to undermine Thailand’s attractiveness as an investment destination. Toyota Motor’s Thai subsidiary said on Monday it may reconsider a plan to spend USD600 million, and could even dial down production if the protests drag on. Toyota is one of Thailand’s biggest foreign investors.

India’s Sensex was 0.2% up, driven by a rally in auto and bank stocks on expectations the central bank will keep its rates steady next week.