Bank stocks lead in foreign cash flood
CATHY HOLCOMBE
Markets soared in Southeast Asia and Hong
Kong yesterday as overseas investors bought
up banking, property and technology-related
stocks amid signs of growing liquidity and
confidence in the region.
The Hang Seng Index crashed through 12,000
points for the first time in 17 months and then
kept on going, ending the day up 4.41 per cent
at 12,490.3.
Thailand's benchmark index soared 8.59 per
cent in its first day of trade following a
three-day holiday, while a rare burst of
institutional enthusiasm pushed Indonesia's
battered index up 7.16 per cent.
"Liquidity is coming in because interest rates
are coming down, currencies are stable and
Asia looks very cheap from North America,"
said SSB-Citibank Asset Management director
Giampaolo Guarnieri.
While Mr Guarnieri believed Asia offered value
on a two-year view, he said the swiftness of
regional market jumps in the past month
smacked of rally-chasing by fund managers
fearing benchmark underperformance.
"The shift towards Asia, it's getting a bit
crazy," he said.
Markets in Japan, Korea and Australia saw
smaller gains yesterday, but all three hung on
to long-time highs reached in the past month.
Korea and Japan can thank their rallies on
overseas funds, which yesterday appeared to
switch to "laggard" markets in Indonesia and
Thailand.
"It's foreign money flowing in," said James
Mitchell, head of research at Salomon Smith
Barney Thailand.
He said investors were celebrating "a very
strong performance on Wall Street, signs of
commodity prices stabilising and global
growth".
The Dow Jones Industrial Average's quick
march to a record 10,462.72 on Thursday -
less than a month after its first close above
10,000 - has boosted sentiment in Asia as well
as made stocks in the region look
comparatively cheap, analysts said.
Banking giant HSBC, for instance, is one of
the only major Hong Kong blue chips trading
on valuations comparable with Wall Street's
market. HSBC jumped $7 to $277 yesterday, a
whisker away from its record high of $279
reached in July 1997.
A rise in banking and property stocks was
behind the Singapore Straits Times Index's
3.73 per cent jump yesterday, while Malaysia's
composite index advanced 3.01 per cent.
The Philippines rallied 2.58 per cent, bringing
its week's gains to 6.12 per cent following
market-boosting cut in interest rates.
While technology stocks have lost ground in
Japan and Taiwan in the past two days, the
more recent Hong Kong technology stock run
continued apace.
Internet fever has fuelled rallies in the stocks of
Hongkong Telecom and Wharf Holdings - the
former is the SAR's dominant Internet service
provider while the latter recently announced
plans to offer hi-speed Internet access through
its cable network.
"In Asia if you're looking at basic Internet
services and ISP [service providers], etc, it's a
brand-new market, it's a huge market," Mr
Guarnieri said.
"It's almost a virgin territory."
Mr Guarnieri said that Nasdaq-listed Pacific
Internet, based in Singapore, or Internet plays
in Japan and India offered bigger markets and
more innovation than Hong Kong's Internet
plays.
HSBC Securities Asian strategist Abhijit
Chakrabortti said regional markets would
continue to gain from asset re-allocations by
the world's money managers, but that he felt
the SAR could lead the pack. "Markets like
Singapore and Korea are pretty well owned in
regional portfolios but most people, because of
concerns about dollar risk or high real interest
rates, have been relatively underowned in
Hong Kong."
Brokers said Asian fund managers added fuel
to the stocks run in Hong Kong, as they
switched out of fixed-rate deposits or lowered
cash allocations.