Asian markets soar, America regained economic vigor
Asian stock markets gained ground on Wednesday, from Tokyo to Sydney, a day after the Dow Jones Industrial Average hit an all-time high, with central-bank policy helping spur equity buying. Stock indexes in Japan and Australia hit their highest levels since September 2008. In Hong Kong, the Hang Seng rallied more than 200 points on a turnover of HK$73.25 billion, AFP reports.
Asian markets rallied as Dow hit record high
“The safety net has been built globally and there are ample funds afloat,” said Kenichi Hirano, market analyst at Tachibana Securities. “Monetary easing measures by Japan, the U.S. and Europe are providing excess liquidity in the market,” said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management. “The Dow’s gains are just part of it… and for the Nikkei, the 12,000 mark isn’t the ceiling.”
While the Dow ended at a record all time high, most Asian benchmarks have a long way to go to match that performance. The Nikkei Average, for example, remains around 70% off its record closing high of 38,915.87, hit in December 1989, just ahead of the bubble bursting that resulted in Japans Lost Decade.
Other Asian benchmarks also well shy of their all-time records included the Kospi - around 10% off its 2,228.96 record close reached May 2, 2011 - and the Australian market - around 25% off its 6,828.71 record on Nov. 1, 2007. Chinese markets are also well below all-time highs. Hong Kong reached its record of 31,638.22 on Oct. 30, 2007, while Shanghais highest ever close of 6,092.06 was hit Oct. 16 of the same year.
Prosperous time for stock investors
“The medium-term picture still looks favorable, in our opinion. Although we foresee little stimulus from the macro side in the first half of 2013, we see limited potential for downside surprises, unlike in 2012. At the same time, central banks are being very accommodative and are acting as a put option for the capital markets,” said Credit Suisse Asset Management emerging-markets strategist Adrian Zuercher.
“The dearth of investment alternatives in an environment of record-low market interest rates by now across almost every fixed-income asset segment remains the most compelling argument in favor of stocks. The prevailing ‘yield drought’ is veritably forcing investors into stocks,” Zuercher said. Steeper local yield curves should become the “new norm,” given a stronger global economy and a reluctance among central banks to raise rates, with the move likely to broadly benefit Asian financials, said the analysts.
Gregg Gibbs, senior forex strategist at global investment bank RBS, even said the resilience of the Wall Street index in contrast to other asset classes makes it a fresh safe haven for investors. “We have been looking at the Dow as the new safe haven,” Gibbs said on CNBC’s “Asia Squawk Box” on Wednesday. “When you look at the Dow and the U.S. dollar compared with many emerging markets including China, the U.S. offers the best economy with the best outlook globally,” he said.
Jack Bouroudjian, CEO of Chicago-based wealth manager Bull and Bears Market, supported the case for investing in the Dow saying he expected the U.S. equities bull rally to continue for the next couple of years. “Not buying into the U.S. equity market is one of the most dangerous things you can do. Here we are with only 2 percent yields in the 10-year Treasuries, and we’ve got a market at record highs with corporate America making more than they’ve ever made before,” he said.