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Oct. 25, 2010, 9:12 a.m. EDT

Shanghai fronts Asian stock rally

Investors hoping for Fed easing and strong China earning reports

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By V. Phani Kumar, MarketWatch

HONG KONG (MarketWatch) -- Most Asian markets climbed Monday on expectations that further monetary easing by the U.S. Federal Reserve would boost liquidity in the region, and with Chinese stocks rising amid hopes for strong corporate earnings.

Click to Play

Singapore Exchange Bids for Australia's ASX

Singapore Exchange Ltd. made a friendly offer to buy all of ASX Ltd., the operator of the Australian Securities Exchange. Hong Kong bureau chief Peter Stein talks with Asia Pacific finance correspondent Alison Tudor about the possible consolidation.

Singapore Exchange’s multibillion-dollar takeover bid for its Australian counterpart ASX spurred a wave of merger interest and lifted the region’s stock-exchange shares, though the Singapore bourse tumbled in the wake of its lofty bid.

Japanese stocks retreated, with exporters losing ground as the yen climbed to a 15-year high versus the U.S. dollar.

China’s Shanghai Composite /zigman2/quotes/210598127/delayed CN:SHCOMP -0.04%  rose 2.6% to 3,051.42, Hong Kong’s Hang Seng Index /zigman2/quotes/210598030/delayed HK:HSI +0.40%  advanced 0.5%, Australia’s S&P/ASX 200 /zigman2/quotes/210598100/delayed AU:XJO +0.05%  gained 1.3%, South Korea’s Kospi rose 1%, and Taiwan’s Taiex ended 1.7% higher.

In afternoon trading India’s Sensex  rose 0.9%.

Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -1.34%  futures were up 48 points in screen trade.

“Liquidity is the major driver. Hopes for quantitative easing in the U.S. are the reason for the funds flow into the market,” said Castor Pang, a research director at Cinda International.

Referring to the bounce in stock-exchange shares, Pang said the Singapore exchange’s willingness to pay more than a 30% premium for ASX has boosted valuations of all bourses in the region. “It seems investors believe the Hong Kong Exchanges & Clearing may put in motion plans to do more business with mainland Chinese exchanges. It may accelerate listings by Chinese companies…” he said.

Shares of ASX /zigman2/quotes/208455670/delayed ASXFY -1.12%   /zigman2/quotes/205682473/delayed AU:ASX -0.72%  soared 19% in Sydney after Singapore Exchange, or SGX, announced an 8.4 billion Australian dollar ($8.3 billion) cash-and-stock deal for the company.

Among other regional stock exchanges, HKEx /zigman2/quotes/200234512/delayed HK:388 -1.47%   /zigman2/quotes/201215503/delayed HKXCY +0.63%  jumped 4.9% in Hong Kong and Bursa Malaysia climbed 5.1% in Kuala Lumpur trading.

But SGX /zigman2/quotes/206876763/delayed SG:S68 +0.44%  itself lost 5.6% in Singapore afternoon trade on concern that the deal was expensive after it agreed to pay a 37% premium to ASX’s traded price on Friday. Investors also worried that SGX would face regulatory hurdles due to a 15% ownership limit for the Australian exchange.

J.P. Morgan downgraded the stock to neutral from overweight, saying the brokerage expected “SGX to trade on ebb and flow of regulatory stance on merger rather than on volumes traded.”

The SGX-ASX deal news also lifted other Australian shares, with Energy Resources of Australia rising 4.6%, Fox Resources climbing 3.9% and Insurance Australia Group gaining 3.2%.

“In many ways, it’s a shakeup that shows our market is cheap,” said Patersons senior investment adviser Peter Morgan. The price-to-equity valuation for “Singapore Exchange was about 23-24 times, while ASX was about 18 times, so a lot of the gain is coming out of the fact that Singapore Exchange trades at a lot higher multiple than ASX.”

/zigman2/quotes/210598127/delayed
CN : China: Shanghai
3,575.52
-1.36 -0.04%
Volume: 19.63B
Dec. 2, 2021 11:05a
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/zigman2/quotes/210598030/delayed
HK : Hong Kong Exchange
23,753.82
+94.90 +0.40%
Volume: 881,743
Dec. 2, 2021 11:05a
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/zigman2/quotes/210598100/delayed
AU : S&P ASX
7,239.40
+3.50 +0.05%
Volume: 306,518
Dec. 2, 2021 2:00p
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/zigman2/quotes/210598065/realtime
US : Dow Jones Global
34,022.04
-461.68 -1.34%
Volume: 498.38M
Dec. 1, 2021 5:04p
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/zigman2/quotes/208455670/delayed
US : U.S.: OTC
$ 63.80
-0.72 -1.12%
Volume: 364.00
Dec. 1, 2021 3:56p
P/E Ratio
34.38
Dividend Yield
2.45%
Market Cap
$12.41 billion
Rev. per Employee
$1.02M
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/zigman2/quotes/205682473/delayed
AU : Australia: Sydney
$ 89.72
-0.65 -0.72%
Volume: 186,222
Dec. 2, 2021 2:00p
P/E Ratio
36.12
Dividend Yield
2.49%
Market Cap
$17.51 billion
Rev. per Employee
$1.37M
loading...
/zigman2/quotes/200234512/delayed
HK : Hong Kong
$ 428.40
-6.40 -1.47%
Volume: 2.07M
Dec. 2, 2021 11:05a
P/E Ratio
42.48
Dividend Yield
2.14%
Market Cap
$544.03 billion
Rev. per Employee
N/A
loading...
/zigman2/quotes/201215503/delayed
US : U.S.: OTC
$ 55.57
+0.35 +0.63%
Volume: 74,395
Dec. 1, 2021 3:48p
P/E Ratio
42.78
Dividend Yield
1.94%
Market Cap
$69.78 billion
Rev. per Employee
N/A
loading...
/zigman2/quotes/206876763/delayed
SG : Singapore: SGX
$ 9.05
+0.04 +0.44%
Volume: 783,100
Dec. 2, 2021 10:59a
P/E Ratio
22.01
Dividend Yield
3.54%
Market Cap
$9.55 billion
Rev. per Employee
N/A
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