Asian indexes ended mixed Wednesday, with Tokyo and Seoul advancing on optimism over the U.S. bailout of AIG, while Hong Kong and Shanghai fell as investors mulled the possibility of more credit-crunch victims.
In Tokyo, the Nikkei 225 Stock Average ended up 140.07 points, or 1.2%, at 11749.79 on news the U.S. government would lend American International Group /zigman2/quotes/203700638/composite AIG +2.03% up to $85 billion. The index fell nearly 5% Tuesday amid investor anxiety over a global financial crisis with Lehman Brothers Holdings' bankruptcy and the takeover of Merrill Lynch.
On Wednesday, central banks across Japan, Australia and India continued to pump cash into the financial system in a bid to ensure sufficient liquidity flow to banks. The Bank of Japan injected ¥3 trillion ($28.4 billion) into domestic money markets, taking its total injection to ¥5.5 trillion in the past two days.
In Japan, shares of nonlife insurers gained on short-covering, with the AIG aid cheering the mood. Sompo Japan Insurancerose 2.1% while Tokio Marine Holdings /zigman2/quotes/210254144/delayed JP:8766 +2.34% ended up 5.3%.
Although major bank stocks were higher in the morning on short-covering, they trimmed gains and ended the session mixed as investors turned cautious. Mitsubishi UFJ Financial Grouprose 1% while Mizuho Financial Group lost 0.7%.
Midsize banks Aozora Bank and Shinsei Bank ended sharply lower on worries that their relatively large exposure to Lehman Brothers Holdingscould hurt their earnings. Aozora ended down 5.3% while Shinsei sank 10%.
Among other heavyweights, Canon rose 3.4% after saying Tuesday it would buy back 1.1% of its own shares.
But Hong Kong and Shanghai-listed shares dropped as investors considered the impact of the ongoing financial crisis on credit markets in the months ahead.
"This is a short-term relief for the market, but the credit crunch is going to continue. It may even worsen worldwide," said Dale Tsang, managing director at Imperial Dragon Asset Management Co. in Hong Kong.
Hong Kong's Hang Seng Index fell 3.6% to 17637.19, reversing a 2% gain in the first minutes of the session. Chinese banks led the Hang Seng's blue-chip losses on concerns the People's Bank of China's latest interest-rate cut will narrow interest margins of the major lenders. ICBC /zigman2/quotes/201401473/delayed HK:1398 +1.00% lost 9.9%, China Construction Bank /zigman2/quotes/208974133/delayed HK:939 +1.46% fell 8.2%, Bank of Communications /zigman2/quotes/203442771/delayed HK:3328 +1.58% dropped 7.7% and Bank of China /zigman2/quotes/204682472/delayed HK:3988 +0.96% declined 4.6%.
All but six blue-chip stocks ended in the red Wednesday, with banking giant HSBC /zigman2/quotes/202687335/delayed HK:5 -0.10% down 2.5% and heavyweight China Mobile /zigman2/quotes/200868736/delayed HK:941 -0.10% falling 2%.
The mainland's Shanghai Composite wavered between gains and losses earlier in the day, before retreating to end down 2.9% at 1929.05.
Banks and insurers extended their fall from the previous session, with China Life Insurance lost 2.5% while Ping An Insurance slid 9%. China Merchants Bank, which holds $70 million worth of bonds issued by Lehman, tumbled nearly 10%.
Dairy producers also struggled amid a government investigation into the apparently widespread usage of the chemical melamine in milk powder. Yili hit the 10% downside trading limit and Bright Dairy & Food was also down 10%. ( See related article.)
Seoul's Korea Composite Stock Price Index, or Kospi, gained 2.7% to end at 1425.26 after falling sharply Tuesday on Lehman Brothers' bankruptcy filing.
"Although it will take some time for the U.S. financial system to stabilize completely, investors seem to think the worst case (scenario) has passed after Lehman filed for bankruptcy and the U.S. government decided to rescue AIG," said Kim Joo-Hyeong, an analyst at Tong Yang Securities.
Brokerage and shipbuilders rebounded sharply after their recent sharp falls. Mirae Asset Securities rose 8.1% and Samsung Securities gained 6.5%. Among shipbuilders, Hyundai Heavy Industries jumped 10.4% and Samsung Heavy Industries climbed 5.4%.
Falling oil prices boosted transportation stocks. Asiana Airlines gained 5% while Hanjin Shipping rose 8%.
Most technology stocks also rebounded after heavy losses Tuesday. LG Electronics rose 5.8% and LG Display climbed 5%. Hynix Semiconductor jumped 9.9%, partly on expectations that the company's efforts to cut its NAND chip output will stoke a price rebound.
However, Samsung Electronics underperformed its technology peers after SanDisk rejected the company's $5.85 billion bid. ( See related article. )
In Australia, the benchmark S&P/ASX 200 closed down 0.6% at 4722.2 as investors shifted their focus to Morgan Stanley and other potential casualties of the credit crunch.
Confirmation of a U.S. Government plan to lend $85 billion to American International Group pushed the market up to 4822.4 in early trading. However, the market reacted negatively to a CNBC report that Morgan Stanley officials are weighing whether the firm should remain independent or merge with a bank given the recent turbulence in the company's stock.
Financials swung sharply negative, with Macquarie down 7.8%, National Australia Bank falling 5.5% and ANZ losing 2.2%.
Resources suffered from broad market weakness and an ongoing slide in commodity prices. BHP Billiton /zigman2/quotes/201448516/delayed AU:BHP +0.58% lost 2.1%, Rio Tinto /zigman2/quotes/200083756/delayed AU:RIO +1.07% shed 4.5% and Fortescue declined 6.6%.
In Asian currency trading, the U.S. dollar bought ¥105.93, compared with ¥104.86 late Tuesday.
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