The wave of increased sales, which covered yesterday the securities markets in Europe and the U.S. broke today and Asian stock exchanges. Although it was expected, the decision by ratings agency Standard & Poor’s to cut the credit rating of Greece and Portugal brought sharp decreases in the indexes and the risk premium on government securities of the two countries jumped sharply. Regional stock measure MSCI Asia Pacific, which brings together public companies from 10 Asian countries plus Australia and New Zealand slid 1.6 percent to 125.20 points today. This is his fourth decline in five trading session, and meanwhile the cost of insurance to protect against the failure of Asian countries reached its highest level since February. Stock prices of raw materials and the euro rate fell because of concerns that the fiscal crisis in Greece will be released in the eurozone. President of the European Central Bank Jean-Claude Trichet will meet with German politicians and the head of the International Monetary Fund Dominique Strauss-Kahn in Berlin today to discuss a possible rescue plan for Greece. All ten industry groups included in the MSCI Asia Pacific, noted a sharp drop as financial companies ran among the losers. Among national indexes in the region most Japanese Nikkei fell 225, which slid 2.6 percent to 10 924.79 points as investors shrugged off a strong 5-percent increase in retail sales in Japan in March.
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Australia ended the monopoly of the stock exchange, permitting the creation of a second exchange for trading in shares in the country. Authorization is granted to Japan’s Nomura, but its purpose is to create competition to help develop the market. Among the main priorities of Australia has become the local stock market in the center of financial services in Asia-Pacific region, said Finance Minister Chris Bowen of the country, quoted by AP. According to him, higher competition should lead to cost reductions of about 6 million Australian citizens who have contributions to pension funds. “If Australia really wants to be considered a financial center if we are to global center for financial services, the monopoly days of our financial market must be completed,” said Bowen. Authorization for establishing a second exchange in the country is a company of Chi-X Global, which is part of network of Nomura Holdings.
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After a painful downturn last week, most stock indexes in Asia and the Pacific region began this week with significant increases. Optimism prevailed among investors after the United Arab Emirates (UAE) said they would support their banks, which fell into difficulty because of the insolvency of the investment fund Dubai World. Most local currencies rose, and risk premiums on corporate bonds fell. The regional index MSCI Asia Pacific, which monitors the securities markets in ten Asian countries plus Australia and New Zealand, rose 3.5 percent to 117.85 points. This is the strongest measure of stock market growth since the beginning of April this year. Today, the UAE central bank said it stands behind the credit companies in the seven Arab Emirates, and the government of China confirmed that it will not hurry to withdraw its measures to support the economy. The financial companies in the composition of the MSCI Asia Pacific contributed most to the strong increase of the index today after last week suffered the most along the news about the financial problems of Dubai. The main stock index fell in Dubai with a record 7.2 percent last year, and the Abu Dhabi stock slid more than 8%. Today was the first business day of the exchanges in the UAE, which closed late last week because of holidays in the Arab world. The Japanese Nikkei 225 rose by 2.9 percent to 9345.6 points. Shares of exporting companies rose, although the rate of the yen against the dollar increased by 0.7 percent today. This increases the cost of Japanese goods companies abroad. In India, the BSE Sensex 30 rose 1.7 percent to 914.1 points to 16 after the country’s economy grew more than expected by 7.9 percent for the period July-September compared to last year.
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