In today’s trading most Southeast Asian stocks fared well and climbed to a one-month high; this is being attributed to the news that the investors are hoping that the U.S. Federal Reserve’s monetary stimulus will be buying interest in large caps with low valuations such as banks.
Thai SET index topped among outperformers today and gained almost 3% at one point and reached at 1,441.89 which are the highest since August 16. Amidst the hopes, investors even bought back shares such as Kasikornbank and Siam Commercial Bank which were faring badly earlier last week.
On the other hand, Jakarta’s Composite Index also increased by 1.7 percent by Midday amidst the news that Bank Indonesia announced a 25 basis points rate hike late last week. Investors were seen buying Indonesian stocks as they were expecting better returns.
Similarly, whereas Philippine’s main index rose by 2.7 percent, Singapore’s Straits Times Index rose 1.7 percent in today’s trading.
Australian Shares too Performed Better Than Expected
It was a rally time for Australian shares which rose 0.8 per cent and hit five-year highs in today’s trading amidst the news that National Australia Bank and Westpac Banking Corp. gained 1.6 per cent and 0.6 per cent respectively. Like the two mentioned financial organizations, the Commonwealth Bank of Australia too fared better and added 0.4 per cent.
Banks in Australia, particularly the best four have been doing better this year and have gained on average 25.3 per cent on the back of high dividend yields and record profits.
However, market experts opine that on current valuations, the stock prices of Australia’s two biggest banks are highly valued and that may be a reason that fund managers are cautious.
Many of the traders and investors feel that the current trend in hike in banks’ stocks is unsustainable, particularly when two biggest banks have the highest levels of ‘short’ positions.
Like banks, mining companies gained momentum in today’s trade as Rio Tinto Ltd gained by 1%. Similarly, BHP Billiton Ltd rose by 0.5%. Gold miners Newcrest Mining Ltd and Perseus Mining Ltd are also doing better in today’s trade.
Market analysts are of opinion that as growth outlooks are right and interest rates are reasonably low, the stock market is expected to do better this week. Though unemployment, a major economic indicator, increased a bit, that does not seem to have an impact in the overall market performance.
To contact the reporter of this story: Jonathan Millet at firstname.lastname@example.org