Tuesday, October 1, 2013
All Asian Stocks Up In Sept As U.S. Sticks To Monetary Easing
SINGAPORE (NQN)--From August through mid-September, as investors braced for the U.S. Federal Reserve to start scaling back its quantitative easing, an outflow of money from risk assets weighed on Asian stock markets and currencies. However, the Fed's decision not to taper its bond purchasing despite market expectations whetted investor appetite for risk and all Asian stock markets gained momentum by the end of September.
With the Dow Jones industrial average hitting an all-time high, buyback and dip-buying spread to Asian stocks. The Bombay Stock Exchange Sensex index hit a year-to-date high for the first time in two months and briefly marked its highest level in about two years and 10 months. Major benchmark indexes in Thailand, Singapore and other Southeast Asian countries, which had particularly fallen, recovered slightly.
In Shanghai, economic gauges largely showed improvements, and expectations for the government's economic measures also supported the stock market. An experimental free trade zone was opened on Sept. 29, triggering buying of shares in companies which may benefit from the launch. This buying trend carried over to Hong Kong.
In India, the rupee's recovery from its slump encouraged forex traders to buy the currency. But at the Reserve Bank of India's Sept. 20 meeting, bank Gov. Raghuram Rajan stressed that his highest priority is on curbing inflation. At the meeting, the first since the well-known economist became governor, the central bank decided to raise the policy repo rate by 0.25 percentage point to 7.5%, despite market expectations. This move fostered speculation that the policy rate will rise further, weighing on stock price recoveries.
Many stock markets outside of Asia also rose in September. The Dow Jones industrial average rose 2.16% in September, the FTSE 100 index of the U.K. rose 0.77%, and Germany's DAX rose 6.06%. However, uncertainty over U.S. fiscal concerns pushed stock price levels lower toward the end of the month, and some indexes failed to make up for their August declines.