16 theSun | WEDNESDAY NOVEMBER 26 2008

business news

Asia shares rally on Citi rescue

but risks remain
HONGKONG: Asian shares
rallied and bonds fell after
the US government rescued
banking giant Citigroup in a
bid to prevent further damage
to the ailing global financial
system.
But European shares
were set for a tepid start,
with Britain’s FTSE 100 seen
between down 4 points to up 3
points.
The yen edged up from
sharp falls a day earlier
and gained against major
currencies, but some traders
said the Japanese currency
could stall in the near term if
investors continued to return
to battered equity markets
and other riskier assets from
so-called safe havens such as
bonds.
Oil prices retreated below
US$54 (RM194.40) after
surging more than 9% in
the previous session, a rally
that was big enough to send
regional commodity-related
stocks such as BHP Billiton
sharply higher.
But plenty of near-term
risks remained, including
whether other global lenders
are in need of rescue, the
fate of US automakers and
indicators that continue to
signal a rough road ahead for
the global economy.
China’s growth could
well slow to its weakest pace
in almost two decades next
year, the World Bank said,
the latest grim prognosis for
a global economy buckling
despite the concerted efforts of
policymakers.
“What we are seeing is just
short-term optimism and hope.
Economic data from the US,
Japan is not encouraging. So,
the future is not promising,”
said Amitabh Chakraborty,
president-equities at Religare
Securities in India.
The MSCI index of Asia-
Pacific stocks excluding Japan
rose 3.8% as of 0700GMT,
heading towards a third
consecutive daily gain.
Japan’s Nikkei average
jumped 5.2%, resuming trade
after a public holiday on
Monday.
The broader market rally
comes after an initially tepid
Asian reaction to the US plan,
announced early on Monday
Asian time, to shoulder most
potential losses on about
US$306 billion (RM1.016
trillion) of Citigroup’s risky
assets and inject capital into
the struggling lender.
But a subsequent Wall
Street rally, which capped the
best two-day run since the
aftermath of the 1987 stock
market crash, put some of
those doubts to rest, sparking
optimism the US government
could similarly step in to
support other big banks.
The rally in global markets
was also helped after US
President-elect Barack Obama
promised to jolt the faltering
US economy with a stimulus
package, raising the outlook
for beleaguered exporters
worldwide who depend heavily
on US consumer demand.
Shares in Australia and
Hongkong rallied 4-5% each,
while markets in Taiwan,
Singapore and India rose over
2%.
The world’s largest miner,
BHP Billiton, ended 12.2%
higher in Sydney, but after the
market close it announced that
it was pulling the plug on its
long-standing US$66 billion
(RM23.76 billion) bid for rival
Rio Tinto, citing worsening
conditions in metals markets
and demands for asset sales
from European competition
regulators.
South Korea’s KOSPI index
advanced 1.4%, but Shanghai’s
index fell 0.4%.
Gains in Asia were led in
part by banks such as South
Korea’s KB Financial Group
and Commonwealth Bank of
Australia, which recovered
from steep falls on Monday
as worries about slowing
economic growth and rising
bad debts weighed on the
battered financial sector
Investors went from buying
assets perceived as safe havens
during the uncertainty in the
lead-up to Citigroup’s rescue
to shunning them yesterday.
The question is how long it
will last.
Data continues to confirm
the weakness of the global
economy. South Korea
yesterday said consumer
confidence slumped to a
four-month low in November,
while in Germany, corporate
sentiment plunged to its lowest
level in nearly 16 years this
month.
The World Bank also cut
yesterday its 2009 growth
forecast for China, which along
with the US, is a key export
market for Asia.
On the corporate front,
Australia’s Qantas Airways,
and Japan’s Honda Motor were
among the latest companies
in the region to warn of a
toughening outlook. – Reuters

CIMB Islamic
launches first
syariah-compliant
product in HK
KONGKONG: CIMB Islamic, the Islamic banking
arm of Malaysia’s second largest bank CIMB
Group, yesterday launched its first Syariah-com-
pliant product in Hongkong and signed the first
transaction with Hong Leong Bank for its Com-
modity Murabahah Deposit.
The product will utilise commodities like crude
palm oil, metal or any tradeable commodities as
its underlying asset.
CIMB Islamic chief executive officer Badlisyah
Abdul Ghani said the Hongkong Monetary Author-
ity (HKMA) gave its clearance last week for the
launch of the interbank money product.
“It is important for CIMB Islamic to be here
because Hongkong has great potential as an
Islamic financial market,” he said.
HKMA deputy chief Eddie Yue witnessed the
memorandum of understanding signed between
the Hongkong branches of CIMB and Hong Leong.
– Bernama