With news of a bank rescue plan in Ireland, Asia’s financial markets responded positively in early trading. Japan’s Nikkei average logged its fourth winning session in a row, but this this news is offset some by the real estate shares in Hong Kong which finished sharply lower in the wake of government measures to cool red-hot property prices.
In Tokyo, the yen’s recent weakness against the euro and yen encouraged buying in exporters’ stocks. With Ireland’s recent trouble potentially dragging down the value of the Euro, some of the Japanese advantage may be offset though. Currency traders from the largest desks at Goldman Sachs (NYSE: GS) and JPMorgan Chase (NYSE: JPM) will have plenty of homework ahead for them.
In China, investors traded with caution after the People’s Bank of China Friday said it will raise banks’ reserve requirement ratio by half of a percentage point from Nov. 29, the fifth such increase this year, aimed at reining in credit growth and rising inflation. Due to the isolated nature of the Chinese banking sector this will likely not have a major impact on foreign deposits, but could impact growth rates in Asia and abroad as the supply of funds fall.
While China is on the brink of raising rates to stem off overheating, Europe and the United States are eyeing monetary expansion, to deal with slow growth in both regions. The major banks like Citigroup (NYSE: C), Bank of America (NYSE: BAC), and HSBC (NYSE: HBC) have not been able to capitalize on these low cost of funds as loan standards have increased while risk tolerances decreased.
