Asian stocks soar on news of US plan

Published September 20, 2008
Source: Businesstimes.com
By CONRAD TAN

STOCKS in Asia soared yesterday, after news that the US government is preparing a plan for a mass rescue of the financial sector and regulators in the US and UK moved to ban the short-selling of stocks.



Hong Kong's Hang Seng Index jumped 9.6 per cent, erasing almost all its losses earlier this week, led by Chinese banks and insurers that rose more than 16 per cent.

Here, the Straits Times Index ended 5.8 per cent higher after climbing as much as 6.5 per cent earlier in the day, recouping all its losses suffered during four straight days of declines earlier in the week. The jump was the biggest in percentage terms since August 20 last year.


But interbank lending rates here and elsewhere remained unusually high, although they fell from earlier peaks. That suggests strains from the crisis sweeping through global financial markets have not gone away, a day after central banks worldwide flooded the banking system with billions of dollars in additional liquidity in a desperate bid to keep interbank markets functioning properly.

The Singapore interbank offered rate or Sibor for overnight US-dollar loans halved to 3.25 per cent from 6.58 per cent. US-dollar domestic interbank rates for longer maturities also eased, following similar declines in US-dollar interbank rates in Europe and elsewhere on Thursday. But interbank rates in most markets, including Singapore, are still much higher than they were a week earlier - a sign that banks remain cautious about lending to each other amid worries about more financial institutions failures.

The Singapore Exchange said last night that all of investment bank Lehman Brothers' trading positions here have been settled or transferred to other brokers and that Lehman - which filed for bankruptcy in the US on Monday - no longer has any outstanding financial obligations to the exchange.