The Malaysian Insider

HONG KONG, Jan 7 - Asian markets were mixed today as Japan's key index rose for a seventh day but Indian shares tumbled after the chairman of major outsourcing company Satyam Computer admitted to falsely inflating profits for years. European markets opened lower.

India's Sensex index plunged more than 6 per cent to 9,694 after Satyam's chairman, B. Ramalinga Raju, said in a letter to the board released to the stock exchange that the company's balance sheet was loaded with "fictitious" assets and "non-existent cash." (See story)

Shares of Satyam Computer Services Ltd. crashed 77 per cent to 40 rupees (RM2.87). The Securities and Exchange Board of India, the market regulator, said it was investigating the incident.

In Hong Kong, the benchmark Hang Seng sank 3.4 per cent to 9,239.24 after Bank of America Corp. sold part of its stake in No. 2 lender China Construction Bank Ltd. for $2.8 billion, a move to raise cash amid the economic turmoil. Construction Bank shares dived 8.8 per cent, dragging down most banking stocks.

But markets in Japan, South Korea and Australia extended their New Year's rally on hopes that stimulus measures from a new US administration would help speed the world's economic recovery.

Since falling to multiyear lows in November, global equities have advanced strongly, with a number of major benchmarks rising more than 10 per cent to year-end.

Many markets have shown few signs of slowing in 2009, as investors poured money back into riskier assets, such as emerging market stocks, amid speculation that government spending, tax cuts and near-zero interest rates will help bring an end to the global slump later this year.

In recent days, buying sentiment has been supported by U.S. President-elect Barack Obama's economy-boosting proposals, which could cost as much as $775 billion (RM2,635 billion).

Obama said today the US could face trillion-dollar deficits for years to come as it moves ahead with its massive stimulus spending.

But with company earnings expected to be dire in the coming months, the "Obama effect" could be short-lived, said Peter Lai, investment manager at DBS Vickers in Hong Kong.

"After the honeymoon period of Obama wears off, people will realize the cruel reality of the economic slowdown and the credit crisis," Lai said.

As trading opened in Europe, Britain's FTSE 100 lost 1.5 per cent, Germany's DAX shed 0.9 per cent and France's CAC-40 was off 0.6 per cent.

Tokyo's Nikkei 225 stock average rose 158.40 points, or 1.7 per cent, to 9,239.24, as a weaker yen led investors to buy exporters. Honda Motor Co., Japan's No. 2 carmaker, jumped 11 per cent, Nikon Corp. soared 15 per cent and Sony Corp. added 8.7 per cent.

The yen continued to lose ground against the dollar, buoying shares in Japanese exporters, and crude oil prices dipped modestly after briefly rising above $50 a barrel overnight, their highest point since Dec.1

Elsewhere, South Korea's Kospi gained 2.8 per cent to 1,228.17, while benchmarks in Australia, Taiwan and the Philippines were higher by about 1 per cent or more.

Overnight in New York, Wall Street again brushed off more dismal readings about the U.S. economy. Pending home sales fell to the lowest level on record in November, while November factory orders dropped nearly twice as much as economists had expected.

The Dow Jones industrial average gained 62.21, or 0.7 per cent, to 9,015.10. Broader stock indicators showed steeper advances to end at their highest levels since Nov. 5. The Standard & Poor's 500 index rose 7.25, or 0.8 per cent, to 934.70.

US futures eased modestly, pointing to a soft open on Wall Street. Dow futures were down 80 points, or 0.9 per cent, at 8,870 and S&P 500 futures fell 8.5 points, or 0.9 per cent, to 922.

Oil prices were lower, with light, sweet crude for February delivery down 38 cents at US$48.20 a barrel in Asian trade. Overnight, the contract fell 23 cents to settle at $48.58 a barrel after prices at one point reached $50.47.

In currencies, the dollar rose to 93.45 yen from 93.38 yen. The euro was higher at US$1.3577. - AP