beyondbrics

Asian markets continued their solid week on Thursday, buoyed by reports that a Japanese stimulus may be outlined next month. China’s Shanghai Composite and India’s Sensex hit their highest levels for three and 30 months respectively.

Malaysia’s ringgit reached a 13-year peak, after the central bank decided to allow residents to use the currency to settle trade with non-residents, adding to enthusiasm about the economy.

It comes amid speculation that China is diversifying its foreign exchange reserves in other currencies. The currency rose 0.4 per cent against the dollar to around 3.13; it has now gained nearly 2 per cent this month and around 9 per cent this year against the greenback.

Malaysia: The central bank move is the latest in a series of liberalising steps. Offshore trading in the ringgit is still prohibited, yet Standard Chartered analysts said: “We see the FX liberalisation as a medium-term positive for the ringgit as it should, over time, broaden the offshore use of the ringgit for trade settlement.”

Banks were the best performers on the Malaysian stock exchange, with CIMB Holdings moving to a record high ahead of next week’s earnings announcement, adding 3.1 per cent to recent gains. The FTSE Bursa index moved up 0.5 per cent to 1,392.56.

China: The Shanghai Composite was up 0.8 per cent to 2,687.98. Energy stocks led gains, with CNOOC reporting that first-half profits doubled thanks to higher oil prices. After Everbright Bank’s strong IPO yesterday, Chen Xingyu of Phillip Securities told Reuters, “Banks have had good earnings results recently and Everbright Bank’s listing yesterday has given momentum to rise further.”

The Shenzhen Composite rose 0.3 per cent to 1,196.39.

China Mobile, the world’s biggest phone carrier by market value, reported first-half profits of 4.2 per cent – beating expectations. Nonetheless, its stocks in Hong Kong fell 3 per cent. The Hang Seng index was up 0.2 per cent to 21,072.46.

India: The Bombay Sensex was trading up around 1.1 per cent to 18,454.94. Financials led gains: ICICI bank was up over 4 per cent, continuing recent rises. The weather office announced that rains have increased in the past week; a good monsoon season would help lower inflation.

South Korea: Exporters were cheered by the possibility of a Japanese stimulus and strong third-quarter earnings. Hyundai Motor gained 4.6 per cent, while the Kospi index was up 1 per cent to 1,779.64.

Indices in the Philippines and Thailand both added to their two-year highs. The Philippine stock exchange rose 0.7 to 3,560.39, with Banco de Oro Unibank up 4.6 per cent for the day and over 9 per cent so far this month.

The Thai SET index was up 1.3 per cent in late trading to around 891, putting it 3.4 per cent above last Friday’s close. Siam Cement gained 2.7 per cent.

Taiwan’s Taiex index was up less than 0.1 per cent to 7,928.94. Late in the day, the government raised its unadjusted 2010 growth forecast from 6.1 to 8.2 per cent. “Basically every export-driven Asian country is facing the same situation,” Nison Chen of Capital Securities in Taipei told Reuters. “This year growth should keep going down, through Q3 and Q4. The growth low point might be Q4 or Q1. We need to look at whether Christmas in the United States helps and what happens with consumer demand in China.”

In Indonesia, the Jakarta Composite rose 1.1 per cent to 3,105.35. TLKM Telecoms gained 4.7 per cent.

Vietnam‘s VN index was one of the few fallers, down 0.7 per cent to 452.23, after this week’s currency devaluation.

Currencies: The Korean won fell 0.1 per cent against the dollar to 1,172.9, as the government intervened to ease recent appreciation.

There were modest rises for the rupee, up 0.2 per cent to 46.58, and the Thai baht, which added 0.1 per cent to 31.57. The baht is now up over 1 per cent this week against the dollar.

The Indonesian rupiah was flat.