Markets on firmer footing

Investor sentiment was firmer across Asian equity markets entering the last month of the year. Bellwether indices in key markets on Tuesday, Dec 1 traded broadly higher on a slew of upbeat developments.

For a start, investors once again flocked to riskier equities as concern over Dubai’s debt crisis continued to abate. Initial fears that Dubai’s problems would unleash a fresh round of instability in the global financial markets appeared overblown.

China’s latest manufacturing-output figures, which grew at the strongest pace in five years, offered assurance that the global economic recovery remains on track. South Korea also reported its first positive exports growth in 13 months. The country is the first of the major Asian economies to release exports data for November, which rose 18.8% y-o-y.

This bodes well for the rest of the region. South Korean’s exports improvement was driven by strong demand from China, which is expected to grow by over 10% in the last quarter of the year. GDP for the world’s third largest economy has been accelerating over the last few quarters, from 7.9% in 2Q2009 to 8.9% in 3Q2009.

China’s voracious demand, especially for commodities like iron ore, is also underscoring the recovery in Australia. The latter’s central bank raised interest rates for the third straight month, indicating the government’s confidence in its economic rebound.

Shares on Bursa Malaysia also traded on a firmer footing. The benchmark index, the FBM KLCI opened in positive territory and gained as the day progressed. Gains by index heavyweights BAT, YTL Corp, DiGi, CIMB and Maybank lifted the benchmark index 7.6 points higher to 1,266.7.

Market breadth, on the other hand, was more ambivalent. The number of losing stocks was just ahead of gaining ones at the close. About 825 million shares were traded. Some of the most actively traded counters were KNM, Green Packet-WA, GHL Systems and Mlabs Systems.