Regional players shrug off air attacks on Iraq
BARRY PORTER in Singapore
Asian market reaction to United States-British bombing of Iraq was surprisingly muted yesterday, with most regional markets rising after some early jitters.
The region's currencies showed slight weakness, but dealers said this had more to do with a disappointing response to Bangkok's ground-breaking asset sale rather than fears of any economic fallout from the air strikes.
The US dollar initially shot up above 117 Japanese yen in reaction to the bombing news, but drifted lower to 115.91 yen late in Asia, with traders saying the conflict was unlikely to escalate.
Daniel Lian, head of Asian markets research at ANZ Investment Bank, said: 'The situation now is not like the last Gulf War. Iraq is not in a position to disrupt world oil supplies. Besides, there is currently an oversupply of oil in the world.' Simon Flint, an economist at Independent Economic Analysis, said: 'People have been here before with Iraq. This is not going to have any massive oil price effect.
'We have other news in the region clouding matters.' Regional markets were also little concerned about the possible impeachment of US President Bill Clinton.
Andrew Fung, currency strategist at Standard Chartered Bank, said: 'If Clinton is impeached, it is not likely to impact Asia's markets. It wouldn't [see] US policy going off the rails.
'From a market's point of view, [US Federal Reserve Board chairman] Alan Greenspan is more important than Clinton.' The Australian benchmark stock index rose 1.58 per cent and the New Zealand index jumped 2.1 per cent on stronger commodity prices.
There were also modest gains in Manila, Tokyo and Singapore.
Tokyo's Nikkei-225 Index ended 0.21 per cent higher at 14,126.99 points after initially sliding.
Bangkok, Jakarta, Seoul and Taipei were the main losers, with the Korea Composite Index shedding 3.12 per cent.
On the currency markets, sentiment was soured by news Thailand's Financial Restructuring Agency had only been able to accept nine out of 39 bids offered for the repackaged financial assets of 56 defunct finance firms.
Most of the bids are believed to have been too low.
Eight of the nine tranches sold were acquired by Thai groups, with Lehman Brothers the sole successful foreign bidder.
News of additional aid of US$1.85 billion for Thailand under Japan's Miyazawa plan did little to improve sentiment.
Malaysia, which was awarded $1.5 billion under the Miyazawa initiative on Wednesday, saw its stock market close basically flat, having parried early losses.