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Key Asia markets surge, HK swaps new for old

SINGAPORE: Asian stocks shot up on Monday, led by Hong Kong where a switch into blue chips pushed the Hang Seng index to a record close, and Tokyo, where demand for "old economy" shares took the Nikkei to a 32-month high.

"Investors are now taking profit on high-tech stocks," said Stanley Ng, research manager at Mansion House Research in Hong Kong. "It has happened in the States and it has happened here."

But high tech stocks continued to shine in Seoul and Taipei.

The dollar was steady vs the yen in quiet trade ahead of next week's key BOJ "tankan" corporate survey which dealers said might show improvement in business sentiment and help to underpin the Japanese unit.

The dollar stood at 106.79/84 yen in Asia after rising to 107.02 yen, up slightly from 106.84 yen in late U.S. trading on Friday.

Because many "old economy" stocks are index shares, when buyers come back, the benchmark indices rise, Ng said.

Old Japan stocks, which had been heavily pressured by continued unwinding of mutually-held shares in recent months, gained ground also because sharp declines in Internet issues prompted investors to shift their money into domestic demand-related manufacturers, brokers said.

"Selling aimed to dress up books and to unwind cross-held shares ahead of the year-end was almost over by the end of the morning session today, said Hiroichi Nishi, deputy general manager at Nikko Securities.

"Market sentiment would be pretty good for the rest of the business year to Friday," Nishi said.

But new economy shares powered gains in Taipei and Seoul.

Active buying of electronics shares helped Taiwan's index close up 3.43 percent at 9,807.57 as investors set aside political uncertainties and focused on fundamentals.

Brokers said the anticipated ex-dividend rally in electronics stocks was one of the key factors behind Monday's strong gains as investors targeted companies with high-dividend prospects.

"Putting political uncertainty aside, investors are pinning their hopes on an ex-dividend rally led by electronics," said Oliver Fang, head of institutional sales at National Securities.

The market began to rebound last Tuesday after president-elect Chen Shui-bian said he sought "eternal peace" with Beijing, a comment which market analysts said helped ease investor worries over tensions with China that clouded the presidential elections.

The Taiwan dollar rose to around 30.59 against the U.S. unit on expectations of more equity inflows, and analysts said it was set to strengthen further with the central bank seen taking a more relaxed approach to its rise.

In Seoul, the index for the technology-heavy Kosdaq over-the-counter market ended up 3.29 percent at 240.34 as investors bought large-cap technology stocks sold last week.

Singapore shares jumped 3.3 percent to end at a five-week high as funds, including foreign money, moved into traditional and banking stocks after weeks of neglecting these shares. The the key Straits Times Index closed at 2,217.07 points.

Shares in Australia ignored gains in the rest of Asia, ending softer as Kerry Packer companies and Qantas dominated market talk. The benchmark All Ordinaries index .shed 0.67 percent at 3,225.6 in dull trade.-Reuters