By Daniel Inman
Southeast Asian stocks and currencies rose sharply to lead
robust gains across the region as investors returned to emerging
markets in droves after the Federal Reserve's surprise move to
leave its stimulus measures intact.
Indonesian equities surged more than 7% in early trade, though
the advance was later pared to a 4.6% gain late in Asia, Thailand
rose 3.3%, while the Philippines ended up 2.8% at 6511.70.
The Fed's decision to keep up its bond-buying spree is a green
light for global investors, after fears of a change in U.S.
monetary policy resulted in a volatile summer for Asia. Markets in
India and Indonesia had been hit especially hard because of worries
over their slowing economies and trade imbalances just as the fear
of a rollback of U.S. stimulus efforts, which had supported these
markets for years, prompted substantial outflows.
"Policy makers that were under a lot of pressure because of the
prospect of tapering will be celebrating," said Sean Callow, senior
currency strategist at Westpac Institutional Bank in Sydney.
Southeast Asian currencies also rallied with Thailand's baht
(USDTHB) rising as much as 2.5% against the greenback, while
Indonesia's rupiah (USDIDR) gaining as much as 2.4%.
There was also some relief in terms of bond yields, with the
Indonesia 10-year government dollar bond yield falling to 5.08%
from 5.43% on Wednesday, while Philippines nine-year government
dollar bond yield fell to 3.44% from 3.72%.
The broad-based rally adds to strong gains in the U.S. where the
Dow Jones Industrial Average (DJI) closed at a record high and
Treasuries posted their biggest one-day price rally since November
2011.
"The Fed did what they should have, not what the markets
expected," said Steven Ricchiuto, chief economist at Mizuho
Securities.
Japan's Nikkei climbed 1.8% to 14766.18 and Australia's
S&P/ASX 200 rose 1.1% to 5295.70, after hitting a high of
5300.10 earlier in the session. Singapore's Strait Times index
added 1.9% and Hong Kong's Hang Seng rose 1.7% to 23502.51.
The Australian dollar (AUDUSD) was trading at US$0.9513, close
to a high it reached overnight, while the yen (USDJPY) softened to
Yen98.59 per dollar compared with Yen97.93 late Wednesday in New
York.
"It is a pretty patchy recovery, and it is a sign that the U.S.
is not ready for a reduced stimulus," said Matthew Sherwood, head
of investment market research at Perpetual in Sydney.
Japan was also caught up in the declines earlier in the summer,
though its recent gains have now put it closer to a bull market --
defined as a 20% rise from a recent low.
Thursday's gains cemented strong gains for September, with a
number of markets already notching up substantial returns for the
month. The Nikkei is up 10.3% since the end of August and
Thailand's SET is up 14.7% so far this month.
Regional gold miners jumped after gold knocked 4.2% higher
overnight after the Fed move, with Newcrest Mining up 7.9%, Zhaojin
Mining Industry surging 12% and Zijin Mining Group higher by
10.4%.
Some markets were unable to react to the Fed developments
because of a public holiday, with both Shanghai and South Korea
shut until the end of the week.
The Shanghai Composite closed Wednesday up 0.3% and South
Korea's Kospi fell 0.4% on Tuesday.
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