Asia Stocks Boosted by Agricultural Bank IPO News
World markets mostly rose Wednesday as investors cheered the news that a state-owned Chinese bank is readying a record-breaking initial public offering. Worries that Europe’s debt crisis and spending cuts will hurt growth for years kept the region’s markets in check, however.
Britain’s FTSE 100 was flat at 5,025.97, Germany’s DAX was up 0.2 percent at 5,879.45 and France’s CAC-40 edged up 0.2 percent to 3,388.47.
Wall Street was expected to have less momentum on the open — Dow futures were up 0.3 percent at 9,940 though Standard & Poor’s 500 futures were down 0.1 percent at 1,058.
Asian stocks were boosted by the news that the Agricultural Bank of China is preparing an IPO, with the benchmark Shanghai Composite Index advancing 2.8 percent to 2,583.87. The regulator approved the IPO after China’s markets closed.
The Chinese bank has yet to set an IPO price for its shares, but the size of the operation suggests corporate activity is picking up around the world despite the gloom caused by Europe’s debt crisis.
The IPO is expected to raise between $23 billion and $30 billion. That would exceed the world record previously set by Industrial & Commercial Bank of China, whose $21.9 billion dual Hong Kong-Shanghai IPO in October 2006 helped make it the world’s biggest bank by market value.
“China’s A shares rose strongly at the close because the government is going all-out to make sure the Agricultural Bank IPO will be a success,” said Francis Lun, general manager of Fulbright Securities in Hong Kong. “The government is mobilizing state-owned enterprises to be cornerstone investors.”
In Europe, there was less to cheer about. Governments across the region are expected to make deep and painful spending cuts and increase regulation.
German Chancellor Angela Merkel and French President Nicolas Sarkozy stressed in a letter to the European Commission the urgent need to speed up efforts to regulate financial markets, particularly crack down on speculative trading.
The overall feeling in Europe is that its efforts to stem the debt crisis will come at the cost of economic growth for years to come, with only some sectors — such as exports — helped by a faster recovery in the U.S. or Asia.
“The global market mood feels like prolonged periods of gray gloom punctuated by very occasional sunny spells,” said Daragh Maher at Credit Agricole CIB.
Looking ahead, investors will keep an eye on the Federal Reserve’s Beige book for views on the U.S. economy’s outlook, particularly the labor market.
Markets will also be preparing for the European Central Bank interest rate announcement on Thursday. Although rates are expected to be kept at record lows, attention will turn to what President Jean-Claude Trichet has to say about the debt crisis and his bank’s purchases of government bonds.
Elsewhere in Asia, Hong Kong’s Hang Seng shot up in late trading to finish 0.7 percent higher at 19,621.24. Benchmarks in Australia, Singapore, Malaysia and New Zealand were also up.
South Korea’s Kospi shed 0.3 percent to 1,647.22. And Japan’s benchmark Nikkei 225 stock average finished down 1 percent at 9,349.13 — it’s lowest close since Nov. 30.
Even signs of economic recovery in Japan — its machinery orders rose for a second straight month in April — were not enough to ease investor jitters.
“Investors cannot shake off worries that the crisis could drag on for a while, slowing the region’s economy and beyond,” said Kazuhiro Takahashi, equity strategist at Daiwa SMBC Securities Co. Ltd. in Tokyo.
In currencies, the dollar fell to 91.43 yen in Tokyo from 91.53 yen in New York late Tuesday. The euro dropped to $1.1958 from $1.1971, off slightly from the four-year lows it hit earlier this week.
Benchmark crude for July delivery was up 52 cents to $72.51 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 55 cents to settle at $71.99 on Tuesday.
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Associated Press writers Pamela Sampson in Bangkok and Shino Yuasa in Tokyo contributed to this report.
CARLO PIOVANO, Associated Press Writer LONDON