Asia Stocks Gain on U.S. Business Activity Report; Elpida Rises By Patrick Rial and Chan Tien Hin

April 1, 2008-- Asian stocks rebounded from the worst day in two weeks, led by electronics manufacturers and computer-chip makers, after U.S. business activity shrank less than estimated and Elpida Memory Inc. said it will raise prices. Canon Inc., which generates 30 percent of its sales from the Americas, and Sony Corp. both gained the most in a week in Tokyo. Elpida, Japan's largest memory-chip maker, surged for a second day after its chief executive said the company will raise prices by 20 percent this month. The MSCI Asia Pacific Index added 0.5 percent to 140.07 as of 2:51 p.m. in Tokyo. The measure lost 12 percent in the first quarter, the worst start to a year since 1992, as a U.S. housing slump threatened to drag the largest market for Asian goods into a recession. ``The U.S. numbers have provided a feel-good factor to the markets,'' said Mushthaq Ahmad Ibrahim, who manages the equivalent of $1.3 billion as chief investment officer at MIDF Amanah Asset Management Bhd. in Kuala Lumpur. ``You have seen the quarter end with most of the markets in negative territory. Now, you're beginning to see value in the market.'' Japan's Nikkei 225 Stock Average added 0.9 percent to 12,641.94. Investors shrugged off the Bank of Japan's quarterly Tankan survey, which showed that sentiment among the country's largest manufacturers slid to a four-year low last month. Most Asian markets advanced. Shionogi & Co. led an advance among healthcare stocks after a study found the company's cholesterol pill reduced deaths. Baoshan Iron & Steel Co. slid in China after Goldman, Sachs & Co. said steelmakers were among companies that were ``most vulnerable'' to earnings downgrades. Higher Chip Prices Canon jumped 2.2 percent to 4,690 yen. Sony, the world's second-biggest consumer electronics maker, added 1.5 percent to 4,030 yen, the steepest gain since March 25. Taiwan's Asustek Computer Inc., the world's No. 1 maker of boards connecting electronic parts in a computer, rose 1.7 percent to NT$90.50 The National Association of Purchasing Management-Chicago's business index rose to 48.2 in March from a six-year low of 44.5 a month earlier. While a reading lower than 50 signals a contraction, economists in a Bloomberg News survey had projected a gain to 46. The report helped the Standard & Poor's 500 Index break a three-day losing streak in New York. ``The market is trading on very broad macro news these days and the most recent news was a positive figure,'' said Nicole Sze, a Singapore-based investment analyst at Bank Julius Baer & Co., which manages $350 billion in assets worldwide. Japanese stocks rose even as the Tankan index of manufacturer sentiment, the country's most widely watched economic indicator, slid to 11 points in March, the lowest since December 2003. Economists had forecast a drop to 13 points. China Earnings Warning ``The market was expecting an even worse result for the Tankan than what economists had forecast,'' said Akio Yoshino, chief economist at Societe Generale Asset Management (Japan), which holds about $16 billion. Elpida surged 8.1 percent to 3,590 yen, extending yesterday's 2.2 percent gain. The company plans to increase chip prices by 20 percent in April after demand rose and inventory levels fell, Chief Executive Yukio Sakamoto said in a Bloomberg Television interview broadcast yesterday. Samsung Electronics Co., the world's largest maker of computer-memory chips, rose 2.1 percent to 636,000 won. The company is mulling a single-digit increase in computer memory chip prices this month, Reuters reported, citing an executive. Shionogi climbed 9.2 percent to 1,858 yen, the third- biggest percentage advance on the MSCI Asia Pacific Index today. An AstraZeneca Plc study found the Japanese drugmaker's Crestor cholesterol pill helped cut the number of deaths among patients and didn't cause heart disease. China's CSI 300 Index slumped 4.2 percent, the region's biggest drop. Baoshan Iron, China's biggest steelmaker, tumbled 6.2 percent to 11.64 yuan, while Wuhan Iron & Steel Co., the nation's fifth largest, lost 6.4 percent to 13.28 yuan. [From Internet]

Graphical Check: The market had a gap down opening yesterday on the back of weak global cues. The decline continued throughout the day as the indices failed to latch onto any of the support zones. Eventually, the index ended the day with huge losses at virtually the lowest point. A mildly positive opening was seen on account of the improved global picture. The ability of the index to sustain above 4820 today is to be construed as a sign of strength. Until then, the pressure on the indices seems likely. On the downside 4600-4650 is a very good support zone of the market. Yesterday’s price action resulted in the false breakout which took place on Friday. Such a turn of events normally leads to huge volatility and swing on either side of the market. Hence, change of stance from ‘optimistic’ to ‘cautiously optimistic’ in the short term is prudent.

I do not see any major selling in the Large Caps as the sentiments will improve in the days to come due to government coming in full force to clamp down inflation. Already the commodity prices have started to recede with the Soyabean hitting lower circuits.

Also, FM could be considering a roll-back of the changes he made in the STT rules effective from today.......which is hitting the day traders.