SINGAPORE -- Asian stock markets ended higher on Thursday, after the U.S. Federal Reserve raised key interest rates for the first time in almost a decade. Investors saw the move as affirmation of the U.S. economic recovery.
The positive sentiment spread throughout the region, as uncertainty over when the Fed was going to hike interest rates had been an overhang on the markets. All major stock indexes ended higher, with the benchmarks in Shanghai, Taipei, Jakarta, Manila, Kuala Lumpur and Mumbai gaining over 1%.
Among the Asia 300 companies, Malaysian Top Glove led the pack with a gain of close to 11%, extending the winning streak to three days. The world's largest maker of rubber gloves reported record earnings earlier this week, thanks to a weaker ringgit boosting its exports. The Fed hike and a consequent higher greenback are also seen to help its exports.
The technology sector was a strong gainer in Taiwan and shares in leading dynamic random-access memory maker Nanya Technology rose to the daily limit of 10%. The company recently announced it will sell its 24.2% shares in Inotera Memories to U.S.-based memory maker Micron Technologies..
Catcher Technology, which supplies metal casing for Apple's iPhones, and Advantech, world's leading industrial computer manufacturer, both rose by 3.4%. Taiwan Semiconductor Manufaturing and Hon Hai Precision Industry, the largest companies by market cap in Taipei, closed higher 1% and 2.7% respectively, as both exporters stand to gain from a strong U.S. dollar.
Shen Jian-hong, an analyst at Taishin Securities Investment Trust, said the Fed's expected rate hike is positive for Taiwan's stocks. However, "looking forward to 2016, with a weak global economy, and a lack of latest killer applications from the tech sector, we expect Taiex to continue fluctuate significantly next year," Shen said.
In Jakarta, the market was led by index heavy weight Unilever Indonesia, which gained 4.7%. Another consumer counter Hero Supermarket rose by 8.5%, while energy stocks such as Perusahaan Gas Negara and Adaro Energy also moved up.
"It's back to normal. The uncertainty is no longer there," said Tito Sulistio, president of the Indonesia Stock Exchange. "The worst impact from the Fed increase has already [happened]." He added that investors will now turn their focus to monetary policy at Indonesia's central bank, the government's infrastructure spending and fourth-quarter earnings of listed companies.
Bank shares across the region were generally higher, in expectation of better interest margins. Taiwan's banking sector was up over 2%, with Cathay Financial Holdings and Fubon Financial Holdings both rising about 3.7%. Hang Seng Bank in Hong Kong rose 2.5%, while Malaysia's CIMB Group Holdings gained by 3.4%. Singapore's Oversea-Chinese Banking Corp. edged up by 0.9%.
The major losers of the day were in the telecom sector in Thailand, moves that were unrelated to the Fed's decision. Total Access Communication, the second-largest carrier of the country, added another 7.1% loss on Thursday after sliding by the same percentage the day before. The auction for the fourth generation service bandwidth has entered a third day, and the weariness over excessive financial burden for the local telcos are weighing heavily on their share prices. True Corp. and Advanced Info Service, the third and the top players in the industry, saw their shares drop by 3% and 2%, respectively as well.
Market watchers warned that the overall gains in Asia may not last long. "It is a relief rally," said Vasu Menon, vice president of OCBC Wealth Management. He added: "Asian stocks will stay volatile". After the initial reaction, "investors have to continue to watch the U.S. data more carefully, because the pace of [future] rate hikes may be [faster] than the market expected," Vasu said.
Analysts also pointed to other factors that could lead to a bumpy ride ahead. "The shadow of higher interest rates, more earnings disappointments during the upcoming the fourth quarter results season and uncertain growth outlook next year could be a near-term drag," said Yeo Kee Yan, DBS Vickers Securities' vice president for equity research.
Nikkei staff writers Debby Wu and Cheng Ting-fang in Taipei and Nikkei deputy editor Kenji Kawase in Bangkok contributed to this story
Winners, losers among Asia300 stocks on Dec. 17, following Fed rate hike
Perusahaan Gas Negara
Delta Electronics (Thailand)
Krung Thai Bank
Agricultural Bank of China
Total Access Communication (Dtac)
Samsung Heavy Industries
Banyan Tree Holdings
Advanced Info Service
Shinhan Financial Group