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Nikkei Markets

Asian equities rebound as dollar index retreats

South Korean stocks jump on A300 index

HONG KONG (Nikkei Markets) -- Asian shares outside of Japan rebounded Friday, helped by a pullback in the dollar index and more measures to alleviate the market stress caused by the coronavirus outbreak.

The Nikkei Asia300 index of companies outside Japan surged 6.5% to 1,059.62.

The dollar index retreated from three-year highs on Friday, indicating a mild easing in risk aversion. The gauge, which yesterday climbed to new three-year highs, is being watched to ascertain the extent of demand for cash dollars and cash equivalents. A strengthening dollar, despite the U.S. Federal Reserve cutting rates to near zero, is an indication of risk aversion.

In order to augment dollar liquidity, the Fed yesterday expanded dollar swap lines with nine more central banks, including South Korea and Singapore in Asia. The U.S. central bank had previously made that arrangement with the Bank of Japan, the Bank of England, the European Central Bank, the Bank of Canada, and the Swiss National Bank.

DBS Group Research said that dollar hoarding would hurt asset classes across the board and unless the Fed resolves credit and funding issues, market participants "will remain jittery." Fitch Solutions said that the dollar rally reflected "a rapid flight to safe-haven" and continued financial market volatility.

Meanwhile, U.S. Senate Republicans introduced a bill to support an American economy heading toward a possible contraction. The bill provides for direct payments to Americans depending on their income threshold, bridge loans to small businesses, and assistance to sectors affected by the pandemic.

South Korean companies led the rebound on the A300 on Friday after the country's benchmark equity index dropped to more than 10-year lows yesterday. Samsung Electronics climbed 5.7%, Lotte Chemical surged 26.1%, and LG Display added 15.7%.

Hong Kong property developer CK Asset Holdings soared 13.5%. On Thursday, it reported a 27.4% decline in last year's net profit, but said revenues jumped 49.4% from a year earlier. CK Hutchison Holdings rose 8.9% after the ports-to-energy conglomerate posted a 2.1% increase in 2019 net profit even as revenue slipped 3%.

Cathay Pacific Airways declined 1.1%. Its unit HK Express on Friday said it would suspend all flights from Mar. 23 to April 30 due to the coronavirus outbreak.

China Resources Beer advanced 4.6% after saying on Friday that its net profit grew 34.3% last year.

--Nimesh Vora

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