Contracts For Difference

A contract for difference (or CFD) is a contract between two parties, buyer and seller, stipulating that the seller will pay to the buyer the difference between the current value of an asset and its value at contract time. (If the difference is negative, then the buyer pays instead to the seller) For example, when applied to equities, such a contract is an equity derivative that allows investors to speculate on share price movements, without the need for ownership of the underlying shares.

CFDs are currently available in listed [i.e. mini-warrants and ASX CFDs listed on the Australian Securities Exchange] and/or over-the-counter markets in the United Kingdom, Germany, Switzerland, Italy, Singapore, South Africa, Australia, Canada, New Zealand, Sweden, France and Spain. Some other securities markets, such as Hong Kong, have plans to issue CFDs in the near future. CFDs are not permitted in the United States, due to restrictions by the U.S. Securities and Exchange Commission on OTC financial instruments.

CFDs are not suitable for ‘buy and forget’ trading or long-term positions. Each day you maintain the position it costs money (if you are long), so there is a time when CFDs become expensive. For short-term trading they have advantages, provided you get the markets right. But be prepared at some economic stage to cut the position.

Contracts for difference (CFDs) are instruments that offer exposure to the markets at a small percentage of the cost of owning the actual share. This allows the investor to buy or sell an instrument, which usually costs only 10 per cent of the price of the underlying share. It offers great leverage opportunities.

How is different from F&O?

Contracts for differences allow investors to take long or short positions, and unlike futures contracts have no fixed expiry date or contract size. Trades are conducted on a leveraged basis with margins typically ranging from 1% to 30% of the notional value for CFDs on leading equities.

CFDs are convenient for the stock market (if used under around 10 weeks, an estimated point where CFD financing charge exceeds financing charge for stocks) while futures are preferred by professionals for indexes and interest rates trading (but CFDs for indices are used too and futures for stocks also). In addition to avoiding stamp duty, increased flexibility and leverage are other advantages of CFDs over more conventional forms of margin trading (like stocks), although with futures there is usually enough leverage available (typically 20:1, but can be as high as 70:1). All forms of margin trading involve financing charges (with the exception of the Spot Foreign Exchange market), although in the case of futures contracts these are already embedded in the price of the instrument. On the one hand, futures are more transparent (for instance: a group of hedge funds linked to BAE Systems managed to get more than 15% of Alvis plc through CFDs without having to warn the British regulator, see more in the “virtual positions” section of this IFLR article on virtual positions through CFDS). On the other hand, CFD-related hedging is estimated to account for more than 25% of the volume on the London Stock Exchange.

Equities dips ahead of Fed announcement’s, May Day

Equity stocks ended with minimal losses on Wednesday as investors in India and across the globe trimmed positions before the US Fed’s announcement expected later this evening.

It looked that traders were seen squaring off positions ahead of the public holiday Thursday, market sources said, as there is a view that US central bank may leave key interest rates unchanged.

On the global front, Asia markets ended mixed and Europe was also trading mixed.

Sensex closed down 91.15 points or 0.52% at 17287.31, and the Nifty down 29.60 points or 0.57% at 5165.90.

About 1378 shares have advanced, 1488 shares declined, and 216 shares are unchanged.

The BSE Midcap Index ended at 7,138.74 down 0.1%.

The BSE Smallcap Index ended at 8,773.57 down 0.1%.

The BSE Bankex ended at 8,816.99 down 1.7%. Bank of India, Andhra Bank, Kotak Mahindra, Oriental Bank, Allahabad Bank moved downwards.

The BSE Capital Goods Index closed up 0.2% at 13,755.04. Praj Industries, AIA Engineering, Rel Ind Infra, Kirloskar Oil, Bharat Bijlee, Astra Microwave, Lakshmi Machine closed higher

The BSE Auto Index closed at 4,708.32 up 1%. TVS Motor, Mah and Mah, Bosch, Tata Motors, Ashok Leyland, Hind Motors, Maruti Suzuki, Punj Tractors closed higher.

The BSE Metal Index closed at 16,090.20 down 0.6%. Hind Zinc, Sterlite, NALCO, Shree Precoated, Mah Seamless, Jindal Steel, Jindal Saw, JindalStainless closed lower.

The BSE FMCG Index closed up 2% at 2,460.78. Colgate, ITC, Godrej Consumer, HUL, GlaxoSmith Con closed higher.

BSE Oil and Gas Index closed at 11,480.55 down 1.6%. GAIL, Reliance Natura, HPCL, RPL,ONGC, Reliance, ONGC ended in red.

BSE power index closed flat at 3,207.81. Torrent Power, NTPC, Reliance Energy, Tata Power, Power Grid Corp, ended lower.

The BSE IT Index was up 0.2% at 4,244.56. Wipro, I-Flex Solution, Patni Computer, Tech Mahindra, TCS, Infosys closed higher.

Elsewhere is Asia stock markets ended mostly lower after a volatile session. In Tokyo, the Nikkei 225 finished 0.3 per cent lower, in Hong Kong, the Hang Seng Index fell 0.6 per cent and in Singapore the Straits Times dropped 0.77 per cent.

Apart from India, stock markets in China, Hong Kong, Taiwan, Singapore, Thailand, Malaysia, Pakistan, Indonesia, Philippines and Vietnam are closed for a holiday on Thursday.

Later this evening, US Federal Reserve’s latest interest rate decision is due. It is widely expected that the Fed will lower the rate by 25 basis points, and this would be the last cut for some months to follow.

Direct Market Access Facility In India Gets More Aggressive

It will be too early to expect the acceptance of the direct market access (DMA) facility that enables big institutional clients to trade in stocks without a broker’s intervention. However, word on the street is that the ‘trickle’ is fast becoming a sustained flow with more and more institutions are opting for the DMA facility.

According to people familiar with the development, domestic heavyweights like Kotak Securities, Anand Rathi Securities and Reliance Securities have already received the first go-ahead from the stock exchanges. CLSA is said to be the first among foreign majors. Then there are some more players who are awaiting for approval.

“The list of pending applications is dominated by foreign entities,” said a source. UBS, Morgan Stanley, JP Morgan and DSP Merrill Lynch are the entities awaiting approval. Edelweiss Capital, India Infoline and Motilal Oswal Securities are the others who have submitted their request to the stock exchanges.

Unlike SLB (securities lending and borrowing), brokerages interested in offering DMA facility do not have to deposit any money with the stock exchanges. Stock exchanges, on their part, would assign a unique number to the terminal allotted to the broker that will enable them (exchanges) to keep a track of the trades undertaken.

Direct Market Access (DMA) refers to electronic facilities that allow buy side firms to more directly access liquidity for financial securities they may wish to buy or sell. Using DMA, the firms still use the infrastructure of sell side firms but take over more of the control over the way a transaction is executed. This would allow clients direct control of their trades without depending on the broker for trade execution. This reduces cost of transaction and the impact cost on larger deals. Impact cost is the movement of stock price on execution of large deals.

While DMA is new phenomenon in India, globally the facility has succeeded in garnering a substantial share of the daily turnover. Market players say that in the US, DMA accounts for around 25-30% of the daily stock market turnover. In most of the leading European markets too, around 15-20% of the volume is attributed to DMA.

Market players also feel that since DMA offers direct control over orders, it is expected to enhance the level of transparency apart from increasing liquidity and reducing impact costs of large orders. Also, the use of algorithm or programme trading, which is the backbone of DMA, will help players capitalise on the available arbitrage or hedging opportunities. Incidentally, some of the best hedge funds of the world including Renaissance Technologies, DE Shaw, Batterymarch and Barra are known to use ‘quant’ (programmed trading) methods extensively.

However, a section of the market is concerned about the infrastructure costs, which is expected to be substantial in size. “Players desirous of using quant methods require high end code writers (typically PhDs in maths or physics) apart from the necessary technology support.

How to set up?

The set-up would require a few millions of dollars,” says a head of institutional equities of a brokerage that has applied for DMA registration. Some also feel that the initial costs should not act as a dampener, for DMA would enable the client to maximise gains using complex algorithms. They feel that the recovery time can be reduced to a great extent.

Hunted Rau Haunted By The High Life

Just saw this article in a from the Australian.news.com.  Below is an article

IAN Rau is a hunted and haunted man. The Geelong-based company he helped found with partner Graeme Hoy – share, commodity and currency trader Chartwell Enterprises – lies in ruins with millions of dollars missing, its offices ransacked by angry investors and an administrator and the corporate regulator trying to unravel the mess.

No one has been able to find Rau. He’s been in hiding, not, he claims, because he has anything to hide but because of a series of death threats to him and his family. However, in an exclusive interview with The Australian at a secret location, a nervous, emotional and stressed Rau tells a tale of the last days of Chartwell and details examples of profligate spending.

“I feel ashamed, ashamed that people have lost their money, ashamed that I was ever involved with this company. It was something I, and my team, believed in, but we never really knew what was really going on,” he says, tears welling in his eyes.

The Australian Securities and Investments Commission and the administrator have yet to quiz Rau since the collapse and are still piecing together conflicting accounts of Chartwell and its related companies.

This is Rau’s version of the collapse of the investment company. According to investigators, Hoy has a very different perspective on Chartwell’s collapse.

Like Rau, Hoy, who could not be contacted, has gone into hiding, he says, because of physical threats.

Hoy told the Nine Network at the weekend he had done nothing illegal but added it was “quite possible” he would eventually face criminal charges.

Hoy has pointed the finger at Rau for the investment strategies that preceded Chartwell’s decline. Chartwell administrator Bruno Secatore has said Hoy – who did not respond to requests for comment yesterday – told him relations with Rau “soured” because “he was not happy with Ian Rau’s business strategy”.

Hoy and Rau first met in 2000 when both were doing courses in share trading. Rau describes Hoy as “outgoing, gregarious, charming, influential and a great teacher”.

Throughout most of the company’s eight-year history, Rau was proud to know Hoy and to be building a business with him. Now he wishes he’d never met him.

Chartwell, on the back of a soaring market in stocks, commodities and currencies, did well. While known as high-risk, its performance was spectacular, with investor returns as high as 30 per cent. Word got around the regional enclave of Geelong and money poured in. Some potential investors were even offered returns as high as 70 per cent.

Others close to the company have suspicions some so-called “investors” were really using Chartwell to launder dirty money for a 15 per cent fee.

Rau claims to have discovered the true nature of some of the company’s activities at the end as it floundered towards insolvency, although he acknowledges he was advised by a lawyer as early as 2006 to “get out and talk to the authorities”. But he didn’t.

Asked if he regretted not doing that, he said: “Oh absolutely, absolutely.”

Rau had no real financial background but he had learnt to trade and he was responsible for market research and managing the trading team. He claims Hoy ran the financial side of the business, raising capital and finding new investors.

Rau says he became aware early that the company had a strange way of doing business. He would drive down from his then home in Ballarat and work around the clock.

Hoy urged him to bring his wife, saying “take her to dinner, use the card, go on use the card, the company card, it’s all on the business”. When Rau moved to Geelong, Hoy took the same attitude to Rau’s new home – extensive renovations were all put on “the card”, as was the full-time nanny.

Rau claims he thought this was the way Hoy paid him for the effort and hours he was putting in to the trading operations. It would seem Rau’s knowledge and understanding of his responsibilities as a company director were poor or non-existent.

Rau claims he later discovered Hoy was spending investors’ money. He says he found taxi bills for $30,000 run up by Hoy’s ex-wife, and despite his objections this went on for years. Rau says Hoy used investor funds on thousands of dollars of “counselling services” for himself and members of his family. The Rolls-Royce that Hoy claimed was secured for a $10,000 deposit by his restaurant company, Black Swan, he says, turned out to have been secured with a $500,000 deposit from Chartwell funds.

No one really knows how much money has been lost – some claim it is as much as $70million. Hoy has claimed the money has all gone, lost in the sharemarket tumbles and his trading strategy.

Asked where the funds have gone, Rau says: “Well, quite rightly people can say there have been trading losses … I don’t know how much that accounts for, but it doesn’t account for all of it … I can guarantee that.”

Claims have been made and administrators have uncovered transactions that would suggest substantial sums of money were moved offshore on the eve of Chartwell’s collapse. Rau claimed he knew nothing of a web of companies with overseas parents.

As rumours spread and Chartwell staggered to its death, Rau and other staff began comparing notes, trying to establish how many clients the firm really had, who they were and how much money had been coming in and out of the company. Rau says all their questions to Hoy and company accountant now whistleblower Sasha Melnick received part-answers, obfuscation or as it was to turn out, straight-out lies.

“He was still blowing us off,” Rau says. “Hoy was like having a smoke bomb in front of you, you couldn’t see anything.”

Rau went back to his lawyer on April Fool’s Day this year. He resigned all his positions with Chartwell and provided information to officers of the Australian Securities and Investments Commission and the administrator of Hoy’s now-defunct restaurant company Black Swan.

Rau claims his action and advice hastened the end of Chartwell, saving a number of people who were, he claims, “about to sink a lot of money, millions into the company”.

But Rau’s nightmare was only beginning – through quivering lips, he says he was chased out of Geelong. He was a pariah.

One afternoon as he moved furniture out of his home with the help of his father-in-law, a man stood in front of his house and called him over and said: “Walk up the street, I’ve got someone who wants to see you.”

Rau will not identify the person, but they demanded financial details from within the company and when Rau declined to provide them, he was told: “If you don’t tell us, you won’t make it back to your house.”

It was to be the first of a series of death threats.

A stranger appeared on the doorstep of a friend demanding to know where Rau was; the man was armed with a pistol. Then Rau was told: “We’ll come after you and your family.”

Rau, whose wife is about to give birth to their fifth child, took himself and his family into hiding.

Rau says he has no ill-gotten gains from Chartwell. “Graeme was the one with the boats and the cars, he was a lonely man with a mania for spending.”

Rau intends to make himself available to ASIC and the administrator. “I will put my hand up and take my share of responsibility and I will co-operate with them fully, and I look forward to the whole truth about Chartwell coming out.”

But the truth will not save Rau: ignorance of the responsibilities of the Companies Code or the Crimes Act is not a defence.

Financials Keep Bourses In The Negative Territory

The markets ended in red with moderate losses on account of buying interest in index pivotals.  The most interesting part of the game is that FIIs, who have come in recently, have been the buyers. However, the sentiment of the market for pivotals remains unchanged in the negative territory.

Capital goods, power, IT and oil & gas stocks were witnessing selling pressure. However, consumer durable, realty, pharma stocks witnessing are buying interest. Broader markets showed relative strength and closed flat. In the global front, Asia closed mixed and Europe was trading firm.

Shashun, Orchid Chemicals, Bombay Dyeing, Sesa Goa, Bajaj Hindustan closed firm.

After weak results Siemens has been languishing lower, it was down over 9%.

Jaiprakash Asso, Reliance Energy, HDFC Bank, Sterlite Ind, Tata Comm Sun Pharma and Bharti Airtel were among the top gainers on the bourses.

Cipla, Tata Steel, Wipro, ABB and Cipla were top losers on the bourses.

Sensex closed down 110.02 points or 0.64% at 17015.96, and the Nifty down 22.05 points or 0.43% at 5089.65.

About 1396 shares have advanced, 1467 shares declined, and 216 shares are unchanged.

The BSE Midcap Index ended at 7,067.40 up 0.2%.

The BSE Smallcap Index ended at 8,709.82 down 0.2%.

The BSE Bankex ended at 8,816.84 down 0.6%. Bank of India, Andhra Bank, Kotak Mahindra, Oriental Bank, Allahabad Bank moved downwards.

The BSE Capital Goods Index closed down 1.2% at 13,755.04. Siemens L&T, Astra Microwave, BEML, Crompton Greave, Thermax, Greaves Cotton, Areva T&D closed lower.

The BSE Auto Index closed at 4,577.20 down 0.6%. Escorts, TVS Motor, Amtek Auto, Cummins, Punj Tractors, MRF closed lower.

The BSE Metal Index closed at 15,624.22 down 1%. Hind Zinc, Sterlite, NALCO, Shree Precoated, Mah Seamless, Jindal Steel, Jindal Saw, JindalStainless closed lower.

The BSE FMCG Index closed down 0.3% at 2,400.22. Colgate, ITC, Godrej Consumer, HUL, GlaxoSmith Con closed lower.

BSE Oil and Gas Index closed at 11,430.02 down 1%. GAIL, Reliance Natura, HPCL, RPL,ONGC, Reliance, ONGC ended in red.

BSE power index closed at 3,207.81 down 0.5%. Torrent Power, NTPC, Reliance Energy, Tata Power, Power Grid Corp, Crompton Greave ended in red.

The BSE IT Index was down 1% at 4,026.74. Wipro, I-Flex Solution, Patni Computer, Financial Tech, Mphasis, Tech Mahindra, TCS, Infosys closed lower.

Market Weekend Wrap Up: Markets Gains Important Levels This Week

Shrugging off concerns over rising inflation and a hike in the Cash Reserve Ratio, the Bombay Stock Exchange benchmark Sensex gained 4.0 per cent to recapture the psychologically important 17K peak in the week, largely driven by robust earnings by front line stocks.

In the week to April 26, the BSE barometer advanced by another 644.78 points or 3.91 per cent to end the week at 17,125.98 from its last weekend’s close of 16,481.20.

The broader 50-share S&P CNX Nifty of the National Stock Exchange also spurted by 153.30 points or 3.09 per cent to close the week at 5,111.70 from its last weekend’s close.

Investors looked optimistic over the prospect of capital inflows into Indian equity markets after key corporates came out with encouraging fourth quarter financial results and global markets showed signs of recovery, providing bourses a major trigger.

The market wide rollover of nearly 82 per cent to May series is also seen as a bullish factor by market men.

Global stocks are expected to move upwards as world’s largest economy showed signs of resilience after an encouraging US jobs and manufacturing data this week.

Analysts said the outlook for the market is good as some some front line companies such as Reliance Communications, Hindustan Unilever, Reliance Energy and ICICI Bank will unveil financial results next week.

The Reserve Bank of India’s annual monetary policy review on April 29 and the US Federal Reserve meeting at month-end also is expected to play a crucial role in determining the market direction, they added.

Analysts foresee a possibility of a rate hike at home, while they do not rule out a rate cut by the Federal Reserve.

EU gives Thumbs Up For TATA-JLR Deal

The European Commission gave its permission on Friday to Tata Motors’ takeover of Jaguar and Land Rover from US carmaker Ford.

Europe’s top antitrust watchdog gave its blessing to the deal after reviewing the deal for competition threats through a fast-track procedure reserved for transactions not expected to pose any problems.

Tata Motors said in March it was buying the two British luxury icons Jaguar and Land Rover from ailing US carmaker Ford for 2.3 billion dollars (1.5 billion euros), vaulting the Indian company into the premium global car market.

For India’s top carmaker the deal is part of plans to expand its reach beyond Asia.

For Ford selling the prestige brands is supposed to help it focus on turning around its North American operations after losing 15.3 billion dollars over the past two years.

Gold Price Nudges All-Time High: Global Crisis Continues

As the credit crisis of subprime issue further aggravates, the international financial markets reached into a further bleak period. The current financial turmoil period, has made gold a safe haven.

The US economy is in a downturn period with the dollar depreciating further, interest rates which have also declined further. Despite all relief measures the economic data has been weak.  The silver and palladium volatilities jumped to 70 percent in late March, and the S&P 500 index volatility rose to 29 percent. More than a quarter of a million people lost their jobs in the US during the first quarter. Retail sales in the US declined by 0.6 percent month-over-month in February, as households spent less money on items such as cars and eating out.

All the above have made gold the safest investment and this resulted in the prices of gold reaching a new record of $1011/0z (on the London PM fix) on March 17, 2008. Investors bought 72 tonnes of gold in exchange-traded funds in Q1 FY 08, taking total holdings to 943 tonnes ($28 billion) at the end of March. Gold price volatility rose to a quarterly peak of 28 percent on March 20; however, equities and other commodities volatile spiked even higher during the quarter. Gold – and commodities in general – continue to outperform bond and equity markets throughout the Q1 FY 08.

Asian Bond Markets Becoming Very Volatile

The most immediate and visible fallout from the global credit market turmoil has been an increase in volatility in emerging East Asian bond markets, says a new report issued by the Asian Development Bank (ADB).

Credit tightening in emerging East Asian economies has not been severe in the wake of the US subprime mortgage turmoil, the April issue of Asia Bond Monitor (ABM) says. But corporate bond yields have edged up as investors seek risk premiums, while some borrowers have delayed bond issues, relying on short-term bank finance rather than longer-term debt issuance.

At the initial stages of the recent credit tightening, emerging East Asian local currency bond markets benefited as investors chased attractive returns outside US markets. But as risk aversion in global markets spiked, foreign investors began retreating from Asian markets causing a rise in volatility in domestic capital markets.

The pace of government and corporate issuance has slowed but not to the same extent as a decline in global bond issuance. The region’s offshore bond issuance market has slowed markedly and securitization markets have largely dried up.

ABM says the outlook for emerging East Asian bond markets is of continued growth, but at a slower pace. It highlights that domestic credit, supported by ample local savings, continues to provide resources for investment even as portfolio equity and bond flows taper off.

“Governments in the region carried out key reforms in the secondary market in 2007. They need to continue to improve bond market liquidity and strengthen risk management,” says Jong-Wha Lee, Head of ADB’s Office of Regional Economic Integration (OREI).

ABM includes a survey to identify key determinants of bond market liquidity. The survey finds that amid growing risk aversion, illiquidity of the region’s local currency bond markets is a limiting factor in their development.

Increasing investor diversity, availability of hedging tools, consistent secondary market pricing and a more investor-friendly tax structure in corporate bond markets are measures that can help promote more liquid regional bond markets.

ABM says emerging East Asia’s local currency bonds outstanding expanded at an annual rate of 21% in the second half of 2007 from 10% in the first half of last year. Government bond markets grew 21%, largely driven by central bank sterilization and fiscal stimulus. Corporate bond markets grew by 20%.

Heightened inflation risks, the slowdown in global growth and fears of external shocks led to increased volatility in local currency yield curves in 2007. Despite the global market turbulence, the ABF Pan Asian Index gained 8% in 2007 in US dollar terms, partly lifted by stronger regional currencies. The index gained 13.6% in 2006.

ABM cites three main risks to regional bond market outlook: (i) a deep or protracted US economic contraction, (ii) continued global capital market volatility placing pressure on investors to cover rapidly shifting positions, and (iii) rising inflation in the region constraining policy options as growth slows.

It urges policymakers to focus on five key challenges to make local currency markets more vibrant. These are (i) boosting investor confidence by strengthening legal protection and corporate governance, (ii) reduce barriers to market entry and encourage investor diversity, (iii) development of derivative markets and increase liquidity, (iv) better data compilation, and (v) tighten regulatory oversight.

The April edition of ABM has a theme chapter on bond market developments and challenges in India. It says India’s government bond market has grown steadily in size, largely due to the need to finance its fiscal deficit and is comparable to many government bond markets in emerging East Asia. But domestic corporate bond market remains less developed, with private placements dominating.

Like many emerging economies, the investor base in India remains narrow in both government and corporate bond markets, with limited foreign participation. ABM urges regulatory supervision in local bond markets to be streamlined to create a more level playing field for investors.

ABM examines local currency bond developments in emerging East Asia defined as the Association of Southeast Asian Nations member countries, plus the People’s Republic of China, Hong Kong, China and the Republic of Korea.

Asian Stock Counters Mostly Up Despite Economic Concerns, Except Indian StockMarkets Range Bound

Asian stocks closed mostly up on Wednesday, shaking off rising inflation, a fresh record for the price of crude oil and concerns about the fallout from the global credit crunch.

The Chinese bourse led the risers, surging more than four percent as some investors bet it may have hit a nadir after tumbling around 46 percent from a peak last October. Hong Kong stocks rose nearly 1.5 percent.

Japan’s stock market managed a 0.23 percent gain even though official data showed the country’s trade surplus shrank 30.2 percent in March as a US-led world economic slowdown began to bite.

Investors were also waiting nervously for earnings reports due later this week from big Japanese firms, including Canon and Nintendo.

Australia rose 1.6 percent, with South Korea and Singapore also in the black. Shares in Seoul shrugged off the shock resignation Tuesday of Samsung chairman Lee Kun-Hee after 20 years in charge. Taiwan and India closed down.

Regional shares ended mostly higher despite figures showing rising inflation.

Singapore’s annual inflation hit 6.7 percent in March, the highest for nearly three decades, while Australia’s annual inflation reached 4.2 percent for the first quarter of 2008, well above its central bank’s target.

Some share buyers worry governments will take more steps to slow economic growth to curb prices, potentially dimming stock market prospects too.

Meanwhile, crude oil hit a fresh record Tuesday only a little shy of 120 dollars per barrel. Analysts have in part blamed soaring food and fuel costs for the rapid rise in consumer prices.

The US economy, a key buyer of Asian goods and services, is battling to recover from a house price downturn and default crisis among subprime, or riskier, mortgages.

The crisis has led to a global credit crunch with the US expected to drag world growth lower as it slips into a recession this year.

Such fears have cast a pall over Asian markets since late 2007, although some investors are hopeful that the worst leg of the crisis has passed.

TOKYO: Japanese share prices closed marginally higher as market sentiment remained firm despite overnight falls on Wall Street, dealers said.

But they said gains were capped by caution ahead of the annual corporate results season in Japan which is due to get into full swing on Thursday.

The benchmark Nikkei-225 index rose 31.34 points or 0.23 percent to 13,579.16. The broader Topix index of all first-section shares added 2.93 points or 0.22 percent to 1,314.39.

Gainers outpaced decliners 862 to 712, with 143 issues unchanged. Volume rose to 1.70 billion shares from 1.58 billion shares on Tuesday.

“Support was firm as some domestic investors (such as pension funds) have apparently opened fresh positions in addition to short covering,” said Soichiro Monji, chief strategist at Daiwa SB Investments.

“The market’s firm trend remains unchanged, and it won’t surprise me if the (Nikkei) recovers to the February high of more than 14,000 in the near term,” said Yoshinori Nagano, chief strategist at Daiwa Asset Management.

Idemitsu Kosan jumped 10.7 percent to 9,200 yen after the oil refiner said it expects operating profit for the fiscal year ended March of 56 billion yen (544 million dollars).

Nippon Oil rallied 7.4 percent to 770 yen. Trading house Mitsubishi Corp. rose 3.2 percent to 3,600 yen. Bank Mitsubishi UFJ Financial was down 1.6 percent at 1,006 yen.

HONG KONG: Hong Kong share prices closed up 1.4 percent, dealers said.

The Hang Seng index closed up 350.09 points at 25,289.24. Turnover was 105.3 billion Hong Kong dollars (13.5 billion US).

“The market extended its gains after a firm close in China, with China financials and oil counters leading the gains,” said Alex Tang at Core Pacific-Yamaichi Securities.

Investors also believe that the worst of the US credit crisis has passed, he said.

China Merchants Bank was up 4.03 percent at 30.95 after announcing that its first-quarter net profit rose 157 percent to 6.32 billion yuan (904 million US). HSBC was up 0.38 percent at 132.0 and China Mobile rose 2.27 percent at 134.9.

SYDNEY: Australian share prices closed up 1.6 percent, dealers said.

The S&P/ASX 200 index closed 88.3 points higher at 5,652.9, while the broader All Ordinaries added 83 points or 1.5 percent to close at 5,711.4.

Market volume was 1.4 billion shares worth 5.9 billion dollars (5.6 billion US).

Analysts said ANZ Bank’s interim result helped lift the market.

“It has been an exceptional performance given the weak lead-in from the US markets and it is fair to say the ANZ results got the ball rolling in the right direction,” said Joe Youssef at Macquarie Wealth Management.

ANZ rose 4.2 percent to 22.03 dollars. BHP Billiton added 3.6 percent to 45.10 on rises in base metal prices and on record output of iron ore, which increased 22 percent to 28.0 million tons in its financial third quarter.

BHP’s takeover target Rio Tinto advanced 3.4 percent to 147.19. Woodside Petroleum rose 2.8 percent to 60.21.

SHANGHAI: Chinese share prices surged to close 4.15 percent higher, dealers said.

The benchmark Shanghai Composite index, which covers A and B shares, closed up 130.54 points at 3,278.33 on turnover of 86.1 billion yuan (12.3 billion dollars).

“Today’s rebound is largely technical as confidence grew among some buyers that the market will recover after losing so much,” said Wang Mingzhi at GF Securities.

But the key index is still 46.5 percent below a peak hit last October.

China Merchants Bank jumped 4.21 percent to 32.42 yuan after it reported a 157-percent surge in first-quarter net profit.

PetroChina rose 3.19 percent to 16.52 helped by record high crude prices.

The Shanghai A-share index was up 4.14 percent to 3,439.85. The Shenzhen A-share index advanced 4.89 percent to 1,006.50.

The Shanghai B-share Index added 5.60 percent to 234.13. The Shenzhen B-share Index advanced 3.51 percent to 539.45.

TAIPEI: Taiwan share prices closed 0.32 percent lower, dealers said.

The weighted index closed down 28.76 points at 9,008.49. Turnover was 183.13 billion Taiwan dollars (6.04 billion US).

“Wall Street weakness cast a shadow over the bourse,” said Frank Lin at Fubon Securities Co..

“The market is anticipated to continue consolidating around 9,000 points on the index unless any surprising leads emerge to justify decisive moves,” Lin said.

Taiwan Semiconductor Manufacturing fell 2.60 Taiwan dollars to 64.70, Hon Hai gave up 7.00 at 181.00, while United Microelectronics Corp. rose 0.10 to 18.90.

AU Optronics was up 1.50 to 59.90 after its better-than-expected first quarter results.

Acer fell 1.50 to 63.50. The PC vendor reported a net profit of 2.95 billion dollars for the first quarter.

SEOUL: South Korean shares closed 0.7 percent higher, dealers said.

The index finished up 13.30 points at 1,800.79. Volume reached 331 million shares worth 6.4 trillion won (6.46 billion dollars).

“It is pretty soothing that Asian markets did not show a knee-jerk reaction to Wall Street’s decline, and this is further evidence that sentiment continues to stabilize,” said Park Seok-Hyun at Eugene Investment Securities.

Investors also digested Samsung chairman Lee Kun-Hee’s dramatic resignation on Tuesday.

Samsung Electronics plunged 3.26 percent to 653,000 won. POSCO surged 4.6 percent to 488,500 won. Samsung Fire Marine Insurance advanced 2.4 percent to 210,000 won.

Samsung Heavy was 3.7 percent higher at 34,950 won and Samsung Securities was 1.4 percent higher at 82,700 won.

SINGAPORE: Singapore shares closed up 0.2 percent, dealers said.

The Straits Times Index rose 6.61 points to close at 3,193.84. Volume was 1.99 billion dollars (1.47 billion US).

Goh Mou Lih at Westcomb Securities said that “people want to believe the credit crunch in the United States is over.”

DBS Group was up 1.0 percent at 19.90 dollars. Singapore Telecom fell 1.0 percent to 3.84. CapitaLand was up 0.3 percent at 6.93.

KUALA LUMPUR: Malaysian shares closed up 0.7 percent, dealers said.

The Kuala Lumpur Composite Index closed up 8.86 points at 1,288.16.

“It has been a positive performance today, confirming our view that the local bourse had bottomed out,” said Pong Teng Siew at MIMB Investment Bank.

Plantation stock IOI Corp. rose 1.3 percent to 7.60 ringgit. Maybank rose 0.6 percent at 8.25 ringgit. Tenaga advanced 0.8 percent to 6.75 ringgit.

BANGKOK: Thai share prices closed 1.45 percent lower, dealers said.

The Stock Exchange of Thailand (SET) composite index fell 12.36 points to 837.66, and the blue-chip SET 50 index lost 10.56 points to 602.72.

“The market technically fell today. Big cap shares like energy and banking stocks lost after their gains yesterday,” said Chai Chirasevenupraphand, market strategist at Capital Nomura Securities.

PTT lost 8.00 baht to 338.00. Bangkok Bank lost 2.00 to 136.00. Thai Airways fell 1.00 to 27.50.

JAKARTA: Indonesian shares closed 1.1 percent higher, dealers said.

The Jakarta composite index closed up 25.21 points at 2,314.30.

“The selective buying stance shows that investors are anticipating strong results,” said Paulus Thomas at Batavia Prosperindo.

Bumi Resources rallied 5.4 percent to 6,850 rupiah, miner Inco soared 10.2 percent to 7,050 rupiah but Telkom lost 1.1 percent to 8,750 rupiah.

MANILA: Philippine share prices closed 1.1 percent lower, dealers said.

The composite index finished down 30.94 points at 2,824.81. The broader all-share index dropped 13.75 points or 0.8 percent to 1,747.96.

“With oil prices at record highs, investors could not focus on individual stocks and corporate earnings,” said Rommel Macapagal of Westlink Global Equities.

Philippine Long Distance Telephone Co. shed 0.4 percent to 2,610 pesos. Ayala Corp. lost 2.3 percent to 322.50 pesos.

WELLINGTON: New Zealand share prices closed up 0.70 percent, dealers said.

The NZX-50 gross index rose 25.21 points to 3,608.47.

Grant Williamson, a partner at Hamilton, Hindin, Greene, said there was some bargain-hunting in blue-chip stocks and some previously sidelined investors were trading again.

Telecom rose seven cents to 3.86 dollars. Contact Energy rose 13 cents to 9.15 dollars. Fletcher Building rose three cents at 8.53.

MUMBAI: The markets ended with marginal losses amid a rangebound session after six consecutive sessions of positive close. Selling pressure was seen in banks, metal, capital goods and some power and oil stocks. However, realty and some technology stocks were still witnessing buying interest. The Nifty closed above 5000 mark for the third consecutive session. Market breadth was sightly in favour of the declines. Even the broader markets closed flat.

BHEL, ICICI Bank, Tata Steel, HDFC Bank and SAIL were major draggers while movers – Wipro, ACC, M&M, Unitech, Infosys and Cairn India.

Textile stocks were star performers, Arvind Mills was up over 12%, S Kumar Nationwide up 6%, Alok Industries up 8%.

Sugar stocks like Upper Ganges and Oudh Sugar rallied in today’s trade after their results.

Sensex closed down 85.83 points or 0.51% at 16698.04, and the Nifty down 26.50 points or 0.52% at 5022.80.

About 1486 shares have advanced, 1373 shares declined, and 219 shares are unchanged

The BSE Midcap Index ended at 6,699.10 up 1.4%.

The BSE Smallcap Index ended at 8,351.14 up 1.8%.

The BSE Bankex ended at 8,552.46 down 2%. HDFC Bank, ICICI Bank, Bank of India, Andhra Bank, Kotak Mahindra, Oriental Bank, Allahabad Bank moved downwards.

The BSE Capital Goods Index closed down 1% at 13,770.97. BHEL, L&T, Astra Microwave, BEML, Crompton Greave, Thermax, Greaves Cotton, Areva T&D closed lower.

The BSE Auto Index closed at 4,579.55 up 0.7%. Escorts, TVS Motor, Amtek Auto, Cummins, Punj Tractors, MRF closed higher.

The BSE Metal Index closed at 15,548.10 up 0.1%. Hind Zinc, Sterlite, NALCO, Shree Precoated, Mah Seamless, Jindal Steel, Jindal Saw, JindalStainless closed higher.

The BSE FMCG Index closed down 0.4% at 2,372.14. Colgate, ITC, Bata India, Godrej Consumer, HUL, GlaxoSmith Con closed lower.

BSE Oil and Gas Index closed at 11,382.82 down 0.8%. GAIL, Reliance Natura, HPCL, RPL,ONGC, Reliance, ONGC ended in red.

BSE power index closed at 3,299.90 down 0.5%. Torrent Power, NTPC, Reliance Energy, Tata Power, Power Grid Corp, Crompton Greave ended in red.

The BSE IT Index was up 1% at 3,982.85. Wipro, I-Flex Solution, Patni Computer, Financial Tech, Mphasis, Tech Mahindra, TCS, Infosys closed higher.

The NSE cash turnover was at Rs 14823.99 crore and the NSE F&O turnover was at Rs 52107.86 crore. The BSE cash turnover was Rs 6314.76 crore. Total market wide turnover was at Rs 73246.61 crore.