Subprime woes have eased but not disappeared: Daiwa Inst

Asian indices were mixed yesterday, with financials such as Mitsubishi UFJ Financial Group and Mizuho Financial Group leading losses in Japan on continuing global credit concerns, while South Korean shares rose on news that HSBC Holdings PLC is in talks to buy Korea Exchange Bank.

Hong Kong's Hang Seng gained 1.16 per cent or 251.84 points at 21,981.19.Singapore's Straits Times rose 0.86 per cent or 27.90 points at 3,256.56.South Korea's Seoul Composite advanced 1.04 per cent or 18.11 points at 1,754.29.However, Japan's Nikkei declined 0.18 per cent or 29.25 points at 15,872.09.Taiwan's Taiwan Weighted was down 0.50 per cent or 42.01 points at 8,437.07.

Asian markets are trading mixed.Hirokazu Yuihama, Asian Regional Strategist, Daiwa Institute Of Research, said, the problems in the US sub-prime market seem to be easing but haven't disappeared. The stability seen in the markets today is because of yesterday's US market stabilization, which was a result of lot of liquidity injection by Central Banks.

He further says, "For the Japan market, its yen appreciation which is hurting stocks, especially the exporters".

The interest rate differentials between US, other developed markets or developing markets and Japan is wide. So the yen carry trade will rebound after this current temporary unwinding because psychologically global investors are still worried about subprime issues emerging out of the US, he added.