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Nasdaq boosts Asia shares, MSCI changes ignored

Asian share markets took changes to the key Morgan Stanley Capital International (MSCI) index in their stride on Monday, showing little reaction to the alterations and concentrating on Wall Street's latest jump.

A strong rise in U.S. technology stocks on Friday helped lift sentiment in Tokyo, where the Nikkei average rose 2.17 per cent to 15,015.70 -- its first close above 15,000 in more than a month.

Hong Kong's Hang Seng was 1.07 per cent higher at 15,351.68 in early afternoon trade.

The Tokyo share market's nonchalant reaction to the MSCI changes boosted the yen against the US dollar. At 0600 GMT, the dollar was trading at 110.72/82 yen, down from an intra-day high of 111.44.

While Tokyo was one of the biggest losers from MSCI's move to a free-float system, announced late on Sunday, analysts said the changes had been expected, and because they would not be implemented until late next year, the market had time to adjust.

Under the changes, which will start to take effect in November 2001, the MSCI will weigh stocks according to the number of shares freely available for trading rather than by market capitalisation.

Many of Asia's major stocks had been expected to fall on the news, but investors chose instead to focus on the US Nasdaq's surge and the possibility of falling US interest rates after weak jobs data.

The Nasdaq jumped 5.99 per cent to close at 2,917.43 on Friday, while the blue-chip Dow Jones industrial average gained 0.90 per cent to end at 10,712.91.

"It looks like the US market's going to head higher into the new year on expectations of a Fed rate cut," said Hiroyuki Nakai, investment research manager at Tokai Tokyo Securities.

"That should provide a chance for Tokyo stocks to recover as well."

European shares were also expected to take a positive view of the US market's outlook to open stronger later on Monday.

Asia's mood optimistic

Taiwan's TAIEX finished 0.60 per cent higher at 5,284.41 in early trade.

"Nasdaq's rebound helped the Taiwan index. And I am optimistic US stocks would gradually bottom out, a trend that would surely benefit Taiwan stocks," said Hsieh Chih-mao, portfolio manager of Ting Kong Securities proprietary trading.

Shares in India jumped 1.28 per cent to 4,209.40 at 0600 GMT and traders said sentiment was upbeat because of Nasdaq's rise.

"MSCI's announcement has not surprised the markets," a dealer with an Indian brokerage said.

Singapore's key Straits Times Index was 1.27 per cent higher at 1,985.15 by 0600 GMT, while keen interest in Korea's telecom stocks lifted the KOSPI 3.74 per cent to close at 554.80.

"The stabilisation of the US stock market and the award of third-generation mobile licences helped investors remain bullish throughout the day," said Yoo Seung-woo, a fund manager at Balance Asset Management Co.

In Australia, strength among mining stocks and anticipation of another firmer session on Wall Street pushed the S&P/ASX 200 0.76 per cent higher to 3,312.5 by the close.

The only negative in the region was the Malaysian share market, which was trading 0.14 per cent lower at 732.47 by 0600 GMT as investors there took a more cautious approach to the MSCI changes than many of their neighbours.

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