Asian Stocks Rise on Hopes for Treasury Plan

Stock markets in Asia rallied Monday as hopes for the beleaguered American financial system overcame concerns about the still-dire outlook for the global economy.

The gains — more than 3 percent in Japan, Taiwan and India, and more than 2 percent in South Korea, Singapore and Australia and 4.3 percent in Hong Kong — were the latest in the past two weeks as investors around the world took heart from plans by the Obama administration to stabilize the American banking system and from news from leading financial institutions like Citigroup that the year had begun well.

On Monday, the Treasury secretary, Timothy F. Geithner, will announce the details of the administration’s long-awaited plan to purchase troubled assets and remove them from the balance sheets of banks, spurring banks to lend more money to consumers and companies.

Hopes that this plan would begin to resolve the troubles at big financial institutions and set the stage for a gradual recovery in the real economy helped markets across Asia accelerate Monday.

The benchmark Nikkei 225 index in Japan, where markets had been closed for a national holiday on Friday, rose 3.4 percent to a seven-week high.

Banks were among the main beneficiaries, with the top Japanese lender, Mitsubishi UFJ Financial Group, jumping 4.7 percent, Sumitomo Mitsui Financial Group 7.3 percent and Mizuho Financial 5.3 percent.

Mitsubishi UFJ announced it planned to close 50 branches and cut 1,000 jobs to slim down its operations as Japan’s recession and the sharp fall in the stock market eroded its earnings.

Still, analysts remained divided as to whether the rallies seen around the world this month represented a sustained recovery or not.

Many caution that the economic outlook — and thus the outlook for a recovery in corporate earnings — remains dim. Exports, the mainstay for many Asian economies, have slumped, while domestic spending in many parts of the region remains anemic.

A Japanese government survey released Monday showed big Japanese manufacturers were much more pessimistic about business conditions in the first three months of 2009 than they were in the previous quarter. The tankan, a closely watched quarterly survey by the Bank of Japan, which will be released on April 1, also is expected to make for grim reading.

“Is the new bull market starting?” asked analysts at Citigroup in Hong Kong in a research note on about Asia, excluding Japan, on Monday. “We remain skeptical — no one knows if this is a bear or a new bull market.”

Others have begun to turn cautiously optimistic.

Garry Evans, Asia strategist at HSBC in Hong Kong, in a note last week said that “history shows that bear markets end when monetary policy is eased aggressively and the banking system is sorted. The former has now happened; the latter may soon. There seem more upside than downside for stocks.”

“We understand the taboo in the U.S. on nationalizing banks, but we see the chances of a comprehensive bailout plan as quite high now,” Mr. Evans said.