Asia Rallies Ahead of Holiday

All of Asia's markets rallied to an upbeat close on Friday, ahead of next week's Christmas holiday celebrations, with Hong Kong winning back its steep losses for the week.

The Hang Seng leapt 609 points, or 2.26%, to 27,626, as traders showed renewed faith in financials and property stocks like Hang Seng Bank(HSNGY Quote - Cramer on HSNGY - Stock Picks) and Cheung Kong(CHEUY Quote - Cramer on CHEUY - Stock Picks) ahead of 2008. In China, the Shanghai Composite Index rose 58 points, or 1.15%, to 5101, and in Japan, the Nikkei jumped 225 points, or 1.5%, to 15,257, driven up by momentum in tech and exporters.

"Given the very strong performance this year there was progressively more and more caution in the last few weeks, and the recent selloff is still very manageable," says Tahnoon Pasha, head of Asian equities at MFC Global Investment Management in Hong Kong. "It does set a backdrop for positive returns in 2008."

Trading momentum was driven by reported rumors that Merrill Lynch(MER Quote - Cramer on MER - Stock Picks) may get as much as $5 billion in cash from Singaporean fund Temasek. The deal follows this week's news that Morgan Stanley(MS Quote - Cramer on MS - Stock Picks) will receive $5 billion, for a 9.9% stake bought by state-owned China Investment Corp., and other similar foreign cash infusions at the end of this year for Citigroup(C Quote - Cramer on C - Stock Picks) and UBS(UBS Quote - Cramer on UBS - Stock Picks).

Hong Kong financials climbed on the news, with HSBC Holdings(HBC Quote - Cramer on HBC - Stock Picks) up 0.8%, at HK$132.20, Hang Seng Bank rising 3.9%, to HK$158.60, and Bank of China(BACHF Quote - Cramer on BACHF - Stock Picks) finishing 0.3% higher, at HK$3.90.

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