Asia Has Mixed Session

Asian markets ended mixed Friday, as investors mulled which pockets of the region would benefit from this week's rate cuts and suffer from the widening havoc brought by snowstorms in China.

The Hang Seng jumped 668 points, or 2.9%, to 24,124 as investors took Wall Street's overnight lead as an opportunity to buy the previously heavy-hit telcos and financials. The Nikkei finished down 95 points, or 0.7%, at 13,497, and in China, the Shanghai Composite Index lost 63 points, or 1.4%, to 4320.

"The problem is, the [Federal Reserve] has made credit cheaper, but at the same time we know that problems related to subprime are not over yet," says Serdar Kucukakin, an emerging Asia economist for ABN Amro in Holland. "Asian countries are OK economically, but they will get hit hard if there's a full-blown U.S. recession."

In Hong Kong, China Telecom(CHA) leaped 6.4% to HK$5.82, and China Netcom(CN) rose 6.1% to HK$25.25. China Unicom(CHU) added 5.7% to HK$19, while market leader China Mobile(CHL) rallied 2.9% to HK$117.60.

Financial stocks also got an uplift from this week's easing of the money supply in the U.S., although banks lowered lending rates by just 25 basis points. Hong Kong banks usually follow the lead of U.S. monetary policy, but they said they could not afford to cut as aggressively.

HSBC Holdings(HBC) rose 2.6% to HK$118.20, and China Life Insurance(LFC), which has been battered after lower-than-expected earnings this week, climbed 5.4% to HK$29.50.

Among tech shares, Alibaba.com(ALBCF) fell 2.9% to HK$17.92, as investors are still shy about buying Chinese dot-coms, which they think may fall the most in the event of a Chinese slowdown. Baidu.com(BIDU) gained 0.2% to 181.88 euros in Frankfurt.

Aluminum Corp. of China(ACH) said it had teamed up with Alcoa(AA) to buy a 12% stake in U.K.-listed Rio Tinto(RTP), for an estimated $14 billion. The companies announced they would not seek to increase their stake for Rio Tinto, for whom BHP BIlliton(BHP) has made a hostile bid.

Chinese commodity stocks stalled, as investors assessed damage caused to China's manufacturing-heavy economy by the snowstorms. Shares in Aluminum Corp., also known as Chalco, dipped 2.5% on the news to 29.40 yuan in local trading. Sinopec Shanghai Petrochemical(SHI) tumbled 4.2% to 12.40 yuan, and PetroChina(PTR) slipped 3.4% to 24.42 yuan.

PetroChina shares listed in Hong Kong, however, advanced 6.9% to HK$11.46, as traders focused on news that the company is planning to enhance gas stations to offer nonoil services like fast food in the currently scaled-down retail outlets.

Volumes on the Hang Seng were up slightly. Turnover totaled HK$119.4 billion, or $15.3 billion. Many investors are starting to stay away from trading ahead of Chinese New Year, which begins in a few days. Chinese mainland exchanges will close from Wednesday next week, while Hong Kong's will be shut for the last two days of the week.

In Japan, selling was led by Sony(SNE), which plunged 8.2% to 4790 yen after announcing an earnings disappointment. The company also decreased its fiscal year sales targets for the PlayStation 3, to 9.5 million units from 11 million units previously.

Chinese New Year is traditionally a period of volatility in Asia. In 2007, when exchanges reopened after the New Year, the Shanghai Composite index plunged 9% in one day, reverberating stateside where the Dow Jones Industrial Average tumbled 416 points as a result.

"Analysts in Asia are not prepared for the global downturn now underway," writes Macquarie's Asia analyst Tim Rocks in Hong Kong, in a research note issued this week. "Insufficient consideration has been given to rising bad debt."