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Share prices from Shanghai to Singapore soared on hopes that the Year of the Earth Rat, which starts on Thursday, would bring plenty of welcome surprises.
For investors hungry for any piece of good news after a recent spate of bad news from the United States, the day could not have started on a more upbeat note.
Software giant Microsoft's bid for Yahoo sparked a strong rally in Hong Kong-listed Alibaba.com and Tokyo-listed Yahoo Japan, both partly owned by Yahoo. Investors were also excited at the speed at which Aluminum Corp of China snapped up a US$14 billion (S$19.8 billion) stake in Rio Tinto.
For many traders, the proximity of the two deals to the start of the Year of the Rat suggested that the year would be a busy one for mergers and acquisitions.
'The prices of many stocks have fallen so much that they are ripe for the picking. This is a hongbao rally in the making,' said a dealer in Singapore.
Even the less-rosy-than-expected January jobs data in the United States last Friday was taken as a sign by investors that the US central bank would be compelled to cut interest rates further.
China's two domestic bourses were Asia's top performers yesterday, with the Shanghai Composite Index soaring 8.1 per cent and the Shenzhen Composite Index jumping 7.9 per cent.
The upsurge was prompted by a slew of positive reports downplaying the impact of the severe snowstorms now gripping much of China and moves to approve new stock funds and postpone giant fund-raising exercises such as China Railway Construction's US$4 billion initial public offering.
Hong Kong's Hang Seng Index jumped 3.8 per cent, while South Korea's Kospi Index was up 3.4 per cent.
In Singapore, the benchmark Straits Times Index climbed as much as 94 points in afternoon trades before closing 69.28 points, or 2.3 per cent, higher at 3,077.08.
The biggest gainers were financial stocks. United Overseas Bank rose 58 cents to $18.50. DBS Group Holdings gained 28 cents to $17.98, while Singapore Exchange advanced 52 cents to $10.22.
Singapore Airlines rose 62 cents to $16.26, with UBS raising its target to $23.50 after noting that the airline's advance bookings stayed strong for the current quarter.
Property developers were also very much in demand, with City Developments gaining 50 cents to $12 and CapitaLand rising 19 cents to $5.99.
The broader market also saw a sharp rally, as traders celebrated the first day of spring on the Lunar calendar - with 1.51 billion shares worth $2.14 billion traded.
The FTSE-ST Mid Cap Index rose 2.4 per cent to 789.91. Big gainers included China plays, such as China Hongxing Sports, which rose 4.5 cents to 65.5 cents.
Gains in stocks like China XLX Fertiliser, up 2.5 cents to 84.5 cents, lifted the FTSE-ST Small Cap Index by 2.4 per cent to 680.35.
Looking ahead, however, Societe Generale Cross Asset Research advises investors to be alert and not rely on Lady Luck. It expects changes ahead, as growth in the global economy slows to 3.7 per cent from 5.3 per cent last year.
'The prices of many stocks have fallen so much that they are now ripe for the picking,' says a dealer.
