Mumbai/Tokyo, Nov 5 : Asian shares opened at a three-week high and the dollar extended gains on Wednesday as Barack Obama became the next U.S. president, ending uncertainty about who will lead the world's largest economy in the midst of great financial peril.
Bombay Stock Exchange (BSE)'s Sensitive Index or Sensex turned negative after having been up nearly three per cent earlier in the day, as investors locked in some gains after the market had risen more than 40 per cent from a three-year low hit last week.
The Nikkei average gained 3.2 per cent buoyed by exporters such as Honda Motor Co. on a softer yen and after U.S. stocks rose in the biggest election day rally ever.
But Asian stocks pared gains with analysts saying a victory for Obama had been largely priced in after recent rises and concerns about the health of the global economy still paramount.
Sunil Shah, an Indian stock analyst said that for India, the fundamentals still remain unchanged and there is a liquidity problem which needs to be addressed.
"As far as India is concerned, we are grappling with the situation, the Foreign Institutional Investors (FII) money is going out of the country and before we ...once it stops, then we will see stability and sanity returning to the market as we have witnessed that its been a FII play rather than a fundamentalist play because Indian markets, currently also is available very cheap as far as valuations are concerned, ten year low, so I think, attractively poised, the situation hasn't changed post the elections of the US president in the US but we are still having this liquidity problem , it has to be seen, nothing has changed," said Shah.
The new Obama administration, which takes office in January, will face the world's worst financial crisis since the Great Depression, and a potentially steep slowdown in global growth that has pounded markets from Tokyo to Frankfurt to New York.
But some also urged caution despite unprecedented measures to rescue banks across the world, aggressive rate cuts by central banks, and the improvements in credit markets that have in the last week given global markets a respite from a thrashing.
Most of the Asian stocks extended gains after U.S. stocks on Tuesday enjoyed their biggest election day rally ever.