Asia markets ride on Dow coat-tails

Asia markets ride on Dow coat-tails
Alicia Seow-Suyama

SINGAPORE, MARCH 17: Major stock markets across Asia were boosted on Friday by Wall Street's bumper rise overnight. The Dow Jones industrial average blasted up almost five per cent, while the Nasdaq jumped nearly three per cent after three straight sessions of sharp losses.

Hong Kong led the Asian pack, up around 2.5 per cent, as investors bought more blue chip counters, while Tokyo stocks rose for a second consecutive day to close 1.63 per cent higher at 19,566.32. Markets are now bearing in mind the US Federal Reserve's policy board meeting next Tuesday, expected to approve a quarter-point interest rate hike.

In Singapore, South Korea, Malaysia and Indonesia, many people took advantage of a holiday on Thursday to take a long weekend. Tokyo markets will be closed on Monday for Vernal Equinox Day.

TAIWAN TWITCHY: The debut of the state-sponsored T$ 500 billion stock stabilisation fund worked its magic on the last trading day before Saturday's presidential election. Aided by buying from the fund, Taipei stocks closed nearly one per cent higher at 8,763.27, but brokers said fears still abounded after Chinese Premier Zhu Rongji's blunt warnings on Wednesday. Zhu cautioned voters they would not get a second chance if they elected separatist Chen Shui-bian.

China conducted menacing war games around Taiwan in the run-up to the island's first presidential elections in 1996, but has confined itself to angry threats this time. Research house IDEAglobal.com thinks the index will surge quickly back towards the 10,000 level if Lien Chan, the standard-bearer of the ruling Nationalist Party, wins.

Maintaining the status quo would refocus investors' attention on the country's fundamental economic strengths. Stocks could even continue their uptrend to reach 11,500 by year end.

A victory for independent James Soong could see the market retake 9,300 immediately. While the research firm is less bullish on Soong -- a nationalist power broker who left his party -- than on Lien in terms of short-run market impact, it is strongly positive over the long-term due to Soong's soft stance on China.

Worrying investors, on the other hand, is opposition candidate Chen Shui-bian's pro-independence rhetoric, which has riled China. The index could dive to 7,500, and even test 7,000, if Chenwon, IDEAglobal.com said.

South Korean monetary authorities intervened verbally three times on Friday and state banks were also selling won, forcing it into a tight range.

The local unit opened at a low of 1,118.5 and touched a high of 1,117.2, before closing marginally lower after long-position holders were thwarted from selling dollars. The Finance Ministry has repeatedly made similar comments in a bid to slow, if not reverse, the won's rise against the dollar.

The local currency has gained about 1.8 per cent in value this year. Traders said monetary authorities were wary of the won breaking through the 1,117 level backed by dollar inflows from foreign investment in local stocks.

Most Asian bourses were worse off on the week with the exceptions of Manila and Bangkok. In the Philippines, select buying of blue chips and news that the securities watchdog had settled its dispute with the stock exchange helped the index rise one and a half per cent.

Taipei led the losers, falling more than seven per cent on pre-election jitters. And Hong Kong and Seoul were next in line, bogged down by the Nasdaq's pounding this week.

Down in South- East Asia, Jakarta slipped slightly and Singapore and Kuala Lumpur brought up the rear, giving up about 1.8 per cent each.