Asia share markets face volatile trading week

Asia share markets face volatile trading week

HONG KONG (Reuter): Asian shares face a volatile trading week, with Hong Kong poised for further gains, some smaller markets poised for technical recovery but the rest of the region on tenterhooks about recent currency turmoil.

On Friday, the Philippine Central Bank halted a defense of the peso's peg to the U.S. dollar while Indonesia further widened the trading band for the rupiah.

Speculators and hedge funds remain active in the region.

Attention has now focussed on the Malaysian ringgit as a wave of speculation that started with Thailand's July 2 float and effective devaluation of the baht continued to roll throughout Asia.

Although stock markets in Bangkok and Manila welcomed the increased currency flexibility, the regional mood remains uncertain while investors wait to see the effects of the new currency regimes filter through a troubled economic landscape.

Sentiment remained weak among foreign investors, and regional traders reported that net outflows continued unabated last week.

Little improvement is forecast next week, although Hong Kong is expected to continue roaring ahead on post-handover optimism.

The territory returned to Chinese control on July 1.

In Tokyo, the stock market's key index should be trapped in a narrow range this week, caught between two forces -- buying of financially healthy blue-chip issues, especially high techs, and the sell-off of shares in firms with financial problems, brokers said.

On Friday, the 225-share Nikkei average finished at 19,875.49, down 92.51 points from the close a week earlier.

Market strategists expect the Nikkei 225 index to trade narrowly for the time being, as growing concerns about some Japanese companies, including contractors, retailers and brokers, weighed on the market.

In Hong Kong, share prices are expected to continue gaining on follow-through buying after Friday's fresh record closing high, brokers said.

Active futures buying lifted the Hang Seng index of blue chips stocks 386.06 points to close at 15,225.29 on Friday, but the longer term direction remained uncertain as the market waited for government measures to rein in property prices.

In Taipei, Taiwan share prices are expected to follow their recent bull runs and test new highs next week, but brokers said investors would become cautious as the index moved towards heavy 9,600-point resistance.

The central bank's repeated issuances of negotiable certificates of deposit, widely seen as an attempt to keep a lid on the loose liquidity that many experts said was fueling the stock rally, would add caution, brokers said.

In Bangkok, Thai stocks, which fell on profit-taking this week, are expected to advance next week on more buying by foreigners of large capitalized stocks, brokers said.

The Stock Exchange of Thailand (SET) index retreated 4.34 percent in the week to 628.55 points on Friday from a week ago. It fell 3.20 percent from Thursday.

In Kuala Lumpur, Malaysian shares were expected to remain volatile next week as southeast Asian currency turmoil and heavy shorting by foreign investors influenced the market, analysts said.

"It will still be very volatile, but I think it will not be as volatile as this week," said Ang Kok Heng, general manager at TA Asset Management.

The Composite Index of 100 large-capitalized stocks closed the week 55.71 points or 5.19 percent lower on the week.

In Singapore, share prices will be dogged this week by worries over the region's currencies woes with investors basically shrugging off the budget speech by Finance Minister Richard Hu, brokers said.

"I think it may be a variable week, but regional concern over currencies will be more dominant in the Singapore market than the budget," a broker said.

Speculation that the Malaysian ringgit will be targeted next by speculators who forced the Thai and Philippine central banks to devalue the baht and the peso, respectively, will dominate early trading this week.

One broker said some investors may decide that some issues may be ripe for bargain-hunting this week.

The 30-share Straits Times Industrials Index (STII) finished on Friday 1.2 points down on the day at 1,967.14 compared with the previous Friday's close of 1,985.94 points.

In Seoul, stocks are expected to fall next week with blue chips consolidating further, brokers said.

Brokers said investors were tending to shun blue chips as there were no signs of an economic turnaround in sight. They forecast the index would move in a boxed range between 750 and 770. The composite stock index closed at 767.27, down 11.97 points or 1.54 percent from last Saturday's 779.24.

In Sydney, Australian shares are seen entering a sorting out period with yield stocks, such as banks and insurers attracting attention, while high price-earnings (P/E) shares may come under pressure as investors look to signs of growth prospects.

The All Ordinaries index closed at 2,699.1, up 0.17 percent on Friday but down 1.25 percent on the week, with most of the week's fall due to a plunge in gold shares after bullion prices dropped.

In Wellington, the New Zealand share market was in fine shape to climb higher after taking a breather last week following its rise to a record high the previous week.

However, late on Friday, Reserve Bank Governor Don Brash said monetary conditions were too loose and any upward rise in interest rates could dampen the positive sentiment.

The barometer top 40 index closed 10 points lower for the week at 2517.