Asian markets bid fond farewell to profitable 1999

Asian markets bid fond farewell to profitable 1999

HONG KONG (Reuters): Asian asset markets came to a quiet close on Thursday ahead of a widespread New Year break with traders and investors sitting on comfortable gains for 1999.

Stock and bond markets in Japan, South Korea, Hong Kong, Indonesia, the Philippines, Thailand, Taiwan and Singapore will be closed on December 31 to give banks and brokerages enough time to prepare for the millennium change.

In the currency market, banks will be operating in some of the regionals on New Year's eve, but turnover is expected to be minimal.

Whether stocks, bonds or currencies, Asian asset prices turned in some extraordinary returns over the year.

In violence-wracked Indonesia, with its untried new government, the stock market index closed the year up some 70 percent from where it stood at the end of 1998.

The local currency, the rupiah, gained a respectable 10 percent in value against the dollar during the year but more importantly held mainly steady throughout a tumultuous 12 months.

Neighboring Singapore shook off any contagion concerns investors had for the island republic when a huge surge of demand for high technology companies helped boost the local Straits Times index some 78 percent in 1999.

Again the stock gains came during a year when the local currency was largely steady against the U.S. dollar.

Hong Kong, Asia's biggest share market outside Japan, saw its own high tech investment frenzy push the Hang Seng index to an all time record and gains of over 68 percent for the year.

Thanks to the pegged exchange rate, which stayed in place in 1999 despite intense speculation over its possible demise, these gains flowed through directly to U.S. dollar investors.

Among major Asian markets this year it comes as no surprise to learn that South Korea was the place to invest.

South Korean stocks ended trading for 1999 on Tuesday with the main index, the KOSPI, trading on its highs for the year.

The composite index was up almost 83 percent from its 1998 close of 562.46, its recovery a reflection of the South Korean economy's battle back from the effects of the 1997 Asian financial crisis.

The first decade of the new millennium could bring the realignment of regional powers and the first stages of a new Asian common market, according to one top analyst.

Andy Xie, chief economist at Morgan Stanley Dean Witter said the region's stability and prosperity has to come from a condominium between China and Japan to lead the region.

"This sounds farfetched now....However, history eventually moves forward on mutual interests rather than emotive prejudices. A true partnership between China and Japan will likely take place around 2010," Xie said.

Other regional realignments possible early next century are a true detente between China and Taiwan and the reunification of the two Koreas.

Lastly, Morgan Stanley's chief economist said he expects an Asian Common Market will likely be formed around 2010.

"The condominium between China and Japan has to take place before such an initiative can be substantive. This event will signal the emergence of a unified East Asia in the next century," Xie said.