Asian stock markets seen unstable

Asian stock markets seen unstable

SINGAPORE (Reuter): Asian stock markets are expected to remain volatile in the week ahead in the face of continued uncertainty on Wall Street and in Asian currency markets, traders and analysts said.

Regional bourses were seen as unlikely to gain ground in the absence of any clear signals from the U.S.'s Dow Jones index, which suffered a steep 177-point drop on Friday before bouncing back to close just 6.04 points down at 7887.91.

There were also few signs that the Asian currency volatility would abate anytime soon as the Thai baht, Indonesian rupiah, Malaysian ringgit and Singapore dollar all fell on Friday.

Asian currencies have been under pressure since speculation forced the de facto devaluation of the baht on July 2, triggering a domino effect in the Philippines and Indonesia and hurting other regional currencies.

Tokyo stocks are set to lose more ground in the coming week as pessimism over Japan's economy is expected to spur investors to cash in their shares well before closing their books for the fiscal half-year to Sept. 30.

On Friday, the benchmark Nikkei 225 average closed at 18,650.17, down 675.86 points from the previous week's close.

"Since it is difficult to conjure up a bright outlook for the market, investors are being driven to lock in profits as early as possible," said Tadahiro Kamogawa, senior analyst at Yamaichi Securities Co Ltd.

Brokers said the benchmark Nikkei 225 index could retreat further towards 18,500 or 18,000 next week, after Friday's easy slide through 18,801.68, a low reached on Aug. 13 that was considered a key support level.

The market is also likely to keep an eye on Wall Street.

Hong Kong stocks are set for another volatile week with concerns about higher interest rates and regional currency and stock market weakness likely to keep investors on edge.

The blue chip Hang Seng Index lost 667.13 points, or 4.14 percent, during the week to close at 15,429.75 points on Friday.

Analysts said the index may rebound to about 16,000 points if property developers show interest at Wednesday's government land auction, the first since Hong Kong returned to Chinese rule on July 1.

"I think it is going to stay quite volatile," said Richard Verin, head of equities trading at Credit Suisse First Boston.

Philippine shares are likely to remain feeble in the week ahead amid the turmoil in Asian currencies, brokers said.

"Everything is still tied to the currency," Edgar Bancod, senior investment analyst at Paribas Asia Equity, said.

The release in the coming week of first-half GNP and GDP figures, expected to be slightly weaker, will further dampen market sentiment. The composite index fell 20.20 points week-on- week to close at 2,428.73 on Friday.

Thai stocks ended a bruising week 63.66 points, or 10.2 percent, lower as the country continued to suffer from the regional currency turmoil and the depletion of its own foreign reserves.

Brokers said they could not see any quick recovery signs after the baht took another heavy beating on Friday, tumbling about 4.7 percent, touching a record low of 33.30 to the dollar before recovering a bit.

The SET Index posted its seventh consecutive daily loss on Friday to finish the week at its lowest point since end-June. It closed at 559.59, down from 623.25 a week earlier.

Kuala Lumpur shares are expected to wait for direction from Tuesday's release of earnings by bellwether stock Malayan Banking Bhd, which comprises eight percent of the market's value.

On Friday, the Composite Index of 100 key stocks closed down 4.24 points or 0.47 percent to 905.00, a loss of 5.18 points for the last week.

"I think until Maybank results are out, it will be a quiet market," said Phua Lee Kerk, head of research at Jupiter Securities.

Dealers said the Composite Index is seen supported at 880, with topside at 920 to 950.

Taiwan's stock market is expected to consolidate in the coming week amid political uncertainties surrounding next week's ruling party congress and cabinet reshuffle, brokers said.

On Saturday, the index ended down 55.13 points or 0.55 percent at 9,965.42, still higher than last Saturday's 9,706.57. A 9.980-10,100 range was seen for next week.

South Korean stocks are expected to rise steadily in the week ahead as the government is scheduled to announce measures to ease strains in the financial markets, brokers said.

Expectations that the foreign shareholding limit would be expanded soon would help buoy sentiment, they said.

The composite stock index ended at 742.58 on Saturday, down 5.83 points or 0.78 percent from 748.41 last Saturday.

Singapore shares will be vulnerable to developments on Wall Street and in regional currencies, dealers said.

"The Singapore market lacks positive news and should take its cue from Wall Street for now," said a dealer with a European institution.

On Friday, the Straits Times Industrials Index ended down 1.13 points at 1,945.44 compared to 1,953.80 the previous week. Key support for the index was pegged at 1,870, dealers said.

Australian shares are expected to stay volatile near-term in the face of the choppy behavior in U.S. markets, with the earnings reporting season remaining the major local influence.

The All Ordinaries index closed at 2,620.3, down 1.1 percent on the day and down 1.7 percent on the week.

New Zealand market would post further losses despite an underlying willingness to firm if the Dow continues to fall and rates keep rising

The New Zealand stock market shed 19 points on Friday, falling to 2,497.77 in response to the Dow's 127-point Thursday drop.