Asian stocks outlook mixed and uncertain

Asian stocks outlook mixed and uncertain

HONG KONG (Reuter): Currency fluctuations, interest-rate uncertainty and an array of domestic concerns present a mixed outlook for Asian stocks next week.

The prospect of higher U.S. interest rates following testimony by U.S. Federal Reserve chairman Alan Greenspan last week could continue to dampen sentiment in Hong Kong and Singapore, but Tokyo expected to avoid any major sell-off thanks to recent strong gains by the Japanese yen.

Malaysian stocks were seen as the coming week's best bet, with reports of a move back into first-liners after the recent red-hot performance of some of the market's small stocks. Singapore traders expected to lose some buyers to Malaysia due to their own market's lackluster tone.

Little change was expected in the smaller markets of Jakarta, Manila, and Bangkok, all of which were trading on domestic factors.

In Tokyo, stocks will be looking for direction next week, but should avoid sharp plunges as the end of the fiscal year approaches, traders said.

"Financial institutions are going to sell some of their stock holdings, especially those of expensive, high-technology firms, to make up for shortfalls ahead of the book-closing," said Akishige Ishikura, analyst at Dai-ichi Securities.

"Blue-chip rallies from now on are likely to be sporadic as shareholders will sell whenever the prices rise," he added.

Blue-chip buying slowed on Friday when the yen powered to the 119 level against the U.S. dollar for the first time since Jan. 28.

In addition to currency uncertainty, Tokyo stocks will confront position-squaring this week ahead of the settlement of the March futures and options expiry on March 14.

On Friday, the 225-share Nikkei average ended the week down 464.56 points or 2.44 percent at 18,557.00.

Hong Kong: Lingering uncertainty about interest rates will pressure Hong Kong stocks in the coming week, analysts said.

With February U.S. employment data due on Friday, analysts said investors were likely to remain cautious.

"I think the payrolls report could prompt a further selloff in Hong Kong," said Alan Hutcheson, director of research at Deutsche Morgan Grenfell.

The Hang Seng Index ended last week on a shaky note, tumbling 147.88 points, or 1.09 percent, to 13,398.72 on Friday after the U.S. Fed chairman hinted last week the central bank may need to raise rates in coming months.

For the week, the index fell 46.13 points, or 0.34 percent.

Kuala Lumpur, Malaysian stocks are expected to gain ground next week driven by an influx of funds, a friendly economic backdrop and positive corporate results, brokers said.

Investors are also gradually moving into bigger-capitalized stocks from smaller ones.

"We should see a gradual swell moving into the Composite Index," said one broker. "And then, we should start seeing foreign investors (coming in)."

For the week, the benchmark Composite Index closed 7.81 points higher or 0.62 percent at 1,270.67 on Friday.

Taipei, volatile trade is forecast on the Taipei exchange after the index soared to a six-year high of 7,983.71 on Saturday, up 243.77 points or 3.14 percent on the week.

Financial stocks led the rally, which prompted cautionary remarks from a deputy central bank governor on Saturday.

The Taipei index's Saturday close was its highest since May 16, 1990.

Bangkok, the Thai stock market is likely to see some selling pressure especially in finance stocks following news that the country's largest finance company, Finance One, and Thai Danu Bank plan to merge, analysts said.

Local newspapers and finance ministry officials said on Saturday the two agreed to merge, which is likely to fuel concerns about the soundness of Finance One and other finance companies. Neither firm could be reached for comment.

"The merger is a confirmation that Finance One may have some financial problems," said Kasem Prunratanamala, a banking analyst at HSBC James Capel Asia. Finance One has denied rumors this week that it faced a run on deposits from major clients.

"Investors will now begin to question the stability and health of other finance firms after the news," he said.

The SET index dropped 2.69 percent in the week to 727.56 points on Friday from last Thursday. The market was closed on Friday for a holiday but gained 0.21 percent from Thursday.

In Manila, Philippine shares are likely to remain wedged in a tight range next week on a lack of corporate news.

Brokers said speculative issues, such as mining and oil shares, could attract attention from investors seeking short-term profits but blue chips will come under pressure from foreign funds positioning themselves for the Equitable initial public offering.

Equitable Banking Corp is offering 85.412 million shares on March 5 at 113.30 pesos each or 19-times forecast 1997 earnings, with a planned listing date of April 3. The composite index closed at 3,315.28 on Friday, 13.3 points or 0.40 percent higher for the week. Near-term support is pegged at 3,300.

In Seoul, shares are expected to remain within last week's levels with investors showing only selective interest in individual stocks, brokers said.

"The market is expected to trade sideways for the time being, without much of a change in the overall trend, but interest will focus on individual shares," said a Dongsuh Securities broker.

On Friday, the stock index closed at 676.53, 10.19 points or 1.48 percent lower than the previous Friday's close of 686.72.

In Singapore, the Straits Times Industrials (STI) Index is expected to remain on hold next week as it awaits March corporate results before charting a clear course, dealers said.

Dealers said bearish domestic fundamentals are likely to dominate, with the market under pressure from expected poor results from property, marine and electronics firms.

The STI was seen trading narrowly within 2,150 and 2,300 next week, after testing support at 2,190 on broad institutional selling this week.

The STI index ended 5.07 points higher at 2,195.70 on Friday against 2,241.28 on February 21.

In the absence of trading opportunities, Malaysian second- and third-liners should provide better margins, dealers said.

In Sydney, Australian shares are seen consolidating around current levels following a one-percent fall last week as the market continues to digest the corporate earnings season.

The All Ordinaries index closed at 2,449.9, down 25.4 points from a week earlier with losses on Thursday and Friday wiping out gains made earlier in the week.

Rodney Green, chief investment officer at Perpetual Funds Management, said the market was still highly sensitive to moves in overseas markets and not insulated by the earnings season.

In Wellington, New Zealand shares ended firmer but off their highs on Friday after a week dominated by share price volatility in market leader Telecom and poorly-received first-half results from Fletcher Challenge.

The NZSE-40 capital index closed 0.96 percent weaker on Friday at 2,279.33.

Sean Vaughan at County Natwest said next Tuesday's Budget Policy Statement from the government would be watched for indications on where the center-right coalition would spend an extra NZ$5 million over three years, with particular implications for construction stocks such as Milburn and Fletcher Building.