Asian stocks to fall further on S. Korean crisis
Asian stocks to fall further on S. Korean crisis
HONG KONG (Reuters): Asian markets are set for further declines this week, with investors keeping to the sidelines and fearful of developments in South Korea.
Reports that South Korea was demanding early release of financial assistance negotiated under a record International Monetary Fund package heightened nervousness.
Markets were also edge about rumors that Indonesian President Soeharto had fallen ill. Jitters prompted a huge slide in the rupiah and reinforced the sense of crisis in Jakarta, and throughout the entire region.
But South Korea remained the major focus. The world's 11th largest economy before its currency tumbled this year, South Korea has a formidable contagion potential that has erased all confidence in Asia's hopes for an early recovery.
Drastic declines in the won and last week's contagion through Asia's strongest economies in Hong Kong and Taiwan indicated the depth of concern in financial markets about South Korea's economic condition.
The won was poised for further declines as investors waited for the outcome of presidential elections on Dec 18.
Foreign investors were uniformly negative on the outlook for South Korean stocks. A relaxation of foreign investment limits on Dec. 15 to 50 percent from 25 percent was expected to attract virtually no foreign interest.
In Seoul, stocks are expected to widely fluctuate this week with a freefall of the local currency against the U.S. dollar, brokers said.
They also said the market would remain cautious ahead of presidential elections on Dec 18, when the public will choose one candidate who will inherit the economic crisis.
On Saturday, the composite index closed at 359.82, down 75.91 points or 17.42 percent from last Saturday's 435.73.
In Tokyo, the Tokyo market would focus on the release of a much debated package by the ruling Liberal Democratic Party (LDP) meant to help revive Japan's troubled economy.
"If the package disappoints the market, the Nikkei 225 could test its bottom levels early next year," said Hiroshi Arano, general manager of investment planning at Dai-Ichi Kangyo Asset Management Co Ltd.
On Friday, the 225-share Nikkei average extended its losing run to a third consecutive day, closing down 145.85 points or 0.91 percent at 15,904.30 -- its first close below the key 16,000 level since November 25.
In Hong Kong, stocks were expected to trade within a range on subdued volume this week but lingering regional currency woes and fear of further attacks on the Hong Kong dollar would add volatility to the market, analysts said.
"The market is directionless and I believe the Hang Seng Index will move between 10,000 and 11,000 points in the short term," said Patrick Chia at China Everbright Research.
In Taipei, Taiwan's stock market was expected to remain volatile as South Korea continued to struggle with worsening financial turmoil and Asia's ongoing crisis, brokers said.
Brokers nevertheless said there would be a chance the index could test the 8,800-point level if investors could shake off the worst of the Asian crisis jitters.
On Saturday, the index ended down 54.39 points or 0.65 percent to 8,343.88 from last Saturday's 8,243.76 close.
In Singapore, share prices were seen under pressure this week, hit by fallout from the region's woes and a bearish earnings view for companies in its key electronics sector.
"There will be a short round of selling across the market. Low volumes could give us some sharp price moves, but fund managers are going to have to hang on to what they've got to the end of the year now," said a dealer at a European institution.
The Straits Times Industrials Index closed down 31.30 at 1,632.98 on Friday. The index lost 80.79 points or some 4.7 percent from the previous week's close of 1,713.77.
In Bangkok, stocks were falling in the early part of last week as concerns about the region's economic outlook continued to depress the baht and local shares, brokers said.
Hopes of a technical rebound toward the latter half this week helped pare losses on Friday and should limit falls in a market close to nine-year lows, brokers said.
"I think some people are expecting some support this week and are hoping to gain from both a stronger currency and a rising share prices," said a broker.
The SET Index fell 3.12 points, or 0.84 percent, to 368.39 on Friday and its lowest close since December 22, 1988.
In Manila, Philippine shares were likely to remain wobbly next week as ripples from weakening regional currencies kept investors on the defensive, brokers said.
"Why should it go up? People are still wary on what will happen next," said Gina Tan at Angping Securities.
She said local shares, which were on an eight-day rising streak before the peso tumbled by midweek, have been standing on shaky ground due to the poor corporate outlook next year.
In Kuala Lumpur, battered stock and currency markets around the region would remain the main focus of investors in Malaysia this week, dealers said.
"Next week, a lot depends on what happens in Hong Kong. The market is still governed by regional concerns," said Victor Wan, senior analyst at South Johor Securities.
The Kuala Lumpur Stock Exchange (KLSE) Composite Index of 100 large-capitalized stocks closed 32.48 points, or 5.35 percent lower from Friday a week ago. On Friday, the index closed at 574.92, down 14.26 points from Thursday's close.
In Sydney, Australia's stock market looked set to adopt a softer near term as Asian worries preoccupied traders, although the market was slipping into a pre-Christmas lethargy.
The All Ordinaries index lost 0.9 percent to 2,494.0 on Friday and was down 2.5 percent on the week.
In Wellington, New Zealand shares were vulnerable to further Asian fragility after it took a heavy pounding from the fallout of South Korean problems in the latter half of the week.
The market's bluechip NZSE-40 index ended the week 2.7 percent lower at 2330.92 from its 2,394.29 close last week, after losing 1.5 percent on Friday and 1.25 percent on Thursday.