Currency woes in Asia seen pressuring stock markets

Currency woes in Asia seen pressuring stock markets

HONG KONG (Reuter): Asian stocks are seen mixed over the
coming week, with most markets under pressure from persistent
currency woes.

Even Hong Kong, which has gained on institutional interest as
other markets slumped, is expected to come under selling pressure
after reports of speculation and heavy hedging pushed currency
forwards to their highest levels in two years.

The possibility of a speculative attack on the Hong Kong
dollar is considered remote, given the territory's strong
economic condition and huge reserves.

But the entire region has fallen under a cloud of gloom after
currency speculation exposed the quirks and inadequacies of some
Asian economies.

The Association of South East Asian Nations (ASEAN) wrapped up
a two-day ministerial meeting in Kuala Lumpur on Friday pledging
to tighten cooperation in staving off attempts to "destabilize"
members' currencies.

In Tokyo, stocks are likely to be trapped in a narrow range
this week, with the downside supported by bullishness in Wall
Street stocks, brokers said.

The market is waiting for administrative penalties against
Nomura Securities Co Ltd, expected to be announced some time this
week, but they have already been mostly factored in and are
unlikely to rock the market, they said.

On Friday, the 225-share Nikkei average closed at 20,389.54,
up 140.22 points from its closing a week earlier.

In Hong Kong, stocks are expected to come under some selling
pressure in the week ahead due to currency worries, analysts
said.

"This week will be a interesting, crucial time," said
Frederick Tsang, head of research at BNP PrimeEast Securities.
Investors will be watching Hong Kong dollar currency rates and
overnight lending rates for any signs of speculation and hedging,
Tsang said.

The Hang Seng Index closed 51.11 points, or 0.33 percent,
lower at 15,658.12 on Friday after hitting an all-time high of
15,880.57 on Thursday. Over the week the index gained 87.72
points or 0.56 percent.

In Bangkok, Thai stocks are expected to decline slightly in
the coming week as the Thai baht falls and listed companies
report poor second quarter earnings, brokers said.

The Stock Exchange of Thailand (SET) index fell 1.04 percent
in the week to 646.58 points on Friday from a week ago. It gained
1.98 percent from Thursday.

"No positive factor is seen so far," said Chetta Meemangkang
of Prime Finance and Securities.

In Manila, Manila shares are likely to languish in negative
territory as concerns over high domestic interest rates and the
currency turmoil in the region continue to hound the market,
traders said.

"It's still a question of when the central bank will lower
rates and until they do, this will overshadow corporate
earnings," said Allan Araullo, vice-president at Regina Capital
Development.

"The trend next week will still be downwards. If the attack on
the Southeast Asian currencies continues, we may be in for
another correction," said Cilette Liboro, research head at Orion-
Squire Capital.

The main index closed 0.11 points lower at 2,572.69 points.
Week-on-week, the market shed 100.26 points, or 3.75 percent,
from the previous Friday's 2,672.95 level.

In Seoul, Seoul stocks are expected go through further
consolidation as fears of corporate failures continue to haunt
investors, brokers said.

"Investors are likely to remain cautious early next week as
they lack confidence to jump in to the market as corporate
troubles linger on," said Choo Hee-yup of Dongwon Securities.
Brokers said a rebound was possible toward the end of the week as
corporate woes are expected to ease down.

A trading range of 710 to 750 is forecast.

The composite index closed at 732.32 on Saturday, down 9.83
points from last Saturday's 742.15.

In Singapore, dealers said they expected technology stocks to
dominate market activity after the SES Electronics index powered
to a new high of 159.13 on Friday.

The focus will be Venture, which leapt 33 percent after it
launched a new multi-media software audio product and on whether
it can sustain gains.

Dealers said there could be some profit taking but this is
expected to be well absorbed.

In Sydney, Australian shares are seen stronger near term with
hopes high for an interest rate reduction after key economic data
presented a compelling case for the Reserve Bank to act.

The All Ordinaries index closed at 2,691.2, up 0.6 percent on
the day and up 0.3 percent on the week.

Rate cut speculation supported a firmer finish to the week and
dealers said the major question now appeared to be the timing of
a cut.

In Taipei, Taiwan's red-hot electronics shares are expected to
continue to carry the market, helping the benchmark stock index
to test the 10,000-point level, brokers said.

Aided by heavily weighted technology shares, the stock index
was able to maintain its momentum in the past week. An additional
boost from financial shares allowed the index to close a fresh
seven-year high at 9,869.25, up 60.34 points or 0.62 percent on
Saturday.

But brokers cautioned that continued bull run of the
electronic sector would absorb funds that would have otherwise
been pegged to other shares.

Brokers said in light of the 10,000-point level, investors
would become cautious and tend to take profits easily.

In Wellington, foreign investors returned to the New Zealand
stock market late in the week as short-term interest rates
steadied and the dollar seemed to have found a floor.

Brokers said strong interest in index heavyweights suggested a
trend back towards record territory will continue next week.

This week saw the NZSE's Top 40 index restore 50 of the 60
points it lost last week, and it ended at 2,510.61 putting in
range of its record closing high of 2,538.30 set on July 4.