Investors see recovery in SE Asian equity marts

Investors see recovery in SE Asian equity marts

HONG KONG (Reuter): The outlook for Asian equity markets remains poor in the coming week, with local punters hoping for a Southeast Asian recovery but foreign investors staying clear after the wild gyrations of the past two weeks.

"It's getting much harder to comment on Southeast Asia," said Grant Forster, vice president at BT Fund Managers in Hong Kong.

"Things like (Malaysian Prime Minister) Mahathir about-facing on (trading) rules released last week, Indonesia bringing down foreign investment restrictions - the playing field is chopping and changing so fast.

"Given these changes it's getting very difficult to react short-term. You'll get hurt if you do that, and get hurt very quickly."

In an attempt to combat recent market turmoil, Malaysia lifted trading restrictions on short-selling of blue-chip stocks, while Indonesia cut rates and scrapped a 49-percent limit on foreign purchases of listed shares.

The measures sparked a region-wide rally on Friday after two weeks of heavy losses and currency weakness.

Local traders forecast continued strength next week.

But foreigners were less enthusiastic, warning that currencies remain key to equity performance in the short-term, and currencies are due to come under further pressure as concern mounts about funding of wide current account deficits, said Robert Rountree, regional strategist at Nomura Research.

"Discretion is the better part of value at the moment," he quipped. "I wouldn't want to bet the worst is over."

Patrick Wong, investment director at Jardine Fleming Unit Trusts, said the outlook will remain bearish until currencies stabilize and cheaper exports give Southeast Asian economies a much-needed shot in the arm.

"I think people expect that markets will come back down again, despite the recovery of the past few days," he said.

Consolidation is forecast in Hong Kong after a dramatic decline in liquidity that reached record levels in last week's exaggerated moves.

But the outlook is uncertain, with New York providing little direction.

A weaker-than-expected report on August job creation lifted the Dow Industrials in the first few minutes of trading on Friday, but the market quickly turned cautious prior to a speech by Federal Reserve Chairman Alan Greenspan.

The Hang Seng Index advanced 428.30 points, or 3.03 percent, last week to close at 14,563.55 on Friday after gyrating in a wide 1,814 point range.

"The market will consolidate around the present level," said Frederick Tsang, head of research at BNP-PrimeEast Securities. He predicted a trading range of 13,900 to 14,800 points.

TOKYO: Japanese stocks are expected to be firmly capped this week by active profit-taking by corporate investors ahead of interim book closings at the end of September, brokers said.

"The market will keep on digesting profit-taking ahead of the end of the half year. I expect the Nikkei 225 to move between 18,000 and 19,000 for the time being," said Masaaki Higashida, a strategist at Nomura Securities Co Ltd.

On Friday, the benchmark 225-share Nikkei average closed at 18,650.17, up 420.75 points from its closing a week earlier.

KUALA LUMPUR: Malaysian shares are expected to build on Friday's gains next week with some foreign brokerages placing "overweight" positions on the market following the lifting last week of controversial measures to prohibit short-selling.

"There should be broad market buying," said the assistant director of one foreign broker in Kuala Lumpur.

On Friday, the composite index of 100 large-capitalized index ended at 821.59 points, up 90.47 points or 12.37 percent from Thursday's close.

For the week, the Kuala Lumpur Stock Exchange (KLSE) Composite Index of 100 large-capitalized stocks closed 17.19 points or two percent higher from Friday a week ago.

BANGKOK: Thai stocks are also expected to extend recent gains amid investor expectations that a new draft constitution will be approved by parliament and on greater stability in the baht, brokers said.

The Stock Exchange of Thailand (SET) index rose 7.60 percent in the week to 540.39 points on Friday from a week ago. It advanced 3.48 percent from Thursday.

By late on Friday the baht was quoted at 36.95/37.20 per dollar onshore compared with 37.73/37.88 per dollar earlier in the day.

MANILA: Manila shares are likely to move within a narrow band as investors exercise caution due to currency and political fears, brokers said.

"The tension in the financial markets is easing but the relief may just be temporary," said Henry Ong, analyst at Sapphire Securities.

The main index is seen moving within the 1,900 to 2,200. Week- on-week, the main index rose 87.7 points, or 4.34 percent to 2,109.22 from the previous Friday's 2,021.52.

SINGAPORE: Singapore stocks are expected to remain firm next week on renewed optimism in regional markets.

Singapore shares rallied strongly on Friday climbing over three percent following the surge in Malaysian shares after the government reversed trading curbs imposed on the stock market.

The Straits Times Industrial index ended at 1884.06 on Friday, up 78.42 points over the previous week.

SEOUL: The South Korean stock market is expected to rebound from recent doldrums on hopes of government market-boosting measures, brokers said.

"The hopes will help the market remain firm next week," said Cha Hee-gun at Sunkyong Securities. "I expect the market to rebound to the 720 level next week." But brokers said concerns about the weakening won against the dollar would limit sharp gains.

The composite stock index closed on Saturday at 702.90, up 7.53 points or 1.08 percent, from last Saturday's 695.37.

TAIPEI: Taiwan's stock market was expected to consolidate or possibly slide further next week after recent heavy foreign fund selling, brokers said.

Foreign funds have been dumping Taiwanese shares to raise cash to fund redemptions following Southeast Asia's unstable financial markets, triggering sharp declines in the main index.

On Saturday, the index ended up 92.34 points or 0.99 percent at 9,382.73, down 3.83 percent from 9,756.47 last week. - - - -

SYDNEY: Australian shares are set for more choppy trade near- term as the recent serving of profit results is digested. The All Ordinaries index closed at 2,626.0, up 0.7 percent on the day and 1.3 percent over the week.

WELLINGTON: New Zealand shares finished a volatile week on a steady note on Friday but brokers doubt the market will catch fire next week.

Phase three of the Telecom buyback would lend support and much-needed liquidity and the market would again look to the rampaging bull market in the U.S. for direction, brokers said.

The NZSE-40 Capital Index ended at 2,472.67, up 16.46 points or 0.67 percent from last Friday's close.