Sun, May 28, 2006 - Page 10 News List

Asian rollercoaster ride continues

TECHNICAL REBOUND Amid hopes that the worst may be over, markets in Asia recovered from the battering they took amid fears that US interest rates may rise


A Taiwanese man walks past monitors displaying stocks in a Taipei securities trading house last Monday. The TAIEX on Friday closed up 17.86 points at 6,879.5.


Asian stocks rebounded on Friday in a continued rollercoaster ride, with investors taking courage from gains on Wall Street after US growth figures suggested the recent panic over interest rates might be overdone.

Dealers said it was a relief to see solid gains after the battering the markets have taken over the past few weeks on fears the US Federal Reserve could hike rates further than expected to dampen growth and inflation.

Figures overnight showed the US economy grew a revised 5.3 percent in the three months to March, a sharp increase on the fourth quarter's 1.7 percent but still well below forecasts for 5.8 percent while inflation was subdued.

That was enough for a nervous Wall Street which rose 0.84 percent and set Asian stocks up for a strong technical rebound amid hopes the worst, at least, may now be over.

Dealers said investors need certainty above all on US interest rates -- let them be up, unchanged or down, it does not matter just as long as the lead is absolutely clear to allow for a rational calculation of profit and loss.

Global stock and commodity markets have been savaged brutally since the Fed indicated earlier this month its current round of hiking interest rates could soon be over.

Sydney was up 1.55 percent and back above the key 5,000 points level, Tokyo, rose 1.77 percent and in Hong Kong, up 1.26 percent, the view was that the recent losses had been overdone and there was now an opportunity to get back into the market. Mumbai climbed 1.34 percent.

The Jakarta stock market was closed for a public holiday.


Taipei share prices closed 0.26 percent higher as late pressure on large-cap electronic stocks offset some of the gains driven earlier by Wall Street's overnight rally.

Dealers said companies with substantial property holdings extended defensive gains while some large-cap electronic stocks lost ground on continuing uncertainties about the industry outlook.

The weighted index rose 17.86 points at 6,879.5 on turnover of NT$126.72 billion (US$3.95 billion).

The market opened higher due to the strong showing on Wall Street, but "selling pressure emerged in late session and put a lid to the index's rise," said Johnny Lee, manager with President Securities (統一證券).

"Investors who built their electronics [portfolios] previously at highs scaled down their holdings in late session," he said.

He said the prospects of some of these stocks were marred by uncertainties about the companies' performance during this seasonally weak quarter, as well as about taxation and the changes in accounting practice involving employees' bonus shares.

Tokyo share prices closed 1.77 percent higher as gains on Wall Street and bargain-hunters helped the market rebound.

Dealers said investors took heart from an upward revision of US first-quarter GDP data which showed the world's largest economy growing at 5.3 percent, below forecasts of 5.8 percent, which helped ease concerns over the outlook for US interest rates.

The NIKKEI-225 index gained 277.01 points to 15,970.76.

Volume was 1.65 billion shares, down slightly from 1.69 billion on Thursday, when the market fell 1.34 percent.

"Given the improved external environment and Japanese stocks turning cheaper after the sharp falls, investors hunted for bargains," said Hideo Mizutani, a chief strategist at Sieg Securities.

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