Sun, Aug 27, 2006 - Page 10 News List

Asian investors take to the sidelines, keep eye on Fed


Asian stocks closed mixed on Friday with investors taking to the sidelines ahead of a keynote address by US Federal Reserve Chairman Ben Bernanke.

Dealers said investors were hoping the speech at a Kansas City economic symposium would deliver some insights on the US economy amid mixed signals on the direction of interest rates and economic growth.

Weak housing data has pointed to a sharper than expected slowdown in the world's largest economy and main export market for Asia. The data also suggests the Fed has scope to maintain its pause in interest rate hikes.

However, with oil and commodity prices holding steady after record runs, a case remains that further rate hikes are warranted to keep inflation in check.

Manila fared worst with a 1.71 percent slump on losses in the telecom sector while Sydney proved the best performer with 0.72 percent gain amid speculation a formal bid for retailer Coles Myer will shortly be made.

Tokyo was perhaps the region's best indicator, rising a mild 0.14 percent, but across the markets dealers said anticipation ahead Bernanke's speech was cited for maintaining investor caution.

Taipei share prices closed 0.37 percent lower at the day's low after a rebound following Wall Street's overnight gains fizzled.

Dealers said lingering concerns over opposition efforts to force President Chen Shui-bian (陳水扁) to step down before the end of his term had returned to haunt investors, resulting in the lower close.

The weighted index closed down 24.42 points at 6,526.22.

Turnover was NT$59.50 billion (US$1.81 billion).

Dealers said the market opened firmer in a reflex reaction to closing gains on Wall Street and following yesterday's slump on the local bourse, but the advance lacked follow-through and soon gave way to caution.

Regional markets

* Taipei: TAIEX down 0.37 percent to 6,526.22.

* Tokyo: NIKKEI-225 down 21.96 points to 15,938.66.

* Seoul: KOSPI up 1.04 percent to 1,329.35.

* Hong Kong: Hang Seng up 0.43 percent to 16,955.45.

* Shanghai: Shanghai Composite up 0.02 points to 1,623.03.

* Sydney: SP/ASX 200 up 0.72 percent to 5,023.6.

* Singapore: Straits Times Index up 0.29 percent to 2,453.21.

* Kuala Lumpur: Composite index up 2.39 points at 950.52.

* Mumbai: SENSEX up 0.35 percent to 11,572.20.

Source: AFP

"Political factors grabbed the market's spotlight this week and such uncertainties will continue to be the main variable next week," said Johnny Lee, a manager with President Securities (統一證券).

Tokyo share prices closed slightly lower, shedding early gains as investors turned cautious ahead of a speech from the US central bank chief.

The NIKKEI-225 index closed down 21.96 points to 15,938.66. Volume was 1.49 billion shares, unchanged from Thursday.

"The market is eagerly waiting to see Bernanke's latest analysis of the state of the US economy ... and how the US equity market will react," Chuo Securities market analyst Shinji Igarashi said.

"The price movements will most likely continue to be influenced by developments in the US market," Igarashi added.

Stocks got off to a weaker start after the inflation figures came in weaker than expected, and after a brief rally on bargain-hunting the NIKKEI ended below the symbolic 16,000 points level for a second straight day.

The core consumer price index (CPI) increased 0.2 percent year-on-year last month, but the rise was less than the market had expected.

Seoul share prices closed 1.04 percent higher after a two-day correction, with sentiment buoyed by renewed hopes for an end to US rate hikes.

The KOSPI index closed up 13.62 points at 1,329.35.

"The market made a solid rebound on growing hopes that the US Fed would no longer raise rates," Daishin Securities analyst Seong Jin-Kyung said.

Hong Kong share prices closed 0.43 percent higher as select blue chips like China Mobile and HSBC led a technical rebound following the market's sharp fall on Thursday.

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