Asian stocks rose, with a regional index recording its biggest weekly advance since August 2007, as China reduced curbs on lending and the US Federal Reserve led central banks in cutting funding costs for European lenders.
“The soft landing scenario for Asia remains intact and the data is still supportive of the scenario,” said Ng Soo Nam, Singapore-based chief investment officer at Nikko Asset Management Asia Ltd. “Market volatility will continue because problems in Europe cannot be resolved easily. The coordination from central banks was a very big attempt to stabilize the market and that should help moderate the volatility.”
The MSCI Asia Pacific Index rose 8 percent to 117.66, the biggest weekly advance since Aug. 24, 2007. The index nearly erased the month of losses, rising to its highest level since Nov. 15.
Gauges of volatility across the region fell to their lowest levels since July. The HSI Volatility Index plunged 23 percent this week to 27.7 in Hong Kong, suggesting options traders see a swing of 8 percent in the Hang Seng Index in the next 30 days. The Nikkei Stock Average Volatility Index dropped 20 percent to 23.42 and the KOSPI 200 Volatility Index fell 18 percent this week.
Taiwan’s TAIEX surged 5.3 percent this week, the biggest advance since May 2009. The benchmark index, which rallied nearly 4 percent on Thursday after six central banks adopted coordinated actions to provide cheap US dollars to prevent a credit crunch, shed 0.53 percent to close at 7,140.68 on Friday on profit-taking.
The TAIEX is likely to consolidate in the near term as the presidential candidates gear up for the Jan. 14 election and European leaders keep on searching for a solution to the region’s debt woes, Allianz Global Investors Taiwan Ltd (德盛安聯證券投信) fund manager Sunny Chung (鍾兆陽) said.
The combination of political and economic uncertainty is a guarantee of more volatility, which may drive the TAIEX below its 10-year moving average of 6,730 level in the first quarter, Taishin Securities Investment Advisory Co (台新投信) chairman Andy Wu (吳火生) said.
Australia’s benchmark S&P/ASX 200 surged 7.6 percent, the biggest weekly advance since Nov. 28, 2008. Hong Kong’s Hang Seng Index also increased 7.6 percent this week.
India’s Bombay Stock Exchange Sensitive Index rose 7.3 percent. The Nikkei 225 Stock Average gained 5.9 percent this week, while the broader Topix Index increased 5.3 percent.
China’s Shanghai Stock Exchange Composite Index bucked the trend, however, falling 0.8 percent as China’s manufacturing recorded the weakest performance since the global recession eased in 2009.
In other markets on Friday:
Manila ended virtually unchanged from Thursday, adding 0.33 points to 4,290.92
Wellington rose 0.15 percent from Thursday, gaining 5.08 points to 3,282.39.