Asian stocks rose for a second week as optimism that government measures worldwide will ease the financial crisis offset cuts in earnings forecasts at Mizuho Financial Group Inc and Hitachi Ltd.
BHP Billiton Ltd and Kawasaki Kisen Kaisha Ltd led gains among mining and shipping companies after China cut some tariffs on raw material and component imports. Mitsubishi UFJ Financial Group Inc led banks lower as rival Mizuho, Japan’s second-largest lender, cut its earnings target. Hitachi, which makes electrical equipment, slumped 6.5 percent after forecasting the biggest loss by an Asian electronics maker.
“Fiscal and monetary stimulus policies have helped improve sentiment,” said Binay Chandgothia, who oversees about US$1.5 billion as chief investment officer at Principal Asset Management Co in Hong Kong. “These measures will benefit the economy, although there will be more earnings downgrades.”
The MSCI Asia-Pacific Index rose 0.4 percent to 83.42 in the past five days, adding to the previous week’s 3.5 percent increase. The gauge is down 6.9 percent this year amid mounting signs the global recession has hurt corporate profits.
Toyota Motor Corp, the world’s largest automaker, on Friday widened its loss prediction on slowing demand in the US and in Japan. Mitsubishi UFJ cut its full-year profit forecast after the stock market closed on Friday.
The Nikkei 225 Stock Average added 1 percent last week, while Hong Kong’s Hang Seng index climbed 2.8 percent. China’s Shanghai Composite Index surged 9.6 percent.
Stocks have fallen this year amid mounting signs the financial crisis, which has caused more than US$1 trillion in credit-related losses, is hurting corporate earnings. With banks tightening lending, bankruptcies among Japan’s listed companies reached an annual postwar record last year, according to Tokyo Shoko Research Ltd.
Governments around the world are stepping up efforts to ease the crisis that the IMF predicts will cause global growth to almost grind to a halt this year.
Indonesia’s central bank this week lowered its benchmark interest rate for a third straight month. China’s government started investing a second allocation of a 4 trillion yuan (US$580 billion) economic stimulus package, the official Xinhua News Agency reported.
China’s State Council, or Cabinet, also this week said that components and raw materials that “really needed to be imported” will be exempted from import duties.
Taiwanese share prices are expected to encounter strong technical resistance before the market moves above 4,500 points in the week ahead, dealers said on Friday.
The bourse is likely to drop at the beginning of the week before regaining momentum in the second half owing to adequate liquidity as more institutional investors return to rebuild positions, they said.
Bellwether electronic shares may lead the gains on their attractive valuations after a sell-off ahead of the Lunar New Year holiday last month.
But the financial sector is likely to underperform the broader market on bad loan fears amid the economic meltdown, they added.
The market is expected to fall to between 4,200 and 4,300 points on technical factors early on but is likely to overcome the resistance to jump to around 4,550 later, dealers said.
In the week to Friday, the weighted index rose 223.28 points or 5.26 percent to 4,471.25 after a 2.71 percent fall the week before the Lunar New Year holiday.
Average daily turnover stood at NT$59.76 billion (US$1.77 billion), compared with NT$43.41 billion at the close of the previous trading week.
“The technical resistance ahead of 4,500 points is stiff. It is time for the market to pull back to some extent after a strong showing this week,” Taiwan International Securities (金鼎證券) analyst Arch Shih (施博元) said.
But, as many investors remain empty-handed after unloading their holdings before the holiday, the market will be filled with liquidity.
“They [investors] are still hunting bargains. Any technical downturn will provide them with good buying opportunities,” Shih said.
With trading turnover expanding, Shih said he expects large cap stocks, in particular electronics, to continue to be the favorites of institutional investors.
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