Asian stocks rose this week, paring the biggest quarterly slump in three years, on speculation Europe’s leaders may succeed in preventing the region’s credit crisis from spilling into a global recession.
“There’s no doubt the markets are very oversold,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd. “There’s good potential for a bounce and it then becomes about what follow-through reaction we see from Europe. The real issue is whether it’s a durable bounce or whether it’s a dead-cat bounce.”
The MSCI Asia Pacific Index rose 1.2 percent in the five days through Friday, the measure’s first weekly advance in four. Still, the index tumbled 16.2 percent in the quarter, the biggest drop since 2008, as concern mounted that Europe’s sovereign-debt crisis combined with a slowdown in the US economy may drag the world back into recession.
Taiwan’s TAIEX rose 42.77 points, or 0.6 percent, on Friday to 7,225.38, capping a 2.5 percent weekly advance, the most in four weeks. The gauge has dropped 16 percent since June, the largest quarterly loss since the three months ended December 2008.
Hong Kong’s Hang Seng Index, which fell 0.4 percent this week, completed its worst quarterly loss in a decade, slumping 21 percent. Japan’s Nikkei 225 Stock Average climbed 1.6 percent in the week, South Korea’s KOSPI gained 4.3 percent and Australia’s S&P/ASX 200 Index rose 2.7 percent.
HSBC ended the week at HK$60.90 in Hong Kong after a eurozone central bank official said the European Central Bank (ECB) may talk about resuming some bonds purchases from banks when it meets on Thursday.
The ECB may also consider re-offering 12-month loans to banks at its policy meeting next week, according to the official. Interest-rate cuts are likely to be discussed, though they are not on the agenda, the official said. A spokesman for the bank declined to comment.
“Policymakers have been pushed to act because Europe’s situation has gotten so bad,” said Koichi Kurose, chief economist in Tokyo at Resona Bank Ltd. “That’s given stocks a little lift, but if real progress isn’t made, we could see markets go right back down again.”
Concerns the global economy may be sliding into recession drove the Asia-Pacific gauge down more than 20 percent from its May 2 peak earlier in the week, a decline defined as a “bear market” by some investors.
In other markets on Friday:
Manila gained 122.02 points from Thursday to 3,999.65.
Mumbai slid 1.46 percent, or 244.31 points, from Thursday to 16,453.76.
Wellington gained 43.18 points, or 1.31 percent, from Thursday to 3,343.35.
Additional reporting by staff writer
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