MONTREAL - Asian stocks rose on Friday for the ninth straight day, the best
winning streak since 2004 according to Bloomberg News. Consumer staples were
the only sector to have a down day. Every national index typically reviewed
here finished strongly up on the week and the MSCI Asia Pacific Index closed up
3.5% over last Friday at 107.0, while the ex-Japan version of the index was up
4.1% on the week to 346.8.
Hong Kong's Hang Seng Index was the region's largest gainer and its second-most
volatile, climbing to 19,982 by Friday's close, up about 6.2% from last week,
after ending near its daily highs on both Monday and Thursday. The Shanghai
Stock Exchange Composite (SSEC) had another strong week, reaching 3,372 by the
Friday close, rebounding from an intraday low of 3,309. This
closes the index's gap-up from early June 2008.
The SSEC's 4.9% jump over last Friday merited, however, only a fourth place in
overall gain. It surpassed the Hang Seng's volatility to finish first in that
standing this week. The third Greater China index, the Taiwan Stock Exchange
Composite (TSEC), stagnated in relative terms, eighth-ranked both in volatility
and in weekly gain, up only 1.8%. The TSEC tried the last four days of the week
to surmount its medium- and long-term resistance at 7,000.
Every day except Monday, the TSEC registered an intraday high over that level,
the highest being Friday's at 7,046, but it was unable to close above 6,985 and
finished the week at 6,973. Still, strong volume throughout the week on the
Taiwan exchange is a good sign should the index decide to try again next week.
Most but not all technical indicators remain favorable.
The Tokyo market was closed on Monday but its Nikkei 225 benchmark index was
still able to gain 5.8% on the week, twice marking the largest daily percentage
gain and once more among the top three. The Nikkei closed at 9,945, fighting a
long-term resistance established around 10,000 in the last quarter of 2002 and
with rough going up to the mid-11,600s. Its Northeast Asian companion, the
South Korean KOSPI, was up 4.2% to 1,501 on good strength and with good
near-term technical indicators.
In Australasia, New Zealand continued its unaccustomed strength as the 50 Index
Gross rose 5.5%, despite a down day on Monday, to close at 2,961 and set to
challenge a resistance from 2005 at that level next week. The Australian All
Ordinaries also followed its Asian peers with unexpected strength, although up
only 2.5% on the week, closing nevertheless at 4,092 and doing so on steadily
increasing volume through the week, although opening (and closing) with a
gap-up on Friday.
This move signifies a definite attempt to leave behind the resistance around
4,000 inherited from 2005 that had blocked its advance in the middle of last
month. If successful, then the next resistance comes in the high 4,200s. This
is a medium-term resistance dating from several formations in the last quarter
of 2008, and it is perhaps even more significant for the near-term future than
the long-term one inherited from 2005.
Finally, the Singaporean and Indian markets also kept pace with the region's
increasingly torrid advances. The former's Straits Times Index meandered slowly
upwards for the first four days of the week before opening Friday with a gap-up
and closing at 2,519 against a mild medium-term resistance from September 2008,
which is surmounted in the low to mid-2,600s by a stronger resistance from the
second quarter of 2006.
In India, Mumbai's benchmark BSE Sensex 30 continued its bull run to 15,322 in
early afternoon local time Friday, after trying unsuccessfully midday on
Wednesday and at the Friday open to throw a log over 15,500, where multiple
coinciding short- and medium-term resistances are concentrated. As is the case
for several other exchanges as noted above, short-term technical indicators are
on balance favorable.
So what is really happening here? The Asian markets are now searching for
optimism and finding it by picking and choosing good news from among the
torrents of economic statistics released everyday (for example, selected US
housing data, brokerage upgrades of some South Korean stocks).
Their somewhat surprisingly strong performance is due first of all to foreign
capital flooding back into the Asian equity markets and, second, to more
foreign capital following the vanguard institutional investors. Although there
are admittedly fewer places to look than once was the case for significant
return on investment, these investors can nevertheless withdraw their support
as quickly as they have given it.
Dr Robert M Cutler (http://www.robertcutler.org), educated at the
Massachusetts Institute of Technology and The University of Michigan, has
researched and taught at universities in the United States, Canada, France,
Switzerland, and Russia. Now senior research fellow in the Institute of
European, Russian and Eurasian Studies, Carleton University, Canada, he also
consults privately in a variety of fields.
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