MONTREAL - The past week was relatively humdrum for the Asian equity markets,
with the exceptions of Taiwan and Japan, which gained over 5% and lost over 3%
respectively since the previous Friday's close. The Tokyo market so skewed the
region that while the MSCI Asia-Pacific Index was down just under a half of
0.1% to 112.81, its ex-Japan version actually rose 1.8% to 366.57.
The Shanghai Stock Exchange Composite (SSEC) was the most volatile of the week
and also by intraday measures, with a Monday drop of 6.8% and a Thursday
recovery of 4.8% accounting for much of that statistic. The SSEC nevertheless
closed the week almost unchanged at 2,862, underneath the
important resistance level established in June through August last year.
Analysts have started to regard the Chinese market as an indicator of investor
appetite for risk, and in view of the precarious global financial situation,
this helps to account for its volatility. Recent revelations concerning the
manipulations and even artificial nature of some of the statistical series
produced by Chinese agencies seem not have sunk in yet, as the index continues
to show a strength not wholly justified by a drill-down analysis of the
country's economic activity.
The SSEC was the third-best performing index in the region among those
regularly covered here. The first and second were Taiwan, as mentioned, and
Hong Kong. The Taiwan Stock Exchange Composite (TSEC) closed at 7,153,
recovering from a near-term low of 6,630 two weeks ago and showing good
strength, rising each day of the week with a 3.1% surge on Tuesday and ready to
challenge its near-term high from the end of July in the coming week, although
the resistance it now faces in fact extends up into the mid-7,300s as
established from last summer.
The Hang Seng Index in Hong Kong opened at its daily high on both Monday and
Tuesday, but still managed to gain 1.1% on the week to close at 20,319 but
facing strong medium-term resistance in the range up to 21,000, despite good
strength so far rebounding from a short-term low in the 19,700s. In contrast
with Shanghai and Taiwan, which were the most and second-most volatile of the
week, however, Hong Kong was the third least volatile.
The rest of the Asian markets followed no clear aggregate patterns in what was
altogether an otherwise nondescript week. That said, Mumbai and Singapore
continued a predisposition established since the middle of June to be together
among the more volatile exchanges, yet together among those with the lesser
absolute percentage moves, losing respectively 1.5% and 0.8% on the week. The
Indian BSE Sensex 30 ended the week at 15,689, closing near the apex of an
ascending triangle that will probably either throw over a new top above 16,000
before falling back or power through to new medium-term highs.
The Straits Times Index in Singapore closed twice near its daily low and twice
near its daily high to finish at 2,623, below its medium-term resistance in the
high 2,600s yet well above its medium-term support in the high 2,300s.
The Australia and New Zealand markets continued a general pattern also in
evidence since the beginning of summer of being among the least volatile of the
Asian markets but among the better, or at least average, performers. This week,
however, that means that they could still lose ground. The Australia All
Ordinaries was down 1.2% but still closed at 4,443 and without a technical
resistance until the mid-4,600s. It is still capable of sudden weakness that
could take it down to 4,060 without reversing the pattern established over the
past six months.
The New Zealand 50 Index Gross (NZX) had a schizophrenic week, closing near its
daily low on Monday, then opening at its daily high the next two days, and at
its daily low the last two days of the week. It managed to cut its losses and
end down only 0.4% to 3,098, with moderately strong technical indicators
suggesting the possibility of further advances. However, both countries'
currencies are running near tops that their underlying national economies do
not justify.
In North Asia, the Nikkei 225 broke the pattern whereby the markets in Tokyo
and Seoul continued to have average or below-average volatility and average or
below-average absolute percentage changes. The Nikkei was down 3.3% to 10,143
and approaching a crucial juncture where long-term resistances dating from
earlier in the decade will be tested. The South Korean KOSPI gained 0.1% on the
week to close at 1,609, with uniformly good technical indicators auguring
further advances despite the possibility of a near-term pullback.
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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