MONTREAL - This week was overall a strong one for the Asian equity exchanges,
but the overall appearance masks an increasing differentiation of character
among them. The median gain among the nine indices reviewed here was 2.6% and
the arithmetic average was a gain of 1.6%, but in fact five of the exchanges
were up over 2.5% and the other four were up or down less than 1%.
Inter-regional patterns also broke down. The exception was Greater Chinese
bloc's firm placement in the center of the absolute move table, but even that
masked a 2.6% gain by Taiwan and Hong Kong versus a gain of 0.4% in Shanghai as
of mid-afternoon Friday local time.
The Australian All Ordinaries Index marked the strongest gain of the week, up
3.2% to 4,681, fuelled by a search for higher-yielding
equities that has in turn boosted the national currency and so on in a circular
manner for some time. For once, the New Zealand 50 Index Gross (NZX) did not
match this rise, gaining only 0.1% on the week to 3,156 and showing worse
near-term technical indicators. Both may be due soon for a breather, but some
chart analysts will maintain that the Australian index could run as high as
5,000 before encountering significant resistance.
Returning to the Greater China complex, it bears repeating that although the
Shanghai Stock Exchange Composite (SSEC) flagged on Friday, down 2.7% on the
down in mid-afternoon local time to 2,977, fighting to keep its head above the
upper bound of the 2,850-3,000 trading range, to which I have pointed before
after opening the day above 3,060, but with an overall short-term downtrend.
This is down from a medium-term high of 3,500 at the beginning of August, a
run-up attributable to the unflagging government spending that supports
domestic consumption and also production by small- and medium-sized
enterprises.
The Hang Seng Index in Hong Kong advanced on rising commodity prices, up 2.6%
to 21,705 at midday Friday local time. The Taiwan Stock Exchange Composite
(TSEC) was up an equivalent proportion, to 7,526, and still with very strong
medium-term technical indicators, indeed almost overbought after the bounce
coming on the heels of the decline following Taipei's postponement of the
expected economic accord with the mainland to promote freer trade and
investment. So doing, it moved with remarkable ease through the potential
resistance at 7,300 from July-August 2008. It has now recovered no less than
75% of the loss incurred from the all-time high in October 2007 to the low in
November 2008.
Another indicator of the strange week that it was, was the low volatility in
both Mumbai and Singapore. Constituting the South/Southeast Asia bloc in this
survey (of course, there are a number of other exchanges there, but they are
more minor and it is impossible to cover them all), these two exchanges have
typically in recent weeks been among the most volatile in the whole, and often
two of the three most volatile. This week they were two of the three least
volatile.
Software service providers led the BSE Sensex 30 in Mumbai to a 16-month high
above 16,800 in early Thursday trading, a 3.7% gain from the Monday open,
before falling back the rest of the day and Friday, reaching 16,652 in early
mid-afternoon, itself still representing a respectable 2.4% gain on the week. A
resistance interval stretching from about 16,850 into the low 17,000s probably
accounts for the index's flagging behavior. It has been due either to
consolidate recent advances or to enter an extended trading range (which amount
to the same thing) for some time.
The Straits Times Index in Singapore is at 2,663 at the start of late afternoon
local time, off 0.7% on the week with moderately favorable short-term technical
indicators, but still in the narrow trading range from 2,520 to 2,680 that it
has occupied for two months. That looks like holding at least for a while
longer, as on Thursday the index gapped up at the open to nearly 2,700 but
quickly fell back and ended the day inside the top of trading range, from where
it has desultorily wandered downwards all day Friday.
Finally, in Northeast Asia, the South Korean and Japanese exchanges continued
their respective paths of recent weeks, as Tokyo twists and turns while Seoul
soars. The latter's KOSPI was the second biggest winner on the week after
Australia, up over 2.8% to 1,699 with altogether still strong technical
indicators for the short term. The Nikkei 225 in Tokyo closed at 10,370, down
0.7% on the week, unable to exit from the 10,200-10,500 trading range that it
has inhabited since the end of July and unlikely to do to the upside anytime
soon, with neutral to negative short-term technical indicators.
So although the MSCI Asia-Pacific Index closed the week up 0.9% to 118.87, the
national equity markets continued to mark themselves off from one another and,
this week at least, even within geographic regions there were no really
significant homogeneities. The MSCI Asia-Pacific ex-Japan Index, by contrast,
was up 2.8% to 394.21, but that equally overstated the existence of any general
trend, albeit on the other side. It has really become more necessary to inspect
individual markets on their own terms.
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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