Asian stocks rose this week, extending a two-month rally, as regional bank earnings, stress tests for US banks and an expansion in Chinese manufacturing activity boosted optimism that the worst of the financial crisis is over.
United Overseas Bank Ltd (大華銀行), Singapore’s second-biggest bank, jumped 28 percent after posting first-quarter earnings that beat analyst estimates. PetroChina Co (中石油), China’s biggest oil producer, surged 21 percent as crude oil futures climbed. Yuanta Financial Holding Co (元大金控), Taiwan’s biggest brokerage, gained 28 percent after Goldman Sachs Group Inc upgraded the stock.
The MSCI Asia-Pacific Index added 7.8 percent this week to 97.99, a level not seen since Oct. 7. Asian markets have rallied 39 percent since the MSCI benchmark dropped to an almost six-year low on March 9.
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The Nikkei 225 Stock Average added 5.1 percent to 9,432.83, a six-month high, in a trading week that was shortened by holidays from Monday to Wednesday.
Stocks in Taiwan also advanced in the week on optimism closer ties with China will boost domestic growth.
In the week to Friday, the TAIEX rose 591.30 points, or 9.86 percent, to 6,583.87 after a 1.9 percent increase a week earlier.
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Average daily turnover stood at NT$211.87 billion (US$6.40 billion), compared with NT$128.28 billion the previous week.
“Shares have rallied for so many sessions, as foreign investors and Taiwanese investors are all betting on better relations with China,” said Parker Wu (吳年恭), a fund manager at Agricultural Bank of Taiwan (全國農業金庫), who helps oversee the equivalent of US$44 million.
Taiwanese shares are expected to encounter volatility in the week ahead after their recent strong showing, dealers said on Friday.
The recent gains have significantly boosted market valuations, raising downside risks and making the bourse technically weaker, they said.
The financial sector may suffer further pressure after outperforming the broader market and leading the upside on hopes that Taiwan and China will soon sign a memorandum of understanding on banking exchanges, they added.
However, ample liquidity due to continued inflows of foreign funds is likely to lend some support at around 6,200 points as the market faces profit-taking next week, dealers said.
Gains from any technical rebound during the trade may be capped at around 6,600 points next week, they said.
“The market needs some time to consolidate before returning to its previous uptrend,” Taiwan International Securities (金鼎證券) analyst Arch Shih (施博元) said.
“It is not easy for the bourse to overcome the immediate technical barrier at around 6,600 points soon,” Shih said.
He said if trading volume falls to about NT$150 billion, pressure could be absorbed to a large extent.
Yuanta Securities Investment Consulting (元大投顧) analyst Calvin Chen (陳程坤) said he expected foreign institutional investors would continue to build up their portfolios as they lag behind the recent gains.
“Foreign money is expected to prevent the market from sharp falls, although the consolidation is inevitable,” Chen said.
Other markets on Friday:
KUALA LUMPUR: Up 0.3 percent. The Kuala Lumpur Composite Index rose 3.31 points to close at 1,026.78.
JAKARTA: Up 1.80 percent. The Jakarta Composite Index firmed 33.68 points to 1,862.53. The index was helped higher by buying in palm oil and auto-related stocks as regional markets posted gains, dealers said.
MANILA: Up 0.14 percent. The composite index rose 3.06 points to 2,241.98. Investors bought undervalued stocks anticipating a strong rally in the near future, dealers said.
WELLINGTON: Up 0.64 percent. The benchmark NZX-50 index gained 18.26 points to 2,873.14. The index turned in a late rally after profit-takers had the market in negative territory for most of the session, dealers said.
MUMBAI: Down 1.98 percent. The 30-share SENSEX fell 240.51 points to 11,876.43. Investors unwound positions on growing political uncertainty ahead of the results for the country’s general election next week, dealers said.
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