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Wall Street Rebound Prompts Some Gains in Asian Markets - 2003-02-28

With the threat of war in the Persian Gulf continuing to dampen investor sentiment and drive up oil prices, investors are putting their money into shares perceived as risk adverse.

Craig Chan, of Forecast Asia Investment Bank, says utility shares in Hong Kong performed particularity well this week. "In Hong Kong for example I would say that utilities are gaining partly because of risk aversion," he said. In times of downturns we see investors move out from stocks such as banks, out from the property market and actually into safe havens like utilities where there is quite a large dividend."

The Hang Seng Utilities sub-index was up 94 points on Friday, but the main Hang Seng composite index still closed down 1.3 percent for the week, at 9,122.

Oil prices hit twelve-year highs this week, and analysts say that higher fuel costs could hurt the U.S. economy and lower its demand for imports from Asia. Mr. Chan says the higher transportation costs that result will be particularly tough on developing economies like that in the Philippines.

The Philippine Stock Exchange composite index held firm, however. Analysts say bargain hunting lifted the market by almost 14 points on Friday - a gain of 1.3 percent for the day. The index ended the week four points higher at 1,019.

The Nikkei 225 lost 1.7 percent for the week, closing at 8,363, despite some favorable news in Japan on Friday.

Shares of Japanese exporters rose at week's end. A U.S. government report showed American companies had increased their orders for durable goods for the first time in three months. And shares in Sega Corporation shot up more than 15 percent Friday, as investors reacted to a rumor that American companies Microsoft and Electronic Arts might bid for the beleaguered Japanese computer games maker.

Gains on Wall Street did little to boost poor sentiment in Korea. Seoul's Kospi index ended at 575, a drop of over 4.5 percent in the same week that South Korea inaugurated a new president. Analysts blame the poor performance on continued worries over North Korea's alleged nuclear weapons program.