Many markets in Asia continued a second week of gains on the back of rallies on Wall Street. By Friday, however, the buying began to cool, and some profit-taking was evident.
Tokyo's Nikkei 225 index ended the week at 10,281, more than 4.5 percent higher than a week ago. The index, now well above the psychologically important 10,000 point level, has added more than 15 percent since the beginning of this year.
Hiromichi Shirokawa, an economist with UBS Warburg Japan, says shares that represent Japan's domestic economy have picked up, as Japanese citizens are returning to the market.
"We believe that the domestic individuals are coming into the markets [to] buy stocks," he said. "And so, I think the market is seeing a rather sustained recovery."
Mr. Shirokawa predicts that institutional investors, such as pension funds, will start buying Japanese stocks soon. He says this week's gains mark the growing optimism that Japan's economy is recovering after a decade of recession.
Mr. Shirokawa says that investors this week were reacting to better than expected economic data. While profit-takers on Friday drove the Nikkei about 80 points lower, Mr. Shirokawa says he thinks more gains are on the way.
"We believe that the markets can go on further, probably another 10 to 20 percent within the coming month or two," said Mr. Shirokawa.
Gains on the U.S. market boosted Taiwan's technology heavy Taiex index this week. It finished Friday almost three percent higher, at 5,646.
Traders said Taiwan banking shares performed particularly well on Friday, but profit taking sent shares of some electronics companies lower. Hua Nan Financial shares gained more than six percent Friday, after reports emerged that the company hopes to acquire another company.
South Korea's main share index also continued to climb following last week's gains. The Kospi ended Friday at 754, up almost four percent from a week ago.
Hong Kong's Hang Seng index escaped Friday's profit-taking trend. It ended the week at 10,760, up more than three percent, after it gained almost five percent the week before.