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Analysts Predict Asian Market Gains - 2003-10-17


Analysts predict markets in Asia will continue to make gains as economic fundamentals in the United States show steady improvement.

Taiwan's main share index hit a fresh 17-month high on Friday, adding more than three percent over the week.

The Taiex closed Friday at 6,042.

Michael Kurtz, Bear Stearn's Asia investment strategist, says Taiwan's tech-heavy index gained as U.S. corporate earnings, including those of technology companies, rose.

"We are seeing signs of pick up of corporate earnings in the U.S.," he said. "The way we connect the dots is by suggesting that as corporate earnings show signs of improvement and business investment spending, so it means that Taiwan is the primary beneficiary in the region."

Mr. Kurtz explains that about 50 percent of U.S. corporate spending goes towards upgrading information technology. Because Taiwan is a major exporter of memory chips, computers and flat screen monitors, Taiwanese firms stand to benefit.

Seoul's composite index finished Friday in positive territory at 767 - a 1.3 percent increase on the week.

Despite the gain, however, Mr. Kurtz is less optimistic about South Korea's economic prospects. He notes that the country's unemployment continues to be high.

He adds that the strengthening of South Korea's currency, the won, against the dollar, will eat into the corporate profits.

"We are more pessimistic with respect to [South] Korea," said Michael Kurtz. "In an environment, in which with the stronger won, the primary engine of employment creation in [South] Korea, which is the small and medium enterprise sector, is under increasing pressure."

Mr. Kurtz says a jobless recovery in South Korea signals the strong possibility that domestic consumption will remain soft.

Elsewhere, Tokyo's Nikkei 225 index gained 2.3 percent to end the week at 11,037.

Manila's main share index ended 1.6 percent higher this week at 1,367.

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