Gains on Wall Street gave a boost to Asian equities at the end of the week. But one stock analyst warns political developments in Taiwan could influence Hong Kong and Chinese stocks listed in Hong Kong, if Taiwan's crisis over its presidential elections deepens.
Japan's main share index, the Nikkei, rose more than 2 percent on Friday, closing at 11,770. Over the week, the index added 4 percent.
"There's been a very short bounce overnight in not only the NASDAQ, but in the Dow, as well," explained Craig Chang, the head analyst of financial research group Forecast, in Singapore. "And that's really driven quite a bit of hopes in the region of a follow-through bounce.
Investors in Taiwan remained nervous over the political crisis, following last week's election, which President Chen Shui-bian won by a slim margin.
Opposition allegations of fraud and that Mr. Chen orchestrated a shooting injury to gain sympathy votes have plunged the island into crisis. The government is expected to hold a vote recount.
Despite the turmoil, Taiwan's main share index was boosted by gains in technology shares late in the week, and ended Friday only about 40 points below last week's level at 6,132.
Hong Kong was about 1 percent below last week's finish on Friday, closing just below 12,500. The main share index lost ground over the week, as investors reacted to developments in Taiwan.
Mr. Chang says that Chinese equities listed on the Hong Kong stock market would suffer, if Taiwan's current crisis deepened, or the island entered into a confrontation with China.
"If there is any significant deterioration in Taiwan, it would be initially felt in Hong Kong, and we still have to watch the political situation over the weekend, because it really remains extremely liquid for now. Nothing is for sure," he said.
South Korea closed Friday at 863 - about 3 points below last Friday's end. Political concerns about the vote to impeach the president have made investors in Seoul jittery.