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Asian Markets Rally - 2003-08-15


Markets in Asia rallied this week on the back of positive economic data from the United States and hopes that a global economic recovery is under way. Many key Asian stock market indexes now are hovering at 12-month highs.

Analysts say Taiwan's tech heavy Taiex index is benefiting from hope of a recovery in technology stocks in the United States. This week the Taiex hit a 14-month high, adding almost five percent to close at 5,488 on Friday.

Despite significant losses during the health crisis brought on by a Severe Acute Respiratory Syndrome outbreak, the Taiex has gained more than 11 percent over the past 12 months.

Norman Villamin is an Asia equity strategist for the investment bank Morgan Stanley.

"The thing that's really attracting a lot attention in Taiwan is the potential for foreign ownership liberalization that may change Taiwan's weighting for key benchmark indexes around the world," he said. "I think the potential is for that weighting to as much as double by year-end. And I think people have been buying Taiwan on the back of anticipation of that going forward."

Hong Kong's main share index, the Hang Seng, surged almost five percent to 10,424 during the week. Despite a slump during the SARS crisis, which ended in June, the Hang Seng has added more than six percent since the beginning of 2003.

Mr. Villamin says investors are increasingly confident that a global economic recovery is under way and are putting their money back into stocks. He says some of the most likely beneficiaries will be South Korea, Taiwan and Hong Kong, where exporters are heavily reliant on U.S. demand. South Korea's stock market was closed for a public holiday on Friday but the Kospi index closed Thursday at 727, up three percent over the week.

Mr. Villamin says South Korean stocks are also getting a boost from the promise of economic recovery at home.

"In the last three or four months we've seen interest rates cuts in [South] Korea and expectations of fiscal stimulus bring some interest back into the domestically oriented names in Korea," said Norman Villamin.

Despite sliding 16 points on Friday, the Philippine Stock Exchange composite index ended the week up just over one percent, at 1,248.

In currency markets the Philippines peso fell below 55 to the U.S. dollar, a psychologically important level, on Friday. Traders say a court order to suspend the central bank governor prompted selling.