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Asian Equities Make Comeback - 2004-02-06


Equities in Asia made a comeback after profit-taking early in the week. A financial analyst says any declines will be short-lived, as key financial sectors in many countries show strength.

Hong Kong's main share index, the Hang Seng, ended the week at 12,309, 0.5 percent above last week's close.

The index surged about two percent Friday to recover from a slump early in the week.

The Hang Seng sub-index representing financial equities jumped almost 500 points on Friday.

Financial analyst Peter Churchouse of the Hong Kong branch of Morgan Stanley says investor sentiment for Hong Kong's banking sector is strengthening as the economy improves.

"We are seeing a genuine and sustainable economic recovery," said Mr. Churchouse. "With this pick-up in economic growth we are likely to see a pick-up in investment [and] therefore a pick-up in loan demand, which has been quite weak in Hong Kong."

Mr. Churchouse says a strong comeback in banking stocks is also apparent in Singapore and other Southeast Asian countries.

He added, however, that this trend has not been reflected in South Korea, where consumer debt remains a problem.

"There's been a major difference in the [South] Korean banking system compared to the rest of the region, which had this massive expansion of consumer credit two years ago, which really grew too rapidly and resulted in massive defaults," he said.

South Korea's main share index, the Kospi, ended two points higher for the week at 850.

The Philippine stock exchange composite index ended at 1,461, three percent lower than the previous week. The Nikkei declined by about three percent for the week, ending Friday at 10,460.