Asian shares ended the week mainly higher, as positive economic data from the United States lifted confidence in prospects for exporters. Concerns remain, however, over Beijing's decision to take a more active role in changing Hong Kong's political system. Hong Kong's Hang Sang index closed up a half percent at 12,731 Friday, gaining 231 points over last Friday's close.
Markets are still watching Hong Kong's political situation, as Chinese central government authorities began a process of what it calls "reinterpreting" the territory's Basic Law, or constitution.
Many Hong Kong residents want the right to directly elect the city's leader and legislature by 2007 - a timetable Beijing has indicated is too soon.
Enzo von Pfeil, chairman of Commercial Economics Asia, says concerns over Hong Kong's civil liberties are likely to depress share prices in the future. "Everybody's gone pretty bearish on China, so here's yet another reason to tick off, why one doesn't want to be in Hong Kong at present," said Enzo Von Pfeil.
Mr. Von Pfeil says most market watchers expect Beijing to take a harder line on Hong Kong's democracy.
"Beijing is now very scared, and especially the rightist faction up there, in terms of, 'Gosh, we've let the genie out of the bottle in Taiwan," he said. "We can't possibly do that in Hong Kong now.'"
Taiwan's main share index reflected an easing of the island's post-election turmoil. It rose Friday to close at 6,545. That is a gain of nearly 15 percent over last Friday.
Taiwan's High Court has asked President Chen Shui-bian and opposition leader Lien Chan to agree on terms for a recount from the March 20 presidential vote. Mr. Chen's very close victory has led to days of mostly peaceful protests and demands for a recount.
Asian companies that rely on U.S. exports benefited from two U.S. economic reports this week. Initial jobless claims in the United States fell for the first three months of this year, while a major manufacturing index rose for the month of March.
That gave Japanese automakers Nissan Motor and Toyota a boost, and pushed the Nikkei 225 index up more than one percent Friday to its highest level since June of 2002. It closed just below 11,816, gaining 45 points over last week's close.
South Korea's Kospi was almost flat Friday, but the index gained two percent over the week, led by gains in Samsung and LG. Both electronics giants rely on exports for most of their sales.