Asian markets look to Wall St and stimulus moves for direction
Following is how key Asian stock markets are expected to perform in the week ahead.
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TOKYO - Tokyo stocks are seen trading in a tight range this week as investors hold back from taking any decisive steps before gauging the contents of an emergency economic package due as early as April 4.
Tokyo's benchmark Nikkei average has gained 10 percent over the last three weeks, recovering from a 16-year low of 11,819.70 on the back of the central bank's effective return to a zero interest-rate policy and expectations for policy steps to boost the economy and stock market.
With high expectations for policy steps already factored into the market, any half-hearted measures will be severely punished with violent sell-offs, investors predicted.
"If the government gets complacent after the tentative rebound, and comes up with watered-down measures, the market will send out a strong message with share price movements," said Tatsuhiko Takura, general manager of investment research at Tokio Marine Asset Management.
The package is expected to include reform measures on securities-related taxes to lure individual investors to the stock market and the launch of a private fund to absorb stock sales by financial institutions to stem falls in share prices.
The Nikkei average fell 0.56 percent to 12,999.70 last Friday, to end the business year down 36 percent at its lowest year-end closing level since 1984-85.
With much of the market expected to be in a wait-and-see mood, investors are likely to chase global manufacturers and export-oriented firms, especially automakers, amid a sharp depreciation of the yen.
Currency dealers expect further yen weakness especially with more bad news expected early next week with Japan's key "tankan" survey of corporate sentiment on Monday.
Analysts said valuations of some high-tech shares may look attractive after being battered over the past year, but it may be too soon to put money back into the sector as their earnings outlook remained uncertain.
The tankan survey, which is expected to fall for the first time in nine quarters, is likely to have little impact on the market because the bearish outcome is largely factored into share prices, analysts said.
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HONG KONG - Weak bank stocks are likely to remain a drag on Hong Kong's share market this week, but investors will be focused on China Unicom Ltd , China's number two mobile phone operator, ahead of its full-year results.
Hong Kong's Hang Seng Index has been the worst performing benchmark share index in Asia so far this year, losing 15.47 percent by Friday's close of 12,760.64, but gaining 1.41 percent in the week.
The index could get a small boost on Monday from Wall Street's gains last Friday. The Dow Jones industrial average and the technology-laced Nasdaq composite index rose 0.81 percent and 1.08 percent respectively.
Fast-growing number-two mainland Chinese mobile phone carrier China Unicom Ltd is expected to report a full-year earnings increase of about 81 percent on Tuesday despite a continued decline in average revenues per user.
The Hong Kong-listed subsidiary of state-backed China Unicom Group is expected to post a year 2000 profit of 1.53 billion yuan (US$185 million), according to Multex Global Estimates. China Unicom, which went public last summer, earned 839 million yuan in 1999.
Brokers Vickers Ballas said in a report they recommend investors switch out of 34-year-old tycoon Richard Li's Internet and telecoms group Pacific Century CyberWorks (PCCW) and buy China Unicom.
PCCW's shares plunged 14 percent last week after posting a worse-than-expected net loss for 2000, making it the worst performing stock among the Hang Seng's 33 constituents so far this year.
Disappointment that PCCW's management failed to clearly outline how the company would bring about rapid earnings growth, and worries over its ability to meet principal payments on its large debts which come due in 2004, helped drag the shares down.
Weak banking stocks could continue to bedevil the market.
The Hang Seng Index financial sub-index, which comprises HSBC, the biggest stock on the bourse by market capitalisation, Hang Seng Bank , Bank of East Asia and Dao Heng Bank , has underperformed the broader index, losing more than 19 percent in the year to date.
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SINGAPORE - Singapore shares may see a flurry of activity this week after the battered benchmark Straits Times Index ended last week on a positive note, analysts and fund managers said.
The Straits Times Index has lost more than 13 percent since the start of the year and dropped 2.4 percent last week.
But on Friday, it jumped 2.84 percent to 1,674.19 points, powered by a rally in blue chips and banks, as well as window dressing by funds ahead of the close of the first quarter.
"The technical trend is still very weak and daily indicators are still oversold, although we may see some rebounds as the STI goes down," said one chartist, adding he saw firm support for the STI at 1,500 points.
Analysts and dealers also said they had noted increasing volatility in recent sessions.
"Right now it's sort of rotation selling in tech shares. The movement is very erratic," said Chong Yoon Chou, director of Aberdeen Asset Management Asia.
Analysts said uncertainty ahead of first-quarter results from U.S. firms would continue to dog the Singapore market but Friday's higher finish on Wall Street could encourage a firmer tone this week.
The focus is expected to stay on Singapore Telecommunications after a roller-coaster week in the wake of its announcement of a plan to buy Australia's Cable & Wireless Optus , which was seen by many analysts as an expensive deal.
Fund managers and dealers also noted a gradual switch of buying interest into "old economy" stocks.
Bank shares gained ground late last week as speculation about Overseas Union Bank's (OUB) impending alliance with a strategic partner helped rekindle interest in the sector.
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BANGKOK - Thai stocks are expected to move higher this week, boosted by optimism about the government's planned measures to bolster the market.
But the gains will be limited by the bearish trend of the global economy and the weak baht, and trade will be thinned by holidays in some Asian countries, analysts and fund managers say.
The composite index closed up 4.06 points or 1.41 percent on Friday at 291.94 points on turnover of 3.20 billion baht ($71.27 million).
The stock market has been lifted by the planned government measures, which include tax incentives for companies who list, but weak global markets have exerted downward pressure and it rose only 0.58 percent over last week.
This year the index has risen 8.45 percent but it is still far below the peak of 1,789 points registered in January 1994.
Analysts said the slowdown in the United States and Japan would remain a big influence on the Thai market.
Prime Minister Thaksin Shinawatra said on Saturday he planned to offer tax incentives for newly listed firms, aiming to lure more companies to list on the sluggish stock market.
Companies applying for listing within the next three years would be offered a reduction in corporate income tax to 25 percent from 30 percent for five years.
The Thai government said it would also speed up privatising major state enterprises in the transport, communications and energy sectors, and amend major securities-related laws.
Analysts said the measures were welcome but would only give a short-term boost to the market. They expected the SET index to move in a range of 280 to 310 points.
"The stimulus things may help lift market sentiment, but not much as they had already been discounted. The implementation will also take time," said Maris Tarab, managing director of fund management at ING Mutual Funds Management.
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SEOUL (Reuters) - South Korean investors are likely to stay on the sidelines this week as market sentiment has turned bearish after an unexpectedly high March inflation number cooled hopes for a rate cut by the central Bank of Korea (BOK).
The consumer price index (CPI), the broadest gauge of inflation, showed a 0.6 percent uptick in March from a month earlier, versus a 0.2 percent rise in February.
The central bank, which has maintained a neutral bias since it lowered its target for the key short term call rate by 25 basis points to five percent in February, was widely expected to cut its overnight call rate at a policy-setting meeting on Friday.
Analysts said the benchmark index, the Korea Composite Stock Price Index (KOSPI), was expected to move between 500 and 520. The index dipped 0.11 percent to 523.22 on Friday.
"The broader index would look to the U.S. for momentum and if the Nasdaq stays around 1,800, the Korean market will find support at 500 points," said Chung Soon-ho, a fund manager of Korea Investment Trust & Management.
The index shed 2.7 percent on the week. Its downside was supported by a creditors' agreement last Thursday to provide a 2.9 trillion won ($2.20 billion) lifeline to troubled Hyundai Engineering and Construction .
Analysts said some fresh buying from institutional investors was likely to limit the downside for the market.
Analysts said shares in shipbuilding firms such as Samsung Heavy Industries would put a floor under the market as they were key beneficiaries of a weaker won against the dollar, because of their dollar-based settlements.
SK Telecom , South Korea's top mobile carrier, is seen as a buying target after it shed 11.9 percent between March 20 and last Thursday
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