SINGAPORE, July 11 (UPI) -- Asian stock markets had a mixed week, with investors focusing on local fundamentals and developments. Tech stocks continued to support overall sentiments, especially in the early part of the week, helping many markets to reach multi-month highs. But profit-taking activity dominated the later part of the week, following Yahoo's disappointing results.
After touching a 12-month high on Tuesday, Taiwan's TAIEX eased throughout the rest of the week to close Friday at 5,282.38 as profit-taking on tech stocks took some of the shine off.
Early in the week, investors piled in after President Chen Shui-bian announced the country would soon ease curbs on foreign investment in the island's capital markets, ending the $3 billion cap on investment by qualified foreign institutional investors (QFIIs). He also said Taiwan would end the entire QFII system by the end of the year, two years ahead of schedule. Taiwan established the QFII scheme in 1991 to monitor fund inflows into the local market.
Foreign fund favorites like Taiwan Semiconductor Manufacturing Co (TSMC) and United Microelectronics (UMC) posted strong gains early on in the week. TSMC, the world's largest contract microchip maker, posted strong June revenues, boosting second-quarter sales up 13 percent on the year, thus beating the company's own aggressive forecasts. UMC also reported solid June sales on Wednesday. However, the two counters were also in the firing line when the market turned bearish Wednesday, as investors locked in profits.
Early in the week, the market was also speculating that key banking legislation, which would help banks write off bad loans, would be passed later on by parliament. But after parliament failed on Thursday, the last day of a special three-day session, to pass the banking bill, banking shares were heavily sold, with investors worrying much needed banking reforms will now slow down.
Amid the end of week gloom, the construction sector continued to attract interest after parliament approved a bill that will allow companies to securitize real estate to help boost liquidity in the sluggish property market.
SOUTH KOREA
The benchmark Korea Composite Stock Price Index (KOSPI) finished at 704.15 Friday, up 1.6 percent on the week but off a 7 month high close of 708.34 reached Tuesday.
Throughout the early part of the week, speculation the central bank would cut interest rates to support to the ailing economy boosted sentiment, but the market actually fell on the confirmation of the rate cut, as the central bank also lowered its growth forecast to 3.1 percent from a previous 4.1 percent. It said the economy had entered recession for the first time since the 1997-1998 Asian financial crisis.
Though steady foreign buying interest continued to lend support to the market, some investors now feel the upward momentum is weakening and are likely to remain on the sideline until the earnings season kicking off. Memory-chip maker Samsung Electronics and steel maker POSCO Co are set to unveil second-quarter results next week. Analysts expect POSCO's second-quarter profit -- to be released Monday -- to have more than trebled due to rising product prices, while Samsung could report a 40 percent fall in second-quarter profits Wednesday.
Auto maker Hyundai Motor remained a cautious buy as investors believe an expected tax cut for car purchases will boost domestic demand. On the downside, the company has also been dogged by labor concerns, with unionized workers indicating they will continue partial strikes through next week.
Affiliates of SK Global Co have been supported by news they may not be forced to bail out the ailing oil trading company. Local creditors will discuss next week whether to put SK Global into court receivership. This could pressure foreign lenders to support the $2.4 billion bailout plan. Differences between local and foreign creditors remain about a debt buy-out scheme. Local lenders and SK Global have offered to buy foreign lenders' debt for 43 percent of its face value, but foreign creditors have demanded payment of 100 percent, with 72 percent of face value in cash and the remainder in equity-linked securities such as convertible bonds or bonds with warrants.
HONG KONG
The Hang Seng Index retreated Thursday and Friday to close the week at 9,911.50, but the index was still up 2.85 percent on the week.
Throughout the early part of the week, shares had risen after the government announced its decision to postpone a controversial anti-subversion bill.
Last week, growing concerns about political stability in the territory had weighted on activity, with Hong Kong remaining one of Asia's worst performing stock markets this year.
But tens of thousands of people rallied once more Wednesday demanding the complete scrapping of the security bill, shaking investors confidence further. There is now speculation the territory's unpopular leader, Tung Chee-hwa, may have to step down.
Amongst the week's performer, exchange operator Hong Kong Exchanges and Clearing posted some gains on speculation it will benefit from higher turnover as global equities recover from their recent slump.
Liu Chong Hing Bank was also in the spotlight after indicating it had received merger offers, though the bank has yet to identify interested parties.
Chinese beer maker Tsingtao Brewery was also higher after reiterating its 2003 beer output target of 3.5 million tones, despite the SARS outbreak.
THAILAND
After a two-day losing streak, the benchmark Stock Exchange of Thailand (SET) composite index rose 2.13 percent Friday to close at 484.39 points. But dealers noted foreign investors selling throughout the week as profit-taking crept in. The exchange has been one of Asia's best performing markets with investors encouraged by the strong domestic economic environment and low interest rates. The market has risen nearly 30 percent in the last two months.
Activity continued to centre on Thai Petrochemical Industry, the country's largest corporate debt defaulter. A Thai court has now approved a five-man debt administrator appointed by the government in a bid to end a bitter six-year struggle for control over the firm between the company's founder and its creditors.
Meanwhile Advanced Info Service (AIS), Thailand's biggest mobile phone operator was sold down after the company announced it would reduce post-paid rates to retain users.
MALAYSIA
A fairly quiet week for Malaysian equities, which rose to a 10 and a half month high on Monday only to retreat slightly throughout the rest of the week on profit-taking to end nearly flat at 723.90 Friday.
Speculation of imminent banking mergers continued to buoy interest in finance plays, with normally quiet Public Bank trading aggressively.
Indeed, this week AMMB Holdings and Commerce Asset-Holdings announced they would start merger talks of their banking units after receiving approval from the central bank.
RHB Capital, Malaysia's third biggest banking group, also received central bank approval to start merger talks with German insurer Allianz AG for its non-banking business.
Meanwhile, Renong disposed of 158 million shares representing a 6.2 percent stake in Commerce Asset-Holding, the country's second largest banking group, to institutional investors. Renong still holds a 5 percent stake in the bank; which is likely to be sold to strategic investors such as government-linked institutions.
SINGAPORE
The Straits Times Index had a surprisingly good week, even though the Ministry of Trade and Industry announced a worse than expected second quarter flash estimate for Gross Domestic Product. Real GDP in the second quarter contracted 4.3 percent year on year.
The disappointing data was counterbalanced by the central bank's decision to ease monetary policy Thursday, allowing for a weaker local currency, which will benefit exporters. The index closed up 1.7 percent Friday at 1,544.84
Tech stocks were the best performers this week, encouraged by the NASDAQ performance. Chip maker Chartered Semiconductor rose after the company announced a multi-year volume manufacturing agreement with Germany's Infineon Technologies.
