MONTREAL - A nondescript, unstructured week on the main Asian equity markets
ended with all the major national indices ending down after mainly up days at
either end of the week. The singular exception was the Shanghai market, which
posted a more than 11.5% gain on the week. Indeed, Shanghai was the best
performer on three out of the five days and second-best on a fourth.
General past patterns, however, were not in evidence, as the markets were
unsettled and unsure whether to continue their exhausting march downwards.
Geographic groupings were not in evidence.
Thus Taiwan and Hong Kong had a rather rougher week than Shanghai, turning in
two of the three worst performances of the
week, Taiwan in particular being down 6.1% at 4,453, having bounced three weeks
ago off a support close to 4,000 from five-and-a-half years ago. There is
another support underneath that, at 3,800, or 36.7% down from the high in the
low 9600s towards the end of last year.
In the Australasian region, Australia was the largest loser on Monday and
Thursday and for the week as a whole, with the All Ordinaries down 7% to 3,728.
Another 10% decline from that level will take it to the top of the first band
of really substantial support stretching from 3,350 down into the high 2000s.
Indeed, the Australian market’s whole decade of 1993 through 2002 is a closely
worked chart from the 2,000 level itself up through the low 3,300s. Although
the region around 2,600 has an aggregation of minor supports, there are no
especially striking supports throughout this whole band; rather the entire
range represents an underpinning.
The other main market in the Australasian region, New Zealand, was the
third-best performer on the week, down only 0.9% to 2,768, just below the
support around 2,900 from May 2005 and 36% down from its high at 4,305 in early
October 2007. And Singapore, which often but not always follows the general
Australia-New Zealand pattern, posted the median loss of 4.5% on the week.
That performance led it down to the high 1,700s, testing a series of supports
from the early 1990s that were confirmed in 1998 but later broken. These may
break but there is a still firmer support at the 1,500 level, which figure is
down just under 62% from the all-time high nearly 3,900 in November 2007.
The BSE Sensex 30 in Mumbai failed to make good its assault last Monday on the
relatively mild resistance at 10,600 that was established in July 2006. It
backslid on Tuesday and on Wednesday, before closing for a holiday all day on
Thursday and dropping further on Friday after an early-morning rebound. Mumbai
turned in the week’s second-worst performance after Australia, down 6.3% at
midday local time before gaining somewhat to close around 9,530s, but still
down around 65% from its all-time high. With no clear support between there and
the 7,700 level that it bounced off of in late October, it could revisit and
retest that support after some sideways to-ing and fro-ing over the next
several weeks.
Finally, the two bellwether markets, Tokyo and Seoul, also had somewhat
divergent performances, lending further evidence to the unsettled psychology of
the Asian markets, the Nikkei 225 being down 0.6% on the week (actually the
best performance) and the KOSPI down 4.2% to close at 1,088, just over 50% down
from its October 2007 high and finding support from a series of local maxima
stretching from early 2005 back to the late 1990s.
One thing that temporary stabilized was general volatility: not that volatility
significantly decreased, but rather it was relatively invariant across national
markets. Hong Kong was the most volatile on the week, and New Zealand the
least, but aside from these two (and perhaps Taiwan), all other markets were
almost equally volatile, the high-low swings for the week, for example ranging
between only 10.2% and 11.9% for the other six markets. This is a remarkable
concentration of range, but it could signify an incipient consolidation just as
easily as it might be a statistical accident.
To summarize, a general holding pattern of recent weeks continues. A new
element is that the implications of the Chinese announcement of increased
infrastructure spending are still being teased out of the details of its
implementation. It is far from clear, however, that Beijing can replace the
American public as the world economy’s consumer of last resort.
R M Cutler (http://www.robertcutler.org) is a Canadian international
affairs specialist.
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