The Hindu Business Line : Asian indices ignore inflation, post weekly gains

Taiwan, India and Japan were the top performers in Asian stock markets, up by over 4 per cent each; even as crude oil for June delivery neared $128 per barrel (one barrel is equivalent to 117.4 litres) on the New York Mercantile Exchange.

Some emerging market equities such as Russia’s RTS, hit their highest levels, outperforming most global stocks.

Some analysts interpret the gains as signs of risk appetite picking up, as the global investors start chasing high growth commodity based markets once more.

That said the Chinese earthquake became another reason to fuel crude prices, as the world’s most populous country is expected to consume more power as it rebuilds itself from its worst natural disaster in 58 years.

Chinese Indices such as Shanghai (A and B), Shenzhen A, SGX-China managed to close the week flat.

Shanghai-Shenzhen 300 Index Futures were up 1.5 per cent for the week ended Friday.

Amongst Asian indices, Vietnam - touted to be the next Asian tiger - was the worst performer in the week, losing more than 8 per cent, even as the socialist government takes steps to curb spiralling inflation.

Inflation in Vietnam, which rose to over 25 per cent, has cooled off to 22 per cent. The tightening of money supply to control inflation has made credit more elusive to investors who borrow money to invest.

Inflation however did not dampen Russian markets. The bulls continued to march on, with key indices gaining 8.5 per cent for the week.

The Russian Economic Development Ministry has forecast an inflation range of 9-10 per cent for 2008.

Investors in Russia are, however, betting that the country’s oil companies will be taxed less, leading to a boost in oil production and refining.

Investors viewed European stocks with more favour as well.

Most indices in the region, which has higher oil reserves than the developing Asian economies, recorded positive gains.

The other weekly gainers in Europe were Denmark (6.5 per cent), Austria (5.5 per cent) and Norway (5.1 per cent), to name a few.

Brazil was the best performer among the Americas, as foreign investors continue to perceive it as one of the less tricky investments amongst emerging markets.

Stocks in the Latin American nation gained 4.5 per cent for the week as its energy sufficiency, pro-capitalist stance and natural resources continues to impress, especially at a time when investors are bullish about natural resources.

The Dow Jones Industrial Average gained 2 per cent for the week. Stocks in US declined on Friday on the back of weak consumer confidence, muting the overall weekly gain.

Although impact of bad news from U.S has been less on Asian and emerging markets recently, investors would do well to watch out for minutes of U.S Federal Open Market Committee to be released on May 21 (Wednesday) and existing home sales data to be released on May 23 (Friday).

More Stories on : Economy | Stock Markets

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page