MONTREAL - The Taiwan, Mumbai, and Singapore main indices were the most
striking in an altogether striking week on the Asian equity markets. Mumbai and
Singapore were two of the three most volatile exchanges for the fifth week
running. Taiwan joined them in the top three most volatile for the second
successive week.
The Taiwan Stock Exchange Composite (TSEC) tried and failed to surmount the
resistance around 6,000 that I pointed to last week (see
Stirrings of hope, Asia Times Online, April 10, 2009). It closed
Thursday right at the 6,000 level and opened Friday above 6,070 before falling
back to 6,000, mounting one more challenge only to halt the upsurge just below
the level of its open. It then fell
precipitously throughout the day to lose 4% by the close, ending with a weekly
loss for the first time in two months, off 0.5% since last Friday's close.
In Mumbai, the BSE Sensex 30 index was up to 11,287 by midday local time on
Friday, and on the verge of confirming its conquest of the crucial 10,945
intraday high from November 5 to which I also pointed last week. It closed
Wednesday above that level but on Thursday slightly below it. It would need to
maintain the level through the beginning of next week for the penetration to be
unequivocally successful. As Friday afternoon begins, it is mounting a direct
challenge to the governing descending-tops downtrend from its all-time high in
mid-January 2008. The chart of the broader-based Nifty looks as though it has
already met that challenge with tentative success.
The Sensex looks to be Asia's third-best performing index on the week, up 4.7%
as of early Friday afternoon. Singapore's Straits Times Index, which held
volatility honors with the Sensex this week, will be the fourth-best performer,
up about 4% at 1,899.84. It is preparing to challenge the top of its
medium-term trading range at 1,925 from January 5 of this year. If that
challenge is successful, then it could make ready to challenge a secondary
governing descending-tops downtrend, not from the beginning of its decline in
October 2007 but since a more acute phase of that decline beginning last May.
The exuberance of the Indian and Singaporean indices is not so widely shared
throughout the rest of Asia, despite admirable recoveries so far by various
Greater Chinese and northeast Asian national indices. This raises the
possibility of considering India and Singapore not so much as exchanges whose
patterns swing one or the other way between those other two regions, but rather
as characteristic of an emerging South/Southeast Asian regional group.
Australia and New Zealand have been so desultory as to obviate consideration in
this context despite their large gains this week of 5.5% and 3.7%, overdue
following several months of extraordinary weakness. If Singapore is able to
mount a successful challenge to its governing downtrend as just described, and
if other, more minor national indices in that broad region may be construed to
the general pattern thus discerned, then the case for considering all these
together as a regional grouping would be much strengthened.
While Tokyo, Seoul, and Taiwan took a collective breather this week, each
closing down between 0.2% and 0.8% on the week, Shanghai and especially Hong
Kong deserve a special note.
Hong Kong's Hang Seng Index in particular looks to close as one of the week's
best gainers if not the best, up 6.1% at Friday midday but losing strength as
the afternoon wore on to close little changed on the day. Its chart continues
closely to track Singapore's as it has since April last year, and especially in
reference to the approaching critical conjuncture in the latter's chart as
described above.
The Shanghai Stock Exchange Composite (SSEC) index remains firmly above the
2,400 top of the trading range it entered at the end of last August. Closing
the week at 2,532, it is preparing now a key attempt to breach a medium-term
band of resistance stretching from the low 2,600s to the low 2,900s. If the
SSEC succeeds in holding a penetration through the upper bound of that
resistance, then it will have confirmed a bullish reversal of the long-term
decline since late 2007; if not, then we should expect the SSEC to trace
another strong leg down, probably down to medium-term low close to 1,700, the
lower bound of the trading range out of which it has just accelerated upward,
although not necessarily any further than that.
In conclusion, the week's "laggards" are lagging only relatively and actually
taking a breather from recent dynamic upward moves. Tokyo's Nikkei 225, closing
at 8,908 on the week and still enjoying the momentum of a strong short-term
up-channel, looks ready to challenge the top of its medium-term trading range
at 9,080. Seoul passed that test long ago - it is already up nearly one-third
since the beginning of March - and structurally resembles the Shanghai index as
described above.
Dr R M Cutler(http://www.robertcutler.org), educated at the
Massachusetts Institute of Technology and The University of Michigan, has
researched and taught at universities in the United States, Canada, France,
Switzerland, and Russia. Now senior research fellow in the Institute of
European, Russian and Eurasian Studies, Carleton University, Canada, he also
consults privately in a variety of fields.
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