MONTREAL - Last week was marked by a high differentiation of performances among
exchanges around Asia. The MSCI Asia Pacific Index showed the region as a whole
up 2.6%, to 119.28 from the previous week's close, with the ex-Japan Index up
3.0% to 408.49. However, of the nine exchanges discussed here, a group of five
turned in gains of over 2.5% while a group of three registered slight losses.
Only one exchange fell between the two groups.
Nor was there a great deal of uniformity within the geographic subgroups, with
the exception of North Asia, which severely underperformed the rest. The South
Korean KOSPI was down 0.1% to close at 1,572 after having closed Wednesday at
the week's high (including intraday high) of 1,595. It is still near the
bottom of the trading range it has occupied since the beginning of August, and
its short-term technical indicators are neutral to poor but have not
deteriorated since last week.
Japan's Nikkei 225 was off 0.2% to 9,770. Despite the mild loss, it is the
second week running that this index has been the worst performer. Rather like
the KOSPI, the Nikkei is also near the bottom of its recent trading range
(since mid-July) and also has poor short-term technical indicators.
The only other notable intra-subgroup homogeneity was in the fact that Hong
Kong and Taiwan, two of the Greater China exchanges, were two of the three best
performers of the week, also sharing good Monday and Wednesday up days in which
Shanghai did not participate. Indeed, while the Hang Seng Index in Hong Kong
rose 3.3% to 22,344 and the Taiwan Stock Exchange Composition (TSEC) was up
2.7% to 7,666, the mainland's Shanghai Stock Exchange Composite (SSEC), closed
Thursday, labored to rise 0.7% to 3,188.
The SSEC's short-term technical indicators improved considerably over the
course of the week. It is now up against a resistance from April 2007 that it
surmounted four months ago before falling back into its short-term trading
range. The Hang Seng and the TSEC are both now near the top of their respective
short-term trading ranges, and short-term indicators for both turned positive
in the past week.
Mumbai's BSE Sensex 30 turned in the outstanding performance of the week,
rising 4.3% to close at 16,848. The week's close was nearly identical with the
close on Wednesday, with the overwhelming proportion of the week's advance
coming on only two days, Monday and Wednesday. Still, its short-term technical
indicators did improve somewhat from the previous week.
For the last three days of the week, however, the Sensex was unable to hold any
penetration above the 16,850 level; the weekly intraday high was barely above
16,900. Recall that I wrote three weeks ago that this index's three-month
trading range had a top-out in the low 17,200s, where there is significant
resistance from multiple tops from the first quarter of 2008 extending up into
the low 18,000s.
The Straits Times Index (STI) in Singapore yet again chose to follow not the
South Asian but instead the Australasian pattern: or rather, the Australian
pattern, since there was significant divergence between it and the New Zealand
pattern. The New Zealand 50 Index Gross (NZX) was the least-volatile exchange
and tied for second-worst performance, ending almost unchanged but slightly
down at 3,158. It remains at the top of its short-term (since mid-July) trading
range; its short-term technical indicators have improved slightly since the
previous week.
The Australian All Ordinaries Index and the STI, on the other hand, tied for
fourth-best performance of the week, which meant a gain of 2.6%. The Australian
index thus finished at 4,722, but still within its short-term trading range
begun in early September and with somewhat deteriorating short-term technical
indicators. The STI's performance meant that it closed at 2,727, at the top of
its short-term trading range (since late July) and with slightly improving
short-term technicals.
So last week the MSCI Asia Pacific ex-Japan Index returned to its high of a
month ago, although its technical well-being is perhaps a little weaker than it
was back then. Yet there remain the resistances that I mentioned back then, at
414, 418, 422, and 432. Shanghai's strength over the past month (the past week
being an exception) has perhaps buoyed the other exchanges psychologically.
Curiously, however, when Shanghai was weak, (some) other exchanges were very
strong, while a week earlier, when Shanghai was strong, no other exchange was.
Markets everywhere are on thin ice.
Dr Robert 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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