Investors puzzle over Greenspan

ASIAN investors were uncertain which way to read Alan Greenspan's overnight bullish testimony in Washington. Some were cheered by the US Federal Reserve chairman's view that the recovery was well on the way, but others worried that this signals the end of the era of low interest rates that has helped pull Asian economies out of their post-1997 decline.

In Japan, motor shares slid as the recent rise in the yen dented hopes of big benefits to sales and profits, but buoyant electronic stocks continued to fuel the recent powerful rally. The Nikkei 225 Average breached 12,000 for the first time since early August, hitting a peak of 12,010.3 before slipping to 11,885.79, for an advance of 237.45 - a gain on the week of 3.9%, and a 16.5% rise on the year.

Since it hit an 18-year low on 6 February, the Nikkei has rallied 26%, pushed up by expectations of a global recovery and some heavy bear covering following changes to short selling rules. Although the yen eased during the morning after warnings from government ministers that action would be taken against speculators they claim have pushed the currency too far too fast, its recent strength hit shares of Toyota, Honda, Nissan and Mazda by as much as 5%.

Computer-related stocks bounded higher on expectations of a pick-up in demand from the US. Chip-making equipment manufacturers were among the biggest gainers with rises of 4% in Kyocera, while semiconductor giant Fujitsu put on 3.5% and Toshiba was up 2.5%.

Hong Kong stocks held on to some narrow gains as exporters responded to Greenspan's outlook, but action was subdued by the knowledge that the pegging of the local currency to the US dollar means any rise in US interest rate would instantly be duplicated. The Hang Seng index closed the morning session up 45.2 points at 11,233.2.

HSBC Holdings rose for the third day running with a gain of 75 cents at HK$92.50 on the improving prospects for its US business, while big export traders Li & Fung surged almost 2%.

Rapid profit-taking eliminated early gains in Taiwan when shares were lifted by the prospects of participating in the US rebound. The Weighted Average finally drooped 36.5 to 6011.65 after spending some time below the 6000 support level.

Investors were also cashing in their South Korean stocks, deterred by fears of higher interest rates hurting the still-fragile balance sheets of many of the country's large companies, and the Kospi index fell 4.17 points to 825.27.

Singapore stocks broke their losing streak, and the Straits Times index rose 7 points to 1801.3. Sydney stocks took a breather as investors judged that the US recovery hopes were more than priced into the market. But the All Ordinaries index enjoyed a late surge, climbing 45.3 to 3485.3 despite falls for News Corporation and resource stocks.

Smaller South East Asian markets reacted favourably to Greenspan's comments. Thailand's SET index rose 2.27 points at 393.94, Malaysia's Composite index was 5.87 points higher at 747.59, and in Indonesia Jakarta's Composite index was up 3.28 points at 475.67.

Prices and indices in this section are supplied from various sources and calculated at different times and may not always match those listed on the site.