Weekly Overview: Mar 26 to Mar 31, 2007

Global market crossed through a choppy week with mixed endings. .....

YT Kum, CFA 02.04.2007
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Global market crossed through a choppy week with mixed endings.

A huge decline in new home sales and weaker consumer confidence sent US market lower early last week. Ben Bernanke, Fed Chairman, spoke at congressional testimony that US economic outlook is becoming more uncertain, fuelling the worries. Those worries are soon tempered by the stronger-than-expected final read for the fourth quarter GDP growth. A surprising fall in initial jobless claims also gave some supports. The U.S. will begin imposing tariffs on some goods from China, which would possibly trigger a trade war. The latest financial statement of Dell contains some errors, showing its weakness of financial control. For the week, Dow Jones Indust

rial Index closed at 12,354.4, up 1.01%; Nasdaq Composite closed at 2,421.6, up 1.11%; S&P 500 closed at 1,420.9, up 1.06%.

US market bogged down European markets early last week, but some fresh M&A rumors underpinned a strong recovery. After hives of M&A news coming from financials and utilities, it is rumored that Heineken is planning to acquire stakes in Scottish & Newcastle, a vintner in UK. For existing M&A deals, E.On raised its bid for Endesa, a Spanish power company, to US$56.41bn to fight against the joint bid from Enel and Acciona. Citigroup joined the team of investment banks advising Barclays in the potential acquisition to ABN. For the week, London FTSE 100 lost 0.50% to 6,308.0; Frankfurt Xetra DAX closed at 6,917.0, up 0.26%; Paris CAC 40 lost 0.01% to 5,634.2.

Governor of Japanese Central Bank said the bank needs to raise interest rates gradually to sustain a healthy growth of the economy. Better-than-expected February industrial data cheered up stock prices of manufacturers in Japan. But exporters dropped due to slightly stronger Yen. For the week, NIKKEI 225 dropped 1.10% to 17,287.7.

Henderson Land, a construction company, said last Tuesday, it will buy assets from its investment arm for about HK$12.1 billion. The sale is subject to approval from independent shareholders. So Chak-kwong, deputy chairman and group managing director of PCCW resigned last Wednesday, after the company had reported a 21.5 percent yoy drop in 2006 net profit. Ajisen (China), an IPO under spotlight, jumped up more than 30 percent at the first day of launch. For the week, Hang Seng Index added 0.55% to 19,800.9. Shanghai stock market kept running to new highs. Shanghai A-Share Index reached 3,346.4 last week, up 3.59%, leading H-shares Index added 128 to 9,616.2.

Central Bank of Taiwan raised the key interest rate by 0.125%, and it is the eleventh rise in a row. The rate hike sent some insurance stocks, like Cathay Financial higher. HP sued Acer in the U.S., dragged the stock price of Acer as well as other heavyweight tech stocks in Taiwan. For the week, Taiwan TSEC weighted index edged up 0.32% to 7,884.4 and Singapore Straits Times Index rose 0.79% to 3,231.2.

US's ongoing conflict with Iran pushed the crude oil future up 5.76% to US$65.87 per barrel. Gold future rose slightly by 0.87% to US$663.0 per ounce. As for the currencies, the dollar was quoted at 117.835 Yen and the euro was $1.3355. British pound was quoted at $1.9679 and Aussie was $0.8086.

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About Author

YT Kum, CFA  YT Kum is a consultant for Morningstar, contributing to manager selection and asset allocation activities in Asia, and is responsible for providing investment thought leadership on topics relevent to investors in Asia.  

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