Asian Stocks Regain Some Lost Ground 
International Herald Tribune
January 15, 1994
Michael Richardson and Lawrence Malkin    

Reversing several days of sharp falls, most Asia-Pacific stock markets rebounded on Friday, with Malaysia scoring the strongest gain. The composite index of the Kuala Lumpur Stock Exchange jumped 10.2 percent.

The rises, however, failed to make up for recent heavy losses when investors, led by American and Japanese institutions, dumped stock to take profits in what were widely viewed as overheated markets.

The Kuala Lumpur stock market had lost nearly 15 percent of its value in the three days before Friday.

Analysts said that an assurance Thursday by Mahathir Mohamad, the Malaysian prime minister, that the government believed the fall in share prices was temporary because Malaysian companies had a sound base had helped to revive confidence in both the Kuala Lumpur and Singapore exchanges, which trade many of the same companies.

In Singapore, the benchmark index rose 4.92 percent. The Asia-Pacific component of the International Herald Tribune World Stock Index rose 2.81 percent, to 119.74.

Brokers said buying on Asia-Pacific exchanges on Friday came from both foreign and local sources. "People felt the markets had been sold down too aggressively," said James Bax, Managing Director of Baring Securities (Singapore) Pte Ltd. "There is still a lot of money around and the fundamentals of most regional economies are still strong."

But he cautioned that Asia-Pacific stocks were likely to be volatile in the next six months as investors cashed in on huge gains made over the past year and shifted funds to other areas.

The stock market in Japan, which some fund managers have said is due for a re-rating after a dismal performance in the last two years, staged a late afternoon rally. Tokyo's Nikkei average gained 2.13 percent.

"New York shares are starting to recoil from highs, and since other Asian stock markets are overheated, foreigners are pouring into" the Japanese market, a trader at Tsiheiyo Securities in Tokyo told Reuters.

In Hong Kong, the Hang Seng index surged 5.87 percent.

Steven So, an analyst at Jardine Fleming Securities in Hong Kong, said that the rebound of shares in the colony was "quite strong but we need to break above 11,000 to reverse the downtrend" set by the market's plunge this week.

The Hang Seng index ended at 10,774.25, up 597.74 points, after plunging 5 percent on Thursday.

But heavy falls in share values in South Korea and Taiwan underlined the volatile state of regional stock markets.

In Seoul, investors dumped shares across the board after the announcement of government measures aimed at cooling down the market. The composite index plunged 19.63 points, or 2.18 percent, to close at 979.03.

Stocks in Taiwan fell 1.8 percent. Brokers in Taipei said the panic that caused Thursday's 5.9 percent fall had subsided, but many believed the market was still in a downward consolidation after its recent bull run.

Stock markets in Australia and Thailand rose strongly while the Philippines and Indonesia had moderate gains.

Australia gained 28.9 points to close at 2,206.4.

"We've had a couple of days where the market has been off, but there is still a lot of cheap stock around and there is money coming in from overseas," said David Baker, joint managing director at Baker Young securities in Sydney.

The rebound in Asian markets caused little surprise on Wall Street, which had put up warning flags especially for their volatility not as signs of underlying trouble.

The Merrill Lynch advisory that helped trigger the correction was quite explicit: "Hong Kong's market is beginning to display the random day-to-day volatility that suggests to us an intermediate top is forming after a 116 per cent rise in 1993."

"Just remember, this wasn't a wipeout," said David Strongin, international research director for the Securities Industries Association. "Those who got in at the right time in Southeast Asia have done very well, and this still leaves a lot of them quite well off."

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