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ASIA MARKETS: Asian Stocks Rise Ahead Of New Year's Weekend

by December 30, 2016 General

By Kenan MachadoNikkei dips but Toshiba shares recover; weaker dollar boosts China indexesAsia’s equity markets ended 2016 slightly higher, despite a number of unexpected global events that had threatened to throw markets into disarray.With China the main exception, major Asian stock markets rose for the year. Australia’s S&P/ASX 200 rose 7%, while both Japan’s Nikkei Stock Average and Hong Kong’s Hang Seng Index added 0.4%. Singapore’s Straits Times Index rose 0.2% for the year.Among smaller markets, particularly those in Southeast Asia, performance was more mixed, with benchmark indexes in Malaysia, Vietnam and the Philippines ending the year in the red.Thailand’s benchmark SET 50 index was an outperformer, with the index on gaining 18.6% for the year, even as investor buying interest paused after the death of the country’s long-reigning monarch in October.“We are seeing a Goldilocks scenario in global markets,” said Khiem Do, head of Asian multiasset investments at Baring Asset Management.Corporate earnings have been picking up, prompting investments, he said. In addition, Do said that toward the second half of the year, investments in fixed-income assets started moving to equities, helping global markets.Still, there were a number of global surprises that affected Asia’s equity markets, including the Brexit vote in June and Donald Trump’s victory in the U.S. presidential election in November.Even more surprising, analysts say, was the stock-market rally that followed Trump’s win. That was opposite earlier expectations of what would happen in the event of a Trump win, said Andrew Sullivan, managing director of sales trading at Haitong International Securities.“People have become more cautious and acting on fact rather than rumor,” Sullivan saidMeanwhile, the Shanghai Composite Index tanked 12.3% for the year, as regulators there cracked down on leveraged purchases of stocks by insurance companies and as the yuan fell about 6.5% against the U.S. dollar for the year.To be sure, China’s declines could have been much steeper. In January, the Shanghai index plunged as much as 25%, as a circuit-breaker mechanism for the stock market, introduced to reduce volatility, set off a global market panic, forcing authorities to shelve the system.Malaysia’s Bursa index (1818.KU) ended down 3.7% for the year, suffering from the controversy surrounding the Malaysian state investment fund known as 1MDB.Though not considered one of Asia’s main markets, Pakistan’s benchmark KSE 100-stock as on track to become the biggest gainer this year, with a 45.3% surge after its inclusion in the MSCI Emerging Markets Index in June.However, on Friday, the last trading session of 2016, a weaker dollar early in the day sent local currencies higher, hurting the competitiveness of exports in the region.The greenback later recovered to trade 0.4% higher compared with the yen. But that wasn’t enough to stave off the decline in export stocks such as Honda Motor (>> Honda Motor Co Ltd) , which dropped 0.8%; Nissan (>> Nissan Motor Co., Ltd. (ADR)) , which ended down 0.4%; and Sony (>> Sony Corp) , which fell 0.7%.