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Market Savvy

Not All Markets Are on Upswing

September 09, 1998|CHRIS KRAUL | TIMES STAFF WRITER

Federal Reserve Chairman Alan Greenspan's hints that a U.S. interest rate cut might be in the offing continued to buoy worldwide markets Tuesday, but political and economic uncertainty flaring from Indonesia to Brazil cast doubt on how durable the upturns will be.

Composite stock indexes in Japan, Hong Kong and Singapore all finished marginally higher as stocks posted advances in Paris; Frankfurt, Germany; Milan, Italy; and Mexico City. A stronger yen and renewed optimism over U.S. economic and interest rates fueled the gains, as did investor hopes that the worst fallout from the Russian crisis is past.

Uncertainty reigned in Brazil, South America's biggest economy, where stocks fell slightly after the government announced measures to halt the flight of foreign capital, restore confidence and avoid a devaluation. The market's tepid response reflected concerns among investors that the government didn't go far enough. Brazil's Bovespa index closed relatively flat, down only 0.4%.

Greenspan's hint Friday of a possible interest rate cut was good news for Asian stocks because it could mean a better financial scenario for exporters such as Japanese multinational giants, said Jeff Bahrenburg, global investment strategist at Merrill Lynch & Co. in New York.

The yen closed Tuesday at about 132, up from its low of 147.66 to the dollar on Aug. 11.

Other positives in Asia include the improving economic condition of South Korea and the Hong Kong government's intervention in stock markets, according to analysts.

But stocks fell 21% in Malaysia on Tuesday, erasing the 22% gain on Monday after the government imposed currency controls.

Japan's Nikkei-225 stock average ended up 0.8%, while South Korea's bourse ended a four-day rally, edging down 0.5%. In Indonesia, the Jakarta exchange closed down 0.5%, but Hong Kong closed up 1.4%.

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