ASIA STOCKS pull back after rally

Southeast Asian markets notched up healthy returns for a week.

The gains this week helped the recovery of these markets: Indonesia’s JSX was 6.5% higher since last Friday and Thailand’s SET jumped 5.7% over the same period.

On Friday, Asian stocks took a pause after the previous session’s strong gains: Australia’s S&P/ASX 200 fell 0.4%, Indonesia’s JSX fell 1% and the Philippines PSE Composite dropped 0.5%.

The Reserve Bank of India has unexpectedly hiked repo rates, sending the Sensex tumbling by more than 500 points.

The RBI's new Governor Raghuram Rajan raised the repo rate by 25 bps to 7.50%.

Rajan voiced concerns about Rupee strength, with capital outflows driven higher in recent weeks, thanks to concerns that the US Federal Reserve was going to cut the size of its monthly asset purchases driving up FX market volatility. Now that this driver has been mitigated, the focus has turned to internal determinants of the Rupee, primarily India’s fiscal deficit and domestic inflation.

Japan’s Nikkei fell 0.2% as the U.S. dollar weakened slightly in Asia.

In Tokyo, real estate firm Mitsubishi Estate Co. rose 1% after the average land price in greater Tokyo, Osaka and Nagoya rose 0.1% on year as of July 1, the first on-year rise in five years.

Also in Tokyo, retailer Aeon Co. dropped 0.5% after a Nikkei report said that the company’s consolidated operating profit for the six months ending Aug. 31 will likely fall short of market consensus.

Much of North Asia was closed for public holidays Friday, with mainland China, Hong Kong and South Korea shut.

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