HONG KONG - Asia's markets rebounded during 2009 from losses incurred in the global financial crisis, but analysts warned of further volatility in the 12 months ahead.
More than a year after world economies went into freefall, the Asia-Pacific region has recovered strongly, largely due to the rapid deployment of massive government stimulus measures.
The year saw investor confidence return across the region. Hong Kong's Hang Seng Index ended 52% higher after being stripped by nearly the same amount in 2008.
In China the Shanghai Composite Index surged 80% while Seoul's KOSPI added nearly 50%. Tokyo's Nikkei-225 ended a tumultuous year 20% higher.
However, analysts warned of further volatility in 2010, as the United States and China look to end massive stimulus packages.
"If the economic recovery in the US takes hold, the government will likely exit its stimulus package," ICBC International strategist Ernie Hon told Dow Jones Newswires.
"Additionally, China is already facing a potential property market bubble."
The Shanghai Composite Index enjoyed a huge bull run in 2009 after shedding nearly two thirds of its value in 2008 as the effects of the global financial crisis took hold.
Beijing in 2008 unveiled a four-trillion-yuan (586-billion-dollar) stimulus package along with big tax breaks to boost domestic spending amid the global slump.
But analysts see the Chinese market consolidating in 2010 as the government looks to rein in record lending and surging property prices.
"In 2010, the Chinese stock market may continue to consolidate in a see-saw pattern. Various factors may affect the market including the possible exit from the stimulus package" said Cai Junyi, stock analyst at Shanghai Securities.
Japan saw a volatile 12 months as the country exited recession but saw unemployment hit a record high as prices continued to fall along with wages and a stronger yen battered exporters.
On Wednesday the Nikkei-225 closed down 0.86% at 10,546.44, still up 20% over the year.
A major concern for policymakers in 2010 is tackling falling consumer prices and averting another deflationary spiral, analysts said.
"Even if the performances of individual companies are impressive (in 2010), the overall stock market wouldn't get a boost without confidence in Japan," said Hiroaki Kuramochi, chief equity marketing officer at Tokai Tokyo Securities.
Investors will continue to look to the United States amid signs the world's biggest economy is recovering from deep recession.
"Recent US economic data have been encouraging," said Macquarie Private Wealth Associate Director Marcus Droga in Sydney. "The US market obviously believes the economy is more likely to get better".
The Dow Jones Industrial Average was up 20% ahead of Thursday's final trading session of 2009.
Elsewhere Sydney's S&P/ASX 200 index added more than 30% in a year that saw Australia hailed as "the wonder from Down Under", as the only major Western economy to avoid recession and the first to ease monetary stimulus amid surging resources exports to China.
However, AMP Capital Investors chief economist Shane Oliver said he expected a weaker 2010 as the after effects of the banking crisis in the US continued.
"That's going to no doubt throw up a few losses here and there," he said.
In India, Mumbai's Sensex index added a massive 80% as the government's economic reforms and coordinated policy actions restored confidence with foreign investors returning.
Singapore's Straits Times Index was 65% higher, as the government declared the end to a severe recession that had emerged in the third quarter of 2008.
The region's other markets also surged, with Sri Lanka 128% higher, Bangkok and Manila more than 60% up on the year, Kuala Lumpur up 45% and Wellington 18% higher.
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