Asian Markets Tread Water

Despite strong gains in fuel stocks, shares in Chinese air carriers also rose. China Eastern Airlines(CEA Quote) climbed 4.3%, to 19.94 yuan, and Air China(AIRYY Quote) jumped 2.3%, to 27.14 yuan.

Chinese shares also got a boost after an announcement by Beijing that profits on Chinese industrial output from the January to November period -- a broad proxy for economic growth -- increased by 36.7% this year, to 2.3 billion yuan, or $314 million.

In Japan, stocks were sluggish, as a strengthening yen held down exporters from building on last week's gains. The yen was trading at 114.20 vs. the dollar in Japanese trading vs. 114.31 on Wednesday.

Sony(SNE Quote) lost 0.5%, to 6,340 yen, while Honda(HMC Quote) fell 1%, to 3,780 yen. Canon(CAJ Quote) and Nintendo(NTDOY Quote) gained, however, rising 0.18%, to 5,340 yen, and 0.14%, to 67,300 yen, respectively.

After shareholders punished Nintendo for its messy handling of Christmas orders in mid-December, the company has got some reprise in the last day from the announcement by Amazon(AMZN Quote) that the Wii and Nintendo's games were some of the best selling items on the site this year.

In other news, output from carmakers rose by 3.8%, to 1.07 million cars built on the year in November, propelled by exports, which accounted for 600,422 vehicles. Toyota(TM Quote), Japan's largest manufacturer, said that it will raise domestic output by 2%, to 4.3 million vehicles in 2008.

For early 2008, Pang recommends investors buy consumption and retail stocks in China and Hong Kong, which he says will continue to benefit from mainland growth, while being protected from macroeconomic risks such as a rising yuan.

"The government is trying to cool down the economy, but it is still encouraging domestic consumption," says Pang.