Asian stock markets had a strong, if volatile, year _ with China leading the pack and the world's top exchanges _ as investors bet on the region's growth prospects.
Several exchanges notched gains of more than 20 percent, and among Asia's major markets, only Japan and New Zealand ended the year with losses.
But the outlook for 2008 remains clouded by uncertainty over the U.S. economy, soaring oil prices and regional issues, such as accelerating inflation in China and India.
"The bottom-line here is more will be revealed after one or two months of data on the U.S. side to see what's the state of the U.S. economy, especially the consumer spending," said Song Seng Wun, chief executive of CIMB-GK Research Pte. Ltd. in Singapore.
"If (the U.S. economy) can hold, then we should be reasonably intact," Song said.
The Shanghai Composite Index climbed 96.7 percent on the year, the world's best performing major bourse for 2007. Japan's Nikkei 225 fell 11.1 percent and the benchmark NZX-50 in New Zealand fell 0.3 percent.
Elsewhere, Jakarta's JSX index gained 52.1 percent, the Bombay Stock Exchange's Sensex index rose 47.1 percent and Hong Kong's blue chip Hang Seng rose 39.3 percent.
Other large gains were made in South Korea and Malaysia, where the benchmark indices gained almost a third since the last trading day of 2006. The main indices in Singapore and Australia gained 16.6 percent and 11.8 percent, respectively, for the year.
Most of the benchmarks recovered from midyear dips that came as news emerged of spreading problems from defaults on risky loans made in the U.S. housing market. Investment banks, including such powerhouses as Citigroup Inc., Merrill Lynch & Co. and JPMorgan Chase & Co., had invested in bonds based on the loans and lost billions of dollars (euros) as the defaults mounted.
As financial institutions in Europe and Asia also began to report losses from exposure to mortgage-backed bonds, banks around the globe became more wary about lending money, which in turn sparked concern about slowing business investment and growth.
On Friday, a report from Goldman Sachs said write-downs at U.S. banks may deepen, helping to send several markets lower on their last trading day of 2007 and casting the subprime shadow and doubts about the U.S. economy into early next year.
As well, oil prices that had looked as if they had given up on their chase for the US$100 mark are now back near US$96 a barrel, raising new concerns about their impact on growth.
The economic health of the United States is a primary concern to Asian countries, many of which depend on exports to the world's largest economy for growth. High oil prices are a worry, because rising energy costs can cut consumer and industrial demand.
"We will remain hostaged by what's happening overseas, particularly in the U.S. economy ... and also oil prices," said Astro del Castillo, managing director of Manila-based brokerage First Grade Holdings.
"Those are the two major factors that will influence not only the (Philippine) market but also most economies as well," he said.
Asian markets were roiled as well in their last two days of trading for 2007 by the assassination of Pakistani opposition leader Benazir Bhutto.
The Karachi Stock Exchange's benchmark plunged 4.7 percent Monday in its first day of trade following a three-day period of national mourning declared after Bhutto's death last week. The KSE 100 index still finished the year 40 percent higher than at the end of 2006.
Many analysts continue to be cautiously optimistic on the Asian economies, primarily based on the performance of economic engines running full-tilt in China and India.
Once worry about the credit crisis and its impact on the U.S. and global economies dissipates, many analysts say funds will resume their flow to Asian stock markets.
"Most Asian markets are still moving higher as can be seen by our economic performance. Hopefully (fund managers) will be attracted by such," said del Castillo.
The outlook for the broader region next year appears promising, agreed Park So-yeon, a strategist at Korea Investment & Securities Co. in Seoul.
The Kospi _ South Korea's main stock benchmark _ was unlikely to match this year's performance in 2008, though sectors with China exposure were likely to remain strong, she said. Continued demand for commodities in China and India is likely to fuel growth, she said.
"The Asian business cycle is very good. China and Indian demand is very good."
Associated Press Writers Gillian Wong in Singapore and Teresa Cerojano in Manila, and AP Business Writer Kelly Olsen in Seoul, contributed to this report.