ASIAN markets rallied for a fifth straight day, as traders made huge bets that the reporting season will deliver some bumper earnings surprises.

In Singapore, the benchmark Straits Times Index (STI) soared to its best closing level for the year, after soaring 25.19 points to 2,456.15.

With its latest gains, the STI has now surged closed to 1,000 points since bottoming out at 1,456.95 on March 9.

Big gainers included property giants such as City Developments, which rose 34 cents to $9.72, and CapitaLand, which gained eight cents to $3.81.

But the local banks closed mixed, with United Overseas Bank rising 22 cents to $15.60, and OCBC Bank closing flat at $7.03 - off its intraday high of $7.11.

DBS Group Holdings, however, ended four cents down at $12.36, after hitting an intraday high of $12.50.

Overall market volume was a hefty 2.15 billion shares worth $1.8 billion. There were 467 gainers and 102 losers.

Elsewhere in the region, Hong Kong's Hang Seng Index rose 3.7 per cent, South Korea's Kospi Index gained 2.67 per cent, while China's Shanghai Composite Index was up 2.42 per cent.

AmFraser Securities' Najeeb Jarhom said the current rally is proving that history is repeating itself, as the run-up had, so far, mirrored the V-shaped recovery after the 1997 Asian financial crisis.

Merrill Lynch said the 20.4 per cent growth in Singapore's second-quarter economic output flash estimates last week had turned out to be a pleasant surprise for regional markets.

But it added that the 'strong outrun had been underpinned by an outsized contribution from the biomedical sector and that the preliminary data were subject to revision'.

Merrill Lynch said Singapore's sterling performance, together with the strong second-quarter growth data from China, had helped to validate its recent growth upgrades for the region.

But Citigroup strategist Markus Rosgen is more cautious. He said that 'as markets rallied, earnings forecasts had been revised up from negative 11 per cent to negative 2 per cent now'.

This would make the current recession the 'shortest and shallowest since 1975', translating into what amounts to a V-shaped recovery in earnings terms, if the predictions turn out to be accurate.

But with the exception of China, India and Singapore, industrial production had remained negative in most Asian economies, he added.

Data gathered by Citigroup also showed that despite the sharp run-up in regional bourses, the weekly net inflow of fresh money to offshore Asian equity funds had shrunk to just US$131 million (S$188 million) last week from US$464 million a fortnight ago.

But the biggest question still bugging traders is whether United States Federal Reserve chairman Ben Bernanke will shed insight on whether he would be printing more money to buy US bonds when he testifies before Congress today.

Some believe that the huge liquidity which the Fed had poured into the market since March to jump-start the troubled US economy had contributed significantly to the global stock market rally.

engyeow@sph.com.sg