Asia watch

By RAY HEATH
Updated:

 

SHARES in Japanese airlines took off on hopes of a major consolidation in the industry, but softening prices in the US announced on Friday depressed stocks of big Asian exporters in Japan and Hong Kong.

News that the country's national carrier, Japan Airlines, was in merger talks with number three operator Japan Air System, pushed shares of both companies up as much as 4%.

Elsewhere the record 1.6% drop in US producer prices in October was seen as blackening the outlook for key US earnings. Japanese car makers were hard hit by the 4.7% tumble in car prices during the month. Led by Honda shares, which fell 2.5%, the Nikkei 225 Average lost 134.15 to 10,081.56.

Institutional investors were not impressed by revised figures which showed that the gross domestic product shrank by 0.7% against a preliminary estimate of 0.8%. Asahi Bank shares, which have been badly battered by concern over its bad debt problems, rallied 6% after the bank's deal with Goldman Sachs to set up a company to buy some of the non-performing loans.

China's official entry into the World Trade Organisation at the weekend failed to generate any excitement in Hong Kong. After 15 years of waiting, all the implications for business, trade and competition were already in the price, said traders, and the Hang Seng index slipped 16.8 to 10,592.5.

Investors were more concerned about the prospects for the US economy and the implication of falling producer prices for earnings. Big trading firms were down by more than 1%, but sharp gains in property stocks on continuing lower interest rates repaired the damage.

Early falls in Taiwan were quickly wiped out as chip stocks rebounded on reports that prices for 128-megabit DRAM units had moved up from 90 cents to US$1.50 in recent days. Rises among smaller memory chip companies helped the Weighted Average to a 47.43 gain with a two-month high of 4171.21.

Rival South Korean semiconductor groups were also boosted by the price rise, and lifted the Kospi 6.52 points to 583.27. Shares in fallen giant Hynix Semiconductor jumped 13% on reports that it was preparing a major restructuring.

Soaring shares of resources giant WMC dominated the action in Sydney. The stock jumped 7% after reports that WMC directors had started a two-day huddle that would lead to the announcement of a benign A$12bn (£4bn) bid from US aluminium giant Alcoa.

The impact on the S&P/ASX 200 was muted as News Corp shares fell 2% on continuing concerns about US earnings, and the index posted a gain of 19.4 to 3305.4. The All Ordinaries rose 84 to 3305.4.

Blue-chips in Singapore moved sharply ahead and Singapore Airlines was in demand after better-than-expected first-quarter results last week. Its 6% gain was a major contributor to the Straits Times index's 7.5-points gain to 1370.3.

Thai stocks shone in smaller markets, as investors turned optimistic about earnings prospects and the SET index gained 2.86 points to 270.97. The Kuala Lumpur Composite edged up 1.12 points to 600.57, but fears of civil unrest sent the Jakarta Composite index down 6.41 to 370.93.

• Prices and indices in this section are supplied from various sources and calculated at different times and may not always match those listed on the site.

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