Asia Watch

By RAY HEATH
Updated:

 

JAPANESE investors were running for the cover of old-economy stocks and targeting pharmaceuticals groups ahead of a regular survey which is expected to show business leaders have become more despondent about prospects.

The dumping of technology stocks, following an overnight earnings warning from Applied Micro Circuits in the US, was marginally offset by the move into drugmakers, and the Nikkei 225 edged up 82.35 points to 12,978.82.

Other major markets were also hit by AMC's warning, with Taiwan and South Korea down by more than 1%, while Hong Kong's telecoms stocks led the Hang Seng index down 94.95 to 13,079.07.

Japanese investors, already braced for the impact of planned structural reforms, are nervously looking ahead to the next Tankan survey of business opinion carried out by the Bank of Japan. This will be published on Monday, and is expected to show the lowest level of confidence since December 1999. Most economists and analysts polled by Reuters expected the Tankan's main indicator of business opinion to slump to minus 16 from minus eight in the last survey carried out in March.

Economists pointed to the lack of consumer demand, falling investment and uncertainty about a recovery in the US as major factors affecting the outlook of business leaders. Sony was one of the worst-hit stocks, and fell almost 2% after a downgrading by investment bankers Merrill Lynch.

An early attempt at a rally in Taiwan soon faded as hopes of early interest rate cuts were replaced by fears about the outlook for the economy and corporate earnings. Chipmakers led the Weighted index down 86.22 points to 4818.12.

Action in South Korea was dominated by continuing dumping of SK Telecom, which is buying in its own stock, and the Kospi fell 7.30 points to 590.72.

Fixed-line and mobile phone operators pulled Hong Kong's Hang Seng down despite Nasdaq's overnight gain of 0.76%. PCCW, the dominant telecoms operator, which has been suffering from the implosion of its internet business, fell a further 1%.

An expected cut in the Fed's interest rates on Wednesday, which will be swiftly followed in Hong Kong, did nothing for property or bank stocks, and HSBC Holdings lost 0.25 cents to HK$93.50.

Singapore's Straits Times index edged up 7.75 points to 1715.32 as bank shares clawed back some of the recent losses triggered by unease over the financing of DBS's planned purchase of Overseas Union Bank.

Any inspiration over the prospect of lower interest rates was countered in Sydney by the continuing reaction to earnings warnings. However, the All Ordinaries rose 14.8 at 3370.4. Top retailer Cole Myers continued to be punished for its profits warning, and tested 13-month lows, despite a statement that one of its chains would stay in the black in the current year.

Malaysian investors found some courage after early morning falls in bank stocks and some modest buying took the Kuala Lumpur Composite up 5.25 to 595.68.

Selective buying of Thai stocks took the SET index up 3.91 points to 323.72 while the surprise sacking of Indonesia's chief central banker by President Abdurrahman Wahid raised hopes of faster reforms and the Jakarta Composite rose 2.06 points to 437.82.

• 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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