Asia Watch

By RAY HEATH
Updated:

 

JAPANESE shares fell as it became clear that government plans to set up a fund to buy up bad bank loans could take a long while to materialise. Prices crumpled by 1.7% as stocks in big banking groups tumbled, and the Nikkei 225 closed 240.36 points down at 14,289.

Investors were startled by an announcement late on Monday that the planned fund, put forward as one of the planks of an economic rescue package unveiled earlier this year, will not be set up in the current Parliamentary session. This could force banks to admit to massive loan losses when they report in September. Technology stocks were also hit by Nasdaq's lack of direction, and 4,000 job losses at Dell Computer.

Hong Kong stocks followed Wall Street down, led by HSBC Holdings which gave back almost half of Monday's gain of 3% on fears that a slowing US economy would hurt profits, and the Hang Seng index weakened 59.97 points to 13,540.81.

Markets in Taiwan and South Korea were shaken by news from Dell that provided further unwelcome evidence of the slowdown in computer sales.

Taiwan's Weighted index fell 53.22 points to 5,176.71, led down by technology stocks. As well as bleak news from the US, Taiwanese investors face a spate of bad corporate earnings announcements. The pending government sales of part of its holding in Chunghwa Telecom, which will be announced later this week, also weighed on prices.

In Seoul, foreign buying of old-economy stocks gave some support to the Kospi index, also boosted by a jump in Hynix Semiconductor stocks after the struggling group launched a bond issue, but the index ended the day down 5.59 points at 590.91.

South East Asian markets returned from Monday's holiday in mixed mood. In Thailand stocks resumed their climb on growing hopes of a bad-loan bail out by the government, and the SET index added almost 2% with a rise of 5.39 points to 306.48. Singapore trade was subdued in the wake of Wall Street's lack of direction, and ahead of results due today from US technology giant Cisco Systems, a key customer of local component groups. The Straits Times index slipped 5.96 points to 1708.88 as investors took a dim view of Singapore Telecom's continuing shopping spree in Asia, and its stock fell by more than 4%.

Malaysian stocks resumed their backtracking as investors rushed to protect earlier profits after Friday's 5% plunge, and the Kuala Lumpur Composite index fell a further 4.55 points to 572.44. The week-long levitation by Indonesian stocks was halted by profit-taking which sent the Jakarta Composite index down 3.28 points to 372.28.

In Australia a 1.5% surge in News Corporation shares failed to offset widespread falls elsewhere in the market to leave the All Ordinaries index down 13.8 points at 3280.1. The main interest centred on resources giant WMC group, which reached new highs on Monday on rumours of an impending takeover bid by the South African Anglo American combine. WMC shares, which hit A$10 at one time on Monday, fell four cents to A$9.71 after chief executive Hugh Morgan denied that talks were in progress.

• 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.

Most watched Money videos