Asia Watch

By RAY HEATH
Updated:

 

Stocks eased in Japan as the overnight 3% advance on Nasdaq was countered by concerns over the domestic economy, and the adamant refusal of the Central Bank to consider a return to the zero interest rate policy abandoned in July last year.

The Nikkei 225 refused to tackle the significant 14,000 level, and closed down 91.08 points at 13893.

Though computer stocks were weakened by reports of continuing sluggish sales by US giant Comapaq, there were some sharp eruptions elsewhere in the technology sector.

Games group Sega rocketed almost 16% on reports that it was giving up trying to beat Sony's PlayStation2, and was preparing to abandon its own Dreamcaster console in favour of supplying its rival with software.

The remarkable resurrection of internet investor Softbank continued ahead of third-quarter figures due today, and after an upward rating by Salomon Smith Barney. Softbank stock, which had gained more than 80% in seven trading days, added a further 16%.

In the Philippines, stocks were tracking higher on hopes of rapid cuts in interest rats as the new government of President Gloria Arroyo gets to grips with the country's economic problems. Gains were modest compared with Monday's euphoric 17% surge, which was reversed by profit-taking on Tuesday. The Composite index added 16.25 points to 1678.55.

Expectations of an interest rate cut of half a point as early as tomorrow were bolstered by a firmer peso, but politicians have started to warn of the depth of problems that face the country. According to one politician, the government coffers are empty, while new economics minister Alberto Romulo warned that unpaid bills made it difficult to judge the true state of the country's finances.

Bangkok stocks were back on their post-election trot, and a 2% gain in morning trade consolidated the SET index above the 320 support level. Retail investors continued to chase banks and financial stocks, which led the SET up 2.04 to 327.66.

The recent run-up in bank stocks is beginning to look too heady for some analysts, who worry that Thailand's banking system continues to be weighed down by non-performing loans, which still represent 35% of lending.

With many of Indonesia's retail market players celebrating the Lunar New Year, trade in Jakarta was reduced to a trickle that left the Composite index barely changed at 416.06, up 0.31 points.

Australian stocks gave only a weak cheer to better-than-expected inflation figures that point to an early cut in interest rates. Fourth-quarter inflation skidded to 0.3% from 3.7% in the third quarter, about one third of most recent estimates.

Though analysts reckoned this should open the way for the Central Bank to cut interest rates at its next meeting in February, the impact on stock prices was muted, and the All Ordinaries index ascended 9 points to 3245.1.

Investors were concerned that the impact of lower borrowing costs could be cancelled out by lower growth.

Hong Kong, Malaysia, Singapore, South Korea and Taiwan were closed for Lunar New Year holidays.

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

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