Asia Watch

By THIS IS MONEY
Updated:

 

Any holiday mood that may have lingered in Japan evaporated from the opening bell as markets reopened after the long weekend and the Nikkei 225 Average plunged 353.72 points to 13,513.89.

In a country where interest rates are already close to rock bottom, the US Federal Reserve's half-point cut last week had little impact. Much more significant is the implication of a slowing US economy for Japan's exports and its economic growth.

Morgan Stanley Dean Witter deepened the gloom with its verdict that the US is now in a real recession, and growth in gross domestic product is set to fall to 1.25% this year. The bank also slashed its estimates of Japan's growth from 0.6% this year to 0.3%. The bleak assessment hammered stocks of leading exporters and electronics groups.

The Vodafone shares sale through a US$3bn (£2bn) convertible bond issue by Hutchison Whampoa received a standing ovation in Hong Kong. Shares in the conglomerate jumped 2% and pushed the Hang Seng index up 64.06 points to 15,550.59.

Political hopes overcame economic fears in Taiwan and the Weighted index surged more than 3% with a 187.61 points jump to 5376.12, wiping out yesterday's sharp reversal. Buyers focused on top electronic stocks, ignoring the bleaker outlook for semiconductor sales, as investors bet that a Cabinet reshuffle would ease political strains that threaten to stall the economy.

Foreign institutions were diving in and out of South Korean stocks and the Kospi ended the session up 3.27 at 589.92, after an early morning low of 577.32. Investors' nerves became frayed after a key government purchase of bonds in the struggling Hyundai Electronics group stalled on a squabble over terms. Chipmaking giant Samsung Electronics fell as worries persist over demand from a slowing US economy.

Buying of defensive stocks boosted Singapore's Straits Times index, which gained 11.39 points to 1962.59. Singapore Telecommunications, arms manufacturer Singapore Technologies and the top banks were among the most active stocks.

Concerns over a telecommunications pricing war which knocked 2% off Telekom Malaysia, one of the country's leading blue-chips, stifled an early rally, and the Kuala Lumpur Composite dropped 6.91 to 668.09.

Thailand's post-election bull continued to run as the win by the Thai Rak Thai party boosted hopes of stable government - despite the corruption charges hanging over party leader Thaksin Shinawatra. The SET index vaulted 6.91 points to 302.75, a 2.3% gain on top of yesterday's

3.17% rise. Blue-chip stocks strengthened in Indonesia, where the Jakarta Composite gained 1.76 points to 417.53.

In nervous Sydney markets, Tokyo's fall was just one factor in general weakness that saw the All Ordinaries off 18.1 points at 3189.4. Retail stocks were pushed down by reports of slowing sales, suggesting that talk of a pre-Christmas boomlet had been a fairy story.

Two sectors to escape the morning drift were telecoms and banks, which moved ahead on the view that they will continue to provide solid earnings. Telstra was the top traded stock among telecoms while National Australia Bank was the leader in financials.

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

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