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Asia wounded by sell-off
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November 10, 1998: 5:52 a.m. ET
Region's prognosis gloomy as all but one of the major markets sees red
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LONDON (CNNfn) - There was blood on the carpet of trading floors across Asia Tuesday, as all but one of the ten major regional markets ended the day firmly in the red.
Tokyo stocks eased modestly amid renewed fears that the government's planned financial booster shots will not save the health of the ailing Japanese economy.
Tokyo's Nikkei was joined by indexes in Hong Kong, Singapore, Australia, Indonesia, Korea, the Philippines, Taiwan and Thailand.
Only Malaysia managed to crawl into the black and even that was by less than half a percent.
Japan's benchmark Nikkei stock average closed down 86.45 points or 0.61 percent at 14,108.09. December futures were down 120 at 14,110.
In an announcement taken badly by the markets, Finance Minister Kiichi Miyazawa said Tuesday it was not very easy to implement an income tax cut. Investors read the statement as a sign that a swift consumer spending injection is less likely.
Later reports that the government and opposition were pulling together did little to help the market.
Stocks were mixed. NTT Docomo was up 1.36 percent to 4,470,000 yen. Traders said bargain-hunting lifted the cellular operator's shares, not news that the company had agreed to a tie-up with Hong Kong's SmarTone Mobile Communications.
Nippon Telegraph and Telephone closed down 3.47 percent at 946,000 yen. Traders said there were growing worries over the expected sale of government-owned NTT shares later this year.
Fuji Heavy Industries closed up 3.67 percent at 650 yen after the company said Monday its operating profit totaled 28.54 billion yen in the six months to September 30, up from 24.49 billion yen in the same period a year earlier.
After the market closed Nissan Motor posted a parent net loss of 32.55 billion yen ($266 million) in the half-year to the end of September. It closed down 0.61 percent at 327 yen.
Hong Kong's Hang Seng fell back to 9721.33, a loss of 130.60 points or 1.33 percent. For much of the afternoon the index had been off 200 points. Traders blamed a loss of confidence in the territory's key banking and property sectors.
By last week the index had risen 2,682 points in two months and investors appeared unwilling to risk buying at what they feared could be the top of the market.
Sun Hung Kai Properties slid 4 percent, to HK$48. Henderson Land lost 3.3 percent, to HK$35.40. Banking giant HSBC Holdings tumbled 2.2 percent, to HK$176.00.
Red chips fared better. China Everbright was up 7.7 percent to HK$0.71 and China Resources up 2 percent to HK$2.375.
"The sentiment that crossed over from New York was not good," said one trader. "The retail money was buying red chips but funds were selling the market".
He warned the market could dive back below 9,500 before the week is out as institutional investors look to their year-end profits.
"We could lose another 300- 400 points," said the trader. "In the next few weeks there is a lot of window dressing by the funds to be done ahead of December 31".
Singapore tumbled 3.87 percent to 1172.06, 47.22 points lower, after government figures confirmed the city-state's economy had slipped into reverse in the third quarter for the first time in 12 years.
The Philippines accelerated its recent decline by losing 75.41 points or 4.4 percent to end the day at 1,637.10. Australia slipped 6.7 points to close at 2,682.4.
Traders blamed weaker U.S. and Asian stocks with struggling commodity prices dragging down mining shares. Turnover was fairly high at A$1.047 billion (US$659.6 million).
National Australia Bank ended 39 cents higher at A$22.96 but global mining company Rio Tinto shed 58 cents to A$20.56.
Taiwan lost a little more than 2 percent to close at 6,812.30, 145.10 points down. Korea shed 21.21 points, a hefty five percent, to close at 403.24.
The opening of a special assembly of Indonesia's People's Consultative Assembly with few early signs of the expected mass student protests was not enough to boost Jakarta stocks. They closed 7.089 points lower at 357.304.
Thailand finished off a massive 7.48 percent. "In general it's the fact that the short-sellers are finished covering their shorts," said Paul Wanglee, an analyst at Goldman Sachs.
"Secondly, institutions think the local markets have got ahead of themselves and the upside form here is limited. They have had 20-30 percent of the easy money and they might as well cash in".
Malaysia was the only market to end the day in the black, up a modest 0.4 percent. The KLSE was cushioned by a deal involving auto maker Proton.
DRB-Hicom bucked the trend on its the planned sale of auto making subsidiary Proton. DRB stock closed up 7 percent.
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