Markets & Stocks
Asia takes a beating
May 7, 1999: 6:27 a.m. ET

Nikkei slides 2%, wiping out much of Thursday's gain; HK, Singapore plummet
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LONDON (CNNfn) - Asia's biggest equity markets took a pummeling Friday as investors bailed out of markets that are back up to levels that prevailed before financial crisis erupted in July 1997. Tokyo slid more than 2 percent, while investors lopped around 4 percent off Hong Kong and Singapore blue chips.
     Japan's Nikkei 225 average tumbled 354.09 points to close at 16,946.52, erasing more than half the gains from its surge Thursday, when the average raced up 599 points to its highest level in 18 months. Tokyo traders had been cheered by Wall Street's strong performance during Japan's Golden Week holiday.
     But Friday's fallback, analysts said, suggested traders may have second thoughts about the magnitude of Thursday's rally.
     The slide across much of the region came a day after Federal Reserve chief Alan Greenspan spooked investors with a warning that despite the phenomenal success of the U.S. economy, a tight labor market could spell higher inflation risks. The speech provoked fears of a U.S. interest rate hike, though Greenspan himself did not specifically address the issue.
     Despite the setback on the Nikkei, analysts believe Tokyo will return to winning ways next week after pledges by Japanese Prime Minister Keizo Obuchi to show "unwavering resolve" in efforts to restore Japan's economic growth. A senior official, economic planning agency minister Taichi Sakaiya, said Friday he'd step down if growth isn't seen in the fiscal year to next March.
     Hong Kong's Hang Seng index slid sharply as investors fled blue chips. The index closed down 4.2 percent, or 572.81 points, at 12,997.43. Heavy sell-offs in heavyweights HSBC Holdings, Hongkong Telecom and Hutchison Whampoa dragged the index lower.
     Hong Kong Telecom fell 5.7 percent to HK$19.15 after the company reported a 32.4 percent dip in 1998 net profit. Hutchison slipped 4.4 percent to HK$70.25, while HSBC gave up 4.3 percent to HK$270.00.
     Singapore's Straits Times index closed down 3.8 percent at 1,899.45 amid caution ahead of the release of U.S. labor data Friday. But Singapore's Deputy Prime Minister, Lee Hsien Loong said the country's economic fundamentals were intact amid strong sentiment.
     In Tokyo shares in Matsushita Electric Industrial Co. slipped 3.5 percent to 2,235 yen despite a report that the Japanese electronics giant is in talks with U.S. software powerhouse AT&T (T), BMG Entertainment and Universal Music Group about a possible alliance to distribute music over the Internet.
     Matsushita told Reuters it is "mulling various possibilities", but could not confirm Friday's report in Japan's Nihon Keizai Shimbun business daily. The paper said the companies could strike a deal as early as next week and test operations on the system may begin by the Fall.
     A poor showing by banks and industrial blue chips dragged Australia's All Ordinaries index below the 3,000 level Friday. The index finished off 1.7 percent, or 51 points, at 2,987.1. Traders attributed the weak bank performance to a rise in U.S. bond yields.
     Taiwan's weighted index closed down 1.2 percent, at 7,469.33, while Thai shares plunged to end 4.75 percent lower amid a sell-off in the financial sector aggravated by the regional down-trend.
     Several markets managed to buck the regional downturn. Philippine shares ended up 0.4 percent at 2,526.76, while Jakarta stocks inched fractionally higher to close at 581.425. Korea stocks were flat at 810.62 at the close.
     After trading in the black earlier, Kuala Lumpur succumbed to souring sentiment across the region to end 3.6 percent lower at 691.68.Back to top
     --from staff and wire reports


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