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Asia down on rate worries
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November 17, 1998: 6:21 a.m. ET
Most Asian markets down on nervousness ahead of U.S. Fed meeting
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LONDON (CNNfn) - Hong Kong stocks fell nearly 1.5 percent Tuesday, while a cut in Japan's government debt rating by Moody's ratings service failed to hurt Tokyo stocks.
The battered benchmark Nikkei index fell just 0.11 percent while the Hang Seng index tumbled 1.45 percent.
Traders were nervous ahead of the U.S. Federal Reserve's meeting on interest rates. Gains on Wall Street and in Europe Monday had little effect.
Singapore and Thailand closed down slightly, but Australia, Korea and Malaysia crept higher.
The Philippines and Taiwan posted the day's most aggressive gains, up just under 2 percent. Indonesia was closed for a public holiday.
In Japan Moody's had been hinting at a rate cut for months and so it was no surprise to the markets when it came.
The Nikkei closed down just 0.11 percent at 14,413.00, a loss of 15.27 points. December futures were down 90 at 14,360.
As a group, banking stocks were up a little with Sumitomo Bank among the best performers. Sumitomo Monday became the latest Japanese bank to confirm it will apply for an injection of public funds. It rose more than 1 percent to 1,342.
Auto stocks were lower. Honda Motor fell 2.5 percent to 4,230 while Mazda Motor dropped 0.2 percent to 487.
West LB Securities head Jens Muenster said the market had been expecting the downgrade since Moody's announced its intention in July.
"The fact that it happened today, a couple of days after the (economic stimulus) package looks awkward," he said.
Traders are braced for another downgrade. "They also put the outlook on Japan as negative," said Munster. "That means in six months Japan will probably be downgraded again."
Hong Kong stocks fell by a more aggressive 1.45 percent to 10148.69, 149.40 points lower.
HSBC Holdings dropped HK$2.5 to HK$180.5 while property stock Cheung Kong was down 0.43 percent to HK$58. Fellow property company Sun Hung Kai was down 0.9 percent to HK$54.75.
"There is still buying support under the market," said South China Brokerage vice-chairman Howard Gorges who pointed out that Cheung Kong, HSBC and Sun Hung Kai all bounced back from their lows.
He added: "Even if the Fed does nothing, and I suspect it will do nothing, I think there is quite a lot of pressure on Hong Kong interest rates to come down this Friday."
Singapore was also down. The Straits Times Index closed a modest 5.98 points lower at 1235.76.
Australia finished up 0.08 percent with the activity centered on newcomer Cable & Wireless Optus which inflated total turnover to A$1.594 billion (US$1 billion).
It listed at A$2.61 at lunch time and closed at A$2.65. The 305.2 million shares traded were worth a total of about A$800 million.
There was good news for most of the region's other markets. The U.S. and Japan unveiled a $10 billion aid plan for Asia at the APEC meeting.
The package is comprised of a combined $5 billion from Japan, the Asian Development Bank and the World Bank. The U.S. is contributing another $5 billion through Export Import Bank trade financing and Overseas Private Investment Corp. programs.
The money is separate from Japan's $30 billion Miyazawa plan for Asia.
The U.S. will provide an additional $1 billion in trade financing each to Indonesia, Thailand and South Korea.
Korea closed up 0.53 percent while Taiwan and the Philippines both finished almost 2 percent higher.
Malaysian stocks shrugged off the political row about U.S. support for local democracy activists to add 0.45 percent. But Thailand sagged, finishing down 0.32 percent. 
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