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Tokyo dives in triple yasu
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December 22, 1998: 5:22 a.m. ET
Equities, bonds and the yen all move lower; other Asian markets mixed
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LONDON (CNNfn) - Tokyo stocks plunged Tuesday as Japan was gripped by a triple yasu - a sell-off in the bond, equity and currency markets. The drop pulled the Nikkei average below the crucial 14,000 barrier for the first time in more than six weeks.
After a strong start to the week Monday, Hong Kong also lost ground, falling back just under 1 percent. But Singapore kept its head to move 1 percent higher.
Most other markets traded in a tight range. Thailand added almost 2 percent while Australia and the Philippines closed about 1 percent ahead. Indonesia ended up 0.5 percent.
The major movers were Taiwan, which jumped more than 3 percent, and Korea, which dived 3 percent. Malaysia finished the session down 2.5 percent.
Japan's benchmark Nikkei average closed down 2.64 percent or 373.5 points at 13,779.45.
"It started in the bond market which has been selling off aggressively in recent days," said Lehman Brothers chief economist Russell Jones. "There is too much supply relative to demand and the price has to fall to make them (bonds) attractive.
"That kicked into the equities market. Around 25 percent of bank profits come through bond holdings. If they are losing these capital gains then the banks are hit. People then started selling the yen because I think they started fearing things are not smelling too good here."
The banking sector fell 2.3 percent. Sumitomo Bank dived 4.2 percent to 1,235 yen while Sanwa Bank shed 3.17 percent to 946 yen.
Real estate stocks fell 2.5 percent while oil shares fell 3.6 percent. Nissan Diesel plunged 8 percent to 198 yen.
With the yen falling to 117 on the dollar at one point, the big exporters held up a little better. Mazda Motor was down 1 percent to 424 yen while software distributor and memory-module manufacturer Softbank bucked the overall climbed almost 4 percent to 5,920.
Rumors of a deal involving Singapore's second largest listed company took the Straits Times Index higher. It closed up 1 percent or 14.67 points up at 1,412.4.
Index heavyweight DBS Bank jumped 30 cents to S$8.2 after rumors started circulating mid-morning that it was set to sell its 30 percent stake in DBS Land.
DBS Land - whose majority shareholder, the Singapore government, is expected to buy the bank's stake -- jumped 13 cents to S$2.46 on the news.
"It makes a lot of sense for them to sell a non-performing, non-core asset and switch into a regional or domestic bank," said Salomon Smith Barney sales trader Mark Julliem.
The acquisitive bank bought Hong Kong's Kwong On bank last week.
Other banks also did well. OCBC climbed 30 cents at S$11.4 while OUB added 25 cents to S$7.45.
Hong Kong stocks dipped 0.7 percent, or 73.45 points, to 10,322.5.
Monday's rally on the back of last week's interest rate cut was tempered by news that the territory is suffering from deflation for the first time in almost 25 years. That pessimism made itself felt again Tuesday.
"It was profit taking from yesterday's 100-point gain," explained Core Pacific Yamaichi research director Alex Tang, who said investors were staying on the sidelines ahead of the U.S. Federal Reserve meeting later Tuesday. "At HK$2.5 billion the volume was extremely thin ahead of the Christmas holiday."
Heavyweight HSBC Holdings saved the index further blushes, holding firm at HK$198.5. Developers also stood still.
New World was steady at HK$20.35 while Cheung Kong stuck at HK$58.25 despite an announcement that chairman and managing director Li Ka Shing - for many the embodiment of Hong Kong's rags to riches success story - would be standing down as managing director (although staying on as chairman) in the new year.
Unusually, banks and property stocks did not determine the direction of the index. Other blue chips fell sufficiently to decide the market's fate. Cathay Pacific lost 20 cents to S$7.85 while China Telecom dived 75 cents to HK$14.15.
Elsewhere Australia closed 0.8 percent higher while Taiwan leaped 3.4 percent. The Philippines added 1 percent by the close in Manila.
The volatile Korean market, which has seen strong swings in recent weeks, plunged 3.1 percent. Seoul sees one of its biggest ever listings Wednesday in the form of Korea Telecom.
Thailand closed 1.8 percent 0.5 percent. Malaysia tumbled 2.5 percent.
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