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Tokyo closes sharply lower
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April 12, 1999: 5:05 a.m. ET
Compaq's profit warning takes its toll on Nikkei and Hang Seng
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LONDON (CNNfn) - Asia's main markets closed sharply lower Monday with technology stocks suffering from the profit warning by U.S. PC maker Compaq. Tokyo dropped almost 350 points, and Hong Kong shares also closed well into the minus column.
The Nikkei 225 dived 348 points to 16,507.40, a drop of just over 2 percent, as investors reacted nervously to the warning by Compaq that its results would fall far short of analysts' expectations. But the underlying market sentiment still appeared positive with overseas buyers expected to remain active.
"Foreign buying will continue hugely because most foreigners are underweight in Japan and they see it as a hedge against a fall on Wall Street," Jeremy Markwick-Smith, a salesman at Paribas in Tokyo told Reuters.
After surging almost 8 percent last week, the Hang Seng also suffered jitters from the Compaq fall-out, although the losses were eased by a quarter of a percentage point cut in interest rates after the bell Friday. Hong Kong blue chips lost 169 points to close at 11,744.74, a fall of 1.42 percent.
"The profit warning by Compaq is potentially going to cause a correction on the U.S. market, and people aren't putting in buy orders today," Tom Hester, regional head of Asian equity sales at ING Barings in Hong Kong told Reuters.
Technology stocks were among the heaviest losers in Tokyo, with Sony Corp. down almost 3 percent at 12,000 yen, while Canon Inc. was over 4 percent lower at 2,865 yen.
The fall in Hong Kong was anticipated by the market. "Hong Kong saw very big gains, 8 percent, last week. This [correction] was expected," Alan Hutcheson, director of research at Pacific Challenge told Reuters.
Index heavyweight, HSBC Holdings, shed HK$4 to end at HK$266.
Elsewhere in the region, the markets were mixed. Singapore's Straits Times index was flat, at 1,664.83. In Sydney, the All Ordinaries index shed 21 points to 3,038.
In Manila, blue chips surged almost 2.5 percent to 2,157 after the Philippine central bank cut interest rates. South Korea's Kospi added just 2 points to end at 689, while Taiwan's index of leading shares closed 23 points lower at 7,242.
Malaysian and Thai blue chips lacked direction. Kuala Lumpur's Composite index was up 3 point at 571.55, while in Bangkok the headline index was less than 1 point lower at 371.
Jakarta's JSX index was almost 1 percent higher in late trading at 425.
-- from staff and wire reports
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