Asia watch

ASIAN chipmakers were being shortcircuited again after a report from Dataquest warned that sales of semiconductors this year would fall by one third to US$152bn (£105bn).

The size of the fall, the biggest year-on-year decline by the industry, shocked investors in the tech-heavy markets of Japan, South Korea, Taiwan and Singapore, although most markets were rescued by demand for old-economy stocks and safe-haven blue-chips.

An early slump in Tokyo, which took the Nikkei 225 Average down below 10,350, was later reversed by a spurt of buying of bank stocks following the Bank of Japan's measures to ease liquidity revealed on Wednesday. By the close it was down 37.41 to 10,434.52

Toshiba fell more than 2% while NEC, singled out by Dataquest's report as the worst-hit supplier with sales almost halved this year, was close behind. A Reuters survey showing institutional investors would probably be net sellers of Japanese stocks next year, did nothing to help sentiment.

Investors were worried that a planned reduction of 2.3% in government spending this year, as part of the reforms of Prime Minister Junichiro Koizumi, would inflict more short-term pain on the economy. Economic news continued to be all bad. The latest instalment was a further shrinking in the country's trade surplus in November. It was down for the 17th month in a row, falling 16% as exports dwindled.

The Bank of Japan's plan to pump trillions of yen back into the financial system to stimulate the economy brought some respite to recently-besieged bank stocks, led by industry giant Mizuho, which added almost 3%.

A 5% slide on the Philadelphia Semiconductor Index overnight, which reinforced the message from Dataquest, brought big early falls to chip stocks in Taiwan and South Korea.

Late bargain-hunting on other electronic stocks in Taiwan, pushed the Weighted Average index back up by 73.92 points to 5295.88, but chip giant Taiwan Semiconductor suffered a near-2% drop.

South Korean investors turned their backs on chipmakers, sending Samsung and Hynix sharply lower, but heavy buying of domestically-driven counters such as stores and food producers overcame the weakness in electronics, and the Kospi bounced back 15.57 to 662.62.

The few Hong Kong investors who were taking notice of the markets ahead of the holiday break became worried about events in Argentina and the potential impact on the loan book of HSBC Holdings, which tumbled more than 1%. The profit warning from Motorola continued to hurt shares of China-based cellphone operators China Mobile and China Unicom. But Hang Seng index reversed its losses to end ahead 48.6 at 11,613.8.

A combination of profit-taking and bargain-hunting left Australian shares mixed, with the All Ordinaries finally ending ahead 76.2 at 3343.9.

Singapore investors moved in on blue-chips such as Singapore Press Holdings to leave the Straits Times index up 7.7 to 1603.1. Malaysia's Kuala Lumpur Composite index fell 2.25 points to 661.87. Thai stocks moved gently ahead and the SET index added 2.21 to 297.55, while the Jakarta Composite edged up one point to 376.07.

Prices and indices in this section are supplied from various sources and calculated at different times and may not always match those listed on the site.