Exporters take a pasting in Japan

LEADING exporters took a pasting in Japan today as the yen bobbed higher against the dollar, thanks to another US crackdown on imports.

A more muscular currency - a constant headache for Japan's policymakers and some of its executives - means lower earnings for companies that sell a substantial portion of their goods overseas.

The cause of the latest foreign exchange swings came from Washington, where the Bush administration took aim at Chinese textile imports. The measures - which would curb growth of the affected lines - were seen as potentially protectionist and so negative for the greenback.

Consumer electronics giant Sony fell 160 yen or 4.2% to 3680 yen, rival Matsushita Electric Industrial lost 32 yen or 2.3% at 1367, and carmaker Honda Motor shed 90 yen or 2.1% to 130.

Traders said weakness on Wall Street also took the wind out of the local market's sails. The Nikkei 225 retreated 282.45 points to 9614.60.

Tokyo has now undergone a substantial correction. Since it peaked on 21 October at 11,238, the Nikkei has reversed by nearly 14%.

The reversal, stoked by suspicions from some quarters that the market's rise was overdone in the first place, has come despite a continued flow of positive economic data. Japan's economy, the world's second largest, may be headed in the right direction, but for now at least the equity market does not want to know.

Japan's gross domestic product rose 0.6% between July and September, latest data shows. That was far above most analysts' estimates and marked the seventh consecutive quarter of economic growth.

Tech stocks also dropped amid continued profit-taking and the market's general weakness.

Advantest was shorn of 480 yen or 6% to 7370 yen and NEC stumbled by 37 yen to 804 yen, a drop of 4.4%.

Washington's latest trade move also took its toll in Hong Kong. Texwinca Holdings and Fountain Set, the world's top two players in knitted cotton output, fell sharply.

Texwinca traded at HK$5.25, off 35 cents or 6.3%, while its rival shed 25 cents or 4.4% to HK$5.45. Banks, pumped up on Tuesday on news that they would be allowed to handle yuan retail business, dropped. While the yuan move was judged to be a plus, traders said it would make little difference in the short term to profits.

HSBC, the global lender, gave up HK$2 or 1.7% to HK$116 and Bank of China (Hong Kong) dipped 15 cents or 1% to HK$13.05. The Hang Seng index softened 196.59 points or 1.6% to 11,830.67.

South Korea markets, hit by the same negative factors in play elsewhere, faced an extra local burden in worries about LG Group, the country's second-largest conglomerate.

Prosecutors reportedly searched the headquarters of LG Home Shopping, down 9.2% to 55,400 won. LG Group sank 11.1% to 8630 won, also hurt by fears about its credit card unit, LG Card, which has requested aid from its banks.

The Korea Composite Stock Price Index fell 24.86 points to 776.11.

Singapore fell in line with the regional trend. The Straits Times index dropped 21.7 points or 1.3% to 1686.68, led lower by lender DBS Group, down 20 cents or 1.4% to S$14.20.