Fed cut gives techs fresh impetus

THE US Federal Reserve's 11th interest rate cut this year proved a tonic for Asian technology stocks today as recent profittaking was replaced by some rapid portfolio rebuilding before the year-end.

Even Japanese shares bounded ahead more than 3%, despite indications from the latest Tankan survey of business confidence that there is no end in sight for the country's slide into recession.

The warning from the Fed that no recovery is due failed to dim the hopes of investors that the quarter-point cut will help the US economy start to pull around next year and boost demand for key Asian exports.

A report from Standard & Poor's that fund managers in the US are picking up growth stocks and targeting bombed-out technology counters provided another excuse for moving back in.

After four days of falls, Tokyo's Nikkei 225 Average rose 327.61 points to 10,801.52 after the Bank of Japan's Tankan survey showed that while business confidence had dropped to a near-three year low, the results were better than expected by economists polled earlier in the week.

The fall of the yen to below 125 against the US dollar also encouraged buying of exporters. Sony and Canon were among the leaders, with rises of more than 2%, while Tokyo Electron, a major supplier of semiconductor manufacturing equipment, soared 5%.

Taiwan stocks were the biggest gainers, rising more than 5%. Buyers charged in after semiconductor giants. The country's shares, which are being widely tipped around the region as next year's winners, along with this year's top performer, South Korea, were further lifted by news from the Nokia telephone giant that fourth-quarter earnings could be above estimates. This revived recently-waning sentiment among investors in Taiwan's big electronics groups and the Weighted Average sharply reversed two days of falls with a 268.20 leap to 5542.17.

The impact on South Korean technology counters was more muted but still strong enough to boost the Kospi by 10.52 to 680.60.

In contrast to the excitement elsewhere, Hong Kong stocks were flat as sliding banks put the brakes on the Hang Seng index, which closed unchanged at 11,693.

Attempts to prop up profit margins by cutting deposit rates back to a near-invisible 0.125% failed to deter selling by investors, who judged that profits would still suffer. HSBC Holdings fell HK$1.50 to HK$94.25. Even property stocks, which usually respond positively to interest rate cuts, remained static after broker Goldman Sachs judged them to be overvalued after a recent sharp rally. Australian investors were unimpressed by the Fed's move, preferring to listen to the recovery warnings, and despite the continuing flashes from the gold market on takeover action, the All Ordinaries fell 34.9 to 3265.3.

Singapore's technology sector was alone in celebrating the interest rate cut. While the sub-index jumped more than 2%, the Straits Times index ended unchanged at 1602.8.

Corporate debt concerns in Malaysia kept investors at bay and the Kuala Lumpur Composite drifted down 2.67 to 665.42. Thailand's SET rose 2.39 points to 297.25 and in Indonesia the Jakarta Composite added 1.23 points to 372.47.

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