Japan shrugs off downgrade

JAPAN absorbed the impact of a downgrade by Moody's Investor Service of government bonds by two notches to A2 from Aa3, five grades below the highest level. Moody's said the outlook on Japan's sovereign debt was stable, signalling there will be no further downgrades in the near future.

Moody's said the government's economic policies would fail to stem the deterioration in Japan's domestic debt position.

But Tokyo stocks held firmer in early afternoon with market players largely unfazed. The Nikkei 225 Average was up 65.56 at 11,835.59 at one stage, before closing down 6.33 at 11,763.70.

Hong Kong's Hang Seng ended down 78.7 points at 11,301.9 as sidelined investors awaited further clues on the health of the global and local economies.

South-east Asian-centred conglomerate First Pacific stole the show, leaping 9.70% on talk it was selling its stake in Philippine-Long Distance Telephone at a huge premium. First Pacific was one of the gainers in the market, ending the morning at HK$1.57.

Seoul stocks fell by noon as foreign investors sold heavyweight Samsung Electronics after UBS Warburg cut its target price for the world's top memory chipmaker's shares. The Kospi was down 11.55 at 827.12. Warburg cut Samsung to 'hold' from 'strong buy', citing falling prices for D-Ram chips. It cut its target price to 420,000 won from 580,000 won.

Taiwan stocks were lower as sentiment turned cautious amid the slack manufacturing season, keeping the dominant electronics sector weak despite Nasdaq's overnight gains. The Weighted Average was down 66.98 points at 5669.21 by lunch.

Australia's All Ordinaries rose, despite Reserve Bank signals that interest rates would rise, and four days of losses on Wall Street. The index gained 35.1 points at 3373.6. Shares in Rupert Murdoch's News Corporation dropped almost 5% as investors reshuffled portfolios at the last minute to take account of MSCI changes, and on jitters over its Italian expansion plans. The stock was down 0.63 cents to A$12.65 in afternoon trade.

The Kuala Lumpur Composite was down 9.78 at 749.55 and Singapore's Straits Times lost 7 points to 1676.5. Thailand's SET fell 1.41 to end the morning at 406, while Indonesia's main board climbed 5.57 points to 528.22.

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