Qwest cripples Eastern confidence

ANOTHER accounting scandal drained what little confidence Asian investors had in US corporate reporting. Markets in the region were toppled by an overnight slide on Wall Street as Qwest Communications became the latest addition to the nation's accounting scandal sheet.

The Dow Jones Industrial Average plunged through 9000 with a 3.1% slide that took it back to the level of last September, and the wider-based S&P 500 crashed back to its October 1997 value. President Bush's call for severe penalties, including longer jail sentences for erring executives, did nothing to counter the growing Asian conviction that too many American companies' annual reports are fictitious.

Fears that weaker US stocks will lead to more downward pressure on the US dollar is casting a pall over the shares of Asia's exporters, whose sales and profits in their biggest market will suffer. Japan, Hong Kong and South Korea led the rout, which brought Tokyo's Nikkei 225 Average down by more than 2% in early trade, and by the close of business it stood at 10,485.74, down 266.92 points.

Shares in Sony fell almost 2% after the company, which relies heavily on US sales, reckoned that the recent rise in the yen had already wiped 8bn yen (£45m) off current year's profits. Honda Motor, which recently revealed that its forecasts for the year were based on an exchange rate of 125 yen to the dollar, followed Sony with a tumble of nearly 1%.

Japan's property stocks were hurt even more as investors sold on fears that a slowdown in US export values would send the economy back into recession, drying up any chance of a revival in demand.

Electronics and motor stocks were also taking a pounding in the South Korean market. Hyundai Motor, whose sales could be dented by the strength of the won, led the avalanche and fell more than 6%, although debt-ridden Hynix Semiconductor continued to defy gravity, and rose by its daily price limit of 15% as investors sensed that an asset sale was in the offing.

Taiwan investors also fretted about the recent pumping-up of the local currency, and shares in the dominant electronics sector slid, dragging the Weighted Average down 52.17 to 5209.84.

Although a weakening US dollar could be good for Hong Kong's competitiveness thanks to the peg to the local currency, Wall Street's gloom invaded the blue-chip sector, and the Hang Seng index fell 228.7 to 10558.8.

Revived fears over US advertising revenues sent News Corp shares spinning in Sydney, but the All Ordinaries index rose 14.1 to 3189.3. Predictions of a higher gold price in the wake of the falling US dollar did nothing to help resource stocks which lost more than 1%.

Singapore stocks led the way down in South-East Asia, the Straits Times index off 23.8 at 1608.1. In Malaysia, the Kuala Lumpur Composite index fell 2.66 points to 740.51, while in Thailand stocks traded sideways, leaving the SET index down 0.13 at 402.84. In Jakarta, Indonesia's Composite index lost 3.35 points to 474.02.

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.