Stocks brush off recovery signs

STRONG signs that Asia's economic recovery is accelerating failed to boost shares in the region as investors stood back following another day of woe on Wall Street. With the Dow Jones Industrial Average looking set to break back through 9000 as it tested 10-month lows overnight with a 178.81 tumble to 9096.09, cautious trading kept regional markets marking time.

As the yen resumed its climb against the US dollar, adding to the clouds over the Japan's chipmakers, the Nikkei 225 index slid 207.59 points to close at 10,752.66. Little comfort was derived from a 3.2% year-on-year bounce in Singapore's growth, its first improvement in five months. The Straits Times index crept up 0.6 points at 1645.32.

This backed up a forecast by the Asian Development Bank that the region ex-Japan is heading for 5.3% growth in the current year, up from 4.3% in 2001.

Although this is a relatively modest expansion compared with the 8%-plus growth seen in the Asian bubble era which imploded in 1997, the past five years has seen a promising programme of reform which would help provide sustainable growth, said the ADB.

Even this bullish analysis was not enough to encourage investors, who were more worried about Wall Street and the outlook for the region's technology stocks. These were badly hit by a downgrading of the semiconductor sector by broker Merrill Lynch, which warned that a drying up of orders would bring investment down by 20% in the current year.

Japan's big semiconductor-linked counters were the biggest drag on the Nikkei 225 as they fell by as much as 4%. The yen's renewed upward march also battered exporters, car makers among the worst hit. Honda slumped almost 3% despite a bullish long-term sales forecast. The company expects to raise global production by 700,000 vehicles to 3.4m over the next three years - high yen or no high yen. The company said its main manufacturing push would be in the US and Asia, where it plans a new plant in China.

Taiwan stocks were pounded by the Merrill report, which prompted falls of up to 3.4% in major chip makers, which have recently looked cheap on reports that their profitability was improving. The recent sharp rally in the Weighted Average index came to an abrupt halt as it fell 93.75 points to 5294.77.

In South Korea the Kospi index, after a late break through 800 yesterday, narrowly held on to the support level with a fall of 1.41 points to 800.57.

The purchase of a major stake in local broadcaster Asian Television by Tom.com, an internet group turned advertising venture run by Li Ka-Shing, Hong Kong's richest man, took its shares up 7%, but this had no effect on the Hang Seng index of blue-chips, which dipped 55.6 points to 10,787.5.

In Sydney, News Corporation reversed recent gains with a 2% fall and other blue-chips weakened. But the All Ordinaries index overcame its losses to close ahead 20.8 at 3226.2.

Stronger manufacturing growth last month in Malaysia did little to boost sentiment and the Kuala Lumpur Composite index lost 3.55 points at 740.03. Thailand stocks edged up and the SET index added 0.73 to 403.95, but in Indonesia the Jakarta Composite index fell 3.03 points to 477.28.

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.