Techs rally retreats after reality check

ASIAN markets resumed their recent retreats, battered by profit-taking as investors judged that strong post-11 September rallies had taken prices up too far in light of a lack of firm evidence of a US recovery.

The technology stocks, which had provided most of the power, faded again across the region, while in Japan the build-up of bad economic news more than wiped out yesterday's strong rally.

Although yesterday's Bank of Japan survey of business confidence had not been as bad as feared, investors judged that it was still signalling months, if not years, of struggle ahead for the economy.

The Nikkei 225 Average shed 368.07 to 10,433.45, led down by banks on more evidence of their bad debt problems, and recently-strong technology stocks, which became top targets for profit-takers. Today's batch of bad news was a 27% contraction in the trade surplus in October. Imports fell by 4.6%, reflecting the slowing of the economy, but exports slowed by 9% as overseas markets continued to dry up.

Biggest fallers were bank stocks, following a report in Nihon Keizei Shimbun that bad loans among regional banks had soared 19% in the first half of the year. This unnerved investors in the major banking houses, which tumbled by as much as 4%, led by Mizuho Holdings.

Warnings that slack demand was forcing US chip group Applied Materials to shed up to 10% of its workforce sent shudders through Japan's technology stocks, which were felt around the region.

The technology-driven markets in Taiwan failed to hold a strong early surge as nerves broke and technology stocks were dumped, driving the Weighted Average index down more than 3% at one time. It fell 140.85 points to 5398.46, overpowered by heavy falls in leading chipmakers. South Korea's market was saved from big losses by foreign buying which offset heavy local selling, and the fall in the Kospi was limited to 8.49 points to 672.94.

Overseas institutions continued to buy up technology stocks, but old-economy counters were suffering, with Pohang Iron and Steel a casualty of the falling yen, which is likely to hurt the Korean giant's competitiveness overseas.

Banking stocks were the main casualties in Hong Kong, where the market plunged. Continuing concern that falling US interest rates are now set to cut into local profit margins sparked selling among the banks, which took the Hang Seng index down 317.5 to 11,529.5.

HSBC Holdings lost HK$1.25 to HK$94.75, while stocks in local export-dependent companies wavered ahead of US retail figures, which could provide some bad news about the Christmas selling seasons. Sydney stocks dithered before leaving the All Ordinaries index ahead 47.2 points at 3312.5. The main feature was a 32% surge in the shares of Metal Storm, a local developer of high-technology weapons which had a rousing reception in first dealings on Wall Street, where they soared 30%.

Bank stocks in Singapore fell on depression over the economic outlook, and with technology shares suffering from the Applied Materials fallout, the Straits Times index slid 24.9 points to 1569.7.

The Kuala Lumpur Composite drifted down 3.59 points to 665.63, as Thailand's SET lost 1.38 points to 296.33, while the Jakarta Composite edged up 0.94 to 373.80.

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.