Techs take a tumble after Intel warning

THE foundations of Asia's technology rally began to look shakey today after profit warnings on the Intel chip giant dragged Nasdaq down 3.4% overnight. Tech stocks around the region tumbled following a 7% drop in the Intel share price after Banc of America Securities slashed its earnings forecast for the current year.

The downgrading rocked other US chip stocks, and the widely-followed Philadelphia Semiconductor index lost 7%, speeding up the race for the exits by investors in technology-heavy markets of Tokyo, Taiwan and South Korea.

Japan's Nikkei 225 Average weathered the worst of the tech tumble, thanks to growing expectations of a solid anti-deflationary package emerging from a policy meeting of the powerful Bank of Japan next week. After an early fall of 130 points, the index recovered to a closing gain of 61.36 points at 10,356.78.

There was little respite for Japanese chipmakers, run-up recently on predictions that the US chip market was beginning to turn around as computer manufacturers rebuilt stocks to meet expected growth in demand. Recent market favourite Tokyo Electron bore the brunt of the selling and lost almost 2%, while electronics giant Hitachi crumbled more than 3%.

Matsushita, makers of Panasonic consumer products, bucked the trend with a near 4% rise after hopes of a profit recovery next year overcame dismay at the near-doubling of its forecast losses in the current trading period.

The shake-out in chip stocks extended recent damage to once high-flying Taiwanese stocks, and a fall of 46.27 points to 5609.83 in the Weighted Average left it a whisker away from falling into the red for the first time this year. After scoring average-gains of almost 90% since October, the country's electronics giants led the falls, and Taiwan Semiconductor was down by almost 2%.

The better fundamentals of South Korea's economy kept investors away from the sell button despite early falls in its semiconductor giants, and the Kospi index pulled out of an early dive to show a gain of 5.02 points at 792.64.

Hong Kong investors were depressed by a government report which warned that the territory's huge reserves could evaporate by 2009 as public spending outran income, and the Hang Seng index dived 155.26 points to 10,633.64.

A rise in unemployment in January to a recent record of 6.7%, up from 6.1% in December, added to the economic gloom and pushed down bank shares. HSBC Holdings fell HK$1.25 to HK$86.50.

Locally-quoted Legend Holdings, China's largest personal computer maker, fell heavily on the Intel downgrading.

News Corporation shares dominated action in Sydney and lost 6%, echoing similar overnight fall in its American Depository Receipts in New York, and the All Ordinaries index dropped 13 points to 3366.7.

Singapore's Straits Times index was pasted by falls in technology counters, and lost 39.62 points at 1692.21. Other South East Asian markets were mixed after a blacklisting by California's state retirement fund. In Malaysia, the Kuala Lumpur Composite tumbled 9.27 points to 708.12, Thailand's SET index fell 2.46 points to 359.03, but Indonesia's Jakarta Composite held steady at 459.39, up 0.93.

Prices and indices in this report are from various sources and calculated at different times and may not always match those listed elsewhere on the site.