US leap seen as dead-cat bounce

WALL Street's mighty bound, which slashed a 400-point loss to a drop of 45 points in late trading yesterday, failed to impress Asian investors today.

Well aware that even a dead cat will bounce if thrown off a high enough building, investors quickly backed away from shares, erasing some fragile gains seen in early trading.

A mild morning rally in Tokyo stocks was reversed in early afternoon trading after the Bank of Japan said it was leaving its monetary policy unchanged. After touching 10,503, the Nikkei 225 retreated to 10,250.42, a loss of 124.73 points.

The BoJ, anxious to blow a little air on the flickering flame of Japan ' s economy, announced that the 16-month zero interest rate policy would stay in force. Rumours that the relentless rise of the yen against the US dollar would provoke some action from BoJ Governor Masaru Hayami proved groundless. The only solid gains in Tokyo stock were among chip counters, as investors took up US bets that semiconductor giant Intel would turn in upbeat second-quarter earnings later today.

Wall Street's waverings and a local outbreak of initial public offering fever kept investors away from Hong Kong's market, and the Hang Seng index tumbled 156.32 to 10,425.34.

The flotation of BoC Hong Kong, the local arm of the mainland Bank of China, is sucking money out of the market as small investors queue up for application forms. More than a million prospectuses have been handed out since the doors opened yesterday, as small investors prepare to pile in on hopes of a solid premium when trading starts on Thursday next week.

Doubt about the size of any quick profit were raised today by the debut of the latest new issue, CKI Life Sciences, which opened with a 14% premium over the issue price, a modest gain by past Hong Kong standards. The gain in the shares owed more to the controlling interest of local tycoon Li Kashing than to any long-term expectations that it would be a biotechnology winner, warned sceptical commentators.

The BoC issue and a record rate of bankruptcies among Hong Kong enterprises hurt other banking shares, with HSBC Holdings down 75 cents to HK$87.25.

A strong showing overnight by the Philadelphia Semiconductor Index, now at 12-month highs, failed to have the usual galvanising effect on technology stocks in Taiwan and South Korea, where the strength of local currencies has raised fears about their ability to compete in key US markets.

Investors were quick to pounce on some modest gains, and by early afternoon the Taiwan-Weighted Average was down 34.63 points to 5358.38, while the Kospi in South Korea slid 8.61 points to 774.91.

Computer-related stocks in Singapore scored some useful gains, but big bluechips remained friendless and the Straits Times index lost 18.01 points to 1591.75.

Sydney investors continued their investment strike, awaiting some positive signs that the Wall Street gyrations are near their end, and the All Ordinaries tested a nine-month low with a dive of 39.9 to 3106.1.

Malaysia's Kuala Lumpur Composite fell 2.70 to 736.43, Thailand's SET index dropped 2.19 to 397.17, and, at 480.38, Indonesia's Jakarta Composite was off 0.52.

Prices and indices in this section are supplied from various sources and calculated at different times and may not always match those listed.