Asian shares sent reeling after tech stock hit

Asian shares sent reeling after tech stock hit
EDWIN CHAN

SINGAPORE, MAY 11: Stock markets across Asia tumbled on Thursday after a sharp decline in US stocks prompted a sell-off that slashed 4.6 per cent off Tokyo's Nikkei average.

US investors on Wednesday shrugged off strong quarterly results from Internet networking giant Cisco Systems, choosing to focus instead on technology valuation concerns. The Nasdaq index fell 5.59 per cent and the Dow Jones Industrial Average dropped 1.6 per cent.

Japan's benchmark Nikkei average shed 819 points or 4.63 per cent to close just off its intra-day low at 16,882.46, after investors unloaded large-cap tech stocks. It was the first time the Nikkei had closed below 17,000 since September.

Matsushita Electric Industrial Co Ltd, the world's largest maker of consumer electronics, fell 9.09 per cent to 2,700 yen in the biggest one-day fall for the company in 10 years. Other major high-tech stock also slipped, with industry leader Sony Corp falling 3.13 percent to 11,440 yen.

"Tech is hugely important in places like Japan, Korea and Taiwan," said Giles Ockenden, an equity strategist at Jardine Fleming Securities in Tokyo.

FOREIGNERS SELL JAPAN:The Tokyo market was also spooked by data showing foreigners had turned net sellers of Japanese stocks in the month of April, the first time this has happened since September 1998. Tokyo analysts expected further foreign selling in the next few weeks, until US markets stabilised and Japan's economy offered stronger evidence of a sustained recovery.

Taiwan stocks closed 2.45 percent weaker, leaving the TAIEX index at 8,349.91. World micro chip foundry leader Taiwan Semiconductor, the most heavily weighted share in the market, plunged T$9 to T$179.

Australia's S&P/ASX 200 index closed 1.54 per cent down at2,996.4, while Singapore's Straits Times Index ended at 2,003.72, off 2.6 per cent on the day.

Hong Kong and Korean markets were closed for a holiday.

Among smaller markets, Manila's main share index closed off 1.17 percent at an 18 month trough of 1,505.21 while the Kuala Lumpur Composite Index finished 1.26 percent down at 920.71. In Bombay, the main index was down 5.59 percent at 4,209.35 in mid-afternoon trading.

Some analysts said sharp US rate hikes and a strengthening dollar might leave Asia's markets in the lurch, as it could spook investors already uncomfortable with softening Asian currencies.

The dollar rallied to two-month highs after steep losses in Tokyo shares overshadowed U.S Stock weakness, while the euro was trapped in ranges ahead of a European Central Bank meeting. The dollar rose above 110 yen, a level where traders saidthey had seen large options-related positions, to a high of 110.06 by 0700 GMT. That was up more than 0.5 percent on the day. This helped euro/yen rise above 99.60.

By 0900 GMT the dollar/yen had retraced to 109.81/86, while the euro/yen was back at 99.43/53.

The dollar had initially struggled to make headway after Wall Street's losses, but US stock weakness was overshadowed by the Nikkei's decline, which depressed yen sentiment as it dented confidence about the Japanese economy.

The euro hovered around $0.9050, marginally above New York's close and more than half a cent below Wednesday's one-week highs. It was still about two cents above its record lows of $0.8844 hit last week. The single currency found some support from persistent concerns about possible ECB intervention as the market awaited its interest rate decision, due out at 145 GMT.

Most Asian currencies remained on the defensive against the dollar. "Besides the theme of higher US interest rates, the focus for Asian markets right now is also very bad equity market performance and that's leading to portfolio outflows out of Asian countries," said Thio Chin Loo, strategist at BNP Paribas Group in Singapore.