Sun, Feb 08, 2004 page10

• TSMC paces fall in Asian indexes; China advances

  • BLOOMBERG
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  Asian stocks fell this week, led by Sharp Corp and Taiwan Semiconductor Manu-facturing Co (TSMC, 台積電), on concern a decline in the dollar against regional currencies will reduce the value of exporters' overseas earnings.

  Ricoh Co, Japan's second-largest office equipment maker, and Olympus Corp, the world's third-biggest seller of digital cameras, dropped after cutting sales forecasts because of the yen's gain. The dollar fell this week to a 3-and-a-half year low against the yen and a seven-month low against the New Taiwan dollar.

  The US is Asia's biggest overseas market.

  "We expect the dollar to continue to weaken gradually and we're staying away from exporters," said Teo Chon Kiat, who helps manage about US$1.4 billion in Asia, excluding Japan, at DBS Asset Management Ltd in Singapore.

  The Morgan Stanley Capital International Asia-Pacific Index, which tracks 854 companies in the region, fell 0.8 percent in the past five days for its second weekly drop.

  Benchmarks in China and Thailand were among the best performers in the region after government officials said they've made progress in containing bird flu.

  Airline shares advanced after Singapore Airlines reported earnings that beat some forecasts and All Nippon Airways Co.

  returned to profit. The Bloomberg Asia Pacific Airlines Index topped the performance of all 10 industry groups in the MSCI Asia Pacific Index.

  In the US, The Standard & Poor's 500 Index gained 1 percent in the past five days, for its 10th weekly gain in the last 11. The Dow Jones Industrial Average snapped a two-week slide by gaining 1 percent to 10,593.03. The NASDAQ Composite dropped a third week to 2064.01.

  All three indexes rose yesterday after a government report on job growth spurred optimism that the economy is expanding at a pace that will boost earnings without triggering a rise in interest rates.

  Sharp, Japan's largest maker of liquid-crystal displays, shed 3.5 percent to ¥1,838 this week. Vice president Hiroshi Saji said on Monday that the company stuck to its profit forecast even as third-quarter net income surged 27 percent "because of uncertainty in the currency market." Ricoh lost 4.7 percent to ¥1,950. It cut its full-year sales forecast by 1.3 percent. Olympus shed 8.1 percent to ¥2,035 after lowering its full-year sales forecast to ¥650 billion (US$6 billion) from ¥660 billion.

  Japan's Nikkei 225 Stock Average lost 3 percent and the Topix index declined 1.8 percent for the week.

  TSMC, the world's biggest supplier of made-to-order chips, slipped 4.6 percent to NT$63.

  To halt the dollar's decline, Asian governments including Japan have sold their own currencies. Taiwan's foreign-currency reserves rose to a record US$215 billion in January, indicating the central bank sold its currency for US dollars.

  Japanese Finance Minister Sadakazu Tanigaki said he will tell his G7 counterparts that Japan is "ready to take action" to limit damage to exports by stemming the yen's yearlong rally. G7 finance ministers were meeting in Florida yesterday.

  In China, the Shanghai Composite Index advanced 5.6 percent to 1679.19. Thailand's SET Index rose 1.8 percent to 711.15 in the week, rebounding from a 7.4 percent slump the previous week.

  China's government said it has controlled all 23 known bird-flu outbreaks in the country after overcoming earlier failures in reporting the disease. Thai officials said the virus is now active in only one province, Bangkok, and has been cleared in 39 other provinces.

  Anton Rychener, the UN agency's representative in Vietnam, said Friday bird flu has been found in pigs in the country, Agence France-Presse reported. A new strain mutated in pigs could be much more dangerous, officials at the World Health Organization have said.

  Benchmarks in Hong Kong and Thailand slid last week on concern the spread of the bird flu virus in the region will damp travel demand and curb consumer spending.

  "This is good progress for the government to clean up the infected areas," said Suppamas Payakapan, a strategist at Phillip Securities (Thailand) Pcl. "This works to help gain confidence among investors."

  The Bloomberg Asia Pacific Airlines Index, which tracks 13 carriers in the region, gained 1.9 percent this week.

  Singapore Air, the world's second-biggest carrier by market value, added 0.9 percent to S$11.40. The airline on Thursday said profit for the three months ended Dec. 31 more than doubled to S$378 million (US$224 million) from a year ago, topping the median forecast of four analysts surveyed by Bloomberg.

  "It's a pretty good set of results," said Caleb Woo, who helps manages US$1.4 billion at DBS Asset Management Ltd in Singapore. "If you look at the regional traffic statistics for airlines, it's all been rising."

  All Nippon Airways, Asia's second-biggest airline by sales, gained 1 percent to ¥292. The airline earned 6.9 billion yen in the third quarter, compared with a loss a year earlier, and plans to pay its first dividend in seven years.
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