Sun, May 16, 2004 - Page 10 News List

Asian indexes have huge weekly drop


Asian stocks slid this week, dragging the MSCI Asia-Pacific Index toward its biggest drop in almost two years. Exporters such as Kyocera Corp and Samsung Electronics Co led declines amid concern rising oil prices and higher interest rates in the US and China will dent earnings.

Rising rates "are going to put a lid on earnings and returns on equity will be relatively subdued," said Hans Goetti, a Singapore-based money manager for private banking clients at Citigroup Asset Management, which oversees US$463 billion globally.

"Another big worry is that oil prices will go higher. We don't think it's a good time to buy stocks." The Morgan Stanley Capital International Asia-Pacific Index, which includes more that 850 companies, slumped 6.3 percent this week, its biggest slide since the five days ended July 26, 2002.

Japan's Nikkei 225 Stock Average and the broader Topix index slid 5.2 percent, their biggest weekly declines since Oct. 24.

South Korea's Kospi index had its biggest weekly drop in 13 months.

India's benchmark Sensitive Index, or Sensex, posted its biggest weekly loss since September 2001 on concern the Congress party-led alliance, which defeated the ruling Bharatiya Janata Party's coalition in general elections, will delay selling state-owned assets because of resistance from party members and socialists allies.

Kyocera, the world's largest maker of ceramic packaging used to protect finished microchips, lost 9.8 percent this week. The company gets more than half its sales overseas.

Samsung Electronics, the world's biggest maker of memory chips, tumbled 9 percent. It's fallen 20 percent in the past three weeks on concern a slowdown in China, the world's seventh-largest economy, will spread.

"We may see global economies cool off a bit, and that's going to be a major concern," said Seiichiro Iwamoto, who helps manage the equivalent of US$887 million in equities at Fuji Investment Management Co in Tokyo.

United Microelectronics Corp, the world's second-largest supplier of made-to-order computer chips, declined 7.2 percent in the week.

The Sensex dropped 11 percent, its biggest weekly slide since the five days ended Sept. 14, 2001. State-owned companies, such as Hindustan Petroleum Corp and Mahanagar Telephone Nigam Ltd, led declines, falling 29 percent and 24 percent respectively.

"It's almost a foregone conclusion that disinvestment will be more gradual under a Congress-led government," said Rajeev Malik, senior economist at JP Morgan Chase Bank in Singapore.

The former government's asset sales had fueled an 83 percent gain in the Sensex in the year to March 31, attracting US$7.6 billion of overseas portfolio investment.

"The market was in a bull run for over a year," said Hong Chye Quah, portfolio manager at Invesco Asset Management in Singapore. "People wanted the good times to continue -- expectations were excessively high."

Transportation companies fell on concern higher oil prices may reduce profits. Crude oil futures for June delivery on the New York Mercantile Exchange climbed to a record US$41.56 a barrel in Friday's session, beating the US$41.15 high on Oct. 10, 1990, when Iraq occupied Kuwait. Oil gained 3.6 percent this week.

Singapore Airlines Ltd, the national carrier, declined 6.2 percent this week. Cathay Pacific Airways Ltd, Hong Kong's largest carrier, slid 4 percent.

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