Sun, May 15, 2005 - Page 10 News List

Heavy Wall Street losses drag down Asian markets

RALLY Taiwanese share prices were supported by hopes that an increase in the nation's Morgan Stanley Capital International index weightings will attract foreign investments


Asian stocks closed mixed to weaker on Friday after further heavy losses on Wall Street despite what should have been supportive US retail sales figures and lower oil prices, dealers said.

They said there was some surprise at the outcome in New York, which was hit after Wal Mart missed targets and issued downbeat guidance, and this only added to the very confusing recent picture for investors to grapple with.

The US data should have been a straightforward positive, but instead there was much comment that if the US economy is really doing so well, then the US Federal Reserve may have to hike interest rates more aggressively.

At the same time, continued frenzied speculation about a possible imminent yuan revaluation, despite another forceful Chinese central bank denial, only added to the sense of caution, leaving investors with no incentives to take any risks ahead of the weekend.

On the day, Taiwanese share prices rose 0.79 percent, supported by hopes that an increase in its Morgan Stanley Capital International index weightings will attract foreign investor support. Hong Kong lost 0.73 percent in uncertain trade ahead of a public holiday tomorrow.

The TAIEX closed up 46.88 points at 5,981.48, off a low of 5,925.67 and a high of 6,001.19, on turnover of NT$77.34 billion (US$2.47 billion). Risers led decliners 526 to 314, with 179 stocks unchanged.

The new MSCI-listed companies rallied and large-caps also gained ground in the run-up to MSCI's plan to increase Taiwan's overall weighting in its country indices.

"The MSCI lead served as a catalyst for the market," Fuhwa Securities Co (復華證券) assistant vice president Samson Chueh (闕山雄) said, referring to widespread expectations that foreign investors will pick up on the MSCI move.

The MSCI indices are closely followed by international investors and so any change can have a ready impact on sentiment and fund flows.

However, the tone remained cautious ahead of yesterday's National Assembly election, a special constitutional body which could have a key role in determining relations between the parties and in turn ties with China, Chueh added.

Japanese share prices closed 0.26 percent lower after official data pointed worryingly to a fall in key private sector machinery orders for the three months to June, dealers said.

The Tokyo Stock Exchange's benchmark NIKKEI-225 index lost 28.83 points to 11,049.11. The broader TOPIX index of all first section shares fell 5.67 points or 0.50 percent to 1,134.82.

South Korean share prices closed 0.21 percent higher, steadying in a very modest technical bounce after a week of heavy losses as investors worried about the economic outlook, dealers said. The KOSPI index closed up 1.98 points at 923.19, off a high of 925.08 and a low of 910.72.

Hong Kong share prices closed 0.73 percent lower following sharp falls on Wall Street and on concerns the market could see a significant correction soon following substantial gains over the past few weeks, dealers said.

The Hang Seng Index closed down 101.47 points at 13,866.81, off a low of 13,841.86 and high of 13,921.42. The Hang Seng China Enterprises Index was down 63.40 points or 1.34 percent at 4,654.54.

Chinese share prices closed 0.33 percent higher, staging a modest bounce on bargain-hunting after recent sharp falls, with automakers and airline companies buoyed by lower oil prices, dealers said.

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