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Regional share markets seem set to rebound

Looking back * The Nikkei shed 0.5 percent last week to 8,685.72. * The TOPIX dropped 0.6 percent to 866.89. * Both benchmarks completed their fourth weekly declines in the last five.

A recovery in Japanese stocks from their worst month since June depends on the ability of the US Federal Reserve to keep the world's biggest economy from sliding back into a recession, some investors said.

Hitachi Ltd, Advantest Corp and other companies that rely on US demand may get a boost next week from an interest-rate cut when Fed policy makers meet Wednesday. Recent US economic reports pointing to a slowdown in Japan's biggest trading partner could push the Fed to help spur consumer demand by keeping borrowing costs low, some investors said.

"With the US economy showing signs of slowing growth, the Fed has a valid excuse to cut rates," said Jun Terasaka, who is buying telecommunications companies and electronics makers for the US$160 million in shares he helps manage at Toyota Asset Management Co.

"That will provide a cushion to Japanese exporters and provide a boost to sentiment as well."

Exporters such as Taiwan Semiconductor Manufacturing Co (台灣積體電路公司), Li & Fung Ltd in Hong Kong, and Australia's News Corp, which makes three-quarters of its sales in the US, may also rise.

In Singapore, CapitaLand Ltd may gain after the real-estate developer may say third-quarter profit rose 63 percent because of gains from the sale of three shopping malls.

For the week just ended, the Nikkei shed 0.5 percent to 8,685.72, while the TOPIX dropped 0.6 percent to 866.89. Both benchmarks completed their fourth weekly declines in five.

Markets in Japan, Singapore, Malaysia and India will be closed Monday for public holidays.

Stocks rose after reports showing rising US unemployment and slowing manufacturing boosted anticipation of a Fed rate cut.

"The market will by default have some knee-jerk reaction" should the Fed lowers interest rates, said Basil Masters, chief investment officer at Credit Agricole Asset Management Japan Ltd, which handles US$1 billion in Japanese stocks.

"But that would be as much of a reaction you will get here, unless the cut spurs hopes" of sustained future growth.

Exports, which accounted for half of Japan's 0.6 percent economic growth in the second quarter, fell for a third month in August as US demand slowed, which handles US$1 billion in Japanese stocks.

"But that would be as much of a reaction you will get here, unless the cut spurs hopes" of sustained future growth.

Hitachi, Japan's largest maker of electronics, slashed its full-year profit forecast by 40 percent, blaming a slower-than-expected recovery in the US and weakness in the Japanese economy.

Advantest, the world's biggest maker of equipment used to test computer memory chips, widened its annual loss forecast to ?6.3 billion as more of its customers pare spending because of slowing demand for personal computers and mobile phones.

"The technology industry is just beginning a long road to recovery, which won't come through before next year," said Takeshi Yamaguchi, who helps manage ?130 billion in Japanese equities at Sumisei Global Investment Trust Management Co.

Hong kong

In Hong Kong, Li & Fung and Johnson Electric Holdings Ltd may rise.

Hong Kong shipped a fifth of its exports to the US in the first half of 2002. Li & Fung buys Asian-made garments on behalf of US companies such as Abercrombie & Fitch Co. Johnson Electric, a maker of small electric motors, gets a third of its revenue in North America.

Investors will also monitor China Telecom Corp as shares of the nation's largest phone company start trading in Hong Kong on Nov. 7. China Telecom on Thursday delayed pricing shares to Nov. 5, sparking concern that demand may be slack in the US$3.68 billion share sale, the world's third-largest this year.

Taiwan

A Fed rate cut may also lift the share prices of exporters such as Taiwan Semiconductor and Quanta Computer Inc (廣達) in Taiwan and Singapore companies such as DBS Group Holdings Ltd and Singapore Telecommunications Ltd.

The US buys a fifth of Taiwan and Singapore's exports.

Taiwan Semiconductor, the world's largest supplier of made-to-order chips, whose US-traded shares rose 3.5 percent yesterday, sold three-quarters of its chips to US customers in the third quarter.

Singapore

CapitaLand, Singapore's biggest real estate developer, may say third-quarter profit rose 63 percent, boosted by a S$100.8 million (US$57 million) gain from the sale of three shopping malls. Profit for the three months ended Sept. 30 probably increased to S$134.6 million from a year earlier, based on the average estimate of four analysts polled by Bloomberg News. The company reports earnings on Tuesday.

South korea

Chohung Bank may fall as its employees will vote Nov. 12 on whether to strike in protest at the government's plan to sell a stake in the lender or merge it with rivals, the union at South Korea's fourth-largest bank said.

Australia

In Australia, News Corp, the world's fifth-largest media, may gain on optimism a US rate cut will boost spending and demand for advertising. The company is also due to release its second-quarter earnings on Wednesday.

Mining companies such as BHP Billiton and Rio Tinto Group may advance as lower interest rates may boost demand for metals used in construction and manufacturing in the world's biggest economy.

"The stock that stands out as being affected by global growth is BHP Billiton," said Lochiel Crafter, who oversees US$21 billion as chief investment officer at State Street Global Advisors Inc. in Sydney. US economic "data to date has been on the soft side. The market consensus is building toward a 50 basis-point rate cut next week."

Crafter likes property trusts and consumer companies such as retailers because there's "certainty of cash flow."
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