South Korean stocks fell this week, with the KOSPI index having its biggest weekly decline in more than six months. Shares of the nation's largest companies such as Samsung Electronics Co led the drop after the US said North Korea disclosed it had nuclear weapons.
The KOSPI index slid 9.3 percent, its biggest decline since the five days ended Oct. 11, 2002. Shares fell after US President George W. Bush accused North Korea of "blackmail," following talks in Beijing at which the communist state stated to US officials that it possessed nuclear weaponry.
"There is an overreaction now among domestic investors, emotionally shocked by the revelation," said Michael Reed, country head at Franklin Templeton Investment Trust Management Co.
in Seoul. Still, the ``admission of nuclear weapons isn't a huge surprise because investors already expected it from last year.'' Elsewhere in Asia, Japan's Nikkei 225 Stock Average declined 2.2 percent this week, falling to its lowest since November 1982.
The TOPIX index dropped 1.1 percent, led by Sony Corp, after the company reported a fourth-quarter loss that was almost triple some analysts' estimates.
Benchmarks in Taiwan, Hong Kong and Singapore tumbled on concern the spread of the deadly severe acute respiratory syndrome, or SARS, will continue to curb consumer spending and stop businesses from placing orders in countries affected.
Samsung Electronics, the world's biggest memory chipmaker, fell 8.7 percent this week and was the second-heaviest drag on the KOSPI. Posco, the world's second-largest steelmaker and the third- biggest contributor to the KOSPI's slide, sank 12 percent.
US officials, who declined to be identified, told reporters that North Korean negotiators said the country had nuclear arms during two days of talks in Beijing between US, Chinese and North Korean officials. The meeting was intended to resolve a seven-month standoff between the US and North Korea following the North's admission last year that it broke a global agreement and reactivated its nuclear program.
North Korea's "admitting to having nuclear weapons will add an additional risk premium to Korean stocks," said Seo Jeong Kwang, a strategist at LG Investment & Securities Co.
In addition, North Korea may have as many as 200 mid-range missiles capable of striking Japan, the Asahi newspaper said Friday on its Web site. That's about twice the number previously believed to be available for North Korea's military.
Sony fell 17 percent, its biggest weekly decline since the five-days ended Jan. 7, 2000. The world's second-largest consumer electronics maker, which was the heaviest drag on the Nikkei this week, said after the market closed Thursday it lost ?111.1 billion (US$918 million) in the three months ended March 31. Analysts surveyed by Bloomberg News expected a ?39 billion loss.
"Sony's earnings definitely caught a lot of us by surprise," said Rich Herman, who helps manage US$2.2 billion as a fund manager at Philadelphia Advisors International. The fund won't buy Sony "until we understand Sony's management strategy." Computer-related companies declined on concern Sony's results signaled slowing demand, some investors said.
TDK Corp, Japan's biggest maker of magnetic parts for hard-disk drives, slid 11 percent and was the second-heaviest drag on the Nikkei. Rohm Co, which makes customized semiconductors for consumer electronics and counts Sony among its clients, dropped 5.5 percent this week.
The TAIEX index fell 9 percent this week. Singapore's Straits Times index fell 4 percent, while Hong Kong's Hang Seng Index lost 2 percent. The latter two benchmarks had their fifth weekly declines in a row on concern the spread of SARS will curb economic growth.
The Taiwanese government will also impose restrictions on visitors from Hong Kong, requiring them to obtain visas before arriving in Taiwan, the Taipei Times reported on Saturday, citing Premier Yu Shyi-kun.
Taiwan Semiconductor Manu-facturing Co (台灣積體電路公司), the world's largest supplier of made-to-order chips, dropped 4.2 percent.
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