18:33 16-FEB-Asia Markets-PCCW falls
By Anchalee Koetsawang
SINGAPORE, Feb 16 (Reuters) - Asian stocks were a mixed bag
on Wednesday as players switched out of the usual market darlings
such as telecoms and technology to banks and utilities.
Hong Kong's market rose sharply despite a four-percent drop
in the recent star performer Pacific Century CyberWorks Ltd
<1186.HK> which corrected from Tuesday's seven percent rise.
Investors consolidated positions while waiting for more news
on its merger talks with Cable & Wireless HKT <0008.HK>.
In the bond market, newly-issued Hanvit Bank's subordinated
note worth $850 million was snatched up, prompting hopes that
more banks in the region will follow through with similar issues.
The market has become increasingly cautious about automakers'
and airlines' shares as a surge in international oil prices
triggered concerns about their bottom lines.
NIKKEI, TAIEX, HANG SENG MARCH HIGHER
Tokyo's benchmark Nikkei average was thrust higher by demand
for bank shares after major credit rating agencies indicated a
proposed new tax on big banks would not affect their credit
quality.
But corporate selling of cross-held shares ahead of end-March
book closings is expected to continue to weigh on large-cap high
tech shares.
In Hong Kong, speculation swirled over possible partners for
PCCW's bid for Cable & Wireless HKT. The craving for more news on
the possible merger sent the overbought PCCW's share tumbling.
"There's not been much news divulged. Both PCCW and Cable &
Wireless are giving a little bit back since both have obviously
jumped up so much," said Jerry Pang, institutional sales manager
at HSBC securities.
But the benchmark Hang Seng Index <.HSI> rose more than 2.0
percent at the close as investors switched from high-flying
telecom-related counters to banks and utilities.
HANVIT'S SPREAD TIGHTENS
Hanvit Bank's <00030.KS> two tranches of subordinated notes
were in demand with Asian investors impressed by South Korea's
recovery story.
Analysts said the deal size of $850 million was well over the
$500 million initially offered, indicating high investor interest
in the subordinated debt sector.
The bank issued $300 million of lower tier two notes at a
spread of 520 basis points over equivalent U.S. Treasuries. It
also issued $550 million upper tier two notes at 612.5 basis
points over.
The spreads of the notes have tightened to 494 basis points
and 580 basis points respectively.
Their success is expected to lure more banks into the
subordinated debt market.
"The deal is obviously important, and hopefully will see a
lot of follow through," said Raja Visweswaran, head of fixed
income at Bank of America
"When you look around Asia, many other candidates for
subordinated debt issues crop up -- ranging from Cho Hung Bank in
Korea to Bangkok Bank in Thailand," he said.
THAI TPI INSOLVENCY CASE UNSETTLES MARKET
The delays and confusion surrounding the restructuring of
Thai Petrochemical Industry's $2.99 billion debt
unnerved the market.
At the end of the day, analysts said it raised questions over
whether Thailand's new bankruptcy laws had any teeth.
"The flip-flops in this case are showing up the weakness of
the bankruptcy laws in the country, especially in seemingly
simple matters such as acceptance of agreements made between
companies and steering committees of creditors," said
Visweswaran.
"Thailand will have to send a strong signal to its errant
corporates. Otherwise, it risks sliding into a fresh crisis
fairly quickly," he said.
Apart from syndicated loans, TPI has outstanding convertible
bonds worth $48 million which will mature in 2003.
A floating rate note worth six billion yen issued by one of
its units will mature next year.
BOT TO SHIFT TO INFLATION TARGETING
The market welcomed the Bank of Thailand's move to shift its
monetary policy from exchange rate targeting to inflation
targeting.
The proposal, along with other amendments to financial
institutions, was approved by the cabinet on Tuesday. However, it
could take months before they become laws.
"Inflation targeting elsewhere seemed to be quite successful.
I think the big question is how they manage the intermediate
period," said Andrew Dermot-Fung, treasury economist at Standard
Chartered.
"Inflation is now low. But as we head toward the end of the
year, inflation is going to pick up. The economy is going to
improve this year but not to the point it is going to be
resilient to sustained and strong increases in interest rates."
But others said the central bank faced major challenges.
"For an inflation target to be credible, it must be fixed for
a very long period of time. This may not be easy," said Supavud
Saicheua, head of economics at Merrill Lynch in Bangkok.
"Inflation targeting could also be politically controversial.
For example, a drought causing crop losses (domestic supply
shock) would require tight monetary policy, which would worsen
economic hardship for farmers. This would apply even if the BOT's
inflation excludes volatile items such as food," he said.
CURRENCIES VS U.S. DOLLAR 0918 GMT
Change on the day
Currency Latest bid Prev Close Pct Move
Japan yen 108.33 109.27 +0.87
Sing dlr 1.7012 1.6995 -0.10
Taiwan dlr 30.63 30.68 +0.16
Korean won 1125.50 1126.00 +0.04
Baht 37.58 37.52 -0.16
Peso 40.52 40.42 -0.25
Rupiah 7390.00 7305.00 -1.15
Ringgit 3.7995 3.7995 +0.00
Change on year
Currency Latest End prev yr Pct Move
Japan yen 108.33 102.21 -5.65
Sing dlr 1.7012 1.6640 -2.19
Taiwan dlr 30.63 31.38 +2.45
Korean won 1125.50 1135.00 +0.84
Baht 37.58 37.45 -0.35
Peso 40.52 40.20 -0.79
Rupiah 7390.00 6975.00 -5.62
Ringgit 3.7995 3.7997 +0.01
------------------------------------------------
ASIAN STOCK MARKETS 0918 GMT
Change on the day
Market Current Prev Close Pct Move
Tokyo 19599.18 19367.83 +1.19
Hong Kong 17043.39 16688.16 +2.13
Singapore 2212.32 2199.36 +0.59
Taipei 10064.49 9957.74 +1.07
Seoul 879.50 879.70 -0.02
Bangkok 423.49 430.97 -1.74
Manila 1894.95 1938.06 -2.22
Jakarta 621.90 636.90 -2.35
Kuala Lumpur 998.77 995.52 +0.33
Change on year
Market Current End prev yr Pct Move
Tokyo 19599.18 18934.34 +3.51
Hong Kong 17043.39 16962.10 +0.48
Singapore 2212.32 2479.58 -10.78
Taipei 10064.49 8448.84 +19.12
Seoul 879.50 1028.07 -14.45
Bangkok 423.49 481.92 -12.12
Manila 1894.95 2142.97 -11.57
Jakarta 621.90 676.92 -8.13
Kuala Lumpur 998.77 812.33 +22.95
((Asia Forex Desk (65) 870-3841;fax (65) 870-3787; email;
asia.forex@reuters.com))
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