ADR Report: Asia Mkts May See Relief As Dow,Nasdaq Climb
Updated: Tuesday, March 13, 2001 04:23 PM ET
By Shaheen Pasha
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Technology and telecommunications American depositary receipts rebounded in line with a bounce-back in U.S. markets Tuesday, in a move that could spell some relief for the battered Asian markets on Wednesday, traders said.
The Bank of New York ADR Index closed at 114.49, down 0.34%, while the International Market Index finished up 0.08% at 626.57 and the Nasdaq ADR Index gained 1.9% to close at 392.98.
The Dow rose 82.55, or 0.8%, to close at 10290.80 and the Nasdaq climbed back above the 2000 mark with a close of 2014.66, up 91.28, or 4.7%.
"ADRs are trading up relative to where they closed overseas," said Joe Dorilio, head of international trading at ING Barings.
Despite the trepidation over the Nasdaq's low close Monday, Dorilio said it appeared that people were psychologically preparing themselves for a bounce.
And bargain hunters were on the prowl for beaten-down stocks, namely in the tech sector.
Mido Shammaa, assistant portfolio manager of the Global e-Fund at International Assets Advisory Corp., said handset manufacturers - which had a down day in the Asian market following NTT DoCoMo Inc.'s announcement that only two out of 11 handset manufacturers that signed contracts will be ready to launch the company's third-generation mobile phone service in May - should see some upside in Wednesday's trading day.
"These stocks are rebounding now with some bottom fishing going on," Shammaa said. "I think it's going to be a positive opening as people feel better...and (stocks) get a positive lift from the way the Nasdaq is closing."
Asian markets could definitely use a reprieve.
The Nikkei fell 351.67 points, or 2.9%, Tuesday to 11819.70, the lowest finish since January 1985. The Nikkei extended its losing streak to four sessions, during which it has lost a total of 904.19 points, or 7.1%.
Losses were seen across the board as fears of a continued contraction in global investment money prompted players to cash in holdings across sectors.
Hong Kong's Hang Seng Index closed Tuesday at its lowest level since Nov. 3, 1999, as banking and property counters led the decline following heavy losses on global stock markets.
Traders said the market is concerned the U.S. Federal Reserve Open Market Committee will cut interest rates by only 25 basis points at its next meeting, March 20, rather than the 50-basis-point cut that some have been calling for in recent weeks. That hurt banking and property plays.
Goldman Sachs' downgrade Monday of banking heavyweight HSBC Holdings PLC helped fuel the decline. While HSBC ended 3.4% lower in Hong Kong, its depositary shares were up 1.8% at $64.30 in New York.
The blue-chip Hang Seng Index ended down 283.69 points, or 2.06%, at 13493.03. It traded the session in a range of 13517.08 and 13277.52.
Shammaa saw some relief for Hong Kong companies as tech rebounds. In particular, China Mobile Ltd. and Pacific Century Cyberworks Ltd. should rise Wednesday given that they ended in New York above their close in local markets, Shammaa said. China Mobile gained 4.2% to $23.95 and Pacific Century rose 3.6% to $5.18.
Asia wasn't alone in showing weakness Tuesday, following Monday's sinking Dow and Nasdaq.
U.K. shares dropped sharply for the third consecutive day, forging a new 27-month closing low due to negative corporate news and mounting economic concerns.
The FTSE 100 closed down 105.8, or 1.8%, at 5720.7 on provisional market volume of 2.11 billion shares.
The biggest loser on the U.K. market was Cable & Wireless PLC), which fell 20% in London to 545 pence after issuing a trading statement.
The firm's 8% annual forecast earnings before interest, tax, depreciation and amortization margin was well below expectations, said one analyst who had seen the figure at 12.5%. He added that the group restructuring charges of GBP950 million were also a surprise. Cable and Wireless also announced that it would reduce its work force by 4000 over the next 12 months.
On the New York Stock Exchange, Cable & Wireless ADRs closed down 23% at $23.17.
Other technology stocks hit were Energis PLC, which fell 11% in London to 373.5 pence, and Colt Telecom Group PLC, which lost 7.2% to 1058 pence. In New York, Energis closed down 3.8% at $28.75 and Colt ADRs ended down 1.1% at $63.38.
Shares ended lower in Paris for the fourth straight session, as Monday's overall battering from plunging U.S. markets continued to weigh on the bourse.
The CAC-40 index of the most heavily traded stocks closed down 55.53 points, or 1.0%, at 5,186.87 points, its lowest level since November 1999.
Frankfurt's Xetra Dax closed down 83.63 points or 1.4% at 5962.93.
"We're in a trader's market," said Jim Joyce, head of international trading at Credit Suisse First Boston. He saw the ADR market showing a "tentative upside" as the Dow and Nasdaq bounce back from their lows.
-By Shaheen Pasha, Dow Jones Newswires, 201-938-2312; shaheen.pasha@dowjones.com
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