Asian Stocks Fall on U.S. Strikes in Afghanistan; Venture Leads
South Asia News
Mon, 08 Oct 2001, 11:37am HKT
By Chan Sue Ling
Hong Kong, Oct. 8 (Bloomberg) -- Asian stocks fell as U.S. strikes against Afghanistan's Taliban regime heightened concern a protracted conflict will cause a global recession. Exporters such as Venture Manufacturing Ltd. and BHP Billiton Ltd. led declines.
Hong Kong's Hang Seng Index fell 3.2 percent, Singapore's Straits Times Index lost 3 percent, and Taiwan's TWSE Index shed 2.1 percent. Stocks in Australia and Korea also fell, while Japan is closed for a holiday. Asian markets were the first to react to the offensive promised by U.S. President George W. Bush in retaliation for the Sept. 11 attacks in New York and Washington.
``The knee-jerk reaction is probably from retail investors as most institutional investors have expected this,'' said Pauline Dan, who helps manage $320 million in Asia, excluding Japan, at IG Investment Management (Hong Kong) Ltd. Cash makes up 20 percent of her holdings. ``It's not the conflict per se but the fear of more terrorist attacks in other parts of the world.''
The U.S. and U.K. last night began targeting terrorist camps and the Taliban's facilities with bombs and cruise missiles. Additional concerns about the U.S. economy, which buys a third of Asian exports, also weighed on investors. The U.S. economy lost 199,000 jobs last month, the biggest decline in more than 10 years, though the unemployment rate held at 4.9 percent.
At the same time, investors sought out gold companies such as Newcrest Mining Ltd. on expectations the precious metal will hold its value in times of global strife.
Newcrest, Australia's second-largest gold producer, gained 2.3 percent to A$3.58, while Lihir Gold Ltd., the nation's No. 3 gold miner, added 4.1 percent to A$1.27. The price of gold gained 8 percent since Sept. 11.
Among Australian exporters, BHP, which exports copper, steel and other metals, lost 3.8 percent to A$8.89. News Corp., the Sydney-based media company which makes 80 percent of its sales in the U.S., slid 4.6 percent to A$12.84. The S&P/ASX 200 Index fell 46.70, or 1.5 percent, to 3132.30.
Hong Kong
The Hang Seng Index fell 330.81 to 9,946.57 and is poised for its biggest drop since Sept. 21. HSBC Holdings Plc, a U.K.- based bank with branches in New York and the Middle East, fell 1.8 percent to HK$83. Li & Fung Ltd., which helps U.S. companies source clothing products in Asia, lost 6.6 percent to HK$7.80.
Property shares added to losses on a report that Sun Hung Kai Properties Ltd. plans to sell rural residential apartments at prices half of those at nearby property developments, a week after Cheung Kong (Holdings) Ltd. priced its apartments a fifth cheaper than expected.
SHK Properties shed 5.4 percent to HK$47.80 on concern of a price war. Cheung Kong, Hong Kong's biggest developer, fell 4.7 percent to HK$60.50. Henderson Land Development Co., the No. 3 developer, fell 5.8 percent to HK$23.55.
``With the U.S.' ongoing anti-terrorist war, people will try to save more and spend less on big ticket items like property,'' said Derek Cheung, an analyst at HSBC Securities (Asia) Ltd. ``Property prices may fall 10 percent by the fourth quarter or early next year, depending on how soon developers decide to cut prices.''
Singapore, Korea
Singapore's Straits Times Index dropped 41.68 to 1343.77. Venture, the city-state's largest electronics manufacturer by market value, fell 4.1 percent to S$8.30, tracking an 0.8 percent slide in Nasdaq futures. DBS Group Holdings Ltd., Southeast Asia's largest lender by assets, dropped 5.3 percent to S$10.80.
``When there's a war, the (U.S.) economy will have to take a back seat because a lot of resources will be spent on military strikes,'' said Tan Choon Hoe, who helps manage $1 billion in Asian investments, excluding Japan, at AIB Govett (Asia) Ltd. ``A recession in the U.S. is quite certain and the question now is how deep it will be and how fast things will pick up.''
In Korea, the government urged investors to remain calm and said the central bank stands ready to ``take measures,'' if the markets are volatile.
Samsung Electronics Co., the biggest maker of computer- memory chips, shed 0.7 percent to 146,500 won. Pohang Iron & Steel Co., the world's second-biggest steelmaker, declined 1.7 percent to 82,600 won. The Kospi shed 2.36, or 0.5 percent, to 499.56.
Taiwan
Taiwan's TWSE Index dropped 74.49 to 3510.51. United Microelectronics Corp. slid 2 percent to NT$24.50. The second- biggest made-to-order chipmaker forecast a loss of NT$3.2 billion, or 24 cents a share, reversing an April forecast of NT$13.3 billion, or NT$1 a share, in profit.
Airline shares also fell on concern the U.S. military action will drive away air travelers, causing sales and earnings to decline. China Airlines Co., Taiwan's biggest airline, slid 5.6 percent to NT$9.35. Eva Airways Corp., the second-biggest airline, lost 2.7 percent to NT$5.50.
``The market will react negatively to the news of the U.S. military action and will go down,'' said Cheng Yi-sheng, who helps manage $43 million in investments at Taiwan Securities Ltd. ``The index may collapse below 3,400 before government funds come into the market.''
Taiwan Securities sold almost all its stock investments, invested in cash deposits, and bought derivatives betting the index will fall.
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