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Technology Stocks : Pacific Century CyberWorks (PCW, PCWKF) -- Ignore unavailable to you. Want to Upgrade?

To: ms.smartest.person who wrote (4380)	1/7/2001 9:18:39 PM
From: ms.smartest.person	Read Replies (1) \| Respond to of 4541

Asia Welcomes U.S. Rate Cut by YURI KAGEYAMA AP Business Writer TOKYO (AP) -- The interest rate cut in the United States is proving a pleasant New Year's surprise for Asia, raising hopes the region can keep a shaky recovery going by boosting exports to a less frugal America. But while stock markets here surged on the heels of the Federal Reserve's rate reduction Wednesday, experts expressed caution. Further cuts are needed for potential lasting benefits to the region, a huge exporter of cars and electronics that's still smarting from a 1998 financial crisis. Layoffs are rampant in South Korea. Japan faces a multitrillion-dollar government debt. ''No one has money in Japan -- the nation, the banks, the companies. The only hope for us is for Americans to make money and spend,'' said Shigeyuki Murata, a 45-year-old book translator. He was checking his investments by gazing at a brokerage firm's electronic display -- parading Tokyo share prices on a rare upswing Friday. Similar sentiments were echoed elsewhere in Asia. ''If the U.S. economy booms, it will help our economy and our construction industry,'' said Kim Jung-il, a 39-year-old building contractor in South Korea. ''We want a good U.S. economy as much as Americans do.'' The U.S. Federal Reserve slashed its benchmark interest rate by half a percentage point between its regular meetings -- a surprise that sent a global signal the Fed wants to revive the sagging U.S. economy. Reflecting a trend across the region, the benchmark Nikkei stock index in Tokyo rose 1.2 percent Friday following a powerful rally on Wall Street. It had slipped the day before, as investors initially expressed caution toward the rate cut. The benchmark index in Hong Kong rose 4 percent Thursday and 1 percent more Friday, while Taiwan's main index surged 3 percent Friday. The South Korea index rose 4 percent to its highest close in nearly three months. Whether the rallies last is debatable, but previous Asian market surges following dramatic Fed moves provide some guidance. The Nikkei in Tokyo pushed up about 25 percent in each of the 12 months after the Fed's half-point reduction in July 1992 and after the Fed last changed rates between meetings in October 1998. In South Korea, the main stock index rose 43 percent in the year after July 1992 and 106 percent after October 1998, as the nation rebounded from the region's financial crisis. Asia is still smarting from that recession, which pushed hundreds of companies into bankruptcy and sent investors fleeing. ''The rate cut is going to be a psychological plus for American consumers,'' said Testuo Kitagawa, spokesman for Toyota Motor Corp., Japan's largest car maker. Toyota, which has posted strong sales despite a slowdown among rival automakers, had hoped for slightly higher sales this year. With the Fed's rate cut, expectations are heightened. Asia's economic health hinges so much on the American economy that a ''soft-landing'' is crucial in any U.S. slowdown, analysts say. Shinichi Ichikawa, strategist with Credit Suisse First Boston Securities in Tokyo, expects the Tokyo stock market to recover further in the next couple of months. Frank Jeng, marketing manager of Via Technologies, Taiwan's largest chip-designer, was less sanguine, noting the Taipei market was merely recovering earlier losses. ''It's positive news, but we cannot count on the rate cut to drive up demand for computers'' in the United States, he said. PC sales in the U.S. leveled off last year amid a general consumer spending slowdown. One advantage for Asia is that the rate cut has not yet pushed the dollar down; lower interest rates tend to decrease the value of that nation's currency. But the dollar could weaken in coming months if the Fed cuts rates further, as many economists expect. That could hurt Asian exporters by dampening overseas profits and making their products more expensive across the Pacific. Lower U.S. interest rates are sure to be good news for Hong Kong, which pegs its dollar to the U.S. dollar and centers around two big industries highly sensitive to rates -- banking and property. Hong Kong commercial banks cut interest rates by a half-point Friday, following the Fed's move. That should help people pay mortgages, businesses borrow money and encourage investors. Wong Kwong-fei, for one, was hoping to get a break on the $1,667 mortgage he pays every month for his 600-square-foot apartment. ''It will help relieve the pressure on the mortgage I'm paying,'' said the 38-year-old maintenance man. But Lee Keun-mo, chief analyst at Good Morning Securities in Seoul, foresees only a short-term lift to stock markets. ''We must remember that the Fed rate cut was designed to slow the pace of the economic slowdown in the United States,'' Lee said. ''It is not going to accelerate U.S. economic growth.'' AP-NY-01-07-01 1310EST< 01/07/2001 newsday.com