INTERNATIONAL MARKET: 4:56 AM UPDATE
Tokyo's Nikkei drops on GDP fears
HK, Seoul fall as Wall Street fails to rally on HP-Compaq
By Mariko Ando, CBS.MarketWatch.com
Last Update: 4:56 AM ET Sep 5, 2001
TOKYO (CBS.MW) - Tokyo stocks fell Wednesday, as investors feared that upcoming Japan GDP data might show that the world's second-biggest economy was deteriorating much faster than expected, analysts said.
Other key markets in the region also posted losses after Wall Street gave thumbs down to Hewlett-Packard's proposed $25 billion takeover of rival Compaq Computer (CPQ).
Despite initial euphoria from the Asian markets, Wall Street failed to sustain a rally on the HP-Compaq deal. HP shares (HWP) plunged 19 percent on worries that the proposed acquisition won't help profit growth for either of the struggling companies. See full story. The Dow eked out a mild 0.5 percent gain, while the Nasdaq fell 1.92 percent on the first day back from the Labor Day holiday.
In Tokyo, the Nikkei Average lost 1.61 percent, or 173.80 points, to close at 10,598.79. Japan's key index rallied 3.5 percent Tuesday as investors falsely bet the HP-Compaq news would boost U.S. technology shares.
The broader Topix lost 1.13 percent to 1,087.72.
Analysts said investors were deeply concerned about deteriorating economic conditions at home. The Cabinet Office told officials of the ruling Liberal Democratic Party that April-June gross domestic product data, to be released Friday, would show a 1.2 percent contraction, local media reported.
"A contraction of over one percent is much more than the market's expectation of about minus 0.4 to 0.6 percent," said Yasuo Ueki, an independent analyst.
"Market players no longer welcome a Nikkei 200 or 300 point jump, as they fear the index could easily reverse course and erase gains in a few minutes. We now have to eye the 10,000-level as the next support line. So far, the market has no positive factors around."
Technology shares, which enjoyed big gains the previous day following the HP-Compaq announcement, ended lower. Technology bellwether Sony (SNE) (6758) lost 2.3 percent to 5,160 yen. NEC (NIPNY) (6701) sank 5 percent to 1,423 yen and Hitachi (HIT) (6501) dropped 2.9 percent to 874 yen.
Shares of Sharp (SHCAY) (6753) closed flat at 1,260 yen. Japan's leading maker of liquid crystal displays (LCDs) for computer screens said Tuesday its group net profit for the first half year ending September would fall 15.6 percent from a year earlier to 16 billion yen, due to the global economic slump.
Retailers also lost ground on fears that they won't see a recovery in domestic sales until the economy gets back to a recovery track.
Shares of Fast Retailing (9983) (FSRTFM), Japan's top casual-wear retailer, plunged 13.5 percent to 12,800 yen. The company said after the market closed Tuesday that its August sales on a same-store basis had fallen 1.9 percent from a year earlier, marking its first year-on-year decline since September 1998.
Ito-Yokado (IYCOY) (8264) sank 6.4 percent to 4,220 yen. Supermarket operator Olympic (8289) dived 7.3 percent to 1,479 yen.
HK, Seoul, Taipei also fall
Hong Kong's Hang Seng Index tumbled 193.72 points, or 1.74 percent, to close at 10,943.14.
China cell phone companies led decliners after news of HP's acquisition of Compaq boosted their shares the previous day. China Mobile (CHL) (0941), the mainland's biggest mobile phone company, sank 3.8 percent to 23.05 Hong Kong dollars. Rival China Unicom (CHU) (0762) lost 3.2 percent to HK$9.2.
Ports-to-telecoms conglomerate Hutchison Whampoa (HUWHY) (0013) fell 1.1 percent to HK$67. Hutchison conceded it may need to risk its own balance sheet to secure lending for a third-generation mobile phone subsidiary in Italy, the Financial Times quoted Canning Fok, the company's managing director, as saying.
In South Korea, the benchmark Kospi dropped 1.23 percent to close at 551.91 points.
Samsung Electronics, the world's top memory chipmaker, lost 3.6 percent to 189,500 won after the Philadelphia Stock Exchange's semiconductor sub-index tumbled 3.4 percent. SK Telecom (SKM) sank 5 percent to 218,500 won.
Meanwhile, U.S. auto giant General Motors (GM) is ready to pay nearly $782 million to buy two plants from South Korea's bankrupt Daewoo Motors, the Korea Economic Daily reported. Shares of Daewoo Motor Sales, the automaker's sales channel, dropped 2.2 percent to 3,350 won.
Technology shares weakened in Taiwan, where the Weighted Index fell 1.53 percent to close at 4,424.91. The world's foundry leader Taiwan Semiconductor Manufacturing (TSM) shed 0.8 percent to 65.50 Taiwan dollars.
United Microelectronics (UMC) lost 0.7 percent to T$40.00. Shares fell despite media reports that the world's second largest microchip foundry has signed a 5-year agreement to supply semiconductors to Conexant Systems (CNXT).
Australian stocks ended unchanged after its central bank cut key interest rates by a quarter percentage point to 4.75 percent, citing worse-than-expected international economic conditions.
The All Ordinaries Index closed at 3,231.10, up only 0.09 percent. Volume leader Telstra (TLS) added 0.4 percent to 4.97 Australian dollars. But banking shares lost ground.
In New Zealand, the benchmark NZ Top 40 fell 0.81 percent to close at 2,027.23. Air New Zealand's unrestricted B shares tumbled 6.6 percent to 99 cents. Investors were disappointed by media reports that the government is not immediately raising the troubled airline's foreign ownership cap.
Singapore's Straits Times Index advanced 0.07 percent to 1,621.76 by late in the afternoon. Malaysia's KLSE Composite was trading up 0.04 percent at 688.03 by late afternoon.
The dollar was quoted at 119.76 yen in late afternoon Tokyo, up from 119.25 yen in New York late Tuesday. It changed hands at 119.37 yen late Tuesday in Tokyo.
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