Asian Markets Update: Ericsson Warning Sends Asian Telecom Stocks Lower
Kaya Laterman
06/30/00 - 05:03 AM EDT
TOKYO -- A harsh profit warning from one of the world's largest mobile phone companies put a damper on Asian telecom shares, sending most markets in the region lower on Friday.
In Japan, investors paid scant attention to the slashing by
Fitch IBCA of Japan's long-term local currency credit rating to AA+ from AAA late Thursday, as market participants had generally suspected such action in the last few weeks.
Japan's benchmark
Nikkei 225 index shed 64.85 points to 17,411.05, while the
Topix index, which includes all shares listed on the
Tokyo Stock Exchange's first section, lost 3.06 to 1591.60. The
Jasdaq small-cap index rose 1.03, or 1.2%, to 90.35, while the Nikkei
over-the-counter index gained 13.77 to 1787.90.
If the ratings news on Japan was largely ignored, the market took to heart words from Kurt Hellstrom, the chief executive of Sweden's
Ericsson, who said the high price of third-generation mobile phone operating licenses could cut into company profits. The high costs, Hellstrom added, could retard growth in the booming industry.
Japanese cellular phone part maker
Kyocera (KYO Quote) dropped 510 yen, or 2.8%, to 17,990 ($170.36), while
NTT DoCoMo, Japan's largest mobile phone group, shed 140,000, or 4.7%, to 2.87 million. Other large-cap tech shares were generally weaker, with
Sony (SNE Quote) shedding 200, or 2.0%, to 9900, while
Softbank lost 100 to 14,400.
Construction, paper and other domestic Japanese cyclicals continued to draw in buying from mutual funds, possibly including six new funds targeting low-priced shares. Many investors are hoping that Tuesday's release of the
Bank of Japan's June tankan survey on corporate sentiment will show that the general economy is improving. Building giant
Kumagai Gumi jumped 11, or 20.8%, to 64.
The dollar edged slightly higher against the yen to fetch 105.59, a move dealers attributed to the Fitch ratings action. In reducing the rating, Fitch cited concerns over economic recovery in the household sector, as well as Japan's expanding public sector debt.
Hong Kong's
Hang Seng index fell 131.02 points to 16,155.78, also on worries over the future profits of mobile phone operators.
Cable & Wireless HKT (HKT Quote) fell HK$0.25, or 1.4%, to 17.25 ($2.21), while
Hutchison Whampoa (HUWHY Quote) shed 0.25 to 99.25.
China Mobile (CHL Quote), formerly known as China Telecom, lost 3.00, or 4.2%, to 69.25. The firm said it would reduce its board lot size to 500 shares from the current 2000.
Interest rate-sensitive stocks rose after the U.S. Federal Reserve left rates unchanged this week. Banking group
HSBC (HBC Quote) picked up 2.00, or 2.3%, to 89.25, on hopes of an earnings surprise at the firm's July 31 interim announcement. Property shares were also higher, with
Cheung Kong rising 1.50, or 1.8%, to 86.75, and
Sun Hung Kai Properties (SUHJY Quote) gaining 2.25, or 4.2%, to 56.50.
Elsewhere in Asia, Korea's
Kospi index rose 2.32 to 821.22, while Taiwan's
TWSE index jumped 144.20, or 1.8%, to 8265.09 after falling to a six-month low on Thursday.
