Asian Markets Update: Hong Kong Underwhelmed by Congress Vote on China

HONG KONG -- Stocks rose in Asia with Japanese tech issues leading the way following Wall Street's bounce, as the correlation between what American investors do at home and what their counterparts do on the other side of the world just seems to grow.

The passage by Congress of Permanent Normal Trading Relations for China was initially hailed in Hong Kong, which rapidly moved on to more immediate concerns for stocks. China has already got most favored nation status, and the only difference now is that there will be no vote on the issue yearly. As for the more globally important step of China's joining the World Trade Organization, Beijing has already done deals with both the U.S. and the European Union in hammering out the terms for China's accession. The passage of permanent normal trade by the U.S. Senate would all but ensure WTO accession, but that stands to benefit non-Chinese companies more in the short term.

In Japan, the key Nikkei 225 index rose 203.38 points, or 1.3%, to 16,247.82, while the Topix index, which includes all shares listed on the Tokyo Stock Exchange's first section, was up 19.03, or 1.3%, to 1523.96. The Jasdaq small-cap index gained 3.46 or 4.5%, to 80.55 while the Nikkei over-the-counter index rose 54.54, or 3.3%, to 1711.12.

As the market wound up trading, a senior official with the Economic Planning Agency said the government would be revising downward by two-tenths of a point its estimate for growth in the 4th quarter of last year. At the same time, Akira Sadahiro denied a report in the New York Times that Japan omitted unfavorable data from its last GDP report.

Sony (SNE) rose 590 yen or 6.2%, to 10,080. Internet investor Softbank gained 2000 or 14.2% to 16,100, having fallen before today by 75% from its high in February. Hitachi (HIT) rose 18 or 1.4% to 1264, while Toshiba fell 15, or 1.5% to 985.

Nippon Telegraph & Telephone (NTT) was unchanged at 1.27 million, but its mobile unit NTT DoCoMo (NMCNY) picked up 160,000, or 3% to 2.83 million.

In Hong Kong, the passage of PNTR for China had a limited effect on stocks, since the betting had been that the bill would pass Congress. The benchmark Hang Seng index initially rose more than 2%, but then gave up all of those gains toward the end of the day. Less than an hour before closing, it was down 65.27 points, or 0.5%, at 13,868.71, weighed down by the concerns that have dogged it of late: higher interest rates and a sluggish local real estate market.

China Telecom (CHL) rose HK$.80, or 1.7%, to 48.70, while Hutchison Whampoa, a big investor in China's port infrastructure, (HUWHY) fell 2.25 or 2.5% to 86.25.

The next goal for China's trade negotiators -- accession into the World Trade Organization -- is likely to be realized this year. It should initially favor U.S. companies eager for increased access to China. But companies from China with the global reach of U.S. multinationals are non-existent, so for China's corporate sector PNTR simply guarantees a continuation of market access Chinese companies already enjoy.

Little surprise, then, that the Hang Seng China Affiliated Enterprises index, which mostly tracks the stocks of mainland Chinese companies incorporated and traded in Hong Kong, was down 5.6%. One of the few world-class Chinese companies, computer maker Legend (LGHLY) continued its steady slide brought on by the global sell-off in technology and Internet companies, falling 0.75, or 9.3%, to 7.30. Despite steady earnings growth, Legend still trades at 107 times trailing earnings.

Hong Kong Internet investor Pacific Century CyberWorks was down 0.50, or 3.6% to 13.45, before it announced that it would hold a joint news conference later today with takeover target Cable & Wireless HKT (HKT) to explain in detail their proposed transaction. HKT was down 0.55 or 3.1% to 17.20.

One of the markets least correlated with America's is Taiwan, because it is dominated so thoroughly by domestic investors: the TWSE index was one of the few Asian markets to fall Thursday, closing down 62.31 points, or 0.7%, at 8438.10. South Korea's Kospi index rose 23.40, or 3.5%, to 698.35.

In currency trading, the dollar was little changed against the yen, fetching 107.715 yen.

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