Asian Markets Update: Japanese Investors Return to the Old Economy, as Tech Shares Suffer

In Taiwan, stocks soar again as political tensions ease.
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TOKYO-- Choppy trading continued in Japan ahead of the March 31 fiscal year-end, as dealers opted for laggard blue-chips instead of recently highflying tech shares.

In Hong Kong, the major news centered on

Hutchison Whampoa's

(HUWHY)

sale of a third of its 5% stake in

Vodafone AirTouch

(VOD) - Get Report

yesterday. There was disagreement in the market over the reason for the sale, with some observers thinking Hutchison was building up its reserves to buy out an international telecom firm, and others worried that the planned merger between Vodafone and

Mannesmann

could get stuck with European anti-monopoly authorities.

Japan's

Nikkei 225

index slipped 28.99 points to 19,704.60, while the

Topix

index, which includes all shares listed on the

Tokyo Stock Exchange's

first section, shed 6.77 to 1651.55. The

Jasdaq

small-cap index fell 4.93, or 4.2%, to 113.36, while the Nikkei

over-the-counter

shares shed 67.17, or 2.8%, to 2356.42.

Dealers at domestic securities firms have been shedding recent highflyers such as

Softbank

,

Hikari Tsushin

, and small-cap Net shares, instead picking up larger telecom, tech, beverage and food makers. Foreign investors were also seen making the same moves, but the selling will probably end shortly after April 1, when buy orders for tech shares on behalf of fund managers are expected to begin pouring in.

Softbank closed down 11,000 yen, or 9.8%, to 101,000 after it announced it sold its 4.85% stake in

Trend Micro

(TMIC)

.

Fujitsu

(FJTSY)

climbed 195, or 6.65, to 3130, while

Nippon Telegraph and Telephone

(NTT)

rose 110,000, or 7.9%, to 1.5 million.

Trading was suspended in

Mitsubishi Motors

by the end of the day, with shares last trading at 410.

The Nihon Keizai Shimbun

reported that the board agreed to sell a 33.4% stake to

DaimlerChrysler

(DCX)

, giving the German-US auto giant veto power on Mitsubishi's board. The paper also said Mitsubishi would spin off its passenger car division, to be 50%-owned by Daimler.

Sankyo

shed 35, or 1.5%, to 2250 after the U.S.

Food and Drug Administration

asked

Warner-Lambert

(WLA)

to pull the diabetes drug Rezulin, which Sankyo licenses to Warner, off the shelves.

The dollar climbed to a two-week high against the yen, changing hands at 107.33 yen as trading moved over to London.

Some dealers are also taking a close look at the euro, because there is increasing speculation that it may be boosted via an intervention by the

Bank of Japan

. The talk started yesterday when Japanese news wire

Jiji Press

reported that the French Finance Ministry had asked the BOJ to buy the euro against the yen on March 8, when the BOJ had bought both the dollar and the euro to weaken the yen. The French ministry has denied such talk, and so has the BOJ. But some traders are speculating that the French may be rebelling against the

European Central Bank

, which has refused to intervene to lift the sagging euro.

Hong Kong's

Hang Seng

index closed up 163.54 at 17,710.58, with the market looking forward to earnings from Hutchison Whampoa and its 50%-owned unit

Cheung Kong

, up HK$3.50, or 3.1%, to 115.50 later in the day. More so than earnings, however, the market was taken with the possibility that Hutchison, up 5.50,or 4.0%, to 144.00, was preparing to buy up a telecom operator in the months to come, using the $5.1 billion raised from its sale of shares in Vodafone.

China Telecom

(CHL) - Get Report

fell 0.50 to 74.50, after word got out that its rival

China Unicom

was looking for a dual listing in Hong Kong and in the U.S. around May.

Taiwan's

TWSE

index jumped 464.48, or 5.1%, to 9533.87, after reports that outgoing president Lee Teung-hui will retire as head of the ruling Nationalist party. Days of protests have been held in Taiwan by Nationalists, angry at Lee because they blame a split in the party for the Nationalist defeat in last weekend's presidential election. Stocks have rallied this week on government-backed buying, and also from relief that

President-Elect Chen Shui-bian

has toned down the pro-independence stance of his Democratic Progressive Party. That has made conflict with China appear less likely.