Asian Markets Update: Japan's Tankan Survey Sends Stocks Down
TOKYO -- The market's overly optimistic expectations for the
Bank of Japan's tankan
survey of corporate sentiment sent shares on the
Tokyo Stock Exchange
slightly lower Tuesday, as the numbers suggested hard times still lie ahead for small- and medium-sized firms.
Although the percentage of companies that are positive about current business conditions actually increased more than economists had predicted, corporate spending plans for small and mid-sized firms actually fell from the previous survey, which depressed the market.
The
Nikkei 225
index shed 144.51 points to 17,470.15, while the
Topix
index, which includes all shares listed on the TSE's first section, rose 3.43 to 1606.94. The
Jasdaq
small-cap index lost 0.07 to 89.98, while the Nikkei
over-the-counter
index gained 9.82 to 1806.60.
The tankan result has started a new debate in the market over whether the BOJ will raise the overnight call loan rate by 25 basis points in July. Some traders suggest that the central bank may hold off abandoning its zero interest policy until after the release of gross domestic product figures in September. But others argued that a rate increase may come sooner, on the grounds that the BOJ wants to give Japan's corporate sector greater incentive to restructure if the cost of capital rises.
Tech shares were mixed, with
Advantest
dropping 530 yen, or 2.2%, to 23,420 ($220.23) and
Kyocera
(KYO)
shedding 560, or 3.2%, to 17,210.
Japan Telecom
, which is 30%-owned by the U.K.'s
British Telecom
(BTY)
and
AT&T
(T) - Get Report
, jumped 70,000, or 1.5%, to 4.91 million after the
Nihon Keizai Shimbun
reported that the company would enter the Japanese local phone market as early as May of next year. The company's possible soon-to-be rival
Nippon Telegraph & Telephone
(NTT)
was flat at 1.49 million.
Japanese investors were busy buying the yen as the BOJ's tankan figures came in relatively strong. But foreign investors sold off the currency as they shed key Japanese tech shares. The greenback closed Tokyo trading slightly higher, recently buying 106.34 yen.
Hong Kong's
Hang Seng
index rose 110.79 points to 16,235.76 in listless trading ahead of the American Fourth of July holiday. Shares of
Pacific Century CyberWorks
are getting hit as investors quickly take profits via arbitrage plays between PCCW and
Cable & Wireless HKT
(HKT)
, which will end trading on Aug. 2 due to its takeover by Pacific Century. PCCW fell HK$0.20, or 1.3%, to 14.80 ($1.89), while HKT closed flat at 16.95.
Fund managers reportedly are switching into
China Unicom
(CHU) - Get Report
and out of
China Mobile
(CHL) - Get Report
, formerly known as China Telecom. Reports that the number of China Unicom subscribers jumped 90% to 8 million at the end of June could have something to do with the company's shares jumping 1.00, or 5.9%, to 17.95, while China Mobile gained only 0.25 to 68.00.
Elsewhere in Asia, Korea's
Kospi
index fell 16.68, or 2.0%, to 818.53, while Taiwan's
TWSE
index dropped 245.23, or 3.0%, to 8052.54. Investors in Taiwan are reportedly getting frustrated at contradictory remarks from top government officials over the island's position on the "One China" policy.
