Asian Markets Update: Microsoft Upstages Politics, Hammers Tech Stocks

Obuchi's likely successor is expected to continue current policies until snap elections.
Author:
Publish date:

TOKYO -- Japan's prime minister is in a coma and politics in the world's second-largest economy are in disarray, but it was the

Nasdaq Composite

which moved the country's markets most on Tuesday.

Although the political upheaval in Japan leaves questions regarding the course of the country's economic policy, as it tries to shake off ten years of recession, Tokyo investors were much more disturbed by Nasdaq's 7.6% drop overnight. Both large and small-cap tech issues were heavily sold on news of

Microsoft's

(MSFT) - Get Report

plunge. A judge in the U.S. said Monday that Microsoft had "maintained its monopoly power by anticompetitive means."

With blue chips favored heavily by investors since technology stocks began their precipitous decline in March, the

Nikkei 225

index shed just 132.06 points, to 20,594.29, while the

Topix

index, which includes all shares listed on the

Tokyo Stock Exchange's

first section fell 18.16, or 1.1%, to 1714.29. Technology stocks were harder hit: The

Jasdaq

small-cap index plunged 6.67, or 6.4%, to 96.87, while the Nikkei

over-the-counter

index fell 122.21, or 5.5%, to 2092.30.

On the political front, the revelation on Monday that

Prime Minister Keizo Obuchi is in a coma

sent politicians in his ruling Liberal Democratic Party into action far more quickly than the party has tended to act in the field of economic reform. Current party

Secretary General Yoshiro Mori

looks likely to be officially elected as Obuchi's successor Wednesday afternoon. The Cabinet line-up is not expected to change, since a realignment will likely come up before the July Group of Eight summit here, after snap elections for parliament's Lower House.

Mori's ascension will not affect Japanese stocks in the short run, since he's expected to carry on the reformist policies put in place by Obuchi. The result of the snap-election, however, is the longer-term imponderable.

Politics aside, the tech beating continued Tuesday as investors shied away from the sector that helped the stock market on its bull run last year. The market is currently waiting for earnings from the year ended March 31 -- mostly expected around May -- to see whether tech plays will actually post profits or not.

Softbank

fell 5000 yen, or 5.8%, to 81,500,

Trend Micro

(TMIC)

lost 2000, or 12.4%, to 14,100,

Hikari Tsushin

is ask-only at 60,380, while

Sony

(SNE) - Get Report

lost 240, or 1.6%, to 14,760.

With tech shares down, blue chips picked up much of the slack, thanks to an overflow of cash expected in the market over the next few months, as some 3 to 5 trillion yen of postal fund deposits mature this month. Old Japan shares are now on the rise, with

Japan Airlines

(JAPNY)

up 50, or 17.2%, to 340, and steel maker

NKK

(NKKCY)

up 7, or 10%, to 77.

Korea's

Kospi

index fell 16.28, or 1.9%, to 830.16, also hurt by Nasdaq. The selling in tech shares also spilled over to telecom shares, with

SK Telecom

(SKM) - Get Report

down 199,000 won, or 5.9%, to 3.15 million.

Hong Kong and Taiwan markets were closed for national holidays.