Asian Markets Update: Salomon Report Hammers Chip Shares Region-Wide
TOKYO -- Shares of Asian chip makers took a pounding after Salomon Smith Barney issued a pessimistic report overnight on the future of the industry. But after the dust settled, what was left behind was major confusion over the potential growth of the region's markets, especially in Japan.
Only a day before U.S. shares tumbled, partly on missed earnings estimates, news had broken that
Mitsubishi Electric
(MIELY)
, one of the world's top chip makers, was joining other manufacturers in planning to increase capital investment this year to record levels.
The
Nikkei 225
index shed 153.58 points to 17,282.37, while the
Topix
index, which includes all shares listed on the
Tokyo Stock Exchange's
first section, lost 10.55 to 1590.63. The
Jasdaq
small-cap index fell 3.24, or 3.6%, to 86.14, while the Nikkei
over-the-counter
index lost 34.76, or 1.9%, to 1777.17.
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All major Asian chip makers crumbled following Salomon's pessimistic report.
NEC
(NIPNY)
shed 250 yen, or 7.3%, to 3200,
Toshiba
lost 81, or 6.5%, to 1167, Mitsubishi Electric tumbled 70, or 6.0%, to 1107,
Tokyo Electron
lost 230, or 1.6%, to 14,480, while
Rohm
shed 700, or 2.2%, to 30,800. The timing of Salomon's report was considered bad timing for these shares, since many traders thought the sector would rally following a report in the
Nihon Keizai Shimbun
yesterday that said profits for Japanese chipmakers would likely soar in fiscal 2000.
Tumbling right along were Internet shares, with
Softbank
falling 1750, or 14.1%, to 10,700.
Yahoo! Japan
shed 4.45 million, or 11.7%, to 33.55 million, and
Trans Cosmos
lost 1700, or 10.1%, to 13,900.
Comments from
U.S. Treasury Secretary Larry Summers
helped the greenback edge higher against the yen to around 106.96. Many dealers thought the
Bank of Japan
may hold off raising interest rates on July 17 after Summers again repeated his view that Japan needed to focus on encouraging domestic demand-led economic growth. Some dealers speculated that this comment was one way the U.S. was pressuring Japan to hold off hiking rates.
Hong Kong bucked the regional trend and the
Hang Seng
index managed to inch up 15.32 to 16,489.59. Telecom shares continue to be hot, largely due to news that
Hutchison Whampoa
(HUWHY)
, up HK$2.50, or 2.3%, to 109.50 ($14.04) may sell a stake of its U.K. mobile unit to Dutch
KPN Telecom
and Japan's
NTT DoCoMo
.
China Mobile
(CHL) - Get China Mobile Ltd. Report
, formerly known as China Telecom, gained 0.50 to 69.50, while
China Unicom
(CHU) - Get China Unicom (Hong Kong) Ltd. Report
, climbed 0.05 to 18.35.
Property shares also rose, with
Sun Hung Kai Properties
(SUHJY)
up 1.75, or 2.0%, to 59.75.
Korea's
Kospi
index rose 7.23 to 837.63 but Taiwan got hit on Salomon's report. The
TWSE
index lost 132.35, or 1.6%, to 8289.39 as
Taiwan Semiconductor Manufacturing
(TSM) - Get Taiwan Semiconductor Manufacturing Co. Ltd. Report
fell TW$4.00, or 2.7%, to 145.00 ($4.72).
