Asian stocks plunge after fresh yen slide

Asian stocks plunge after fresh yen slide

SINGAPORE (Reuters): A slide in the embattled yen past the 146-per-dollar mark yesterday unleashed ferocious pressures on regional stock exchanges, with Hong Kong leading the way with a drop of 6 percent before a slight recovery.

The yen hit 146.10 per dollar in afternoon trade in Tokyo, but was quoted at 145.89/5.99 at 0817 GMT.

Few bourses escaped the fears about a regional economic downturn, which gathered momentum after Japan's first quarter Gross Domestic Product figures on Friday showed the country officially in recession.

Tokyo's Nikkei 225 closed down 197.16 points -- 1.31 percent -- at 14,825.17. Hopes that cash-rich pension funds might step into the market slowed the fall in morning trade, but the bears took the lead as the day wore on.

"The GDP figures were weak indeed, and I don't think the Nikkei 225 will head sharply higher any time soon," said Shinichi Ichikawa, strategist at Credit Lyonnais Securities Co Ltd.

Concern over Japan's first recession in 23 years and the impact on its neighbors has been exacerbated by the yen's further decline, brokers said.

Hong Kong was hit hard by a combination of the falling yen, a rise in local interbank rates and worries about jobless figures.

The unemployment rate jumped to 4.2 percent in the March-to- May period, the highest level in 15 years.

The Hang Seng fell down more than six percent at one stage before rebounding slightly. At the close, the Hang Seng was down 452.94 points or 5.72 percent to 7,462.50.

Jitters about the high interest rates combined with the falling yen to give the Hang Seng a hammering. "The (interbank) one-month rate rose to about 20 percent and the Japanese yen continued to fall...Stock markets in the whole region are weak," said Percy Au-Young, sales director at DBS Securities.

A 10.66 percent drop in Philippine Long Distance Telephone Co started a long slide for the Manila market. The heavily-traded blue chip also saw strong selling in its American Depositary Receipts in New York on Friday.

"Investors sold down PLDT in New York because of negative sentiment on Asian companies," a trader at a foreign brokerage said.

But there was a slight rebound in afternoon trade. At 0813 GMT, Manila's key stock index was down 4.49 percent at 1,746.86 having lost 82.16 points. It fell nearly six percent earlier.

The KLSE was down 4.42 percent at 451.47, a loss of 4.42 percent at 0821 GMT.

In Seoul, where investors are anxiously awaiting a government list of non-viable companies on Thursday, the Korea Stock Exchange Composite Index closed at an 11-year low at 288.21, 4.82 percent, 14.60 points, down on the day.

But another recently-beleaguered market, Taiwan, defied the regional gloom, picked up by a soaring electronics sector led by microchip giant Taiwan Semiconductor which was up T$4 at T$72.5. The Taiwan weighted index ended up 2.34 percent, 166.72 points, at 7,283.83.

Brokers said the markets were reassured by the fact that the Taiwan dollar had managed to buck the trend and move up against the U.S. dollar.

"Investors are convinced that the government really will defend the market," said Allen Hung, vice-president at National Securities.

"With the government so bullish, some investors are beginning to think maybe they don't have to be so bearish."

Rises in dual-listed Indonesian stocks failed to buoy the markets in Jakarta. The JSX index went up in early trade before falling victim to weakness in the rupiah and the regional malaise.

Australia's currency woes hit the All Ordinaries, but the successful float of financial services giant AMP Ltd moderated the blow.

The All Ordinaries closed off 0.16 percent at 2,567.5, a fall of 4.2 points.

Bombay was also hit by persistent selling pressure, skidding a year low in afternoon trading. Brokers blamed the regional crisis and the deep shadow of international sanctions imposed in the wake of India's nuclear tests.

The BSE was down 4.16 points at 3,208.13 points at 0811 GMT, a loss of 139.28 points.