Local issues dominate Asian market

Local issues dominate Asian market

HONG KONG (Reuters): Asian asset markets turned introspective
on Tuesday, with investors taking leads from domestic factors
after a mixed overnight session on Wall Street failed to give
clear direction.

Benchmark equity indices in South Korea, Hong Kong and the
Philippines moved higher, but sank to four-week lows in Japan.

Indonesian assets were dogged by political risks, as critics
of President Abdurrahman Wahid or much more popularly called Gus
Dur intensified calls for him to quit, and the corporate debt
woes of the Sinar Mas group with its Asia Pulp and Paper unit
seemingly lumbering towards default.

Japan's benchmark Nikkei 225 fell almost one percent as high-
tech manufacturers' stocks tumbled on weaker earnings outlooks
and kept the broader market under pressure.

The U.S. dollar fell to one-month lows against the yen for the
second straight day as the Japanese currency benefited from
speculation of local funds repatriating money ahead of the fiscal
year-end in March.

The debt problems at Indonesia's Asia Pulp and Paper (APP)
dominated the bond market as fears grew of a formal default by
one of the group's operating units later this week, while
political risks added to the shadow cast over financial markets.

As key politicians called for the start of impeachment
proceedings against Gus Dur, investors pondered whether PT Tjiwi
Kimia would be able to make a coupon payment deadline on one of
the two bonds that had interest due last Thursday.

Analysts said complex structures put in place by the Group's
management made it difficult to determine how quickly this might
lead to a group-wide default on its near $11 billion of debt.

Complicating the outlook for creditors is that the government
wants APP parent, the troubled Sinar Mas Group conglomerate, to
pledge APP as part of a guarantee of its $1.3 billion debts to
Bank Internasional Indonesia (BII).

Bonds in APP group companies have been marked down as low as
20 cents in the dollar by international investors who hold them,
in anticipation of a group-wide default.

Stocks were not spared the fallout and the benchmark Jakarta
Stock Exchange index sank some two percent.

South Korea's benchmark stock index posted Asia's biggest
percentage gain on Tuesday after as financial issues rebounded
towards the close.

Institutions chased the market aggressively in a late bout of
buying, backed by a bounce in futures, fund managers said.

That offset falls for chipmakers after a drop of more than
four percent in the U.S. semiconductors sub-index overnight, with
heavyweight Samsung Electronics struggling to keep its 20-day
moving average of 200,000 won.

The Kosdaq over-the-counter market, home to many high-tech
issues, finished up 2.24 percent at 79.72, a rise of 1.75 points.

Taiwan stocks closed lower as disappointed investors sold
shares after the government failed to make an announcement about
resuming construction of a controversial nuclear power plant.

"The market will continue to face selling pressure in the
short term if the power plant issue cannot be settled," said
Jackie Hung, fund manager of Golden Dragon Fund for International
Investment Trust.

Taiwan media had said the government could make the
announcement as early as Monday but the cabinet did not make any.

However, deputies in Taiwan's anti-nuclear Democratic
Progressive Party (DPP) agreed on Monday to the resumption of
construction, raising hopes for an end to a bitter political
stand-off over the plant.

Analysts say reversing the cabinet decision to scrap the plant
would be a boost for the economy and a boon for the DPP in
parliamentary elections.