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.