Profit-taking hits stock markets

Profit-taking hits stock markets

HONG KONG (AFP): Investors were quick to lock in profits yesterday on two days of handsome gains, cutting short a rally on Asia-Pacific stock markets.

The profit-taking overshadowed optimism sparked by a new agreement between Indonesia and the International Monetary Fund spelling out tough new reform measures to pull the country's economy back from the brink.

The markets were waiting for Indonesia to follow up on the agreement with concrete action, analysts said.

Stocks in Hong Kong shed 7.0 percent, Jakarta 3.4 percent, Singapore 0.8 percent, Sydney 0.8 percent, Kuala Lumpur 2.1 percent, Bangkok 1.0 percent, Taiwan 0.4 percent, Shanghai 6.0 percent and Auckland 1.0 percent.

The exceptions were Seoul, up a strong 6.5 percent, and Manila which ended 1.2 percent higher.

The Tokyo market was closed for a holiday.

In Hong Kong, worries over domestic corporate earnings amid higher interest rates hit stock market sentiment and sparked jitters elsewhere in Asia, notably Singapore and Sydney.

The key Hang Seng index lost 647.57 points to close at 8,578.98, after two consecutive sessions of gains. The market had gained 7.4 percent Tuesday and 5.8 percent Wednesday.

In Singapore, share prices closed 0.8 percent lower, off their highs, as positive sentiment in the region following a new deal between the IMF and Indonesia were overshadowed by profit-taking.

"Sharper losses in Hong Kong in the afternoon and a renewed weakness of regional currencies after Indonesia submitted a revised economic program to the IMF dragged the market lower," a dealer with a local brokerage said.

The key Straits Times Industrials index ended 9.91 points down at 1,233.36 in volatile trade, sliding from the 3.0 percent rise it registered earlier. The broader All-Singapore index was up slightly by 0.2 points to end at 366. 58.

In Sydney, Australian shares fell 0.8 percent as investors cast a wary eye on a plunging Hong Kong bourse and cashed in profits from strong gains the previous day.

The Australian Stock Exchange's key All Ordinaries index fell 20.8 points to 2,584.5, with another big fall in Hong Kong and weakening gold affected sentiment during the day.

In Kuala Lumpur, Malaysia's key stock index ended 2.1 percent lower as short-term investors locked in profits amid weaker regional bourses.

The Kuala Lumpur Stock Exchange composite index fell 11.21 points to end at 525.47 after rising 12 percent the previous two days. The index hit a high of 549.74 points and a low of 520.61.

In Bangkok, Thai shares slid 1.0 percent as foreign investors locked in profits, selling their finance sector stocks after two days of sharp market gains.

"After a strong start this morning with buying mainly in communications and energy stocks, the market dropped in the afternoon mainly on profit-taking by foreigners," an analyst from Seamico Securities said.

The Stock Exchange of Thailand (SET) broad based index fell 3.56 points to close the day at 364.13, off a high of 377.75. The SET 50 index was down 0.34 points at 26.22.

In Manila, Philippine share prices rose 1.2 percent due to the continued strength of the local currency, analysts said.

"It is still the forex market that is driving the sentiment of the stock market," said Julie Villena of Magnum International Securities Inc.

However, she said that the market would probably see "cautious trading" after the index crosses the 1,750-level. The Philippine Stock Exchange composite index rose 20.63 points to close at 1,706.85 points.

In Seoul, share prices shot up 6.5 percent on the Korea Stock Exchange on aggressive buying by foreign investors and the relative stability of the won, dealers said.

Foreign investors were "unimaginably bullish," spreading their interest to banks and underpriced large-caps, while continuing to buy their favorite core blue chips, LG Securities dealer Yoon Sam-oui said.

"Since the won started recovering from the 1,800 level against the U.S. dollar, foreign fund inflows have been escalating (to make foreign exchange profits) and were boosted by the release of the current-account surplus for December," Yoon said.

The composite index closed up 30.85 points at 505.98, off a high of 506.52.

In Taipei, Taiwanese stocks led by financial issues dropped 0.4 percent as investors locked in profits after two days of sharp gains, dealers said.

"It's natural. Big players wanted to lock in profits after the market rallied 5.7 percent in the past couple of days," said Clement Lu of Taiwan International Securities Corp.

The Taiwan Stock Exchange weighted price index moved down 27.48 points to 7,770.77.

In Shanghai, the B shares, nominally reserved for foreign investors, dropped 6.0 percent with investors lacking the confidence to cross the index's upper resistance level, dealers said.

"There was a correction after rising for two days, mainly because the investors weren't optimistic about the future. Another reason was that the level of 47 points ... had formed a strong upper resistance," a Nikko Securities dealer said.

The Shanghai Stock Exchange's B share index lost 2.71 points to close at 42.76 points while the A share index of locally- traded stocks rose 15.52 points, or 1.2 percent, to 1,287.71 points.

In Auckland, New Zealand shares closed down 1.0 percent on the absence of buying interest, dealers said.

The NZSE-40 index fell 21.82 points to 2,214.58 on a turnover of NZ$53.94 million (US$30 million).