Asian Stocks Fall:Nikkei drops almost 700 points (5%)

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03/29 02:00 Asian Stocks Fall; Furukawa, CyberWorks, Chartered Semi Lead By Renee Kim

Tokyo, March 29 (Bloomberg) -- Asian stocks fell, led by Furukawa Electric Co. and computer-related companies after industry leaders Nortel Networks Corp. and Palm Inc. cut forecasts, a sign earnings and share prices may keep sliding.

Japan's Nikkei 225 stock average plunged 5 percent, its biggest drop since April 17. Hong Kong's Hang Seng Index fell 1.5 percent, led by Pacific Century CyberWorks Ltd. after it reported a loss double analysts' worst forecast. Chartered Semiconductor Manufacturing Ltd. led Singapore's Straits Times Index 1.3 percent lower, while Korea's Kospi shed 0.9 percent.

``It's a sign that the second quarter is going to be worse than the first quarter for Asia,'' said Pranab Kumar Sarmah, an analyst at Daiwa Institute of Research Singapore Pte.

In the U.S., shares of Nortel plummeted 16 percent after the biggest maker of fiber-optic equipment said it will post a wider first-quarter loss. Separately, Palm, the biggest maker of electronic organizers, saw its shares tumble 48 percent as it expects a loss in the fiscal fourth quarter.

The Bloomberg Asia Pacific Electronics Index, comprised of the region's biggest computer-related companies, dropped 5.6 percent, on course for its biggest loss since May 11. The Nasdaq Composite Index dropped 6 percent yesterday.

Japan's Furukawa, which is one of the biggest shareholders of Nortel's rival JDS Uniphase Corp., slid 11 percent to 1312 yen. NEC Corp., Japan's largest computer maker, shed 3.3 percent to 1977 yen. Sharp Corp., which makes liquid-crystal display screens used in handheld devices, fell 3.5 percent to 1622 yen.

Japanese companies whose profitability is tied to capital investments also declined after the government said industrial production rose a seasonally adjusted 0.4 percent last month, missing forecasts for the eighth month.

Kyocera Corp., the world's largest maker of ceramic packaging use to protect finished microchips, with overseas sales accounting for more than half of its sales, dropped 7.2 percent to 11,510 yen. Tokyo Electron Ltd., the second-largest maker of semiconductor production equipment, lost 6.7 percent to 8300 yen.

The Nikkei lost 693.15 to 13,072.36, while the broader Topix index fell 3.9 percent to 1285.20.

Hong Kong

Hong Kong's Hang Seng Index fell 203.29 to 12,648.13, its second decline in three days.

CyberWorks plunged 12 percent to HK$3.05, on course for its biggest drop in six months. The company, whose shares slumped 84 percent in the past year, said it lost $886 million last year. As of Dec. 31, CyberWorks' liabilities exceeded the value of its assets by HK$14.1 billion ($1.8 billion).

``Some pension funds with strict investment discipline may have to sell the stock because the company is now in negative equity, meaning they are doing their business without capital, just based on borrowings,'' said Peter Chau, who helps manage about $1 billion in Asia at TAL CEF Global Asset Management Ltd.

Telecommunications stocks added to losses following Nortel and Palm's warnings. China Mobile (H.K.) Ltd., China's largest publicly traded mobile telephone company, fell 1.4 percent to HK$34.60. China Unicom Ltd., a unit of China's second-largest telephone company, fell 1.2 percent to HK$8.45.

Singapore

Singapore's Straits Times Index fell 21.18 to 1633.14, its lowest since April 1999.

Chartered Semi, the third-largest maker of chips to companies' design, declined 7.9 percent to S$4.20, bringing its loss in three days to 21 percent. Datacraft Asia Ltd., which set up a quarter of Asia's communications networking systems, fell 3.2 percent to $4.82. Omni Industries Ltd. shed 3 percent to S$2.63.

``The markets are declining for two reasons: the impact of Nasdaq and technology on Asian markets and the supposed outlook for the U.S. economy,'' said Tim Julien, regional director at ING Investment Management Asia Pacific Ltd., which manages $1 billion in Asian equities.

Among other decliners, Pacific Century Regional Developments Ltd. extended losses, falling 7.9 percent to 58 Singapore cents on its Hong Kong unit, CyberWorks' loss.

Korea

Korea's Kospi lost 4.99 to 523.80. Samsung Electronics Co., the biggest computer memory chipmaker, fell 1.5 percent to 204,500 won. Samsung SDI Co., Korea's largest computer monitor maker, fell 6.6 percent to 58,200 won. A fifth of Korea's total exports go to the U.S., its largest trading partner.

``Investors will not be convinced that the worst is over, until it is proven in a string of economic indicators,'' said Park Joon Beom, a strategist at LG Investment & Securities Co.

Adding to the index's declines, SK Telecom Co., Korea's No. 1 mobile phone service provider, fell 1.4 percent to 182,000 won, its lowest since November 1999. Its parent said a plan to sell a 14.5 percent stake in SKT will be delayed.

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-- Carl Jenkins (somewherepress@aol.com), March 29, 2001


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