Asia claws back after torrid morning

Japanese stocks bounced off a 16-year low in early trade, but remain weak.

In this story: Yen falls Hong Kong touches 18-month low Some markets rise 'Put money in bonds' RELATED STORIES

By staff and wire reports

TOKYO, Japan -- Shares prices across Asia clawed back from an early sell-off on Thursday, but remained weak as investors reeled from Wall Street's massive retreat.

Japan's key Nikkei average fell to 11,433.88 in early trade -- touching below 11,500 for the first time since December 26, 1984 -- but by early afternoon was marginally higher at 11848.83.

Other markets were generally weaker, but off early lows, after the benchmark Dow Jones industrial average in New York suffered its 10th-largest points decline ever on Wednesday.

The Nasdaq Composite Index fell 42.69 points, or 2.12 percent, to close at 1,972.09, above Monday's nearly 28-month low of 1,923.

Japanese financial stocks, 19 of which are the subject of a negative credit review from international ratings agency Fitch IBCA, dragged Tokyo's equities market lower initially.

Yen falls

The selling was exacerbated by the woes of the yen, which continued to weaken against the U.S. dollar, hitting ¥120.75-95 at 0400 GMT from 119.87-90 yen late Wednesday.

Financial Services Agency Minister Hakuo Yanagisawa has pledged a package of measures by the end of March to help banks purge the mountain of bad debts weighing on their balance sheets.

"Until we know specifically what's going to be contained in the FSA (Financial Services Agency) report (on resolving banks' bad loans) it's a dangerous time to be in banks. I think people are taking profits when they can," said Dick Beason, chief strategist at UBS Warburg.

Meanwhile, Hong Kong stocks fell more than 2 percent at the open on Thursday as investors continued to bet that further falls would emerge in the U.S., which has been buffeted by more signs of an economic downturn.

Hong Kong touches 18-month low

The Hang Seng Index was trading down 0.91 percent at 13209.06 at midday after earlier breaking below 13,000 for the first time since October 1999.

Elsewhere, several equity markets were improving after a negative morning, with Singapore's Straits Times index 0.45 percent weaker at 1784.14 at midday -- but at its high for the day after earlier falling to 1757.8.

Korea's KOSPI index was 2.12 percent weaker in early afternoon trade, close to its 12-month lows at 531.77, while the tech-focused Kosdaq market was faring worse, tumbling 3.82 percent to 69.29.

Australia's benchmark all ordinaries index closed 1.1 percent weaker at 3188.4, off 22.6 points.

Some markets rise

Among the handful of other markets to rise, New Zealand's NZSE-40 index closed 0.71 percent higher at 2090.22, while Taiwan's weighted index was 0.6 percent higher in afternoon trade at 5692.29.

In China, the Shanghai B share market's U.S. dollar denominated stocks were 0.73 percent lower at 134.464, while Shenzhen's Hong Kong dollar denominated B shares were 1.88 percent higher at 256.35.

Despite the rebound in the early afternoon, analysts say the short-term outlook remains bleak for regional equities.

"It's going to go down further, that's for sure," says ING Baring's chief equities strategist in Asia, Markus Rosgen.

"I'd say it has the potential to fall another 20 percent, based almost entirely on the fact that the U.S continues to dictate the direction of trade and, by almost any measure, remains expensive."

'Put money in bonds'

Rosgen says the best place to invest money in Asia is in economies that remain relatively protected from the U.S. and Japanese woes, and outside of high-tech sectors altogether.

"You would want to be invested in utilities, or regional financials that aren't exposed to Japan. If you can't find something there, you will lose the least money by putting your money in bonds," he says.

One Singapore-based strategist, who asked not to be named, says his firm is overweight investing in Hong Kong and China, since it sees them as less directly exposed to the U.S. and Japanese turmoil.

"We're overweight emerging markets, but neutral on Asia," he says. "We still think that in the longer-term, with a 12-mont outlook, there are returns of 15 percent to 20 percent to be made.

"We're overweight Hong Kong and China and neutral to underweight on the markets with the most to lose from U.S. and Japanese problems are those that have either a large export element in their economies, or a heavy reliance on techs, so Singapore, Taiwan, Australia, Malaysia."

Dow industrials fall below 10,000
Mar. 14, 2001
Tech stocks sour
Mar. 14, 2001
Europe closes sharply lower as markets recouped earlier losses
Mar. 14, 2001

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