Tuesday, March 10, 2009

Asian Gains Tuesday Leave Japan Behind

Hong Kong rebounds strongly, and China brushes off deflation concerns, but Tokyo deflated by Buffett remarks on U.S. economy.

HSBC and other financial stocks led a rebound in Hong Kong, and other Pacific Rim markets mostly finished higher. Yet, after renowned investor Warren Buffett said the U.S. economy has "fallen off a cliff," Japanese manufacturers and exporters were still unable to see light at the end of the tunnel.

Japan's Nikkei 225 average on Tuesday fell a further 31.05 points, or 0.4%, to 7,054.98, after closing at a 26-year low, at 7,086.03, the previous day. The broader Topix index lost still more, diminishing by 1.0%, to 703.50.

Drug maker Astellas Pharma (other-otc: ALPMF - news - people ) dropped by 160 yen ($1.63), or 5.3%, to 2,860 yen ($29.05), and Chugai Pharmaceutical (other-otc: CHGCF - news - people ) tumbled by by 97 yen (99 cents), or 5.9%, to 1,552 yen ($15.76), on worries about their global competitiveness after U.S. pharmaceutical company Merck proposed a takeover of its rival Schering-Plough in a $41 billion deal.

Canon Inc (nyse: CAJ - news - people ) declined for the seventh straight day, falling by 25 yen (25 cents), or 1.2%, to 2,135 yen ($21.68). Investors have been concerned that the demand for Canon’s products will not pick up because of the continuing deterioration of economic conditions in North America and Europe. Another electronics producer, Toshiba (other-otc: TOSBF - news - people ), lost 6 yen (6 cents), or 2.6%, to 221 yen ($2.24), after the company said on Tuesday it would shift some of its solid-state drive assembly lines to the Philippines, from a domestic plant, in the second quarter to cut costs and increase output. Toshiba, the world's No. 2 maker of NAND flash memory after Samsung Electronics (other-otc: SSNLF - news - people ), is expecting to see strong growth for NAND-based SSD memory devices since they are more shock resistant and energy saving than other hard-disk drives. But Kyocera rebounded by 140 yen ($1.42), or 2.6%, to 5,580 yen ($56.70).

The yen was steady at 98.655 against the U.S. dollar in Tuesday afternoon trading.

Notwithstanding the selling pressure on exporters, equity indexes in Hong Kong, South Korea, and Australia managed to stay above the horizon as financial stocks rebounded.

Hong Kong’s Hang Seng index was up by 3.1%, to 11,690.91. Heavyweight HSBC (nyse: HBC - news - people ) clawed back 4.60 Hong Kong dollars (59 cents), or 13.9%, to 37.60 Hong Kong dollars ($4.82), after sliding by 24%, to 33.00 Hong Kong dollars ($4.23), on Monday. HSBC had shocked the market Monday by nearly doubling its daily loss in the last ten minutes, during Hong Kong's post-close auction period, as big investors shorted the stock in anticipation of buying them back on the cheap after the bank completes its $17.7 billion rights issue. Hong Kong's securities watchdog, the Securities and Futures Commission, is looking into the sharp plunge, the city's financial chief said on Tuesday.

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