Asian stocks off sharply after rate cut

By staff and wire reports

HONG KONG, China -- Asian stocks sold off sharply on Wednesday, with Japan's Nikkei sinking more than 3 percent.

Its losses led the region. But other major markets such as Hong Kong and Australia also ended with losses of close to 1 percent.

The region saw no benefit from the U.S. Federal Reserve's decision overnight to cut U.S. interest rates by 50 basis points, or half a percent. Stocks had largely factored in that widely anticipated move.

Instead, bank stocks felt the pressure of the global slowdown. Technology investors were jittery, after Qualcomm Inc. posted disappointing results.

That meant Taiwan was the only main Asia-Pacific market trading in the black, with Singapore just below break-even going into late trade.

Banks weighing on Tokyo trade

In Japan, the Nikkei gave up 3.3 percent to end at 10,284.98. It was a large drop after several days of tight trading.

The broader Topix index fell 2.35 percent to 1,038.52. That's still a big one-day move for that index, which has less exposure to technology stocks.

Japanese banks, which have seen stock prices crumble as the domestic economy shrinks, suffered heavily.


Japanese mobile phone leader NTT DoCoMo fell 3.8% ahead of its earnings report after the market closed

Mizuho Holdings, the largest bank in the world by assets, tumbled 8.2 percent to 315,000 yen. It set yet another in a string of lifetime lows, after its listing in September 2000.

A report suggested it would almost double bad-loan disposals in fiscal 2001 to 1.8 trillion yen.

The whole banking sector gave up 4.1 percent. Many Japan watchers consider its bad-loan problem to be the largest challenge facing its economy.

But loans have been going bad on Japanese banks as fast as they can write them off.

Leading cell-phone company NTT DoCoMo fell 3.8 percent to 1.53 million yen. It reported earnings after the close, booking a 263 billion yen ($2.2 billion) extra charge to write down its investment in KPN Mobile, a Dutch cell-phone company.

That pushed DoCoMo into the red for the first time since 1994, with a net loss of 27.8 billion yen for the six months through September.

Hong Kong cuts rates but sees little fruit

Hong Kong's market rose in morning trade after the Fed's decision. Hong Kong's interest rates typically follow U.S. rates because the Hong Kong dollar is pegged to the U.S. dollar.

The Hong Kong Monetary Authority did indeed cut its overnight discount rate by 50 basis points, to 3.5 percent.

Banking giant HSBC, the largest listing in Hong Kong, was one of the gainers. It rose 1.14 percent to HK$89.00.

But most smaller banks were posting losses.

Legend Computer, mainland China's largest computer maker, gave up 1.63 percent to HK$3.025 after posting earnings Wednesday.

It came in with a first-half profit of HK$453.4 million ($58 million), below estimates thanks to a poor second quarter and flagging demand for computers.

In China, the mainland's B share markets were also off sharply. The Shanghai index lost 2.8 percent, while the Shenzhen market closed down 4.2 percent.

Investors were fretting about the impact as the government launched a crackdown on market corruption.

Stocks got little boost from China's expected entry into the World Trade Organization, set for November 10.

Mining and bank stocks sink Sydney

In Australia, the S&P/ASX 200 index closed off 1.0 percent at 3,252.6.

The Reserve Bank, as expected, did not follow the U.S. rate cut. Australia has a general election this weekend, and such a move would be construed as political.

News Corp., Sydney's largest listing, climbed 0.9 percent to A$13.82 ahead of its earnings, which it releases Thursday. It had fallen as much as 1.8 percent in early trade.

BHP Billiton closed down 0.9 percent at A$8.91. It was a bad day for mining companies, with WMC falling 4.3 percent on a report that Alcoa might back off its offer to buy the company.

Australia's biggest bank, National Australia Bank, lost 1.6 percent ahead of its earnings on Thursday. Analysts expect a net profit of A$3.8 billion.

All of Australia's biggest banks ended the day down.

New Zealand's benchmark NZSE-40 Capital index lost 0.7 percent to close at 1,995. That was a setback after Tuesday's close, its first over 2,000 since Sept. 11.

New Zealand Telecom fell 1.5 percent to end at NZ$4.66, its first decline after three days of rises.

Contact Energy fell 8 cents to NZ$4.09. Edison has offered NZ$4.25 in a takeover bid that seems to be gaining momentum.

Fisher & Paykel was one of the big losers, giving up 3.7 percent to NZ$14.40, as investors weighed its decision to split its health-care and appliances businesses.

Taiwan up strongly in day's only gains

South Korea's Kospi was also off, giving up 0.6 percent to 562.03.

SK Telecom lost 2.0 percent to 249,500 won, after posting third-quarter profits that were down 7 percent at 291 billion won ($226.5 million).

Hyundai Motor, Korea's largest carmaker, moved ahead again. It closed up 1.8 percent at 22,700 won aftter predicting a 15.6 percent rise in U.S. sales next year.

Taiwan's Taiex index was the only major index to make it into the black. And it did so in impressive fashion, rising 1.8 percent to 4,158.89.

That was its fifth straight day of gains. It drew strength from the U.S. rate cut and Nasdaq's 2.3 percent rise overnight. The Dow put on a more muted 1.6 percent.

Taiwan's techs serve the United States as their main market. Contract chipmaking No. 1 Taiwan Semiconductor Manufacturing Co. climbed 2.3 percent to T$67.00.

Rival United Microelectronics lifted 6.5 percent to T$34.30.

Memory chip maker Winbond Electronics rose the daily limit of 7 percent to end at T$13.25.

Singapore's Straits Times index was down 0.03 percent at 1,333.59 in afternoon trade.

Investors were selling off technology stocks on news of the Fed rate cut. Datacraft Asia remained particularly weak after its recent profit warning.

Singapore Telecommunications was down 1.8 percent at S$1.67 at midday, ahead of its earnings on Thursday.

Reuters contributed to this report.